How to Start Government Contracting: Complete 2026 Guide

The federal government spent over $755 billion on contracts in fiscal year 2025, making it the single largest purchaser of goods and services in the world. <!-- GREEN: public USAspending data --> For small businesses, the statutory mandate to receive at least 23% of prime contracting dollars -- reinforced by agency scorecards, OSDBU advocacy offices, and executive orders -- creates a structured market entry pathway that does not exist in the private sector. Yet the failure rate for new entrants remains high, driven primarily by administrative missteps, lack of market research, and the misguided "shotgun approach" of bidding on every opportunity without a strategy.

This guide walks through the complete process of entering the federal contracting market in 2026, including the regulatory changes that took effect in October 2025 and the SBA recertification rules effective January 2026.

"Government contracting is not a sales process. It is a scientific process. The firms that treat it as such are the ones still winning contracts five years from now."

What Do You Need to Start Government Contracting?

Starting in government contracting requires completing a series of administrative, legal, and strategic steps before you can bid on your first opportunity. Unlike the private sector, federal procurement operates under the Federal Acquisition Regulation (FAR), which mandates specific registrations, certifications, and compliance assertions. Skipping or rushing these steps is the most common cause of early failure.

The core requirements fall into three categories:

1. Administrative registration -- SAM.gov, UEI, CAGE code
2. Market positioning -- NAICS code selection, size standard verification, socioeconomic certifications
3. Market intelligence -- FPDS research, incumbent analysis, pipeline development

Each step builds on the previous one. Attempting to bid on contracts before completing all three categories is the GovCon equivalent of showing up to a marathon without training.

How Do You Register in SAM.gov?

The System for Award Management (SAM.gov) is the mandatory registration portal for all firms seeking to perform work as prime contractors or receive direct payments from the federal government. Registration is free. <!-- GREEN: FAR 52.204-7 requirement, publicly documented -->

Step 1: Gather Required Documentation

Before starting the online process, collect these items:

• Taxpayer Identification Number (TIN) -- Your EIN (for businesses) or SSN (for sole proprietors)
• Bank account information -- Routing number and account number for Electronic Funds Transfer (EFT), which is how the government pays contractors
• Business formation documents -- Articles of incorporation, operating agreement, or equivalent
• NAICS code(s) -- Your primary and secondary North American Industry Classification System codes (more on selection below)
• Executive compensation data -- Required if your firm receives more than 80% of annual revenue from federal sources and exceeds $25 million in receipts <!-- GREEN: FAR provision, publicly documented -->

Step 2: Obtain Your Unique Entity Identifier (UEI)

The UEI replaced the legacy DUNS number as the standard entity identifier for federal contracting. It is a 12-character alphanumeric code assigned directly through SAM.gov at no cost. <!-- GREEN: SAM.gov process, publicly documented --> You will receive your UEI during the registration process -- there is no separate application.

Step 3: Complete Representations and Certifications

The "Reps and Certs" section of SAM.gov is a legal attestation. You are certifying compliance with federal labor laws, environmental regulations, domestic sourcing requirements, and other FAR provisions. These are not checkboxes to rush through -- inaccurate representations can result in False Claims Act liability. <!-- GREEN: legal fact, publicly documented -->

Key certifications include:

• Small business size status for your primary NAICS code
• Socioeconomic designations (8(a), HUBZone, WOSB, SDVOSB, if applicable)
• Place of manufacture and domestic sourcing compliance (Buy American Act)
• Organizational conflict of interest disclosures
• Tax delinquency and felony conviction disclosures

Step 4: Receive Your CAGE Code

For domestic entities, the Defense Logistics Agency automatically assigns a five-character Commercial and Government Entity (CAGE) code during SAM.gov registration. This code is required for all Department of Defense contracts and serves as a primary identifier across federal financial systems. <!-- GREEN: FAR 52.204-16, publicly documented -->

Step 5: Maintain Your Registration

SAM.gov registrations must be renewed annually. Letting your registration lapse makes you ineligible to receive contract awards or payments. Set a calendar reminder 60 days before expiration.

How Do You Choose the Right NAICS Codes?

NAICS code selection is one of the most consequential decisions a new contractor makes, because your NAICS code determines whether you qualify as "small" for a specific procurement. Each NAICS code carries its own SBA size standard -- measured by either average annual revenue (over five fiscal years) or average number of employees (over 24 months).

<!-- YELLOW: Size standards are updated periodically by SBA. Verify these figures are current at time of publication. -->

Strategic selection principles:

• Primary code accuracy: Your primary NAICS code should represent your core revenue-generating capability. Misrepresenting your primary NAICS is a certification violation.
• Multiple codes: You may register multiple NAICS codes for different service lines. Agencies use NAICS codes to determine set-aside eligibility on a per-solicitation basis.
• Size standard awareness: A $30M company is "small" under 541512 ($34M threshold) but "large" under 541330 ($25.5M threshold). This distinction determines which opportunities you can pursue as a small business.

