The Small-Business Guide to Government Contracts
How to Comply with the Key Rules and Regulations . . . and Avoid Terminated Agreements, Fines, or Worse
Author: Steven J. Koprince
Pub Date: June 2012
Print Edition: $27.95
Print ISBN: 9780814439722
Page Count: 352
Format: Paper or Softback
e-Book ISBN: 9780814431979
Buy the book:
IMAGINE YOUR SMALL BUSINESS losing millions of dollars in lucrative
contracts, paying heavy fines, or even being prohibited from
selling to your largest customer—all for violating rules you didn’t
know existed. It sounds like a nightmare, but when it comes to doing
business with the federal government, it is a reality countless small
business owners face.
If Uncle Sam is one of your small business’s customers, you’re not
alone. The federal government spends $500 billion annually to buy
goods and services from contractors, and thanks to special rules requiring
agencies to award contracts to small businesses, nearly a
quarter of those procurement dollars go to small companies. Contracting
with the government can be lucrative—but if you don’t know
the key rules and regulations, it can also be very risky.
When the government is your customer, you must learn a whole
new rulebook, very different from the one you may be used to in the
commercial marketplace. It’s a big rulebook—thousands of pages of
dense text, spread out over a hodgepodge of federal statutes and regulations.
And, as counterintuitive as it sounds, the rules are actually
more complex for small businesses than for large companies. Not only
does your small business have to follow most of the same government
contracting regulations as big players such as Boeing, Lockheed, and
IBM, but you must also obey a special set of regulations that apply
only to small business contractors.
Of course, behemoths like Boeing have in-house legal departments
to help them navigate their way through the regulatory maze.
But chances are, your small business doesn’t have a single lawyer on
staff, and you may not even know a lawyer who specializes in government
contracts (especially the small business rules), much less have
the budget to hire one to provide daily advice on compliance.
So what do you do?
If you’re like many small government contractors, you spend a little
time reading pieces of the FAR, talk to others in the industry, and
attend the occasional procurement conference or symposium. You try
your best to learn the rules. If you do call a government contracts
lawyer, it’s after something has gone wrong—you end up on the wrong
end of a protest, or government investigators show up to audit your
compliance with the small business rules or wage and hour regulations.
By then, it may be too late.
What Are the Risks?
You may be wondering whether it’s really important to teach yourself
all these government contracting rules. After all, if you act honestly
and apologize if you happen to inadvertently violate a rule you didn’t
know about, won’t that be good enough?
Probably not. Government contracting isn’t like being pulled over
for speeding, when, if you have a good driving record and are very
polite to the officer, there’s a chance you will get off with a warning.
Don’t expect the same treatment when it comes to government contracting.
Breaking the rules, even unintentionally, can have dire consequences
for you and your business:
! Terminated contracts. Every year, the government terminates
countless small business contracts as the result of competitors’ successful
size or eligibility protests. Other contracts are terminated—or
never awarded in the first place—because contractors violate ethical,
conflict-of-interest, and other requirements.
! Suspensions and debarments. The government is increasingly
suspending and debarring contractors, that is, prohibiting those
contractors from selling anything to the government for a certain period
of time—often six months for a suspension and three years for a
debarment. Political pressure is mounting to further increase the frequency
of suspensions and debarments and make debarments mandatory
for certain violations (they are already mandatory for some).
! Fines and financial penalties. Breaking many of the government
contracting rules can result in civil fines and other financial
penalties. For small contractors, the risk is especially acute in the wake
of a 2010 law providing that if a company incorrectly certifies itself as
“small” for a federal contract, it can be forced to repay the government
the total value of the contract, plus additional damages.
! Jail time. Egregious violations of the contracting rules can land a
contractor’s owners or officers in the Big House, where you may get the
chance to interact with another contractor’s employees—prison guards.
If you contract with the government, you owe it to yourself, your
company, and your employees to know the government contracting
rules. That’s what this book is all about.
Where Do All These Rules Come From?
For small contractors, learning the government contracting rules can
be particularly challenging because there is no single source to find
them. These rules are spread out among a variety of federal statutes
and regulations, most notably:
! The Federal Acquisition Regulation, or FAR. The FAR is the
largest single set of government contracting regulations, weighing in at
around 2,000 densely packed pages in hard copy. You can find the FAR
! The U.S. Small Business Administration’s regulations. As a
small government contractor, you will discover (if you haven’t already)
that the SBA plays a big role in your government contracting business.
Its regulations establish the framework for deciding what companies
qualify as “small” businesses, as well as which companies are eligible
for the SBA’s special contracting programs for disadvantaged small
! The Department of Labor’s regulations. The Department of
Labor oversees the rules governing how much you must pay your
workers, how much vacation time you must give them, and other rules
covering your relationship with your employees.
