Last updated: September 2026
When I started Drakov Industries through the VR&E Self-Employment track, I learned quickly that running a business and selling to the government are two different skills. Federal contracting can be a steady source of revenue for a veteran-owned business. It can also eat up months of unpaid effort if you go in without a plan. This post walks through how the process actually works today, where veterans have a real edge, and where the old advice no longer holds.
The size of the opportunity
The old version of this post said the government spends "over $600 billion" a year on contracts, without a source. Here's what the government actually reports. In fiscal year 2025, small businesses received about $179 billion in federal prime contracts, close to 28% of the dollars eligible for small business credit. Service-disabled veteran-owned small businesses (SDVOSBs) received about $32.5 billion, which cleared the government-wide 5% goal for SDVOSBs.
That's real money, but it's also competitive. SDVOSB awards were slightly lower as a share of spending in FY2025 than in FY2024, and every small business category dipped. The government doesn't hand out contracts because you served. It does give you some tools that reduce the competition you face.
Where veterans actually have an advantage
SDVOSB status is the big one. If you have a service-connected disability rating (even 0%) and you own and control at least 51% of your business, SBA certification as an SDVOSB lets you compete for set-aside and sole-source contracts across the whole federal government. A plain Veteran-Owned Small Business (VOSB) certification mainly helps at the VA, through its Veterans First program. My post on VOSB and SDVOSB certification explains the difference and how to apply through SBA's VetCert program.
Your military experience helps you speak the customer's language. If you served, you already understand chains of command, acronyms, and how government offices make decisions. That helps with agencies like DoD and the VA.
About security clearances: the old post said a clearance from your military service is "a huge advantage" to maintain. That needs a correction. Your clearance goes inactive when you separate. It can generally be reinstated within 24 months, but only if an employer or agency sponsors you for a position that requires it. You can't keep a clearance active on your own. Your business also can't hold a facility clearance unless a government agency or prime contractor sponsors it for a specific classified contract. A recent clearance can still make you a stronger hire or teaming partner, but it isn't something you can carry into your own business by itself.
Step one: get registered
Before you can win a federal contract, you need to be in the government's system. Here's the order I'd follow:
Register in SAM.gov. Registration is free and must be renewed every year. When you register, you'll get a Unique Entity ID (UEI). The old post told readers to get a DUNS number from Dun & Bradstreet. The government stopped using DUNS numbers in April 2022, and the UEI replaced them.
Get your CAGE code. It's assigned automatically through your SAM.gov registration.
Choose your NAICS codes carefully. They determine which opportunities you can bid on and which SBA size standard applies to you.
Get SBA certified as a VOSB or SDVOSB through VetCert. Self-certification no longer counts for set-asides or for helping primes meet their subcontracting goals.
Look at state and local certifications, which can open doors to state agency work and help you build a track record.
Watch out for companies that charge to "register" you in SAM.gov or to "handle" your VetCert application. Both are free, and free help is available from APEX Accelerators (formerly called PTACs) and SBA's Veterans Business Outreach Centers.
How the rules are changing right now
The Federal Acquisition Regulation (FAR) is the rulebook for how agencies buy. In April 2025, an executive order launched the "Revolutionary FAR Overhaul," a plain-language rewrite of the whole FAR. Agencies have adopted most of the new text through temporary "class deviations" while formal rulemaking catches up. Formal proposed rules for 21 FAR parts were published in June 2026. Part 19, which covers small business programs, wasn't in that first batch.
What this means for you: when you read a solicitation, look for which FAR deviation the agency is using. Don't assume an older guide, including the old version of this post, reflects the current rules.
Several dollar thresholds that matter to small businesses also went up on October 1, 2025:
| Threshold | What it means | Amount (as of Oct. 1, 2025) |
|---|---|---|
| Micro-purchase threshold | Agencies can buy with a government purchase card and little or no competition | $15,000 |
| Simplified acquisition threshold (SAT) | Agencies can use faster, simpler buying procedures | $350,000 |
| SDVOSB sole-source limit (FAR) | Max contract value (with options) for a sole-source SDVOSB award | $5 million ($8.5 million manufacturing) |
| VA SDVOSB sole-source limit (VAAR) | VA's own limit under Veterans First | $5 million |
Sources: FAR inflation adjustment final rule (Aug. 27, 2025); FAR 19.1406; VAAR 819.7008
The micro-purchase threshold is worth knowing about. Many agency buyers can pay up to $15,000 with a purchase card without a formal competition. For a new business with no federal track record, small purchase-card buys can be an easier first win than a large proposal.
If you want to work with DoD, plan for cybersecurity requirements. The Cybersecurity Maturity Model Certification (CMMC) program started showing up in DoD contracts on November 10, 2025. Phase 2 begins November 10, 2026, when many contracts that handle Controlled Unclassified Information will require third-party assessments. If your business will touch DoD information, start working on this now.
