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Basic Requirements for Government Contracts

requirements for government contracts

Since the federal government is known to be one of the most lavish spenders all over the world, it made up its own national procurement system.

Many companies are bidding over the available government contracts in the hope of bringing their businesses to potential success. But before any company may do business with the federal, there are federal contractor requirements that they need to accomplish.

The different requirements for government contracts and the other essential things you need to know about the government contracting industry are listed below. So, read along to learn more!

What are the three principles of government contracting?

Before we learn how to get into the government contracting industry, let us first discuss the three government contracting principles.

The federal government has an extreme set of rules and standards for picking the items or services it acquires. Regulations of the policy framework consist of competitive pricing, a fair level of competition, and commitment to the applicable regulations. Nonetheless, the following are the three principles that government contractors should remember:

Transparency

Every contracting process must go through a transparent selection procedure. In addition, if any federal contractors have any questions, clarifications, or objections, the procuring government office should give them a public platform where they can freely discuss them.

Economy

Since federal contractors use a significant number of their resources as they bid on federal contracts, the economy principle has been brought into government contracting.

The economy principle dictates that the selection process for doing business with the federal should be efficient and cost-effective. This means that the federal government must only force the process necessary for the contract, terms, and urgency.

Responsibility

Regardless of the bidding process method, the contracting officer must choose among the bidding federal contractors the one who is responsive and responsible before awarding any contracts.

With the responsibility principle, the government contractors, contracting officers, and buying agencies are all held accountable for their actions during the selection process. As a result, if their efforts do not turn out well, they are then subject to disciplinary, civil, or criminal sanctions.

What are federal contractor requirements?

Since you already know the three principles in government contracting, we may then proceed with learning the different requirements that any federal contractor who wants to be should comply.

Register your business

To be considered for government contracting projects, the first thing your business must do is to be registered with the System for Award Management (SAM.gov). The United States government’s System for Award Management is an official website that gives searchable databases for companies interested in doing government contracts.

Acquire Unique Entity Identifier Number

In the recent government contracting bidding process, a business must have a unique nine-digit number from the Data Universal Numbering System (DUNS Number). But on April 04, 2022, the United States government stopped using the DUNS and instead used UEI or Unique Entity ID created at SAM.gov.

Unique Entity ID is a 12-character alphanumeric ID, and just like the DUNS Number, UEI is used to track down the international financial transactions of companies.

Get a North American Industry Classification System code

North American Industry Classification System or NAICS code is required for all small businesses and federal contractors. The United States government uses this unique code to classify federal contractors, small businesses quickly and collect their economic statistical data.

Your company will need to obtain a NAICS code to apply and bid for federal contracts. However, keep in mind that you may need to get multiple NAICS codes if you work in different industries.

For more information about the North American Classification System, you may visit the Small Business Administration.

Check your Employer Identification Number

Another requirement that both a small business and enterprise must comply with is the Employer Identification Number or EIN.

The EIN or also known as the Federal Tax Identification Number or Tax Identification Number is made up of nine digits used by employers for reporting taxes. Businesses can apply for the Employer Identification Number directly through the Internal Revenue Service (IRS) without any charge.

Apply for certification

The federal government established small business programs and sole-source contracts for small businesses eligible to gain government certification.

Your certifications may be processed with the Small Business Administration. Once you get your certificate, it is highly suggested that you keep all the documents and have them for your records. But if there’s any information you wish to change during the application process, you may contact the SBA immediately to revise your application.

Meet size standards

Before submitting any proposal, it is best to ensure that your business meets the size standards because this size defines if your company would qualify for a particular contract.

The Code of Federal Regulations Title 13 part 121 states all the given exceptions and laws made by the government for all business standards.

To know more information, if your business qualifies as a small business for government contracting, you may check the SBA Table of size standards and size standards tool.

Research government agencies

If you are looking forward to doing business with any federal department, this step may be optional. But if you are eyeing a specific federal agency like the defense department, you must thoroughly understand how they operate, procure, and budget ceiling.

By researching the specific government department, you may be able to prepare in bidding their open contract concretely.

Search for open federal contracts online

After your business comply with all the contract requirements, you may then search for open commercial contracts to find out which federal government agencies are willing to acquire your product or service.

It may also be helpful to check SAM.gov to get some information about the department’s past purchases and recent biddings.

