The federal government encourages small businesses to take on contracting opportunities. The process to register as a federal contractor is more straight-forward than most people think.

Federal government contracting

The U.S. government is the world’s largest customer. It buys all types of products and services, and is required by law to provide opportunities for small businesses.

There are two broad categories of government contractors:

• Prime contractors bid on and win contracts directly from government agencies
• Subcontractors join prime contractor teams, usually to provide a specific capability or product.

For your small business to serve as a prime contractor or subcontractor, you’ll need to legally qualify as a small business and register as a government contractor. Then you can start looking for both prime or subcontracting opportunities with the federal government.

Comply with federal contracting rules

The federal government is very particular about how it purchases products and services. It aims to make sure that competition is fair and open, prices are competitive, it gets what it pays for, and all laws are followed.

Different rules and regulations apply to different types of federal purchases. The Federal Acquisition Regulation or Defense Federal Acquisition Regulation Supplement apply to most federal agencies, so you might want to read them over. Individual organizations often have their own rules as well.

Common rules include:

• Size standards that vary by industry
• Sourcing rules that prevent your company from manufacturing your own materials
• Legal requirements like the Buy American Act and the Trade Agreements Act
• Limits to how much you can subcontract and who you can subcontract with
• Minimum amounts for you to spend on work or materials for the contract
• You should carefully document and report on your business activities to meet the federal government’s rules for procurement.

Small and disadvantaged businesses

The federal government tries to award a significant percentage of all federal government contracting dollars to small businesses. In addition, the federal government tries to award a certain percentage to businesses in the following categories.

• Women-owned small businesses
• Small disadvantaged business
• Service-disabled veteran-owned small businesses
• HUBZone program participants

The SBA’s 8(a) Business Development program helps eligible socially and economically disadvantaged individuals grow their businesses through one-on-one counseling, training workshops, matchmaking opportunities with federal buyers, and other management and technical guidance.