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Government Contracting: Everything you always wanted to know, but were afraid to ask
From the US Government Small Business Office

>† View all government 101 articles

Contracting Levels

Federal Government
Department of Defense (DoD)
Army - Navy - Air Force
Supply Centers Federal Civilian Agencies General Services Administration (GSA)
Veterans' Administration
Government Departments

Dollar "Thresholds"

Federal Acquisition Streamlining Act of 1994 meant that dollar thresholds were changed to:

  • $2,500/Under: Micro Purchases - unrestricted, credit cards, "off the shelf"
  • $2,500 - $100,000: Simplified Acquisition Procedures; reserved exclusively for small business concerns; use of credit cards and electronic commerce are maximized;
  • Above $100,000: standard purchasing rules apply.

Electronic Commerce

EC - Electronic Commerce
EBBs - Electronic Bulletin Boards
EDI - Electronic Data Interchange
EFT - Electronic Funds Transfer
The Internet
Credit Cards

EBBs - Electronic Bulletin Boards

  • Used mostly by the Defense Supply Centers
  • Contractor can view open solicitations and download solicitations and drawings.
  • Contractor bids back through the EBB
  • Requires computer, modem, on-line registration
  • Phone connection generally not toll-free
  • Some may require specific software to ensure complete access to the EBB

EDI - Electronic Data Interchange

  • Paperless FEDERAL government contracting
  • Short response time - usually the next business day
  • Contract range is $100,000 and less
  • Manufacturers/Wholesalers are best suited
  • Requires a contract with a VAN (Valued Added Network). This is the contractor's link to all federal government EDI bidding opportunities. VAN secures the contractor's bid. Cost $$$.
  • Requires a computer, modem, VAN, and special communications software.

EFT - Electronic Funds Transfer

  • Money electronically deposited in your checking account
  • Payment usually within 10 days
  • Payment by EFT became mandatory January 1, 1999; with exceptions.
  • Very routine

The Internet

Credit Cards

  • Standard VISA/Master Card
  • Used for purchases less than $2500 - "off-the-shelf" items
  • Some agencies are purchasing up to $100,000 per transaction on their cards


  • Often the best way to contact a buyer/get needed information fast
  • Bypasses the dreaded "voice mail"


  • Going from military to commercial specs
  • Going from design specs to performance specs
  • Use of "off the shelf" commercial items in simplified acquisitions

How to get started

  • Target Your Market
  • Federal Agency Forecasts
  • Be Competitive
  • Be Persistent
  • Be Patient

Things needed to get started

  • Federal Level
  • Register in SBA's Pro-Net
  • Central Contractor Registration - DOD
  • Register with agencies that buy your product/service - SF 129
  • Search for bidding opportunities
  • Accept EFT and credit cards
  • Become a client of a PTAC

Things to do when starting

Find out how the agency contracts

  • Purchase Orders
  • Basic Ordering Agreement
  • Indefinite Delivery/Indefinite Quantity
  • Fixed Price Contracts
  • Credit Cards

Do a test run

  • Request a solicitation
  • Are you competitive?
  • Watch for the award and compare your pricing
  • Always read ALL the rules that apply to your particular procurement opportunity - Federal Acquisition Regulation
  • Always follow the prescribed procedures
  • Questions should be directed to the Contracting Officer

You're ready to bid

  • Read the solicitation CAREFULLY!
  • Request a "Buy History" if available
  • Get clarification in writing of any ambiguities or mistakes in the bid package
  • Attend pre-bid meetings (construction and service contracts)
  • Do a walk-through if possible (construction and service contracts)
  • Get all your key players involved in preparing your bid
  • Have someone unfamiliar with the solicitation proofread your proposal/bid (does it make sense?)
  • Submit your bid on time in the prescribed manner
  • Contract Award
  • Are you the low bidder?
  • Are you Responsive?
  • Are you Responsible?
  • Pre-award Survey - Be prepared to be audited
  • When you bid on a government contract you give up your customary right to privacy. A team of experts will tour your facility to validate:
    • Technical capability
    • Production capability
    • Quality assurance program
    • Accounts receivable
    • Inventory control
    • Net worth of the business
    • Line of credit
    • Cash flow
    • Accounting system
    • System for qualifying suppliers
    • Packaging, marking and shipping


Federal Level
  • Small Business (self-certify)
  • Woman-owned Business (self-certify)
  • Self-Certification is not questioned until a competitor or other interested party protests
  • SBA certification Small Disadvantaged Business (pre-certification)
  • SBA 8(a) Program (pre-certification)
  • SBA Hubzone certification (pre-certification)
  • Set Aside Programs
  • "Set Aside" contracting dollars
  • Rules have changed drastically
  • Three Set Aside categories:
    • Small Business Set Asides (SBSA)
    • SBA 8(a) Contract Set Asides
    • SBA Hubzone Set Asides
  • Other factors in the equation:
    • SDB Price and Evaluation Factors
    • Goals
    • Set Aside Programs (cont.)
    • SBA 8(a) Program
  • For socially and economically disadvantaged businesses
    • Must be a small business (13 CFR Part 121)
    • Nine year program - graduation
    • Must be in business 2 years to apply (waiver)
    • SBA Certification is required
    • Certification recognized also as SDB certification
  • Sub-Contracting
    • Register in and use Pro-Net
    • Get list of Prime/General contractors in area and market to them
    • SBA Subcontracting Directory
    • Attend as many small business conferences/workshops as possible
    • Networking - most important aspect

Should I market to the Government?

  • Do you have a product or service that the government already buys?
  • If so, why should they buy from you rather than their present supplier?
  • Small business preference
  • Fast delivery
  • Low overhead/lower price
  • Are you the only supplier/distributor?
  • Do you have a new item?
  • Who is the government end user?
  • Who makes the decision to buy?
  • What is process to introduce a new item? Is testing required?
  • Judgement call: Is it worth your time and effort to introduce the new item?

Where can I go for help?

  • Procurement Technical Assistance Centers PTACs provide:
    • Free one-on-one contracting counseling
    • Forms and more forms
    • Automated federal buy history
    • Automated bid matching
    • Specifications and Standards
    • Government contracting resource library
    • Information on eContracting
    • Assistance with certification programs
    • Contract administration guidance
  • SBA assistance available
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Popular terms (Glossary)

Contract Award: Occurs when the contracting officer has signed and distributed the contract to, or notified the contractor.

Commerce Business Daily: A Department of Commerce publication used by federal agencies to publish a summary or synopsis of their upcoming procurements to notify interested businesses. Now largely replaced by the Fedbizopps internet site.

RFP - Request for Proposal: A process where an agency or government can seek a specific proposal from vendors. Follows a specifications process and formalized set of standards and procedures. Generally seeks less vendor input than an RFI but more than an RFQ.

>† Glossary:Index (all)

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