Guide
Government contracting glossary
Government contracting comes with its own language — acronyms, program names, and process terms that insiders use constantly but rarely stop to explain. This glossary covers 50+ terms you will encounter as a small business pursuing federal, state, or local contracts, written in plain English without assuming any prior experience.
8
8(a) Business Development Program
The 8(a) program is run by the Small Business Administration (SBA) and is designed for small businesses that are owned and controlled by individuals who are socially or economically disadvantaged — including many minority-owned businesses. Once certified, 8(a) firms can compete for set-aside contracts that are restricted only to other 8(a) companies, which dramatically reduces the number of competitors. The program also offers business development support, mentoring, and the ability to form joint ventures with more established firms.
B
Best Value
Best value is an evaluation approach where the government does not automatically award the contract to the lowest bidder. Instead, the agency weighs a combination of factors — such as technical approach, relevant experience, past performance, and price — to determine which offer represents the best overall deal. This approach gives small businesses room to compete on quality and expertise, not just on who can cut their price the most.
Blanket Purchase Agreement (BPA)
A Blanket Purchase Agreement is a simplified arrangement where the government pre-negotiates pricing and terms with one or more vendors for goods or services it expects to need repeatedly. Rather than issuing a new contract each time, the agency can place orders quickly against the existing BPA. BPAs are often established under GSA Schedule contracts, and they are a common way agencies streamline routine purchasing.
Bundled Contract
Contract bundling happens when a government agency takes several smaller requirements — things that could reasonably be performed by separate small businesses — and combines them into one large contract. This makes the work easier for the agency to manage but harder for small businesses to compete for, since many small firms lack the capacity to handle very large, multi-faceted contracts. Federal law requires agencies to justify bundling decisions and consider the impact on small businesses.
C
Capability Statement
A capability statement is a one- or two-page marketing document that summarizes what your business does, who you serve, what differentiates you from competitors, your relevant past performance, your certifications, your NAICS codes, your UEI number, and your contact information. Think of it as a resume for your company — something you hand to contracting officers, prime contractors, and agency small business representatives when introducing yourself. A strong capability statement is one of the most important business development tools in government contracting.
CO (Contracting Officer)
A Contracting Officer is the government official who has been granted legal authority to enter into, administer, modify, and terminate contracts on behalf of the government. The CO is the only person who can legally obligate the government to spend money — meaning no matter what anyone else at an agency tells you, only the CO can make an official commitment. Building a relationship with the CO and their office is a key part of winning and managing government work.
COR (Contracting Officer's Representative)
A Contracting Officer's Representative is a government employee — typically a program or technical staff member — who is appointed by the Contracting Officer to help oversee a specific contract. The COR monitors the contractor's day-to-day performance, reviews deliverables, and communicates between the contractor and the CO. The COR does not have the authority to change contract terms, but they are usually your primary point of contact during contract performance.
CPARS (Contractor Performance Assessment Reporting System)
CPARS is the federal government's official system for recording evaluations of how well contractors performed on their contracts. When a contract ends — or at certain milestones during a long contract — the government rates the contractor on factors like quality, schedule, cost control, and management. These ratings are stored in CPARS and are visible to other agencies when evaluating future proposals. A strong CPARS record is one of the most valuable assets a federal contractor can build.
Cost-Reimbursement Contract
In a cost-reimbursement contract, the government agrees to pay the contractor back for allowable, allocable, and reasonable costs incurred during performance, plus a predetermined fee. This type of contract is used when the scope of work is uncertain or difficult to define precisely upfront — for example, research and development work. Unlike a firm-fixed-price contract, the final cost can vary based on what the work actually requires. Contractors must maintain accounting systems capable of tracking and documenting costs.
D
DCAA (Defense Contract Audit Agency)
DCAA is a Defense Department agency that provides accounting and financial advisory services related to Department of Defense contracts and grants. Its primary job is to audit contractor cost data to make sure the government is only paying for legitimate, allowable costs. If your business does cost-reimbursement work for the DoD, DCAA may audit your accounting systems, labor charging practices, and indirect cost rates. Having a DCAA-compliant accounting system is often a prerequisite for winning certain types of defense contracts.
