What is government contracting?

Why the process looks the way it does

Every unusual step exists to make a decision defensible later.

A private buyer can choose a supplier because they like them. A public buyer generally cannot. The requirement has to be published, the evaluation criteria have to be set before proposals arrive, and the award has to be explainable against those criteria after the fact. That is why deadlines are hard, why questions go through a formal channel, and why an evaluator cannot use information you did not put in your response.

Trade agreements add a second layer. Above certain contract values, agreements such as the WTO Government Procurement Agreement, the USMCA, the CETA, and Canada’s internal CFTA require open competition and minimum posting periods. Below those values a buyer has more freedom, which is where much of the accessible work for a small company sits.

The practical consequence is that fairness is procedural, not personal. A buyer who likes your company still cannot accept a late submission or read a page past the stated limit. Understanding that early saves a lot of frustration.

• Requirements published rather than negotiated privately
• Evaluation criteria fixed before responses arrive
• Questions answered to all bidders at once
• Awards that have to survive a challenge

Who is allowed to sell

Registration is an identity record, not a licence or a qualification.

In the United States, selling to a federal agency means an active registration in SAM.gov. That produces a Unique Entity ID and a CAGE code, and it is free. Registration does not qualify you for anything and does not put you on a list buyers shop from. It exists so an agency can legally put you on contract and pay you.

In Canada, federal suppliers register through CanadaBuys and obtain a Procurement Business Number, which is your CRA business number with a supplier suffix. Depending on the commodity you may also need an SAP Ariba account to receive and respond to solicitations. Provinces, municipalities, and broader public sector bodies such as hospitals and school boards run their own portals with their own registrations.

Some work carries additional gates: a security clearance for the company and its personnel, a professional licence, bonding capacity for construction, or a place on a qualified supplier list. Those are requirement-specific. Check them against the notice rather than assuming a general standard applies.

How a requirement becomes a contract

The solicitation is late in the process, not the start of it.

A need starts inside the buying organisation, often a year or more before anything is published. It gets budgeted, then scoped. Somewhere in the scoping the buyer does market research to find out who can do the work and what it should cost. That research may be visible as an acquisition forecast, a sources sought notice, a request for information, or a draft solicitation posted for comment.

The formal solicitation follows. Bidders ask written questions, the buyer answers all of them publicly through an amendment, responses are submitted by the deadline, and an evaluation team scores them against the published criteria. An award notice goes out, unsuccessful bidders can usually ask for a debriefing, and a short window opens in which the award can be challenged.

Then the part that actually pays: performance, invoicing, contract administration, option exercises, and closeout. A contractor who treats award as the finish line tends to be surprised by how much of the value sits in the years after it.

• Planning and budget, often 6 to 18 months ahead
• Market research through forecasts, RFIs, and sources sought
• Solicitation, questions, and amendments
• Evaluation, award, debriefing, and challenge window
• Performance, options, and closeout

What you are actually signing

The obligations that come with the contract are often the surprise.

A public contract incorporates clauses, usually by reference rather than in full text. In the United States those come from Part 52 of the Federal Acquisition Regulation and any agency supplement. A single line in the solicitation can pull in dozens of them. Canadian federal contracts work the same way through the Standard Acquisition Clauses and Conditions manual.

Those clauses create real obligations: record retention, audit rights, labour standards and prevailing wage, non-discrimination and accessibility requirements, cybersecurity controls on systems that hold government information, reporting on subcontracting, and limits on how much of the work you can pass to others. Some carry criminal exposure for false statements.

Read the clause list before you price the work, not after you win it. A cybersecurity or accounting-system requirement can cost more to satisfy than the margin on a first contract.

Where the money and the risk sit

Contract type decides who absorbs a cost overrun.

A firm fixed price contract puts the risk on you. You quoted a number, and you deliver for that number whether it takes the hours you estimated or twice as many. Most straightforward goods and services are bought this way, and it is the simplest to administer.

Time and materials pays for hours at agreed rates against a ceiling. Cost reimbursement pays your allowable costs plus a fee, and it comes with the heaviest administrative load, because the government is paying your actual costs and therefore needs an accounting system it can audit. Small companies rarely start here.

Payment timing matters as much as price. United States federal payments are governed by the Prompt Payment Act. Canadian federal work falls under the Federal Prompt Payment for Construction Work Act, and the provinces have their own prompt payment and construction holdback regimes with different clocks. Build the cash gap into your plan before the first invoice, not after.

• Firm fixed price: you carry the overrun
• Time and materials: rates agreed, ceiling capped
• Cost reimbursement: audited costs plus fee
• Payment clocks set by prompt payment legislation

A realistic start

The first contract is usually smaller and later than expected.

Register, then spend the waiting time on the parts that take longest to build: a capability statement written in the buyer’s language, correct industry codes, references you are allowed to name, and any certification you qualify for. Registration alone produces no inbound demand.

Then narrow. A company that watches every notice in its country will drown. A company that watches a handful of buying offices, in the codes it can actually deliver under, at contract sizes it can staff, will see fewer opportunities and win more of them. Subcontracting to an established prime is a common and reasonable first step, and it builds the past performance record that direct awards later ask for.

Expect the first cycle to take longer than one budget year. Treat early bids as a way to learn how a specific buyer evaluates, and keep the written reason for every bid or no-bid decision so the filter improves.