The U.S. federal government is the single largest buyer of goods and services in the world. In FY2024, it awarded over $774 billion in contracts — for everything from janitorial services and roofing repairs to cybersecurity software and military equipment.
A significant portion of that spending is legally required to go to small businesses.
If you've never heard of SAM.gov, you're not alone. Most small business owners have no idea this market exists. This guide explains what government contracting is, why small businesses are favored by law, what the first steps look like, and how to submit your first bid.
What is government contracting?
Government contracting is simply the process of selling goods or services to a federal agency. Instead of selling to a private company or individual, you're selling to the U.S. government — the Army, the VA, the Post Office, the GSA, a national park, a federal courthouse.
The government needs the same things any large institution needs: facilities maintained, roofs replaced, electrical systems upgraded, IT systems managed, supplies purchased, professional services provided. It can't do all of this work internally, so it contracts it out — publicly, competitively, through a standardized bidding process.
All federal contract opportunities are posted on SAM.gov (System for Award Management). It's a free, public database. Every active solicitation is there. Any registered business can bid.
Why small businesses are legally favored
This is the part most small business owners don't know — and it changes everything.
Congress passed the Small Business Act to ensure that small businesses receive a fair share of federal contracting dollars. The law isn't just aspirational. It creates legally binding preferences and protections:
The automatic small business set-aside
Federal contracts between $15,000 and $350,000 are automatically reserved — "set aside" — for small businesses. This is the default. If a contracting officer wants to award a contract in this range to a large company, they have to document a specific justification. Otherwise, the competition is restricted to small businesses only.
This is codified in the Federal Acquisition Regulation (FAR 19.502-2). It's not a preference or a suggestion — it's the legal default for contracts in that range.
The 23% small business goal
The federal government has a statutory goal of awarding at least 23% of all prime contract dollars to small businesses each year. In FY2024, that translated to over $177 billion in small business awards. Agencies that miss their goals face internal pressure — which means contracting officers actively look for small businesses to award to.
Additional set-aside categories
Beyond the baseline small business set-aside, specific groups get additional protected opportunities:
- 8(a) Program: Small businesses owned by socially and economically disadvantaged individuals can receive sole-source awards up to $4.5 million (construction) or $4 million (other) — meaning no competitive bidding at all.
- HUBZone: Businesses in Historically Underutilized Business Zones get dedicated set-asides and a 10% price evaluation preference.
- SDVOSB: Service-disabled veteran-owned businesses have dedicated set-asides, especially at VA and DoD.
- WOSB: Women-owned small businesses have set-aside eligibility across dozens of NAICS codes.
What kinds of businesses win federal contracts?
Almost every type of business. The federal government buys:
- Construction and trades: Roofing, HVAC, plumbing, electrical, concrete, painting, landscaping
- Professional services: Accounting, legal, consulting, HR, training
- IT services: Software development, cybersecurity, IT support, data management
- Products: Office supplies, equipment, vehicles, furniture, food
- Healthcare: Medical staffing, clinical services, medical equipment
- Facilities management: Janitorial, pest control, security, maintenance
If your business does something that a large institution needs — and the federal government is definitely a large institution — there is almost certainly a market for it in the federal contracting system.
Step 1: Find your NAICS code
The North American Industry Classification System (NAICS) codes are the language of federal contracting. Every solicitation is categorized by NAICS code, and every contractor registers with their applicable codes. You need to know yours before you can do anything else.
NAICS codes are 6-digit numbers that classify businesses by industry. Examples:
| NAICS Code | Industry | SBA Size Standard |
|---|---|---|
| 238220 | Plumbing, Heating & Air-Conditioning Contractors | $19M avg annual receipts |
| 238160 | Roofing Contractors | $19M avg annual receipts |
| 238210 | Electrical Contractors | $19M avg annual receipts |
| 541611 | Management Consulting Services | $24.5M avg annual receipts |
| 561720 | Janitorial Services | $22M avg annual receipts |
Look up your code at census.gov/naics. You may have more than one applicable code — register all of them in SAM.gov.
Step 2: Register on SAM.gov
SAM.gov (System for Award Management) is the federal government's centralized contractor registration database. You must be registered here before you can receive any federal contract award or payment. Registration is free.