DFARS (Defense Federal Acquisition Regulation Supplement)
The DFARS is a set of additional procurement rules that apply specifically to Department of Defense contracts, layered on top of the standard FAR rules that govern all federal procurement. The DFARS includes requirements unique to defense work — such as cybersecurity requirements (CMMC), use of domestic materials (Berry Amendment), and specialized contract clauses. When you bid on a DoD contract, expect to see both FAR and DFARS clauses.
DUNS Number
The DUNS (Data Universal Numbering System) number was the nine-digit identifier that businesses previously used to register in SAM.gov and other federal procurement systems. It was assigned by Dun & Bradstreet. In April 2022, the federal government replaced the DUNS number with the UEI (Unique Entity Identifier), which is now the required identifier for all entities doing business with the federal government. If you see references to a DUNS number in older documents or guides, the UEI is the modern equivalent.
E
EDWOSB (Economically Disadvantaged Women-Owned Small Business)
An EDWOSB is a subcategory within the Women-Owned Small Business program that applies to women-owned businesses whose owners meet additional economic disadvantage criteria — based on personal net worth, adjusted gross income, and total assets. EDWOSB-certified firms can compete for set-aside contracts in industries where women-owned businesses are underrepresented in federal contracting. Learn more about eligibility and opportunities at ContractRadar's WOSB resource page.
F
FAR (Federal Acquisition Regulation)
The FAR is the master rulebook for how the federal government buys goods and services. It covers everything from how solicitations must be structured, to how proposals are evaluated, to what contract clauses must be included, to how disputes are resolved. Every federal agency must follow the FAR, and most federal contracts incorporate FAR clauses by reference. You do not need to memorize the entire FAR, but understanding the parts that apply to your contract type is essential to avoiding compliance problems.
FFP (Firm Fixed Price)
A firm-fixed-price contract sets the total price at the time of award, and that price does not change regardless of what the work actually costs the contractor to perform. If you finish under budget, you keep the difference; if costs run over, you absorb the loss. FFP is the most common contract type in federal contracting because it gives the government cost certainty and puts performance risk on the contractor, who is incentivized to be efficient.
FPDS (Federal Procurement Data System)
FPDS is the government's central database of completed federal contract actions. Every contract award, modification, and termination above the micro-purchase threshold is reported to FPDS. Businesses use FPDS for competitive market research — you can look up which agencies buy the services you offer, how much they spend, which companies have been winning those contracts, and what contract vehicles have been used. This data is publicly accessible and is one of the best tools for identifying your target agencies.
Full and Open Competition
Full and open competition means the government is not restricting who can bid on a contract — any business, regardless of size, location, or certification status, is eligible to submit a proposal. Federal law generally requires full and open competition for most procurements unless a legitimate exception applies (such as a small business set-aside, a sole-source justification, or another statutory authority). As a small business, you can still compete on full-and-open contracts, but you will often face competition from large businesses as well.
G
GSA Schedule (General Services Administration Schedule)
A GSA Schedule — also called a Multiple Award Schedule (MAS) or Federal Supply Schedule — is a long-term, government-wide contract that GSA awards to vendors after vetting their prices, terms, and qualifications. Once a company is on a GSA Schedule, federal agencies (and some state and local governments) can buy directly from that vendor without running a full competitive bidding process, as long as they follow streamlined ordering procedures. Getting on a GSA Schedule takes time and paperwork, but it can open a large market once established.
GFE/GFP (Government-Furnished Equipment/Property)
GFE or GFP refers to equipment, materials, or property that the government provides to the contractor to use while performing a contract — rather than requiring the contractor to supply or purchase those items independently. For example, a government agency might provide computers, access to classified facilities, or specialized testing equipment. Contractors are responsible for properly managing, using, and returning government-furnished property, and the FAR has detailed rules governing these obligations.
H
HUBZone (Historically Underutilized Business Zone)
The HUBZone program is an SBA certification for small businesses located in economically distressed areas — designated by census tract, unemployment rate, or other criteria. HUBZone-certified businesses are eligible for set-aside contracts reserved exclusively for HUBZone firms, as well as a 10% price evaluation preference on full-and-open competitions. The program requires that the business's principal office is in a HUBZone and that at least 35% of its employees live in a HUBZone. Explore opportunities at ContractRadar's HUBZone resource page.
