Veteran-owned businesses (VOBs) have significant potential in the federal marketplace. The U.S. government is the world’s largest buyer of goods and services, spending hundreds of billions of dollars each year. A portion of that spending is set aside for small businesses, including those owned by veterans. For entrepreneurs with military backgrounds, government contracting can provide a stable and scalable revenue stream.
Why Compete
Federal agencies are required to meet small business contracting goals, including awarding at least 3% of contracts to Service-Disabled Veteran-Owned Small Businesses (SDVOSBs), according to the U.S. Small Business Administration. This represents billions of dollars in annual opportunities, but only businesses that are properly registered and certified can compete for these set-aside contracts.
Getting Started
Veteran entrepreneurs should understand two key designations: Veteran-Owned Small Business (VOSB) and Service-Disabled Veteran-Owned Small Business (SDVOSB). Both require that the business be at least 51% owned and controlled by a veteran and meet federal size standards. SDVOSBs must also be owned by a veteran with a service-connected disability, and they qualify for additional contracting opportunities.
The U.S. Department of Veterans Affairs manages certification for these programs under reforms established in the National Defense Authorization Act for Fiscal Year 2017.
Entering the federal marketplace begins with registration in the System for Award Management, which is required for all government contractors and includes obtaining a Unique Entity ID. Businesses must also apply for certification through the VA’s VetCert program and identify their NAICS codes, which define the services they provide and determine eligibility for contracts.
Finding Work
Most federal solicitations are listed on SAM.gov, where users can filter for veteran-specific set-asides. Additional prospects are available through the U.S. General Services Administration and individual agency procurement portals.
Government contracts vary in structure. Fixed-price contracts offer a set payment but place more financial risk on the contractor. Cost-reimbursement contracts cover allowable expenses but require more oversight. Indefinite Delivery/Indefinite Quantity (IDIQ) contracts provide flexibility by allowing work to be assigned over time. Understanding these differences helps businesses pursue contracts that align with their capabilities.
Building Trust
Past performance is a critical factor in winning contracts, and for new businesses, it can be challenging. One effective strategy is to subcontract with established prime contractors to build experience and credibility. Smaller contracts and micro-purchases can also help establish a performance record over time.
Businesses must also meet strict compliance requirements. Contractors are required to comply with the Federal Acquisition Regulation (FAR) and applicable cybersecurity and reporting standards. Failure to comply can result in penalties or loss of eligibility, making it essential to understand these obligations early.
Long-Term Value
Government contracting is a long-term strategy, but it offers significant potential for veteran-owned businesses. With the right certifications, a clear understanding of the process and consistent effort, veteran entrepreneurs can build lasting relationships, compete effectively and create new revenue streams through the federal marketplace.
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