The process takes about 6 weeks end-to-end — not because the forms are complicated, but because the background verification process (run by a third party) has that built-in timeline. Start early.
What you'll need to register:
- Your EIN (federal Employer Identification Number / tax ID)
- Your NAICS codes
- Basic business information: legal name, address, ownership structure, revenue size
- Banking information for electronic payment (ACH)
- Your DUNS number (being replaced by the UEI, which SAM.gov will assign)
After you complete registration, you'll receive:
- UEI (Unique Entity Identifier) — your federal contractor ID number
- CAGE code — a 5-character alphanumeric code assigned by the Department of Defense
Both are required to bid. Keep them handy — you'll reference them in every bid you submit.
Step 3: Certify your small business status
In your SAM.gov profile, you'll self-certify your small business status based on your NAICS code and the SBA's size standards. This is what unlocks the automatic small business set-aside.
If you qualify for any additional certifications — HUBZone, SDVOSB, WOSB, or 8(a) — apply for them through the SBA's certification programs. These certifications are verified (not just self-certified) and open up additional protected bidding pools beyond the baseline small business set-aside.
Step 4: Search for opportunities on SAM.gov
Once you're registered, you can search for active solicitations at sam.gov. Filter by:
- NAICS code — your primary trade or service area
- State — where you want to work
- Set-aside type — filter to "Small Business" (or your specific set-aside certification)
- Award type — "Solicitation" for active bidding opportunities
You'll find opportunities ranging from $15K micro-purchases to multi-year, multi-million-dollar IDIQ contracts. Start with single-award, fixed-price solicitations in the $50K–$300K range — these are the most straightforward for first-time bidders.
Step 5: Read the solicitation before anything else
Every solicitation is a document package. The core sections are:
- Statement of Work (SOW) or Performance Work Statement (PWS): What the agency needs done, in detail
- Section L — Instructions to Offerors: Exactly how to format and submit your bid
- Section M — Evaluation Criteria: How your bid will be scored
- Section K — Representations & Certifications: Standard forms pre-filled from your SAM.gov profile
- Attachments: Wage determinations, drawings, specs, or other required documents
Read Section L first. It tells you what to submit, how to format it, and when to submit it. Missing a required document is the #1 reason first-time bids get disqualified — not price.
Step 6: Write and submit your first bid
For most small contracts, a bid has three core elements:
- Technical Capability Statement: Who you are, what you've done, why you can do this specific job. Past performance examples (even commercial work) are valuable here.
- Price Quote: Line-item pricing matching the Contract Line Item Numbers (CLINs) specified in the solicitation. Be thorough and match the format exactly.
- Representations & Certifications: Section K, pre-populated from your SAM.gov registration.
Submission is almost always electronic — through SAM.gov's contract opportunities portal or through a specific platform the agency designates in the solicitation.
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Award timelines vary by contract size and complexity:
- Under $150K: Typically 2–4 weeks after solicitation closing
- $150K–$1M: Typically 4–8 weeks
- Over $1M: Can be several months
If you don't win your first bid, request a debriefing. Agencies are required to provide one, and it will tell you specifically where your bid fell short. Use it. Most contractors who are now winning federal contracts lost their first two or three bids and learned from each one.
Common myths about government contracting
"The process is too complicated." The terminology is unfamiliar, but the process is learnable. Your second bid takes half as long as your first. Your fifth bid takes a fraction of the time.
"You need to know someone inside the government." You don't. The entire system is designed to prevent that. Solicitations are public, evaluation criteria are published, and awards are announced publicly.
"Only large companies win these contracts." Large companies are legally excluded from the automatic set-aside range ($15K–$350K). The system is specifically designed to route work to businesses like yours.
"You won't get paid on time." Federal payment terms are net-30, and agencies face interest penalties for late payment. Federal clients are, on average, better payers than commercial clients.
The bottom line
The federal government spent over $774 billion on contracts in FY2024. A legal mandate directs a significant share of that to small businesses. The opportunities are public. The registration is free. The process is learnable.
The only thing standing between most small businesses and federal contracts is awareness. Now you have that. The next step is registration.