I
IDIQ (Indefinite Delivery/Indefinite Quantity)
An IDIQ contract does not specify a firm quantity of work at the time of award. Instead, the government establishes a ceiling value and then issues individual task orders or delivery orders as specific needs arise over the life of the contract. This structure is extremely common in professional services — IT, consulting, engineering — because agencies cannot always predict their exact needs years in advance. Many large IDIQ vehicles are awarded to multiple companies simultaneously (called a MAC, or multiple-award contract), meaning awarded vendors must compete again for each individual task order.
IFB (Invitation for Bid)
An Invitation for Bid is a sealed bidding method used when the government can precisely define what it needs and price is the only meaningful differentiator. Businesses submit sealed bids by a deadline, the bids are opened publicly, and the contract goes to the lowest responsive and responsible bidder — no negotiation, no evaluation of technical approach. IFBs are more common in construction and commodity purchases than in professional services, where technical approach and experience typically matter more.
J
J&A (Justification and Approval)
A Justification and Approval document is the formal record the government must prepare and approve before it can award a contract without full and open competition. Common justifications include only one source capable of performing the work, unusual and compelling urgency, international agreement requirements, and national security concerns. J&As above certain dollar thresholds must be approved by increasingly senior officials and are generally posted publicly. Tracking J&As can alert businesses to upcoming sole-source awards in their industry.
K
Key Personnel
Key personnel are specific individuals — usually named in a proposal or contract — whom the government considers essential to the successful performance of the contract. This might be a program manager, a lead engineer, or a subject matter expert whose expertise was a significant factor in the award decision. If you need to replace a key personnel member during contract performance, you typically need prior written approval from the Contracting Officer. Government agencies take key personnel substitutions seriously because swapping in less-qualified staff after award is a known contractor tactic.
L
LPTA (Lowest Price Technically Acceptable)
LPTA is an evaluation method where the government first determines which proposals meet minimum technical requirements — a pass/fail gate — and then awards the contract to whichever passing proposal has the lowest price. There is no credit for exceeding the technical minimum or for a superior approach. LPTA has been criticized for driving down quality, and the government has moved away from using it for complex services, but it remains common for commodity-like purchases. Contrast with Best Value, where quality above the minimum can earn credit.
M
MAS (Multiple Award Schedule)
MAS is another name for the GSA Schedule — a set of long-term government-wide contracts managed by the General Services Administration that federal agencies use to purchase goods and services at pre-negotiated prices. The “multiple award” part means GSA awards schedule contracts to many vendors in each category, and agencies then choose among those vendors through a simplified ordering process. Some state and local governments are also authorized to purchase through MAS contracts.
Mentor-Protégé Program
The SBA's Mentor-Protégé Program pairs experienced government contractors (mentors) with small businesses (protégés) to help smaller firms build technical capabilities, improve business systems, and gain access to contracting opportunities. Under the program, a mentor and protégé can form a joint venture to compete for contracts — and in some cases, the joint venture can be treated as a small business even if the mentor is large. Several individual agencies (including DoD and DHS) run their own version of the program in addition to the SBA's.
Micro-Purchase
A micro-purchase is a government purchase below the micro-purchase threshold — currently $10,000 for most purchases, though higher thresholds apply in certain situations. At this level, agencies can buy goods or services without competitive bidding, often using a government purchase card (like a credit card). Micro-purchases are a good entry point for small businesses that are new to government contracting, since the process is simple and fast. Agencies are encouraged to spread micro-purchases among small businesses rather than always using the same vendor.
N
NAICS Code (North American Industry Classification System)
A NAICS code is a six-digit number that classifies a business or a contract by the type of industry involved. The government assigns a NAICS code to every contract opportunity, and each NAICS code comes with a corresponding small business size standard — a revenue or employee count threshold that determines whether your business qualifies as “small” for that type of work. Choosing the right NAICS codes for your business is critical for finding the right opportunities, qualifying for set-asides, and ensuring your SAM.gov registration is accurate. ContractRadar uses your NAICS codes as a primary signal when matching you to relevant contract opportunities.
