The Government Contracting Playbook: 15 Laws of Profitability
Despite being the world’s single largest buyer of goods and services, the U.S. government does business with just a quarter of one percent of small businesses in America. That’s not the top 1%—it’s 0.25%.
Why?
Because there are specific rules that separate the winners from everyone else. As a former Air Force acquisitions officer who managed over $82 billion in contracts, I’ve seen both sides of the table. I’ve trained 247+ professionals in the GovClose certification program, and they’ve collectively generated hundreds of millions in federal revenue.
Here are the 15 rules they learned—and the same ones you need to master.
RULE #1: Selling to the Government Is Hard
Let’s start with truth: this isn’t easy. Government sales (B2G) is more complex than consumer sales (B2C) or business sales (B2B). The difficulty is precisely what makes it worth doing. If it were simple, everyone would do it—and the margins wouldn’t exist.
Anything worth doing in life is difficult. Accept that upfront.
RULE #2: Selling to the Government Takes a Long Time
Plan on 12-18 months to win your first contract. That’s not a worst-case scenario—that’s typical. The government buys differently across agencies and product categories, adding layers of complexity. Your second contract will be easier, but that first one requires patience and persistence.
Calvin Coolidge said it best: “Persistence and determination alone is omnipotent.” Talent matters less than your willingness to stay focused and keep moving forward.
RULE #3: Selling to the Government Can Be Enormously Profitable
Here’s why companies endure the difficulty and timelines: done right, government contracting is incredibly lucrative.
When you have a 3-5 year contract, the government almost always pays—year over year. Even if they cancel, you can recover costs for work performed and preparation for future years. Predictable government revenue makes your business exponentially more valuable if you ever sell.
This is why you push through Rules #1 and #2.
RULE #4: The Law of Profitability
Not all government contracts are created equal. Federal spending data tells us what’s profitable and what’s a trap.
What to avoid:
Commodities (toilet paper, office supplies, low-margin items that go to lowest price)
Middleman strategies (trying to match solicitations with other businesses—it doesn’t work, violates regulations, and generates little to no profit)
What to pursue: High-margin products or services where you can demonstrate unique value and avoid “lowest price technically acceptable” competitions.
RULE #5: There Is No Easy Button
The middleman approach deserves its own warning. Federal Acquisition Regulations don’t recognize “middleman” as a role. When you win a contract, you’re the prime contractor—fully responsible for delivery.
I’ve watched countless people try this strategy. Almost all fail. The few who succeed make minimal profit and find it’s more hassle than it’s worth. Don’t waste your time.
RULE #6: Don’t Start a Government Contracting Business. Start a Business.
This is critical: you need a real business with a track record of 3-5 years (or more) selling your product or service commercially before approaching the government.
The government wants to see past performance. They need proof you’re excellent at what you do. You can’t just decide to “do government contracting”—you need to already be great at providing accounting services, construction, software development, or whatever you’re selling.
Exception: If you want to work in government contracting without owning a business, consider becoming a consultant or account executive. (These roles pay $120K-$400K+ annually.)
RULE #7: The Law of Specificity
When I was an acquisitions officer, companies would pitch me on cybersecurity, then mention they also do janitorial services, HVAC, landscaping, and accounting.
My immediate thought? They don’t specialize in anything.
The government buys different products and services in completely different ways. You must deeply understand how they buy your specific thing. Saying you do everything means you’re focused on nothing.
Pick one thing. Master how the government buys it. Then dominate that niche.
RULE #8: The Law of Verification
Before you invest time and money, verify the government actually buys what you sell—and how much they spend on it.
Here’s how:
Go to USAspending.gov
Click “Search Awards”
Select fiscal years (FY starts October 1st)
Use Product Service Codes or NAICS codes to find your category
Analyze the spending data by agency and year
For example, program management services show roughly $14 billion in federal spending annually. That’s verification the market exists.
RULE #9: The Law of Small Business Spending
The U.S. government is required to award approximately 23% of contracts to small businesses. The SBA sets these goals for federal agencies.