! Federal criminal law. Breaking some of the government contracting
rules (like the prohibition on bribery) results in criminal
penalties. This is how some unscrupulous contractors have wound up
While these are the major sources of the rules we will discuss in
this book, they’re not the only places the rules originate. Other laws
applicable to your small business are peppered throughout the Code
of Federal Regulations (CFR) and United States Code (USC). Some of
the rules have not been codified at all, but instead have been developed
by administrative bodies such as the Government Accountability
Office (GAO) and the SBA’s Office of Hearings and Appeals
(OHA). With so many pages of rules, coming from so many places, it’s
little wonder that many small government contractors simply throw
up their hands in frustration at the thought of trying to learn them.
About This Book
Written in layman’s terms (not “legalese”) and using easy-tounderstand
terms and examples, this book explains the most important
rules your small business must follow to remain in Uncle Sam’s
good graces. The book is intended for the busy small business owner
who doesn’t have the resources to consult a lawyer on every government
contracting decision or the time to master the thousands of
pages of rules on his or her own.
In addition to clear and concise discussion, each chapter includes
several features to help you understand and apply the rules:
! Examples. Key concepts are developed in examples, so that you
can see how a rule might apply in the real world. Some examples are
loosely based on real-life judicial and administrative decisions; others
spring from the author’s fertile imagination.
! The Primary Rules: Where to Find Them. If you want to
read the rules themselves, each chapter includes a section telling
you where to look. Simply plug in the regulatory citation to your favorite
Internet search engine and you should have no trouble finding
! Risk Questionnaires. Chapters 2 and 3, which deal with the important
question of whether your small business is considered affiliated
with other companies, include end-of-chapter questionnaires
allowing you to quickly assess whether your small business might have
an “affiliation problem.”
! Compliance at a Glance. Chapters 4–15 conclude with a summary
of the most important rules discussed in that chapter, each with
a “checkbox” next to it so you can track your company’s compliance.
You will sometimes see the notation (“recommended”) in Complianceat-
a-Glance, meaning that the action is strongly recommended but not
required by law.
This book covers the key rules you should know in order to ensure
that your company remains on the straight and narrow when it does
business with the government. But with thousands of pages of rules
to cover, it does not discuss everything. In particular, this book does
! State and local rules. This book only covers contracting with
the U.S. federal government. It does not address the myriad rules for
contracting with state and local governments around the country.
! Agency-specific rules. Many federal agencies have adopted
their own FAR supplements, which only apply to procurements conducted
by that particular agency (unlike the FAR and the regulations of
the SBA and Department of Labor, which apply to almost all federal
agencies). We do not address agency-specific rules in this book, with
one exception: in Chapter 12, we cover a special contracting program
for service-disabled veterans run by the U.S. Department of Veterans
! Accounting rules. As a government contractor, you need to ensure
that your financial house is in order and your accounting system
is up to snuff. We provide a brief overview in Chapter 10, but for space
reasons, do not address accounting in-depth.
! How to win government contracts. This book is a compliance
guide, not a “how-to” manual on winning government business.
Of course, we’d like to think that gaining a reputation as a knowledgeable
and compliant contractor will provide a competitive edge in
and of itself.
Two Brief Disclaimers
Because this book is, in fact, written by a lawyer, and because we
lawyers are a cautious bunch by nature, we want to pause here for two
First, this book is intended for your educational use only. It does
not constitute legal advice about any specific situation you may face.
Reading it (even if you read it very carefully and dog-ear your favorite
pages) does not create an attorney–client relationship between you
and the author or his law firm.
Second, like most things in life, the government contracting
rules sometimes change. This book reflects the rules as they were
when it was written, and most of those rules are probably still the
same as you’re reading it now. But keep an eye on trade publications
and blogs and keep your ears open for news that a rule has changed.
If you’re not sure whether a rule we discuss in this book has been
amended, use the “The Primary Rules: Where to Find Them” citations
to help you find out. In addition, bookmark the author’s blog, Small-
GovCon (www.smallgovcon.com), for updates about the rules discussed
in this book.
Let’s Get Started
All right, that’s enough disclaiming for one book, don’t you think?
Kick off your shoes, lean back, and let’s discuss what you need to
know to ensure that your small business plays by the rules.
Search the full text of this book
Search Full Text of
For single copy purchases of any AMACOM title, you can connect directly to the online retailer of your choice, from the list below, to buy the title you have selected. Most of our links will take you directly to that title on the site, making your shopping experience easier. You can also visit your local retailer, and if the book is not on their shelves they can special order it for you.
Retailers: Please contact us to change or add a listing.
Buying in Bulk?
We have very competitive discounts starting at 5 copies, as well as personal service, for bulk orders. Simply contact our Special Sales Department. Call 800-250-5308 or 212-903-8420 and ask for Special Sales. You can also email: SpecSlsWeb@amanet.org