O
OASIS (One Acquisition Solution for Integrated Services)
OASIS is a government-wide, multiple-award IDIQ contract vehicle managed by GSA for complex professional services — management consulting, engineering, scientific, financial, and IT services, among others. It is one of the largest and most widely used contract vehicles in the federal market. GSA has released an updated version called OASIS+, which includes separate pools for small businesses and various certifications (8(a), HUBZone, WOSB, etc.). Being on OASIS or OASIS+ makes a company eligible to compete for task orders from many different federal agencies.
Obligation
An obligation occurs when the government formally commits funds to a contract or order, creating a legal liability to pay for the goods or services to be provided. In plain terms, “obligated” means the money has been set aside and is earmarked for that contract. Agencies are required to report obligations to FPDS. Tracking obligation activity is a way for businesses to understand which agencies are actively spending money in their area of work.
Offeror
An offeror is any company or individual that submits a proposal or bid in response to a government solicitation. The term is used broadly — you might also see “bidder” (more common in sealed-bid procurements) or “proposer.” Once a contract is awarded, the winning offeror becomes the “contractor.” All other offerors are entitled to request a debriefing from the agency to understand why their proposal was not selected.
P
Past Performance
Past performance refers to a contractor's track record on previous contracts — did you deliver on time, within budget, and at the required quality level? For most federal procurements, past performance is one of the most heavily weighted evaluation factors. Agencies check CPARS records, contact references, and review documentation of prior work. For businesses new to government contracting, demonstrating relevant commercial or subcontract experience is often the best starting strategy while building a formal government performance record.
PO (Purchase Order)
A purchase order is one of the simplest contract instruments the government uses, typically for straightforward commercial purchases at or below the simplified acquisition threshold. The government issues a PO describing what it wants to buy, and the vendor agrees to the terms by accepting and fulfilling the order. Purchase orders have relatively few required clauses compared to more complex contract types, making them a lower-barrier entry point for businesses new to government sales.
Pre-Solicitation Notice
A pre-solicitation notice is an early public announcement — posted on SAM.gov or a state procurement portal — that an agency intends to release a solicitation in the future. It gives businesses advance warning to start preparing before the official RFP or IFB is released. Agencies sometimes use pre-solicitation notices to collect market research information (similar to an RFI) or simply to alert the vendor community that an opportunity is coming.
Prime Contractor
A prime contractor is the company that holds the direct contractual relationship with the government. The prime is responsible for all aspects of performance, even if it hires subcontractors to perform portions of the work. For small businesses, becoming a prime contractor is the ultimate goal — but subcontracting to an established prime is a common and valuable first step that builds experience, past performance, and agency relationships.
Procurement
Procurement is the full process by which a government agency identifies a need, develops requirements, issues a solicitation, evaluates proposals, awards a contract, and manages performance through completion. It is a broad term that encompasses everything from the initial purchase request inside the agency all the way through final payment and contract closeout. Understanding the procurement lifecycle helps businesses identify the best points to engage with agencies — often long before a solicitation is officially released.
Proposal
A proposal is the formal document a business submits in response to a government solicitation, particularly an RFP. It typically includes a technical volume (explaining your approach and methodology), a management volume (your team, organization, and qualifications), a past performance volume (evidence of successful prior work), and a price volume. Writing compelling, compliant proposals is a core competency in government contracting and a distinct skill from the underlying work your business actually performs.
PSC (Product Service Code)
A Product Service Code is a four-character alphanumeric code that the government uses to categorize what is being purchased in a specific contract action. PSCs are different from NAICS codes — NAICS classifies the industry of the seller, while PSCs describe the product or service being bought. Knowing the PSCs that correspond to your work helps with market research in FPDS, since you can filter contract data by what the government is buying rather than by who is selling it.
R
RFI (Request for Information)
A Request for Information is a notice the government issues when it wants to gather information about the market, learn about available solutions, or understand vendor capabilities — but is not yet ready to issue a formal solicitation. Responding to an RFI does not obligate you to bid on a future contract, and the government will not make an award based on an RFI alone. However, responding thoughtfully can raise your visibility with the agency and may shape how they structure the eventual solicitation.