Contract vehicles: what's changed
Contract vehicles are pre-competed contracts that agencies use to buy quickly without running a new competition each time. The GSA Multiple Award Schedule (MAS) is the most widely used, and it's becoming even more important. An executive order in March 2025 directed agencies to consolidate buying of common goods and services through GSA.
The old post recommended CIO-SP3 as an IT vehicle. That's no longer a good target. NIH canceled its planned replacement, CIO-SP4, in early 2026, and it is sunsetting CIO-SP3 and its related vehicles, with program functions ending after December 31, 2028. Most of that work is expected to shift to GSA vehicles.
For a new business, getting onto a major vehicle usually isn't the first step. Most firms start with open-market awards, small purchases, or subcontracts, build a track record, and then apply for a GSA Schedule once they can show past performance.
Building your foundation
A capability statement is a one- or two-page summary of what you do, your NAICS codes, your certifications, your past performance, and how to reach you. Keep it specific. "We provide logistics solutions" tells a buyer nothing. "We manage warehouse inventory for facilities up to 50,000 square feet" does. If you need help translating military experience into civilian terms, the tips in my post on military skills on a civilian resume apply here too.
Past performance matters a lot. If you don't have federal contracts yet, document your commercial and state or local projects. Subcontracting under a prime is one of the most common ways to build federal past performance.
Pricing in government work often means knowing your fully loaded labor rates: wages plus overhead, benefits, and profit. Price too low and you can win a contract that loses money. Use USAspending.gov to see what agencies have paid for similar work.
Cash flow needs a plan. Under the Prompt Payment Act, agencies generally pay within 30 days of a proper invoice, but you may carry costs for months before your first invoice. SBA loans can help bridge that gap. See my post on SBA loans for veterans.
Finding opportunities
SAM.gov is where agencies post most opportunities over $25,000. Set up saved searches using your NAICS codes and keywords. Pay attention to "sources sought" notices and requests for information (RFIs). Agencies use them to decide whether to set a contract aside for small businesses or SDVOSBs. Answering them is one of the best ways to show an agency you exist before the real solicitation comes out.
Agency procurement forecasts list upcoming buys. Most large agencies publish them, and many are collected on Acquisition.gov.
Agency small business offices. Every major agency has an Office of Small and Disadvantaged Business Utilization (OSDBU). Their job is to help small businesses find opportunities at that agency. Request a meeting and bring your capability statement.
Industry days and networking. Industry days let you hear directly from buyers and meet potential teaming partners. Veteran business groups and APEX Accelerator events are good places to start.
Subcontracting. Large prime contractors have goals for subcontracting to certified veteran-owned firms, and they only get credit when you're SBA-certified. SBA's SubNet lists subcontracting opportunities from primes.
Writing proposals that win
Read the whole solicitation before you write anything. Pay the most attention to the evaluation criteria, which show how the government will score you, and the instructions to offerors, which set page limits, formatting, and what to include.
Make a compliance checklist. A proposal that misses a required section or goes over the page limit can be thrown out without being read.
Answer the question the government asked. Evaluators score what's in front of them, so make it easy to see how you meet each requirement. Use specific examples from your experience instead of general claims about quality and commitment.
Understand how price is weighed. Some contracts go to the lowest-priced acceptable offer. Others use "best value," where a higher price can win if the technical approach is stronger. The solicitation tells you which one applies.
If you lose, ask for a debriefing. The feedback will make your next proposal better.
After you win
Read your contract closely, especially the reporting requirements, invoicing instructions, and any limits on subcontracting. SDVOSB set-aside contracts, for example, limit how much of the work you can pass to firms that aren't similarly situated.
Get any change in scope in writing from the contracting officer before you do the work. Only a contracting officer can change a contract, even if a program manager asks you to do extra.
Deliver well. Agencies rate your performance in CPARS (the Contractor Performance Assessment Reporting System), and future evaluators will read those ratings. A strong first contract is the best marketing you'll ever have.
Growing from there
Once you have past performance, you can pursue larger contracts, join a GSA Schedule, or team with other firms through joint ventures or SBA's Mentor-Protégé Program. Grow into new agencies gradually, and make sure there's real demand before you invest in new capabilities.
If you're still in the early stages of building your business, my posts on starting a veteran-owned business and veteran business grants may help you get your footing first.
Conclusion
Government contracting represents one of the most lucrative and stable business opportunities available to veterans today. Your military background provides you with distinct advantages that civilian contractors simply cannot match, from security clearances to proven leadership under pressure. The path to contracting success isn't always straightforward, but it's absolutely achievable with the right knowledge and persistence. Federal contracting rewards businesses that pick a lane, get their paperwork in order, and build relationships over time.
Thinking about starting or growing your business? The same discipline that served you in uniform can build something of your own. Schedule a free consultation to talk through your plans.