Federal contracting 101: the whole picture

What makes this customer different

Selling to a federal agency is not selling to a large company with more paperwork. Three things are genuinely different, and every rule you will meet comes from one of them.

It spends public money, so it has to be able to show its work. That is why buys are advertised, why competition is the default, why an award without competition needs a written justification, and why the terms are mostly non-negotiable boilerplate. It is also why so much of it is published afterwards: who won, for how much, under what code, against how many offers. That record is the single biggest advantage a newcomer has, and almost nobody uses it.

The person buying is not the person who wants the thing. A program office has the requirement. A contracting officer has the authority to spend the money and sign the contract. They are different people with different incentives, and the contracting officer is the only one who can bind the government. A promise from anybody else is not a promise.

The process runs on a clock you do not control. Requirements are written months before they are advertised, budgets are argued over a year or more before that, and a contract awarded this year may have been shaped by a market research notice eighteen months ago. Firms that win consistently are not faster at responding. They are earlier.

The rules: the FAR, and the supplements

Almost all federal buying is governed by the Federal Acquisition Regulation, the FAR. It is the common rulebook for executive branch agencies, and it covers everything from how a requirement is described to what happens when a contractor is late. A handful of bodies sit outside it, the Postal Service being the usual example.

Agencies then add their own supplements on top for their own needs. The one you will meet most is the Defense Federal Acquisition Regulation Supplement, DFARS, which adds the Department of Defense's requirements around things like cybersecurity, item marking, and where material may be sourced. There are others: GSAR at GSA, AGAR at Agriculture, and so on down the list. A supplement never contradicts the FAR; it adds to it.

You do not read the FAR front to back. Nobody does. You read the parts that touch the buy in front of you, and the clauses the solicitation actually incorporates, which are listed in it by number. The parts a supplier meets most often are Part 12 (commercial products and services), Part 13 (simplified acquisition), Part 15 (negotiated procurement), Part 19 (small business programs) and Part 52 (the clauses themselves).

One live caveat worth knowing in 2026: the FAR is being rewritten. The Revolutionary FAR Overhaul is a government-wide effort to strip the regulation back toward what statute actually requires, part by part, with agencies issuing deviations ahead of formal publication. The practical effect for a supplier is that a clause you learned two years ago may have moved, been simplified, or gone. Read the solicitation in front of you rather than your memory of the last one.

Who is on the other side of the table

Four roles come up constantly, and knowing which one you are talking to changes what you should say.

The contracting officer holds a warrant, which is written authority up to a dollar limit to obligate the government. Only a contracting officer can award, change, or terminate a contract. In the Department of Defense they are often called a KO, to keep them distinct from a commanding officer.

The contracting specialist does much of the work of running the buy under the contracting officer. On a small acquisition, this is often the person who actually answers your question.

The contracting officer's representative, the COR, is the technical eyes on the contract after award. They monitor performance and accept work. They cannot change the contract, and a COR telling you to do something extra is not a modification.

The program or requirements office is the customer who needs the thing. They write the requirement and they have the problem you are solving. Before a solicitation is published, this is who you want to have met.

The names of the contracting people on a notice are published with it, and they are worth keeping, because the same handful of people put out most of the work in any given code at any given office.

How big the buy is decides how it is bought

The size of a purchase determines the procedure, and that in turn determines how hard it is to bid. These thresholds are adjusted for inflation every few years; the figures below took effect on 1 October 2025.

The two kinds of contract, and the vehicles on top

Contract type is about who carries the risk of what the work costs.

Fixed price. You name a price, you deliver, you get paid that price. If it costs you more than you thought, that is yours. Most product buys and most small services work is fixed price, and it is where a small shop with good cost control does well.

Cost reimbursement. The government pays your allowable costs plus a fee. Used when the work cannot be scoped tightly enough to price, most often research and development. It carries real obligations: your accounting system has to segregate direct, indirect and unallowable costs, and it can be audited before you are ever awarded anything.

Between those sit variants: incentive arrangements that share savings or overruns, and time and materials, where you bill agreed labour rates plus materials.

Then there are the vehicles, which are not contract types so much as the roads the money travels down. An indefinite delivery, indefinite quantity contract, an IDIQ, is a long-running contract held by one or several companies, under which the agency places individual orders as it needs them. A GSA schedule is a similar idea at government-wide scale: pre-negotiated prices and terms that any agency may order against. Blanket purchase agreements do the same thing for repeat small buys.

This matters more than almost anything else on this page, and it is the part newcomers miss. A very large share of federal money is spent as orders against vehicles, and an order is usually not advertised. If you watch only the notice feed, an office that spends heavily in your code can look as though it barely buys at all, because everything it buys goes out as an order against a contract that was competed years ago. Getting onto the right vehicle is often the real entry requirement.