RFP (Request for Proposal)
A Request for Proposal is the most common solicitation method for complex government purchases, particularly services. The agency issues an RFP describing the requirement, the evaluation criteria, and the proposal submission instructions. Businesses respond with detailed proposals covering their technical approach, management plan, past performance, and pricing. Awards are made based on either best value or LPTA criteria. RFPs are longer and more complex than RFQs, and the proposals they require take significant effort to prepare well.
RFQ (Request for Quote)
A Request for Quote is a simpler solicitation method used for purchases that are well-defined and relatively straightforward — where the government knows exactly what it wants and needs vendors to provide pricing. RFQs are commonly used for GSA Schedule purchases and simplified acquisitions below the simplified acquisition threshold. Unlike an RFP, vendors typically submit price quotes rather than full proposals, and the process moves faster.
S
SAM.gov (System for Award Management)
SAM.gov is the official United States government website that serves two main functions: it is the central database where federal agencies post contract opportunities, and it is the registration system where businesses must enroll to be eligible for federal awards. Every company that wants to compete for federal contracts needs an active SAM.gov registration with a current UEI number. You can also use SAM.gov to track award announcements and do market research — or use a tool like ContractRadar to monitor opportunities across SAM.gov and dozens of other procurement sources.
SBA (Small Business Administration)
The SBA is the federal agency responsible for supporting the growth and development of small businesses in the United States. In the context of government contracting, the SBA plays several important roles: it establishes small business size standards by NAICS code, certifies businesses for set-aside programs (8(a), HUBZone, WOSB, EDWOSB, SDVOSB), runs the Mentor-Protégé Program, and works with agencies to ensure they meet their small business contracting goals.
SBIR (Small Business Innovation Research)
SBIR is a competitive federal program that funds small businesses to perform research and development with the potential for commercialization. Federal agencies with large R&D budgets are required by law to set aside a percentage of that funding for SBIR awards. The program has three phases: feasibility study, full R&D, and commercialization support. SBIR is an important funding pathway for technology-focused startups and small businesses pursuing innovation in areas like defense, health, and energy.
SDB (Small Disadvantaged Business)
A Small Disadvantaged Business is a small business that is at least 51% owned and controlled by one or more individuals who are socially and economically disadvantaged. SDB status is self-certified in SAM.gov, and it allows agencies to count those awards toward their SDB spending goals. Many 8(a)-certified firms are also classified as SDBs. Find contracting opportunities specifically targeted at disadvantaged businesses at ContractRadar's SDB resource page.
SDVOSB (Service-Disabled Veteran-Owned Small Business)
An SDVOSB is a small business that is at least 51% owned and controlled by one or more veterans with a service-connected disability. SDVOSB-certified companies are eligible for set-aside contracts that only SDVOSB firms can compete for, as well as sole-source awards under certain dollar thresholds — particularly from the Department of Veterans Affairs. The VA has one of the most robust veteran set-aside programs in the federal government. Explore opportunities at ContractRadar's veteran-owned small business resource page.
Set-Aside
A set-aside is a contract that the government restricts to a specific category of small businesses. When a contracting officer designates a procurement as a set-aside, only eligible businesses in that category can compete — large businesses and small businesses without the required certification are excluded. Set-aside categories include small business (general), 8(a), HUBZone, WOSB/EDWOSB, SDVOSB, and veteran-owned. The federal government uses set-asides as one of its primary tools for meeting its small business spending goals. Learn more about 8(a) set-aside opportunities, as well as HUBZone, WOSB, and veteran-owned set-asides.
SIC Code (Standard Industrial Classification)
SIC codes were the original system for classifying businesses by industry, developed in the 1930s and widely used through the 1990s. They have been largely replaced by NAICS codes for federal procurement purposes, though some older government systems, state agencies, and commercial databases still reference SIC codes. If you see a SIC code in a government document, you can generally find its NAICS equivalent through conversion tools published by the Census Bureau.
