Federal Procurement for Beginners: How to Avoid Common Mistakes When Entering the Market for the First Time

Every year, the U.S. federal government spends hundreds of billions of dollars on goods and services from private businesses. From IT support and logistics to scientific equipment and furniture, agencies rely heavily on commercial vendors to meet their operational needs. For new businesses, this market presents an opportunity to secure long-term contracts, diversify revenue, obtain GSA Schedule approval, and build a steady customer base backed by the most reliable buyer in the world.

Despite the clear advantages, entering the federal procurement space is far from simple. The registration process, eligibility requirements, proposal formatting, and compliance expectations can overwhelm even experienced entrepreneurs. Missteps in the early stages can lead to delays, disqualifications, or missed opportunities that may take months to recover from.

This article is designed to help new vendors navigate the early stages of federal contracting. It highlights the most common mistakes that businesses make when first approaching this market and provides clear, actionable guidance on how to avoid them. For companies that want to minimize risks and streamline their entry into government sales, partnering with an experienced consultant like Price Reporter can be a strategic advantage. Since 2006, Price Reporter has helped more than 1,000 businesses obtain and manage GSA contracts with proven tools, expert support, and a strong track record of results.

Understanding the Federal Procurement Ecosystem

Selling to the federal government is not the same as selling in the commercial world. While both involve delivering value, meeting client needs, and managing contracts, the rules, procedures, and expectations in the public sector are more structured, regulated, and documentation-heavy. Understanding how this ecosystem works is the first step toward success.

Federal vs. Commercial Sales

In the commercial sector, businesses can negotiate terms freely and make quick decisions based on market demand. Government sales follow strict procedures guided by law, regulation, and internal agency policy. Every stage of a federal purchase is documented, reviewed, and subject to audit. Pricing must be justified, performance must be reported, and contractors must remain compliant throughout the life of the agreement.

The procurement cycle in the public sector is typically longer, and vendors must follow specific protocols to participate. Unlike commercial buyers, federal agencies cannot simply choose a supplier on a whim. They are bound by procurement rules designed to ensure fairness, transparency, and best value for taxpayers.

Key Procurement Systems

Several government platforms play a central role in how vendors interact with agencies. Each has a specific purpose, and new vendors should become familiar with how they work:

SAM.gov

The System for Award Management (SAM.gov) is the official registration portal for all businesses that want to sell to the federal government. Without an active and accurate SAM registration, a business is not eligible to compete for federal contracts. SAM.gov is also where many federal contract opportunities are published. Vendors can search for solicitations, respond to notices, and track agency procurement activity.

GSA Advantage and eBuy

These two platforms are essential for vendors who hold a GSA contract.

• GSA Advantage is an online catalog where agencies shop for pre-approved products and services under GSA Schedule contracts. Vendors list their offerings along with prices and delivery terms.
• eBuy is an electronic Request for Quotation (RFQ) system. Contracting officers use it to request competitive quotes from approved GSA vendors. For vendors, it provides access to opportunities that are not posted on SAM.gov.

DOD FedMall

FedMall is the Department of Defense’s e-commerce platform. It serves military customers and other authorized buyers across federal and state government. Businesses that sell certain products, especially industrial or operational supplies, may find targeted opportunities through FedMall once properly registered and approved.

Agencies, Contract Types, and Expectations

More than 400 federal agencies and sub-agencies purchase from private vendors. Each has different missions, budgets, and procurement needs. Understanding which agencies are the best fit for your offering is key. Some agencies post public forecasts of what they plan to buy in the coming year. These forecasts can guide your outreach and proposal planning.

Federal contracts come in various forms, including firm-fixed-price, time-and-materials, and indefinite delivery/indefinite quantity (IDIQ) contracts. Each type has different terms, risks, and invoicing requirements. Vendors are expected to understand what they are agreeing to before signing.

Lastly, expectations in federal procurement go beyond price and delivery. Agencies expect compliance with laws like the Trade Agreements Act, adherence to cybersecurity standards, and transparent reporting. Vendors are not just selling a product or service. They are committing to meet federal standards in all aspects of performance.

Mistakes Businesses Make Before They Even Apply

Many companies rush into the federal market without fully understanding what is required to succeed. This often results in wasted time, missed opportunities, or outright disqualification. Avoiding the most common early-stage mistakes can save months of effort and position your business for a smoother entry into government contracting.

Lack of Market Research

One of the biggest mistakes new vendors make is assuming that their product or service is in demand by federal agencies. The truth is that not everything sold commercially is relevant in the public sector. Agencies have specific needs and often buy under different priorities than private companies.

Before pursuing registration or certification, it’s essential to confirm that your offerings are actively being purchased. This can be done through:

• GSA eLibrary – explore what products and services are listed by competitors and how they are categorized.
• Agency procurement forecasts – many agencies publish what they expect to buy in the next fiscal year.
• FPDS.gov (Federal Procurement Data System) – see historical federal spending data by product type, agency, and vendor.

