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How Do Government Contracts Work?

Post Series: Q&A


Rob was asked; How Do Government Contracts Work?

If you’re a small business, then chances are good you’re always looking for ways to expand your revenue and help your business grow. While there’s always the option of promoting and marketing your business to attract more customers, there’s no better option than winning government contracts.

Government contracting is a process that allows you to sell goods or services to the government and it’s other agencies. To do so, the government has a contract with you that states they will purchase the goods or services that you provide. While most people don’t realize it, the U.S. government spends nearly $100 billion worth of goods and services with small businesses every single year.

Before considering whether or not you should seek government contracts, it’s important to know some of the advantages and disadvantages along with how the contracts work. In short, the advantages of government contracts are the extra revenue for your business, the government’s dependency on contractors, and the ability to sell the government just about anything.

The disadvantages, however, is that under contract, your customer is the one who will make all the rules, you’ll need a multi-year commitment, and there’s going to be plenty of red tapes to cross to make it happen.

So how do these contracts work? As mentioned previously, a government contract is a contract between your business and the government that outlines the details of the goods and services you plan to provide to the government. To get the contracts, there is a bidding process that takes place between different businesses competing for the contract.

To secure a contract with the government, it’s going to take more than a simple phone call and filling out some paperwork to make it happen. Frequently, there will be plenty of bidders up against you at the same time competing for the same contract. To secure a government contract, you will need to have done plenty of research on the product and know the price that other companies will consider bidding.

It’s no surprise that government contracts are one of the most fruitful contracts and can help supply your business with additional revenue. While they may be difficult to obtain, once your business obtains a government contract, your business will officially supply the government with whatever goods or services your business may specialize in. Since government contracts are typically multi-year commitments, it’s important to make sure you know all of the necessary information before bidding on a contract.

If you have questions about your business; email Robert Ritch at

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