Registering: what you need before anybody can pay you

None of this is optional and none of it is quick, so start before you have a bid in front of you. In order:

Set-asides: the part of the market reserved for you

Congress sets a government-wide goal for how much prime contract money should go to small businesses, and further goals inside it for specific categories. The headline figures are set in statute.

Those goals are why set-asides exist. A set-aside buy is one only a defined group may compete for, and if you are in the group the competition is a fraction of the size. Some categories also allow sole-source awards up to a limit, which means a contracting officer can hand the work to a qualified firm without competing it at all.

Two practical notes. First, HUBZone is the odd one out: it is about where your business sits and where your employees live, not who owns it, which means it is the one category a firm can sometimes qualify for by deciding where to put its premises. Second, size is per NAICS code, not per company: you may be small for one code and large for another, and the code on the solicitation is the one that counts.

Large prime contractors carry their own obligations here. Above certain values they have to submit subcontracting plans committing a share of the work to small businesses in these categories. That is a door: a prime with a plan to meet is actively looking for firms like yours.

Where the work is announced, and what each announcement is

Most federal opportunities are posted on SAM.gov, which has been the single front door since 2019. What is posted there is not all one thing, and reacting to the wrong kind wastes a lot of time.

One thing to hold on to: by the time a solicitation is published, the requirement has already been written, the budget has already been justified, and in many cases the agency already has a supplier in mind because that supplier has been talking to them for a year. Once a solicitation is out, contact with the agency is tightly restricted and everybody gets the same answers to the same written questions. The window where a conversation can change anything closes before the notice goes up.

That is the single most important thing on this page, and it is the reason a product that shows you only what is open today is showing you the last five per cent of the process.

What arrives before the solicitation

Four things run ahead of a notice, in rough order of how far ahead they are.

Rules. A proposed rule in the Federal Register often runs a year or more ahead of the requirement it eventually produces, and the comment period is the only point in the entire process where a supplier has any formal leverage at all. A rule changing what a class of parts must be marked with, or what cybersecurity a supplier must hold, tells you what buyers in that space will be asking for well before they ask.

Budgets. The Department of Defense publishes its request to Congress line by line, in exhibits that say what it wants to buy and how much it is asking for. That is the earliest public signal there is that money is coming.

Expiring contracts. Every contract has an end date, and the award record carries it. A contract ending in eighteen months is a competition that starts being shaped in about six, and the incumbent is already known to you.

Justifications and market research. A sole-source justification usually states when the work will next be competed. A sources sought notice says the agency is deciding right now whether small firms can do this.

None of these four are secret. All of them are published. Almost none of them are joined to each other, or to the codes you sell under, anywhere except here.

Pricing: what you can actually know before you quote

New suppliers quote blind and then wonder why they lost. They rarely have to. The federal award record says what this office paid for this class of work, how many offers it drew, whether it was competed or sole sourced, whether it was set aside, and who won.

Three numbers change a quote more than anything else. The median for that code at that office, which tells you the size of buy you are looking at. The spread, because a code whose middle half runs from thirty thousand to four hundred thousand is not one market, it is several sharing a code, and you need to find the awards that are your kind. And how often the buy drew a single offer, because an office used to receiving one quote is an office where a credible second quote is welcome.

For services, there is a second layer. GSA publishes the hourly ceiling rates companies are allowed to charge, by job title, across the schedules. That is the only place the government publishes a price per role rather than per contract, and on a labour-heavy bid it is the number that actually decides whether you win.

After you win: the part that catches people out

Winning is the start of the obligations, not the end of them.

Accounting. On cost-type work, and sometimes before award, your accounting system has to be able to separate direct costs, indirect costs and unallowable costs, compute indirect rates, and track time properly. Agencies can audit your system before awarding you anything. A shop that has only ever done commercial fixed-price work usually has to change something here.

Cybersecurity, if you touch defence work. DFARS clauses require specific security practices for covered information, built on the NIST standard for protecting controlled unclassified information, with assessment requirements layered on top. This is not paperwork you can do the week a solicitation lands.

Quality and marking. Depending on what you make, you may need a specific quality standard, and specific items have to carry permanent machine-readable identification.

Conduct. Public trust rules are stricter than commercial norms and they apply to you, not just to the government: conflicts of interest, gratuities, and the handling of competitor and source-selection information.

Past performance also starts accruing the day you win. It is recorded, it follows you, and on the next bid it is evaluated. A small contract delivered cleanly is worth more than a large one delivered late.

The order to do things in

Everything above, as a sequence. Most of the first six weeks is waiting on other people, which is why it starts before you have anything to bid on.