Effective market research helps you focus your efforts on areas where there is actual demand and where your business can realistically compete.

Incomplete or Inaccurate SAM Registration

SAM.gov registration is mandatory for any business that wants to compete for federal contracts. Yet, many vendors submit incomplete, outdated, or incorrect information. Even small errors in addresses, point-of-contact details, or banking information can prevent successful registration or delay payment on awarded contracts.

Inaccurate entries can also create compliance problems later. If your business structure, ownership, or NAICS codes are listed incorrectly, your company may be disqualified from certain opportunities or fail to qualify for small business set-asides.

Vendors should treat SAM registration as a strategic document, not a formality. It must be updated at least once a year, but in practice, it should be reviewed any time there is a change in your business structure or offerings.

Misuse of NAICS and PSC Codes

NAICS (North American Industry Classification System) and PSC (Product and Service Codes) are used by the government to categorize and search for vendors. Selecting the wrong codes can limit your visibility in the systems contracting officers use to find suppliers.

For example, choosing a general NAICS code when a more specific one is available might mean your business never appears in targeted searches. Using inaccurate codes can also disqualify you from set-aside opportunities reserved for small businesses in certain sectors.

Take the time to:

• Review the official NAICS code definitions and match your primary offering carefully.
• Include all relevant codes, not just one. Many vendors offer more than one type of service or product.
• Use tools like the SBA’s Size Standards Tool to confirm eligibility for small business programs based on your selected codes.

Accurate classification improves your visibility, compliance, and chance of being found by agency buyers.

Underestimating Eligibility Requirements

Many businesses assume they can simply register and start bidding. In reality, federal agencies have high expectations, and not every company is ready to meet them.

Typical eligibility expectations include:

• At least two years in business
• A verifiable history of delivering quality products or services
• Sound financials and tax compliance
• Operational infrastructure to support contract fulfillment
• A basic understanding of federal compliance rules

Trying to enter the market before your business is ready often leads to failure. Agencies want to work with reliable, stable vendors who understand the rules of public sector engagement.

Before applying, evaluate your internal capacity, experience, and resources. It may be wise to start by subcontracting or selling through partners if you’re still building those capabilities.

Proposal and Application Pitfalls

Once a business begins the application process, new challenges emerge. Even experienced vendors can make critical mistakes when preparing their proposal or GSA offer. Avoiding these errors not only increases the chances of approval but also helps set the tone for future contracting success.

Submitting an Unclear or Non-Compliant Proposal

Government proposals are not casual sales pitches. They follow strict formatting rules and require full, detailed documentation. One of the most common reasons for rejection is a proposal that fails to follow the instructions outlined in the solicitation.

Typical issues include:

• Missing or outdated financial statements
• Incomplete responses to technical requirements
• Poor formatting that makes the document hard to evaluate
• Vague or generic responses that do not address agency-specific needs

Every section of your proposal should be tailored to the exact language and structure of the solicitation. A proposal that is technically sound, but misaligned with the stated requirements, is unlikely to succeed.

Wrong SIN (Special Item Number) Selection

Special Item Numbers (SINs) are used by the government to categorize products and services under the GSA Schedule. Selecting the wrong SIN can cause confusion during evaluation or misrepresent what your business actually offers.

If your products or services do not align with the SINs you’ve chosen, the proposal may be rejected or delayed during clarification. Even if accepted, being under the wrong SIN means fewer relevant opportunities and lower visibility to buyers searching by category.

To avoid this:

• Study the SIN definitions carefully on GSA eLibrary
• Review competitors’ listings to see how similar offerings are categorized
• Match your commercial catalog to GSA expectations line by line

Alignment between your offering and the chosen SIN is one of the foundations of a strong proposal.

Poor Pricing Strategy

Pricing is a central part of the proposal evaluation process. New vendors sometimes underprice in hopes of winning contracts or fail to understand federal pricing rules, including concepts like the “Most Favored Customer” (MFC) policy.

Underpricing can lead to two major problems:

• The government may view your proposal as unrealistic or unsustainable
• If awarded, the contract could lock you into low rates for years, damaging long-term profitability

On the other hand, overpricing without justification will make your offer uncompetitive. The goal is to strike a balance: offer pricing that is both competitive and justifiable based on your commercial practices, costs, and market benchmarks.

Government buyers are not looking for the cheapest option. They want best value, which includes quality, reliability, and past performance.

Weak or Generic Capability Statements

Your capability statement is often the first impression you make on federal buyers. A weak or vague document is a missed opportunity to differentiate your company from competitors.

Common issues include:

• Overly broad language without clear focus
• No mention of past projects or measurable results
• Generic lists of services without demonstrating relevance to federal needs

A strong capability statement should include:

• A short company overview
• Core competencies and differentiators
• Past performance examples with quantifiable outcomes
• Key clients, certifications, and contract vehicles
• Contact information and NAICS/SIN codes

Tailor this document to the agency or contract you’re pursuing. A well-structured capability statement can influence a buyer’s decision even before a formal solicitation is issued.

