Government contracting (GovCon) in the US is nothing new. The country’s government will hand out these contracts to different organizations when it’s in need of their services.
The US Government Accountability Office reports that the country’s government committed roughly $755 billion to contracts during Fiscal Year 2024. Accounting for inflation, this represents a decrease of $22.5 billion from the previous year. Despite this spending decline, federal agencies continue to award significant numbers of contracts.
In fact, earlier in May of 2026, Yahoo reported that the US is preparing $584 million in military contracts for Saudi Arabia and a potential conflict with Iran. Billions of dollars have already been spent by the US on weapons for this warfare. A large portion of these funds went directly to private government defense contractors.
Government contractors make millions, sometimes billions, but these contracts come with their own challenges. For new contractors, the challenges are often amplified. Many newcomers enter the field expecting quick opportunities and steady contracts. However, the process often becomes more complicated than expected.
The following tips can help you navigate the challenges while building a strong foundation as a new government contractor.
Learn the Rules Before Chasing Opportunities
Many businesses rush into bidding before understanding how federal procurement actually works. That approach usually creates confusion and unnecessary setbacks during the early stages.
Government agencies expect contractors to follow detailed standards throughout every contract phase. Missing even a small requirement can disqualify your proposal immediately.
You should begin by studying registration systems, compliance rules, and contract terminology carefully. It also helps to understand how different agencies purchase products and services.
Understanding how pricing works in GovCon is also vital. In a LinkedIn post, Kizzy Parks, who won over $75 million in federal government contracts, notes, “Two of my greatest leverage points are my willingness to submit my pricing strategy.”
Preparation always creates stronger positioning in the competitive federal marketplace.
Seek Guidance From Experienced Industry Professionals
Trying to navigate federal opportunities entirely alone can slow your progress significantly over time. Many successful companies rely on outside expertise during their early development stages. Experienced advisors often understand challenges that new contractors fail to anticipate initially.
Professional support within government contracting can help you avoid costly compliance mistakes and missed opportunities. Many firms offering GovCon advisory services understand how agencies evaluate proposals and vendor qualifications. Their experience can improve your positioning during competitive bidding situations.
According to Eubanks Accounting & Advisory, professionals can offer support in many ways. For instance, experienced GovCon accountants can offer government contracting accounting services. This support helps ensure compliance and enhance financial management.
As further noted by Eubanks, GovCon advisory solutions can also help you scale your business. That, in turn, might just help you land more contracts in the future. Guidance from experienced professionals helps businesses approach government contracting with greater confidence and preparation. Learning from experts often saves both time and money during critical growth periods.
Build Relationships Before You Need Them
New contractors often underestimate the importance of professional relationships within the federal marketplace. Winning contracts rarely depends only on submitting the lowest bid. Agencies prefer vendors they trust and understand through previous interactions and conversations.
Attending networking events can introduce you to procurement officers, subcontractors, and industry professionals. These relationships often provide insights that are unavailable through official contract listings alone. Conversations with experienced contractors may help you avoid common beginner mistakes.
You should also connect with small business offices connected to federal agencies. These departments often guide new contractors toward suitable opportunities and resources. Trust develops gradually, especially within highly regulated government environments where reliability matters greatly.
Keep Your Documentation Organized From Day One
Government agencies expect contractors to maintain detailed records throughout every project and transaction. Poor organization creates delays, confusion, and compliance risks that damage your professional reputation quickly. Strong documentation habits help you stay prepared for audits and contract reviews.
You should organize financial records, certifications, employee information, and project timelines carefully from the beginning. Waiting until problems appear usually creates unnecessary stress and costly administrative mistakes. Consistent organization also improves communication with agency representatives during active contracts.
Digital tools can simplify record management while improving efficiency across daily operations. Many successful contractors invest in software designed specifically for compliance tracking and reporting. Organized businesses often appear more trustworthy during proposal evaluations and contract negotiations.
Focus on Smaller Contracts First
Many newcomers immediately pursue massive contracts because they seem financially attractive at first glance. Unfortunately, large opportunities often require experience levels that beginners simply have not developed yet.
In 2025, CNBC reported that Palantir secured a US Army contract valued at up to $10 billion over the next decade. This agreement removes standard contract fees and shortens procurement timelines for the military. Such big contracts are not rare, but new contractors should target smaller initial deals before pursuing massive agreements.
Starting smaller usually creates a stronger long-term strategy. Smaller contracts help you understand government expectations without overwhelming your business operations immediately. They also allow you to build a performance history that strengthens future proposals.
Agencies often review past performance carefully before awarding larger projects. Early success on modest contracts can improve your credibility across the federal marketplace significantly. Positive evaluations and completed projects demonstrate reliability to procurement officers reviewing future bids.
FAQs
What are the challenges of government contracts?
Government contracts often involve strict regulations, detailed paperwork, and long approval processes. Businesses must meet compliance standards, reporting requirements, and deadlines. Competition can also be intense, and payment timelines may be slower compared to private-sector contracts.
Is government contracting profitable?
Government contracting can be profitable because contracts are often large and stable. Long-term agreements may provide consistent revenue and credibility. However, profitability depends on managing costs, meeting compliance requirements, and handling administrative complexity effectively.
Why are government contracts hard to get?
Government contracts are difficult to secure due to high competition and complex bidding procedures. Agencies often require proven experience, certifications, and detailed proposals. Smaller businesses may also struggle with compliance requirements and the time needed to complete the application process properly.
Government Contracting in the US in Numbers
| US government contracting spend (Fiscal Year 2024) | Approximately $755 billion |
| Inflation-adjusted change from previous year in GovCon spending | Decrease of $22.5 billion |
| US military contracts for Saudi Arabia (reported in 2026) | $584 million |
| Value of Palantir US Army contract (2025 report) | Up to $10 billion over 10 years |
Entering the federal marketplace can feel intimidating for businesses with limited government experience initially. The process involves strict rules, detailed documentation, and significant competition across multiple industries. However, preparation and persistence can create valuable opportunities for long-term growth and stability.
Success often comes from understanding the system rather than trying to outspend competitors immediately. Remember that every successful government contractor once started exactly where you are today. Growth happens gradually through experience, patience, and steady improvement over time.
By applying these practical strategies consistently, you can navigate the early challenges in government contracting with greater confidence.
