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To compete for the often lucrative contracts with the U.S. government, you must complete several steps to make your business eligible. — 10255185_880/Getty Images

The U.S. government is the largest purchaser of goods and services in the world, awarding hundreds of billions of dollars in federal contracts each year. Contrary to popular belief, these contracts often go to small businesses. The government is not only legally required to consider bids by small businesses, but it also has set a goal to award at least 23% of all federal contracts to smaller ventures.

If you’re interested in competing for some of these often lucrative contracts, follow these steps to prepare your business to bid on a government contract.

[Read more: How to Boost Your Small Business by Becoming a Government Contractor]

Assess your business readiness

There’s no question that competition for government contracts is quite steep. Before you get too far into the bidding process, make sure this is the right option for your business.

The General Services Administration (GSA) has found that businesses with the following assets tend to have higher chances of winning a government contract:

  • Businesses with two years of experience working with federal contracts, either as a prime or subcontractor.
  • Businesses that have contacts and relationships within the federal contracting community.
  • Business owners who work with a mentor who is a successful GSA contractor.
  • Businesses that attend GSA seminars and workshops on contracting.
  • Businesses that invest between $80K—$130K to find and manage the initial government contract.

The GSA has a readiness assessment that can show you where your strengths and weaknesses lie before you spend time and money bidding on government contracts.

Find your NAICS code and business size

Government contracts will ask that you submit your North American Industry Classification System (NAICS) code as part of your application. This code is used by the federal government to classify businesses for statistical purposes related to the U.S. business economy.

The NAICS Association website offers a free search tool that can help you figure out what NAICS codes apply to your business. Codes are categorized by what your business offers. For instance, the NAICS code 611430 applies to businesses that provide professional and management development training. It can take a little bit of work to find the right code for your business: some entrepreneurs prefer using the US Census Bureau code lookup tool to find the best code.

Once you have your code, check the SBA website to determine the small business size standard that applies to your specific NAICS code. Each industry has different standards for what qualifies as “small.” For instance, NAICS code 611430 shows that businesses must have sales below $7 million annually to be considered a small business. This will have relevance as you decide which contracts to bid on, as some contracts are only open to small businesses by the SBA/NAICS code definition.

There are a number of places to monitor for contract opportunities as the government releases requests for proposals.

Where to look for federal contracts

There are a number of places to monitor for contract opportunities as the government releases requests for proposals. Use these resources to see the government contracts on which your company could bid.

  • The Contract Opportunities Search Tool on This is the official database of federal contracting opportunities. You will need to create a profile to bid on contracts through this portal: have your DUNS number ready as well as your NAICS codes.
  • The Dynamic Small Business Search (DSBS): This is a database that government agencies use to find small business contractors for upcoming contracts. It’s maintained by the SBA. You can also use the DSBS to find a small business with which to partner.
  • This website is where government agencies are required to advertise all contracts over $25,000.
  • The GSA Schedules Program: This program connects government buyers with contractors. When you “get on the GSA schedule,” it means you’ve been approved to do business with the government.
  • SubNet: This is a database of subcontracting opportunities, where a large enterprise looks to partner with a small business on a government contract. This could be a good option if you’ve never worked on a government contract before and want an enterprise with experience to show you the ropes.

Browsing these platforms and databases will give you a good sense of what opportunities are out there. As part of your research, it’s also a good idea to check the demand for your product or service within the government. “Determine demand for your products or service with the Contract Opportunities Search Tool on or the GSA Forecast of Contracting Opportunities Tool. And use the Contract-Awarded Labor Category (CALC) site to get an idea of hourly labor rates in federal contracts,” recommended

[Read more: How to Register Your Business With the Federal Government]

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

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Published August 31, 2020