Aliff Solutions offers a free NAICS Finder tool that helps you identify the codes most relevant to your capabilities and analyze which agencies are actively buying under those codes.

How Do You Research the Federal Market Before Bidding?

The difference between contractors who build sustainable federal businesses and those who fail within two years often comes down to market research. The "shotgun approach" -- bidding on every opportunity that appears on SAM.gov -- produces low win rates and high proposal costs. Data-driven targeting produces the opposite.

Federal Procurement Data System (FPDS)

FPDS is the official repository of all federal contract actions exceeding $25,000. <!-- GREEN: public government database --> It is the most powerful free research tool available to new contractors. With FPDS, you can:

• Identify which agencies buy your services by searching keywords or NAICS codes
• Find incumbent contractors who currently hold relevant contracts (these are potential teaming partners and future competitors)
• Analyze contract values to understand pricing expectations in your market
• Track periods of performance to forecast when contracts will be recompeted
• Map contract vehicles to understand whether agencies prefer GSA Schedules, GWACs, or open-market procurements

USAspending.gov

While FPDS provides granular contract data, USAspending.gov offers a narrative view of federal spending with geographic maps, budget breakdowns, and agency-level summaries. <!-- GREEN: public government resource --> Use it to understand macro-level spending patterns before diving into FPDS for specific opportunities.

GSA eLibrary and CALC+

For pricing intelligence, the GSA eLibrary and CALC+ tool reveal the hourly labor rates and product prices awarded under GSA Multiple Award Schedules. <!-- GREEN: public government resource --> This data is critical for developing competitive pricing and understanding where your rates fall relative to the market.

The combination of FPDS for opportunity identification, USAspending for spending trends, and CALC+ for pricing benchmarks gives new contractors the same market intelligence that established firms spend thousands of dollars on consulting fees to obtain.

What Is the Best Way to Win Your First Federal Contract?

For firms with zero federal past performance, the most reliable path to a first prime contract runs through subcontracting. This is not a consolation prize -- it is the strategic foundation that most successful federal contractors have used.

Why Subcontracting First

Under FAR 15.305(a)(2)(iv), firms with no relevant past performance receive a "Neutral" rating in source selections. In Lowest Price Technically Acceptable (LPTA) evaluations, a neutral rating can be sufficient. But in Best Value (Trade-off) competitions -- which represent the majority of significant contract awards -- evaluators will favor firms with documented "Satisfactory" or "Exceptional" ratings in the Contractor Performance Assessment Reporting System (CPARS). <!-- GREEN: FAR provision, publicly documented -->

Subcontracting solves this by:

• Building CPARS-reportable performance history through documented work on federal programs
• Generating revenue while your prime contracting pipeline develops
• Establishing agency relationships with contracting officers and program managers
• Teaching federal compliance requirements in a lower-risk environment (the prime carries primary FAR compliance burden)

How to Find Subcontracting Opportunities

Large prime contractors on contracts exceeding $900,000 ($2 million for construction, effective October 2025) are required by law to maintain small business subcontracting plans. <!-- GREEN: FAR requirement, threshold updated per FAC 2025-06 --> This creates a structural demand for small business partners.

Where to find them:

1. SBA SUBNet -- A database of subcontracting opportunities posted by prime contractors
2. FPDS incumbent analysis -- Identify the top 10 primes winning work in your NAICS codes, then approach them with a specific value proposition
3. Agency OSDBU events -- The Office of Small and Disadvantaged Business Utilization at each agency hosts matchmaking events connecting primes with small businesses
4. Industry conferences -- Events like the GovCon Summit, AFCEA, and agency-specific industry days

The critical mistake to avoid: Do not cold-email prime contractors with a generic capability statement. Instead, identify a specific opportunity (a Sources Sought notice, a recompeting contract), research the requirement, and approach the prime with a targeted teaming proposal that solves a specific problem -- a technical gap they need filled or a socioeconomic goal they need to meet.

What Are the SBA Mentor-Protege and Joint Venture Programs?

As your firm matures, the SBA Mentor-Protege Program (MPP) and Joint Venture structures allow you to pursue contracts that would otherwise be beyond your reach.

SBA Mentor-Protege Program

The MPP allows an approved mentor firm (large or small) to provide technical, management, and financial assistance to a protege small business without triggering SBA affiliation rules. <!-- GREEN: SBA program description, publicly documented --> This "safe harbor" from affiliation is the key advantage -- without it, a large firm's involvement with a small firm would typically destroy the small firm's size status.

