How to Start a Government Contracting Business

Form the Right Business Entity

Before you can contract with the federal government, you need a properly registered business entity. The government contracts with businesses, not individuals.

• LLC — Most flexible, simplest to form, pass-through taxation. Ideal for solo consultants and small teams.
• S-Corporation — Good for minimizing self-employment tax as you grow.
• C-Corporation — Better for businesses targeting venture capital or future acquisition.

You'll also need an EIN (Employer Identification Number) from the IRS — apply free at irs.gov. Required for SAM.gov registration.

Register in SAM.gov — The Most Critical Step

SAM.gov is the federal government's official vendor database. Without registration, you cannot receive a federal contract or grant. It is free, mandatory, and must be renewed every 12 months.

SAM.gov registration is completely free. Allow 7–10 business days. Avoid paid "registration services" — they add no value.

Select Your NAICS Codes

NAICS codes define what your business does. Contracting officers use them to find vendors and determine eligibility for set-asides. You can select multiple codes — choose all that accurately represent your services.

Your primary NAICS code also determines your small business size standard. Look up codes at census.gov/naics or the SBA's size standards tool at sba.gov/size-standards.

Write a Capability Statement

Your capability statement is your government contracting business card — a one-page document that tells contracting officers who you are, what you do, and why they should work with you.

• Core Competencies — Your top 3–5 services using government-friendly terms
• Differentiators — What makes you different from every other vendor
• Past Performance — Commercial work, academic projects, or relevant experience
• Company Data — UEI, CAGE Code, NAICS codes, certifications
• Contact Information — Name, phone, email, website

Understand Small Business Set-Asides & Certifications

The federal government has programs that give qualifying small businesses a significant competitive advantage — limiting competition so only specific categories of business can bid.

Find Opportunities & Build Your Pipeline

A systematic approach to finding and tracking federal opportunities is essential. Best sources:

• SAM.gov — All contracts above $25,000 must be posted here
• USASpending.gov — Research agencies and who they currently buy from
• Agency OSDBU Offices — Every major agency has a Small Business office
• GovWin / Bloomberg Government — Paid tools for advanced intelligence
• Industry Days — Meet contracting officers before bids open

Submit Your First Proposal

Writing a winning federal proposal is a learnable skill. Agencies score proposals against criteria in Section M (Evaluation Factors). Understanding how evaluators think is the difference between winning and losing.

Start by subcontracting for an established prime contractor. This builds past performance — the #1 factor in future wins — with lower risk and less paperwork.