Federal contracting comes with regulations. Lots of them. For small businesses, compliance can feel overwhelming. But it's manageable with the right approach.
The Regulatory Landscape
FAR (Federal Acquisition Regulation): The primary rulebook for federal procurement. Applies to all contracts.
DFARS (Defense FAR Supplement): Additional requirements for DoD contracts. More stringent, especially around cybersecurity.
Agency-Specific Supplements: VA, GSA, and other agencies have their own additional requirements.
Understanding which regulations apply to your contracts is the first step. Not all requirements apply to all contracts.
Key Compliance Areas
Cost Accounting: Government contracts often require specific cost accounting practices. Indirect rate structures, allowable costs, timekeeping requirements.
Cybersecurity: NIST 800-171 compliance for CUI (Controlled Unclassified Information). CMMC certification for DoD contracts.
Labor Compliance: Service Contract Act requirements, prevailing wage rates, Davis-Bacon for construction.
Reporting Requirements: FFATA, FSRS, progress reports. Know your deadlines and submission requirements.
Building Compliance Infrastructure
Documentation Systems: Compliance is largely about documentation. Build systems that capture required information automatically.
Training: Employees need to understand requirements that affect their work. Regular training prevents expensive mistakes.
Internal Audits: Don't wait for government audits to discover problems. Regular self-assessment catches issues early.
Expert Resources: Small businesses rarely need full-time compliance staff. Build relationships with specialists you can call when needed.
Common Compliance Failures
Timekeeping Violations: Improper time charging is one of the most common—and most serious—compliance failures.
Cost Misallocation: Charging unallowable costs or misallocating between contracts triggers audits and penalties.
Subcontracting Reporting: Small business subcontracting requirements aren't optional. Track and report accurately.
Right-Sizing Compliance
Not every contract requires enterprise-level compliance infrastructure. Understand which requirements apply to your specific contracts and scale your systems accordingly. Over-engineering compliance creates overhead. Under-engineering creates risk.