Check for smaller state and local contracts

Small business certification may take a while, so if you are eagerly excited to win some federal contract, you may consider doing with your local or state government business opportunities.

Each local and state has its own contract requirements. To find out their registration process, it is suggested to visit their procurement office or log in to their official website.

How do you get approved for government contracts?

How do you get approved for federal government contracts? | registration requirements for government contracts

Of course, after a long time of effort, you surely would want your business to submit the best proposal and get approved for government business opportunities. But before gaining any government contract, there are things that you should know. Here are some of them:

Place Your Bid

Of course, after all the long hard work on preparing and certification, you would want to submit your proposal writing. But, you shall be reminded that there are a few things you need to know before placing your bid.

A. Carefully study the contracts because the government hardly follows their rules and regulations, and failure to meet their standards may cause your business to be banned from competing.

B. Be sure to understand all sensitive information and rules and regulations of the contract. Many of this regulation are set by the buying government agency. Still, these rules are primarily based on the labor laws, public law, or procurement law established by the Federal Acquisition Regulation.

If you experience any hardships with drafting your bid proposal, you may outsource or work with government procurement consulting services to help you complete the process. But be aware that consulting fees can crumble down your possible profit.

Be patient in receiving an answer

It takes thirty to one hundred twenty days before the assigned contracting officer award the contract to any federal contractors. Additionally, since the bid is made open to the public, the government personnel also publicly announce which bid was awarded to whom.

According to USA.gov, the contracting officers and government agencies have multiple factors to follow before awarding the business opportunities to the contractors. A small business, prime contractors, and subcontractors must:

  1. Show how responsible and responsive they are
  2. Have an excellent past performance references
  3. Meets the technicality and of the proposal
  4. Offer a competitive price 

Indeed with the standards set by the federal government, finding out whether you won the contract or not may take some time. But, one thing is for sure, you will receive a personal update from the government office purchasing the product or service you offer.

Attend government agency events

The federal government would want to know the businesses aiming to work for them. That is why the SBA and other government agencies set up workshops or conferences that allow contractors and subcontractors to gather around.

Government procurement experts often attend these events and share their expertise with all the participants.

During the pandemic, government contracting-related gatherings are not bothered. To cope with the uncertainty, the government conducts seminars, conferences, or workshops through online platforms.

Online events will stay as an option, so if you are outside or running an errand, you can join the event as long as you have an internet connection.

Network within government and procurement programs

The business gathering set by the federal government is not just made for everyone to attend but to help every build a potential network.

By building networks, you’ll get to know different people working in the same industry, government personnel, or even a contracting officer.

By talking and networking with the event participants, you can learn current information about the industry or how a government executive branch works with different contractors and subcontractors. Networking does not just help you to win government contracts but also build trust and business relationships that would determine whether a procuring department can firmly believe in lending you the sensitive information of the possible business with the federal.

Find a mentor

Things are overwhelming as you start in the federal marketplace, but the good thing is that you can find a mentor or join the mentorship programs set by the federal government.

The U.S General Service Administration Mentor Protégé Program connects you to an established business and lets you build a relationship that could turn into a joint venture. Additionally, a program by the Small Business Administration called 8(a) program can also connect you with another successful government contractor to learn and possibly earn some contracts that is specifically for small businesses.

Consider subcontracting to other federal contractors

Despite all the effort and time you spent bidding for a federal contract, things may still be disappointing, especially if you did not make it into the federal marketplace.

However, do not be disheartened because you can still work for the federal government by subcontracting. With subcontracting, you can work for a larger company that has been a prime contract.

Various federal contracts require the prime contractor to subcontract with small businesses. Subcontracting can help you better understand, experience, and build a performance that would be beneficial as you apply for another prime contract.

However, when working as a subcontractor, keep in mind that you are not directly working for a government department. To know more about subcontracting opportunities, you may visit the SBA website.

What is considered a federal contract?

Knowing whether a contract is offered by the federal government is not that hard to do. Every business opportunity that they announce to the public is considered to be a federal contract.

However, any government agency may approach you and offer any business with them. Once you get everything on paper, it can be considered a federal contract.

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Written by Kydeb

She is a content writer at Govcon who writes relevant and informative articles to let the target audience learn more about the government. She loves communicating complex ideas in simple ways and enjoys learning about new things.

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