DoD Contract Types for Small Business

The U.S. federal government aims to conduct 23% of prime contracts with small businesses and 30% of subcontractor contracts with small businesses. The Department of Defense (DoD) is one of the branches of government that offers the most opportunities for small to midsize businesses (SMBs).

Below you'll find an explanation of the different DoD contract types for small businesses and a few tips for growing your small business sales to federal agencies.

In This Article:

• What is the Department of Defense (DoD)?
• Subcontracting on DoD Contracts
• DoD Small Business Contract Programs
• Common Federal Government Contract Types
• Top DoD Contracts to Know
• Win More DoD Small Business Contracts

The Department of Defense is one of the major branches of the United States federal government. As a branch dedicated to national defense services and protecting the U.S. from foreign threats, the DoD has a huge budget and employs millions of people. It offers federal contracts to businesses, contractors and other entities to complete projects in support of reaching its goals.

A prime contractor is a business that works directly with the federal government on a contract opportunity, but sometimes when the prime needs additional skills to complete a contract, it can be beneficial for them to enter into a teaming agreement, or work with a subcontractor to provide some of the products or services that the prime contractor cannot provide on their own. This can be a great route for small business owners to get their firm in on DoD contracts that they might not have had the capabilities to fulfill on their own.

Any DoD subcontract agreements will include basic project requirements and key components like business information, a full scope of work, terms of payment and language to help resolve any potential disputes.

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If you are selling to the DoD or the federal government as a small business it’s crucial to know which socioeconomic categories, if any, fit your organization. For many types of government contracts, agencies are often required to set aside part or all of a contract for companies that meet these eligibility requirements.

The U.S. Small Business Administration (SBA) offers a number of programs designed to help small businesses gain a fair share of federal government contracts, along with set-aside contracts specifically earmarked for small businesses.

Here are several of the most commonly used socioeconomic categories the SBA supports and how much they aim to award to qualified businesses.

• Women-Owned Small Businesses (WOSBs): The U.S. federal government aims to award at least 5% of federal contracting dollars to qualifying WOSBs every year.
• Service-Disabled Veteran Owned Small Businesses (SDVOSBs): The government aims to allocate at least 3% of money from federal contract awards to qualifying Service-Disabled Veteran-Owned Small Business (SDBVOSB) firms every year.
• 8(a) Business Development Program for Small Disadvantaged Businesses: The government aims to award at least 5% of federal contracting dollars to qualified small disadvantaged business operations every year.
• HUBZone Contracts for Small Businesses: The government aims to award at least 3% of federal contracting dollars to HUBZone-certified small businesses every year.

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Small businesses have many ways to provide products and services via defense government contracts, in a variety of industry categories. But depending on which products or services are being procured in the contract, the government may use a different type of contract to meet its needs.

These are the most common types of government contracts that your business may encounter in the federal marketplace as it seeks out new DoD contracts:

• Fixed-price contracts
• Cost-reimbursement contracts
• Time and materials contracts
• Indefinite delivery/Indefinite quantity (IDIQ) Contracts

DoD Sole-Source Contracts

At times, the DoD may prefer sole-source contracts, which are types of government contracts that can be issued without a formal competitive bidding process. This usually happens when only one business can meet the needs of a specific contract in the designated time frame.

Department of Veterans Affairs (VA) Government Contracts

In addition to the DoD, it is worth noting that small businesses and service-disabled veteran-owned small businesses (SDVOSBs) also have the opportunity to win contracts from the Department of Veterans Affairs (VA). The VA typically exceeds its SDVOSB goal by a large margin, but has a tougher time with other socioeconomic categories. The VA has an established hierarchy of contracting preferences. This means the VA must consider SDVOSB and Veteran-Owned Small Businesses (VOSBs) prior to other small business preferences.

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Across the major government agencies within the U.S. federal government, federal contract opportunities abound for small and midsized firms. The DoD and DHS (Department of Health Services) are two notable government agencies with lots to offer for small businesses that meet the correct eligibility requirements.

Deltek + ProPricer offers a report that contains a sampling of the top contracts that the Department of Defense and Department of Homeland Security have put up for bidding. You can access all these opportunities, including updates tracked by more than 150 seasoned human research analysts, in the GovWin IQ platform.

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