Here's a statistic that will shock you: According to SBA data, there are 34.7 million small businesses in the United States.

Yet only 78,677 companies—just 0.23%—won federal contracts in FY24. That's less than a quarter of one percent competing for $774 billion in annual contract opportunities.

Why is this number so low?

It's not because the opportunity is small. It's because most businesses don't understand how the system actually works.

In this episode, I'm breaking down the three rules of SAM that nobody talks about—the realities that separate the 0.23% who win from the 99.77% who struggle.

Rule #1: Don't Use SAM (Yet)

Before you even register on the System for Award Management, you need to validate that the government actually buys what you sell. I'll show you how to use USAspending to research federal buying patterns and save yourself months of wasted effort.

I'll also address a critical warning: the "middleman" or "broker" model being promoted on social media. Federal Acquisition Regulation 52.219-14 requires small business prime contractors to perform at least 50% of services work themselves. Without past performance and in-house capabilities, this model fails—both legally and practically.

Rule #2: Know Who Buys What You Sell—And How

It's not enough to know that agencies buy what you sell. You need to understand which offices, what procurement methods they use (GSA Schedules, GWACs, IDIQs), and what barriers to entry exist. Some contract vehicles take years to access.

Rule #3: Always Start with Sources Sought

Here's what most people miss: there's an entire phase of contracting that happens before the solicitation is ever published. It's called the market research phase, and this is where contracts are actually won.

When agencies post Sources Sought notices or Requests for Information, they're inviting you to shape requirements, demonstrate capabilities, and build relationships. The companies that win consistently are the ones who engage 6-8 months before the RFP drops—attending meetings, providing demonstrations, and establishing trust with program offices.

Writing "cold" proposals to solicitations you found online? That's starting at the end. Your competitors started at the beginning.

I'll explain why the system isn't rigged—it's just that most people don't know about the pre-solicitation engagement phase where the real work happens.

Industry experience suggests it takes 12-24 months to win your first federal contract, and the SBA reports that some businesses spend $80,000 to $130,000 in the process. This is a long-term strategy, not a quick win. But for businesses with proven capabilities and the patience to build properly, federal contracting provides stable, recurring revenue at scale.

Ready to Learn More?

If you want to learn how to use government contracting to win contracts, start a consulting business, or launch a career as an account executive, visit govclose.com. We offer comprehensive training and implementation programs to help you navigate the federal marketplace successfully.

Rick Howard is a former Air Force acquisition officer who managed over $82 billion in defense contracts. He founded GovClose in 2019 to help companies and consultants succeed in the federal marketplace.