Contracting guide

The federal government contracts with small businesses to buy products and services.

Benefits of government contracting

Government contracts are a tremendous financial opportunity for small businesses.

The U.S. government is the largest customer in the world. It buys all types of products and services — in both large and small quantities — and it’s required by law to consider buying from small businesses.

The government wants to buy from small businesses for several reasons, including:

  • To ensure that large businesses don’t “muscle out” small businesses
  • To gain access to the new ideas that small businesses provide
  • To support small businesses as engines of economic development and job creation
  • To offer opportunities to disadvantaged socio-economic groups

How it works

The process of requesting proposals, evaluating bids, and awarding contracts should take place on a level playing field. The government should consider a bid from any qualified business.  

Set-aside and sole-source contracts

Federal agencies must publicly list their contract opportunities. Some of these contracts are set aside exclusively for small businesses.

In some cases, these so-called set-aside contracts might consist of certain types of tasks on larger contracts. In others, entire contracts may be reserved for small businesses. When a contract is set-aside for one specific small business, it’s called a sole-source contract.

SBA’s role in contracting

SBA works with federal agencies in order to award 23% of prime government contract dollars to eligible small businesses. It also offers counseling and help to small business contractors.

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