Post-Award Mistakes That Hurt Long-Term Success

Winning a federal contract or receiving a GSA Schedule award is a significant achievement, but it is only the beginning. Many businesses stumble after the award because they fail to maintain their contract properly, miss critical compliance tasks, or fail to engage with available government platforms. These oversights can lead to poor performance, loss of future opportunities, or even cancellation of the contract.

Neglecting Compliance and Updates

A common misconception is that once a GSA contract is awarded, it remains valid indefinitely without much effort. In reality, contracts require ongoing maintenance. Vendors must keep their catalogs, pricing, points of contact, and terms up to date. Contract modifications must be submitted for any changes, and sales reporting is mandatory on a regular basis.

Failure to comply with these obligations can result in:

• Temporary suspension from GSA Advantage
• Permanent removal from the contract
• Missed sales opportunities due to outdated listings
• Negative performance records that affect future bids

Ignoring Contractor Assessments and Performance Reviews

GSA conducts regular Contractor Assessment Visits (CAVs) to evaluate whether vendors are maintaining their contracts according to federal guidelines. These assessments review:

• Sales tracking and reporting accuracy
• Delivery performance
• Compliance with pricing and terms
• Internal controls and documentation

If the assessment reveals issues, the vendor may receive a low rating, a corrective action plan, or in severe cases, contract cancellation. Staying audit-ready means maintaining organized records and internal processes that align with your contractual obligations.

Not Using Available Tools and Portals

Many vendors stop engaging after the initial award and fail to take advantage of platforms designed to generate new business. Opportunities are constantly posted on systems such as eBuy, SAM.gov, and FedMall, and many agencies actively seek vendors through small business databases.

In addition, subcontracting with prime contractors or participating in set-aside programs can increase exposure and contract volume. Passive vendors miss out on these possibilities and often see little return from their GSA contract.

Common Post-Award Mistakes and How to Avoid Them

By staying proactive and engaged after award, vendors can turn a single contract into a long-term, scalable business model within the federal space. The key is consistent compliance, strategic use of resources, and an active approach to growth.

Setting Up for Success

To thrive in the federal marketplace, businesses must go beyond one-time contract wins. Sustainable success requires a long-term strategy, strong internal systems, and an ability to build trust with federal buyers. By developing a clear federal-focused growth plan and understanding how procurement decisions are made, companies can position themselves for continued opportunity and expansion.

Building a Federal-Focused Growth Plan

A winning strategy starts with clarity. Define your federal business goals, target agencies, contract types, and realistic revenue projections. Consider how federal contracts will fit into your broader operations. Some companies choose to build a separate team or process for handling government clients, which can help streamline compliance and communication.

Include these components in your plan:

• A list of relevant agencies based on past procurement trends
• A calendar of forecasted solicitations and expected bid cycles
• A marketing plan to increase visibility among contracting officers
• Internal resources needed for proposal development, compliance, and delivery

Revisit and update the plan regularly. The federal market changes over time, and staying adaptable is essential.

Understanding the Procurement Cycle and Buyer Behavior

Federal procurement follows a structured cycle that typically includes forecasting, solicitation, evaluation, award, and contract management. Agencies often begin planning purchases months in advance. Vendors who understand this cycle and engage early are more likely to be noticed when opportunities open.

Key points to remember:

• Many agencies publish procurement forecasts each fiscal year
• Buyers often look for past performance or vendor familiarity
• Relationship-building before a solicitation is released can be a competitive advantage
• Some contracts are awarded through simplified acquisition or direct ordering processes

Informed vendors anticipate demand and align their outreach and proposals accordingly.

Importance of Recordkeeping, Responsiveness, and Relationships

Success in federal contracting depends not only on systems and strategy, but also on execution. Agencies value vendors who are reliable, responsive, and easy to work with.

To stand out:

• Keep organized records of proposals, contracts, modifications, and performance data
• Respond quickly to inquiries, RFQs, and compliance requests
• Build professional relationships with contracting officers and agency points of contact
• Follow up after performance reviews or delivery milestones to maintain communication

Even small contracts can lead to long-term relationships when managed properly. Contracting officers often work with the same vendors across multiple awards if the experience is positive.

By focusing on the bigger picture and building a strong foundation, businesses can turn initial efforts into ongoing growth in the federal market. Strategic planning, thoughtful engagement, and operational discipline are the pillars of long-term success.

Conclusion

Getting started in federal procurement can be challenging. The regulations are complex, the processes are rigid, and competition is strong. However, many obstacles faced by new vendors stem from avoidable mistakes. With proper preparation, accurate documentation, and a clear understanding of how government buyers operate, businesses can dramatically improve their chances of success.

For companies that want to navigate this space with confidence, working with experienced consultants can make a significant difference. Price Reporter has been supporting federal contractors since 2006, managing over 1,500 GSA contracts across a wide range of industries. Their team of experts provides tailored guidance, administrative support, and federal market insight that help businesses grow and succeed in the government sector. With the right mindset and the right partner, your business can thrive in the federal space.