Through the MPP, a protege can:

• Form a joint venture with the mentor and bid on small business set-asides
• Access the mentor's infrastructure, personnel, and past performance (in the JV context)
• Receive developmental assistance for up to six years (two three-year terms)

For a deeper analysis of teaming structures, including JV compliance requirements and the 40% performance-of-work rule, see our teaming strategies guide.

Joint Ventures

A Mentor-Protege Joint Venture is a separate legal entity where the small business protege owns at least 51% and serves as the managing venturer. The JV can leverage the past performance of both partners -- allowing a $5M protege to credibly pursue $50M contracts with the support of an established mentor. <!-- GREEN: SBA JV rules, publicly documented -->

The risk of "affiliation" is the primary legal concern in any teaming arrangement. Without the MPP safe harbor, the SBA may determine that a large firm controls the small firm, resulting in loss of small business status. This is why the Mentor-Protege pathway is the preferred structure for large-small partnerships in federal contracting.

What Changed in Federal Procurement for 2026?

The federal contracting landscape underwent significant structural changes in late 2025, driven by the Revolutionary FAR Overhaul (RFO) and Executive Order 14275. New entrants in 2026 benefit from several threshold increases designed to expand small business participation. <!-- GREEN: public regulatory changes, cited in FAC 2025-06 -->

Updated Procurement Thresholds (Effective October 1, 2025)

<!-- GREEN: FAC 2025-06 and Acquisition.gov threshold changes, publicly documented -->

SBA Recertification Rule (Effective January 17, 2026)

The SBA closed the "M&A Loophole" that previously allowed a large firm to acquire a small firm and continue receiving small business set-aside orders under the acquired firm's existing Multiple Award Contracts. Under the new rule, once an acquisition occurs, the firm must immediately recertify as "other than small." <!-- GREEN: SBA rule change, publicly documented per Cherry Bekaert analysis -->

This change protects legitimate small businesses from competing against large-firm-backed entities operating under small business designations.

CMMC 2.0 Requirements

For firms targeting Department of Defense contracts involving Controlled Unclassified Information (CUI), the Cybersecurity Maturity Model Certification (CMMC) 2.0 is now a contractual requirement. Level 2 certification requires a third-party assessment. While the compliance cost can be a barrier for new entrants, achieving CMMC certification early serves as a competitive differentiator that excludes non-compliant competitors from your opportunity set. <!-- GREEN: CMMC final rule, public record -->

For a detailed breakdown of CMMC readiness steps, see our compliance and CMMC readiness guide.

Building Your 12-Month Market Entry Plan

Based on the structural requirements and strategic principles outlined above, here is a recommended timeline for new market entrants:

Months 1-2: Foundation

• Complete SAM.gov registration (UEI, CAGE code, Reps and Certs)
• Select and verify primary and secondary NAICS codes
• Evaluate socioeconomic certification eligibility (certification guide)
• Establish a compliant accounting system (separate direct and indirect cost pools)

Months 3-4: Market Research

• Conduct FPDS analysis for your primary NAICS codes
• Identify top 10 agencies and top 20 incumbent contractors in your space
• Analyze contract vehicles used in your target market (GSA Schedule, OASIS+, SEWP)
• Begin attending agency OSDBU matchmaking events

Months 5-8: Relationship Building

• Approach 5-10 prime contractors with targeted teaming proposals
• Respond to Sources Sought notices and Requests for Information (RFIs)
• Secure first subcontracting position
• Begin building past performance and CPARS history

Months 9-12: First Prime Pursuit

• Identify 3-5 target prime contracting opportunities based on FPDS research
• Develop capture strategy for each (win themes, discriminators, pricing)
• Submit first prime contract proposal
• Evaluate Mentor-Protege program participation

This timeline assumes a firm with established commercial operations entering the federal market. Firms starting from scratch may need 18-24 months before their first prime contract award.

What Tools and Resources Are Available for New GovCon Contractors?

The federal government provides extensive free resources for new contractors. The challenge is not access to information -- it is knowing where to look and how to interpret what you find.

<!-- GREEN: All public government resources -->

Aliff Solutions provides intelligence tools designed to help contractors move beyond manual research. Our NAICS Finder identifies optimal classification codes, our Win Probability Calculator helps prioritize your pipeline, and our platform is built to surface recompete opportunities and pricing intelligence that would take weeks to compile manually.

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Entering government contracting requires patience, precision, and a data-driven approach. The firms that invest in proper registration, thorough market research, and strategic subcontracting before pursuing prime contracts are the ones that build sustainable federal businesses. Aliff Solutions is designed to accelerate that process -- explore our free tools or talk to our team to discuss your market entry strategy.

Sources: SBA.gov, SAM.gov, Acquisition.gov, FPDS.gov, USAspending.gov, FAC 2025-06 threshold changes. All data points referenced in this article are sourced from publicly available federal government resources accessed February 2026.