Simplified Acquisition
Simplified acquisition refers to a streamlined procurement process used for purchases between the micro-purchase threshold ($10,000) and the simplified acquisition threshold (currently $250,000 for most purchases). This process involves less paperwork, fewer required clauses, and faster timelines than full competitive procurement. Agencies use simplified acquisition procedures for straightforward, lower-dollar needs — making it an accessible entry point for small businesses that are building their government contracting experience.
Small Business Size Standard
The small business size standard is the maximum revenue or employee count that a company can have and still qualify as “small” for a given NAICS code. Size standards are set by the SBA and vary widely by industry — a manufacturing firm might need to have fewer than 500 employees, while a professional services firm might have a revenue cap of $16 million or more. Qualifying as small is required to compete for most set-aside contracts, and your size is measured at the time you submit an offer.
SOW (Statement of Work)
The Statement of Work is the section of a contract or solicitation that defines exactly what work must be performed — the specific tasks, deliverables, timelines, performance standards, and reporting requirements. Reading the SOW carefully is the first and most important step when evaluating any contract opportunity, because it tells you precisely what the government expects. Some contracts use a Performance Work Statement (PWS) instead, which describes outcomes and standards rather than prescribing specific tasks — giving the contractor more flexibility in how to achieve results.
Subcontractor
A subcontractor is a business that performs a defined portion of a government contract under an agreement with the prime contractor, rather than under a direct contract with the government. Subcontracting is one of the most practical paths into government contracting for small businesses — it builds experience, past performance references, and agency relationships without requiring you to win a prime contract first. Many large prime contractors are required by law to have a small business subcontracting plan. Learn more in our guide to federal subcontracting opportunities for small businesses.
SUBNet (Subcontracting Network)
SUBNet is an SBA-operated online platform where prime contractors post subcontracting opportunities they have available for small businesses. If you are looking to get into government contracting through the subcontracting path, SUBNet is one of the best places to start. Prime contractors use SUBNet to find small business partners who can help them fulfill their subcontracting plan requirements, and small businesses use it to find primes actively looking for their capabilities.
T
Task Order
A task order is an individual work assignment issued under an IDIQ, GSA Schedule, or other indefinite contract. Each task order defines a specific scope of work, period of performance, and funding amount. Companies that have been awarded an umbrella IDIQ contract must then compete for individual task orders as they are issued — meaning winning the vehicle is just the first step. Task orders can range in value from small and simple to extremely large and complex, depending on the vehicle and agency.
T&M (Time and Materials)
A time-and-materials contract pays the contractor for actual labor hours worked at pre-established fixed hourly rates, plus the actual cost of materials used. T&M is used when the government cannot estimate the total level of effort required upfront — for example, in software maintenance or investigative work. It provides flexibility but also shifts some cost risk to the government, which is why the FAR requires a ceiling price and government oversight to ensure the contractor is not padding hours.
Teaming Agreement
A teaming agreement is a formal written arrangement between two or more companies to pursue a specific government contract together — typically structured with one company as the proposed prime contractor and the other(s) as subcontractors. Teaming helps companies fill capability or past performance gaps in their proposals, and it is common on large, complex procurements. Teaming agreements are enforceable contracts between the parties and should clearly define the role, responsibilities, and anticipated workshare for each team member.
U
UEI (Unique Entity Identifier)
The UEI is a 12-character alphanumeric identifier assigned to every entity registered in SAM.gov. It replaced the old DUNS number in April 2022 and is now the required identifier for any business seeking federal contracts, grants, or assistance awards. Your UEI is assigned automatically when you register your entity in SAM.gov — there is no separate application. You must maintain an active SAM.gov registration (renewed annually) to keep your UEI valid for award purposes.
W
WOSB (Women-Owned Small Business)
A Women-Owned Small Business is a small business that is at least 51% owned and controlled by one or more women who are U.S. citizens. WOSB-certified firms are eligible for set-aside contracts in industries where women-owned businesses are underrepresented in federal contracting — a list updated periodically by the SBA. Women-owned businesses that also meet the economic disadvantage criteria can qualify for EDWOSB status, which opens additional set-aside opportunities. Find relevant contracting opportunities at ContractRadar's WOSB resource page.
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