Federal Procurement Guide: How the Government Buys and How to Sell to It

Federal procurement operates under a specific set of rules, timelines, and decision-making structures that differ fundamentally from commercial purchasing. Understanding how the government buys is a prerequisite for understanding how to sell to it effectively. SDVOSB firms that approach federal contracting with the same model they use for commercial clients spend years learning through expensive mistakes. This guide compresses that learning curve.

The legal framework

Federal acquisitions are governed primarily by the Federal Acquisition Regulation (FAR), a comprehensive set of rules published jointly by the Department of Defense, General Services Administration, and NASA. The FAR covers every aspect of the federal procurement process, from planning through contract closeout. Most agencies also have supplemental regulations (DFARS for Defense, HHSAR for Health and Human Services, and so on) that add agency-specific requirements on top of the FAR baseline.

Every contracting officer, program manager, and acquisition professional in the federal government operates within this framework. Understanding FAR Part 19 (Small Business Programs) and FAR Part 15 (Contracting by Negotiation) in particular will help you understand how set-aside decisions are made and how competitive proposals are evaluated.

Types of federal contracts

The federal government uses several contract types, and understanding the differences affects how you price, perform, and manage risk.

Firm-Fixed-Price (FFP) contracts pay a set price for the defined scope of work. The contractor bears all cost risk. If you complete the work for less than you expected, you keep the savings. If it costs more, you absorb the overrun. FFP contracts are common for well-defined, lower-complexity requirements.

Time-and-Materials (T&M) contracts pay for labor at negotiated hourly rates plus actual material costs. The government bears more cost risk than in FFP, but not unlimited risk, since T&M contracts have a ceiling price. T&M is common for IT services and other work where the scope is not fully defined.

Cost-Plus-Fixed-Fee (CPFF) contracts reimburse the contractor's allowable costs and pay a fixed fee on top. These are common in research, development, and highly complex technical work where costs cannot be reliably estimated in advance. They require rigorous cost accounting systems and regular financial reporting.

Indefinite-Delivery, Indefinite-Quantity (IDIQ) contracts establish a vehicle for placing orders over a multi-year period. The government commits to a minimum order amount but can place orders up to a maximum ceiling. Task orders are competed among IDIQ holders. IDIQs are the dominant vehicle for federal IT and services contracting, as described in the companion article on IDIQ contract vehicles.

The acquisition lifecycle

Every federal acquisition follows a sequence of phases that are largely predictable from the outside. Understanding this lifecycle helps you identify where to insert yourself and what activities to prioritize at each phase.

Requirement definition. Before any solicitation is published, the program office identifies a need and defines a requirement. This is the phase with the most opportunity for industry influence. Agency industry days, one-on-one meetings with program offices, and responses to Sources Sought notices all happen here. SDVOSB firms that engage at this stage can shape requirements, influence whether the acquisition is set aside, and build relationships that carry into the competitive phase.

Acquisition planning. The contracting office develops an acquisition plan that defines the contract type, competition approach, set-aside determination, and evaluation factors. The rule of two assessment that determines whether an SDVOSB set-aside is appropriate happens in this phase. Your visibility to the contracting office, based on Sources Sought responses and prior interactions, directly affects this decision.

Solicitation. The RFP or Request for Quotation (RFQ) is published on SAM.gov. This is when most firms first learn about an opportunity. Firms that have been engaged since the requirement definition phase have 6 to 18 months of additional preparation. Firms seeing the solicitation for the first time have the response window, often 30 to 45 days, to prepare a competitive proposal.

Proposal evaluation. The source selection team evaluates submitted proposals against the criteria and weights defined in the RFP. For negotiated procurements, discussions may be opened to allow offerors to address identified weaknesses. Best and final offers may be requested.

Award and protest. The contract is awarded to the offeror whose proposal represents the best value to the government. Unsuccessful offerors can request a debrief and can file a bid protest with the contracting agency or the Government Accountability Office (GAO) if they believe the award was improper.

Contract performance and closeout. During performance, the contractor delivers services or goods, submits invoices, and receives CPARS assessments. At contract closeout, all deliverables are accepted, final payment is made, and the performance record becomes part of the contractor's federal past performance history.

Simplified acquisitions

Contracts below the simplified acquisition threshold (currently $250,000 for most purposes) are governed by simplified procedures that are faster and less burdensome than full FAR-compliant procurements. For SDVOSB firms early in their federal contracting careers, simplified acquisitions are often the fastest path to initial federal past performance.

Micropurchases, below $10,000, can be made by any government credit card holder without competition. Simplified acquisitions between $10,000 and $250,000 require some competitive process but with significantly less procedural overhead than large acquisitions. Many agencies maintain preferred vendor lists for simplified acquisition categories where regular engagement and relationship-building pays off.

The federal procurement data system

The Federal Procurement Data System (FPDS) captures every federal contract action above the micropurchase threshold. This data is publicly available and is the primary source for competitive intelligence research.

As described in the companion article on analyzing federal contract awards, the FPDS data tells you who is winning what, at what price, for which agencies, and in which NAICS codes. Before pursuing any significant opportunity, review the historical awards data for that agency and requirement type.

Where SDVOSBs fit

SDVOSB firms are eligible to compete in both the general small business market and the SDVOSB-specific set-aside market. The strategic question is how to allocate BD resources between the two.

For most SDVOSB firms, the SDVOSB set-aside market should be the primary focus. The reduced competition makes resources invested in set-aside pursuits more productive than the same resources invested in open competitions. This does not mean ignoring open competitions entirely, but it means prioritizing set-asides when they are available in your target NAICS codes and agencies.