Government Contracting Processes That All Small Businesses Should Know


As of 2001, the United States Federal Government began to utilize Federal Business Opportunities (FedBizOpps) to list all procurement opportunities expected to exceed $25,000. FedBizOpps is how the government communicates its buying specifications to potential contractors. 

The specifications are exact for most of the products and services that government agencies buy regularly. Your contract will contain extremely precise specifications that must be followed meticulously. The specifications which describe the government’s requirements were contained in the invitation for bids or requests for proposals on which you based your bid or proposal.

If your company is awarded a contract, you are bound to deliver the product or service described in the specifications. A company is bound by the terms of these specifications and the basic specifications. Failure to deliver a product meeting these terms will result in the termination of your contract for default. So, it is important to understand all specifications before bidding on a federal contract. The government prefers reliable contractors and attention to the smallest details.

Look To Your Local PTAC Office

Procurement Technical Assistance Centers or PTACs provide free assistance in government contracting. They will help you identify bidding opportunities and if your company meets certain criteria to work with the government. Here is also where you can find out if your business can be certified as 8(a), WOSB., or HUBZone.

Make Use Of Government-Provided Free Tools.

You can identify contracting opportunities online by utilizing this forecasting tool that lets you see available opportunities. You can study government contracts that are a couple of years old to see what requirements are needed to win the job. This puts you in an excellent position to have all your research completed when the contract is about to expire, and you put in your proposal.


The government usually makes sure contracts are competitive through the use of sealed bidding. First, the agency makes sure that its requirements are accurate and complete. Then an Invitation For Bid or IFB is issued. The IFB will describe the type of product or service that the government is procuring. It also includes:

  • Preparation Instructions 
  • Conditions of Purchase
  • Packaging 
  • Delivery 
  • shipping 
  • The payment with contract clauses to be included
  • Submission Deadline

The sealed bids are public at the purchasing office when designated in the invitation.

Simplified Procedures

In 1994 the Federal Acquisition Act or FASA simplified the buying procedures of the government.

Many more harsh restrictions on government purchases were removed for purchases less than $100,000. Now agencies use much simpler procedures for analyzing and soliciting bids up to $100,000. However, the government must still advertise all purchases over $25,000 at

These simplified procedures mean that approval levels are lower, there is much less documentation, and administrative details are less complex. The government now has to reserve purchases that are between $2,500 and $100,000 for small businesses. The exception is the contracting officer can only obtain offers from one or more small businesses that are competitive in price and quality.

Purchases that do not exceed $2,500 individually or through multiple items are considered micro-purchases. These do not require competitive quotes but are open to small businesses. Micro-purchases are often made using government-issued purchase cards or typical credit cards.

Get The Bid Package

After you have ascertained the government contract you want to bid on, you must contact the agency and request a bid package. This package is also often called the solicitation package.

After you receive the package, could you review it carefully? Find out what the purchasing office wants to buy and determine if your company can meet the requirements.

The Bid Package should contain the buyer’s contact information, including name, address, phone number, and e-mail address listed on the bid notice. When you request the bid package, make sure to also ask for amendments.

The Bid

The Federal government has the following type of solicitations for bidding:

  • Request for Quotation (RFQ). This type is for contracts below $150,000 with a simplified acquisition procedure.
  • Request for Proposal (RFP). This type of solicitation asks vendors to propose in response to the government’s request. You can (and often will) discuss delivery details, technical requirements, and specifications with the contracting officer when you bid on that type of solicitation.
  • Invitation for Bid (IFB). The “lowest bid wins” or “sealed bid” type of solicitation. No discussion or price negotiation is implied here.
  • Request for Information (RFI). This is mostly to research the market and evaluate the interest and capabilities of contractors in a specific niche.

Understanding The Regulations

There are many advantages to being a successful government contractor. However, the government has stricter rules and regulations regarding accounting when compared to private sector clients. It is important to keep up with federal regulatory requirements

Federal government agencies receive their funding from taxpayer dollars and need to justify spending to prevent waste. We will help you make sense of government accounting so you can develop a methodology that works for you and your business.

The Integrity Of The Procurement Process

All bidders on government contracts must have equal access to any information needed to create a comprehensive bidding package. A company bidding on a federal contract may not receive information that is not public to provide an unfair competitive advantage in the field. This includes things like an innocent email accidentally going to the wrong person.

Make Sure You Have Your CAGE Code (Commercial and Government Entity)

This code is five characters and unique to your business. It’s your ID code, and government agencies will identify your business using it. It is a bit like a social security number for your business. You will need multiple CAGE codes if your business includes more than one facility. Each location must have its unique code, and each must be registered separately with SAM.

How Do You Get Started Working With The Government?

SAM stands for System Award Management.

To do business with the federal government, you must register your business in the System for Award Management. The government will only hire businesses that have registered in the SAM directory.

We have an article on our site, Everything You Need to Know About SAM for Small Businesses, that gives you important information about this process.

As a smart entrepreneur, you have already used our site to register in the SAM directory. Congratulations on taking this important first step to become a government contractor.