Using USAspending.gov, you can filter by recipient type to see exactly how much is going to small businesses in your category. For program management services, small businesses captured about $6 billion in FY 2024—roughly half of total spending.
This is your advantage as a small business.
RULE #10: You Must Register on SAM.gov
No registration, no contracts. Even if you plan to start as a subcontractor, register on SAM.gov.
Go to SAM.gov, click “Register Your Entity,” and follow their Entity Registration Checklist. Don’t pay anyone to do this for you. You’ll need documents you shouldn’t share with third parties anyway.
Harsh truth: If you can’t figure out how to register on SAM.gov using their checklist, government contracting isn’t for you. It only gets more complicated from here.
RULE #11: Small Business Certifications Help, But They’re Not Magic
You’ve probably heard about certifications like:
8(a) Business Development Program
Service-Disabled Veteran-Owned Small Business (SDVOSB)
Woman-Owned Small Business (WOSB)
HUBZone
The reality: The government doesn’t just hand contracts to certified businesses. These certifications are “nice to haves,” not silver bullets. You still need to do the work.
If you qualify, pursue certification through SBA.gov—but don’t make it your primary focus.
Pro tip: SDVOSB is currently the most powerful certification, especially when selling to the VA, which has special policies favoring veteran-owned businesses.
RULE #12: You Must Provide Value
This bears repeating: your business must excel at something real.
Your value isn’t finding solicitations and matching them to other companies. Your value is being the best landscaper, the most skilled accountant, the leading cybersecurity firm—whatever you do.
The government has systems to track contractor performance. If you don’t deliver excellence, you won’t win another contract. You’re not just serving any customer—you’re potentially supporting our military, our warfighters, our civil servants.
It has to work. It has to be great.
RULE #13: Understanding the Government Contracting Process Is Critical
Providing value isn’t enough. Every great business isn’t automatically successful with the government. You must understand how they buy.
Use USAspending.gov to research:
Which agencies are buying (VA, Army, Air Force, etc.)
What contract vehicles they’re using
Whether they’re prioritizing certain certifications
Which offices within agencies are making purchases
This data is publicly available. The winners use it. The losers don’t.
RULE #14: The Market Research Phase Is Where You Win
Most people think government contracting starts when the RFP (Request for Proposal) drops on SAM.gov.
Wrong.
By the time the solicitation is published, the process is almost over. The real work happens during the market research phase—before the RFP.
During market research:
The government is figuring out what they need
They’re allowed to talk to companies (and you’re allowed to talk to them)
They’re determining requirements, budget, and contract structure
They’re deciding if it should be set aside for small businesses
If you engage during market research, you can:
Help shape the solicitation
Inform requirements based on your capabilities
Build trust and relationships
Recommend whether it should be set-aside for your certification type
Companies that understand this phase win more contracts.
RULE #15: The Hard Work Starts When You Win the Contract
Congratulations—you won your first contract. Now the real work begins.
You must perform flawlessly. You need to understand:
Federal Acquisition Regulations (FAR)
How to handle bad reviews or disputes
What to do if the government terminates for convenience
How to manage scope creep that eats into margins
Having advisors who understand government contracting regulations is essential. Whether that’s hiring trained account executives, bringing in consultants, or training your team—you need expertise on staff who can navigate the government relationship and protect your margins.
Final Thoughts
These 15 rules separate the 0.25% of small businesses winning federal contracts from the 99.75% who struggle or never try.
Yes, it’s hard. Yes, it takes time. But with the right approach—verification, specificity, value, and understanding the process—you can build a highly profitable government contracting business.
The data is available. The spending is there. The opportunities exist.
The question is: are you willing to follow the rules?
Rick is the founder of GovClose, a government contracting certification program that has trained 230+ professionals. He’s a retired USAF Lieutenant Colonel and former DoD acquisitions officer who managed over $82 billion in contracts. Learn more at GovClose.com.
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