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Feb 23, 2022

5 Costly Mistakes New GovCons Make

Time to read: 8 min

Land profitable government contracts and make long-lasting relationships with government buyers. Use the right tools and processes to easily discover your niche. It’s easy to get buried under the licensing, registration, and administrative work. Anyone from small businesses or seasoned GovCon companies will benefit from using our helpful tips. Learn about what to avoid when looking for your next contract.

1. Not Choosing the Right Codes

Understanding how to use the North American Industry Classification System (NAICS) and the Product Service Code (PSC) to filter opportunities is key for new GovCon businesses.

The NAICS and the PSC are key taxonomies used by government bodies to sort through companies and services provided respectively.

Knowing which ones apply to small businesses will considerably increase your visibility and the likelihood of winning a contract, and will save buyers the trouble of having to sort through companies by eligibility.

Determining which NAICS Codes and PSC are fit for your kind of business may be a daunting task at first, as the sheer number of requirements can confuse even the most seasoned professional. Thankfully, many online tools can provide you with the specific codes and training you will need to meet your sector’s prerequisites.

2. Starting as a Prime Contractor

When bidding on your first contract, you will have to decide whether you want to be the prime contractor or a subcontractor in the deal. Knowing your company’s size and resources will definitely help you determine the path you’ll end up taking, but if you’re newer to these competitions, you’ll want to look into the benefits of being a subcontractor initially.

Starting small is the best way to ensure your past experiences have the biggest impact on a new customer market, or on a different customer base you’re trying to explore. Choosing to sub your first work is the best strategic decision in the long run, as you’ll likely be able to use your capabilities to the best effect. Your role in this hypothetical bid might not be as principal, but it will serve as justification for future contracts in which you will be the prime contractor.

A footnote to this issue: negotiate to give yourself the best advantage. Being a subcontractor does not mean less onerous contract terms; you will likely have to ask for those. In most cases, the prime’s obligations to the customer will be very transparent, so definitely use them to get the best deal on your first venture. Issues to be negotiated include:


The workshare will determine what portion of the contract you will be responsible for. It’s important to choose the right balance between revenue and profit margins. Certain portions may generate more revenue than others but will have a lower margin. Consider carefully what portions of a contract you will be responsible for, and focus not only on revenue but also on your net profit.

Access to the Customer (How and Frequency)

Building a solid business network will be how you build a reputation for your business. When negotiating contracts, pay attention to how much facetime you will receive with the client. Factors to consider include how you will contact the client—email, phone calls, in-person meetings, etc—as well as how frequently you get to connect with the client. The more freedom you have to connect directly with the client, the more likely you are to develop a productive business connection.

IP Ownership

Whether you’re developing your idea into something tangible or starting a business around the idea—you should start by protecting your IP. It’s important to safeguard your IP in a contract to protect your ability to reap the benefits of your hard work. IP ownership registration should be discussed before starting any contract.

3. Having a Zero-Sum Mindset

Becoming the head of your niche is the ultimate goal when improving your business, and while it is tempting simply to “be better” than your competitors, building collaborative relationships with them will work far more in your favor, especially if you don’t yet have the range to be a prime contractor.

Group work will not only facilitate your ability to complete certain tasks (while ensuring the correct accountability for them is held) but it will also expand your networking portfolio—and the more people you collaborate with, the more connections you will have that can lead you to bigger and better contracts. Getting a brand new company’s name out there is quite tricky in today’s highly competitive landscape, so start friendly; get to know what you can offer your fellow companies and what you can give them in return. Afterall, in the government contracting space, we are in a non-zero-sum environment.

4. Forgetting to Plan Your Pipeline

Once you’re done forging your company, and determining your vision, uniqueness, and where you fit in the market, you will be tempted just to let the journey take you where you need to be. However, planning your future steps is one of the most important things you can do to ensure your ongoing success. Don’t focus only on near term opportunities.

Every decision you make regarding your business should be strategic and aimed at guiding you on how to reach your goals and build a stronger business foundation:


Conducting research and reporting on previous work should help you determine how you progressed through a certain deal. You need to have a realistic grasp of your capabilities in order to set objectives.

Choosing Objectives

Make sure your intentions are realistic as well. Conducting a SWOT analysis of your business will help you understand what you can do in a set amount of time to grow your companies.


Your business doesn’t exist in a vacuum. If circumstances change, you should be prepared for them. Creating a contingency plan can help sudden switches in your procedures go smoothly and keep them from affecting your results in the long run. Be proactive instead of reactive

5. Going for the Wrong Government Entities

It’s incredible how different government buyers can be from each other. The good news is that many of them are especially favourable to newer companies – but this isn’t easily identifiable from simple research. To pinpoint which GovCon entities move through the process more quickly, you’ll need to look at their performance key indicators, such as SAPs and micropurchases. That’s where online tools like FedScout become very handy – you can use the government search portal on its website to get this information.

Understanding how to find the right government customer leads you to smaller contracts with very high win rates. Get experience under your belt with productive online research and intensive planning. Assert yourself as a trustworthy name in your field. At FedScout, we are focused on the research analysis and contract-hunting side of the job. This leaves you with more time to experiment and focus on providing the best work your business can offer.

The etiquette of GovCon is very detailed and expansive. The resources offered at FedScout will make your day-to-day activities simple and informative. Get started with our free tools and consultation service today. Always be on top of the right government contracts for your business.

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Topics: Government Contracting