Federal vs State vs LocalContracting Differences
Government contracting is not one market. Federal, state, and local governments each have their own rules, registration requirements, and opportunities. Knowing the differences helps you target the right level for your business.
Definition
Federal, state, and local government contracting differ in their governing regulations, registration processes, opportunity sources, and compliance requirements. Federal contracts follow the FAR and use SAM.gov, while state and local governments each maintain separate procurement systems with their own rules and vendor portals.
Key Takeaways
- Federal contracts are governed by the FAR and require SAM.gov registration. State and local contracts follow their own procurement codes and vendor portals.
- There is no single database for all government contracts. SAM.gov covers federal opportunities, but state and local contracts are spread across hundreds of separate portals.
- State and local contracts are generally easier to enter and require less compliance overhead, making them a common starting point for new government contractors.
- Many states offer their own small business preference programs that are separate from federal SBA certifications like 8(a) or SDVOSB.
- Established contractors often pursue opportunities across all three levels to diversify revenue and build past performance.
Side-by-Side Comparison
How federal, state, and local government contracting compare across key dimensions
| Factor | Federal | State | Local |
|---|---|---|---|
| Governing Rules | Federal Acquisition Regulation (FAR) | State procurement codes (vary by state) | Municipal/county procurement codes |
| Where to Find Opportunities | SAM.gov (centralized) | State procurement portals (50 different sites) | City/county websites, regional co-ops |
| Registration Required | SAM.gov (UEI, CAGE code) | State vendor registration portal | City/county vendor registration |
| Size Standards | SBA size standards by NAICS code | State-defined (varies widely) | Often none or follows state standards |
| Payment Terms | Prompt Payment Act (30 days) | 30-45 days (varies by state) | 30-90 days (varies by jurisdiction) |
| Set-Asides Available | 8(a), SDVOSB, WOSB, HUBZone | State-specific preference programs | Local preference programs (if any) |
| Contract Dollar Range | $10K to billions | $5K to hundreds of millions | $1K to tens of millions |
| Competition Level | National (all US businesses) | State-focused (in-state preference common) | Local (strong local preference) |
| Compliance Burden | High (FAR, DFARS, CAS, cybersecurity) | Moderate (state-specific rules) | Lower (simpler requirements) |
Which Level Should You Target?
A decision framework based on your business maturity and resources
Start Local
Best for new government contractors
- Simpler registration and compliance
- Smaller contracts build experience
- Local relationships matter
- Faster payment cycles in many cases
- Lower competition from national firms
Expand to State
Best for contractors with some past performance
- Larger contract values than local
- State preference programs available
- More structured procurement process
- Good stepping stone to federal
- Multi-year contract opportunities
Pursue Federal
Best for experienced contractors ready to scale
- Highest contract dollar values
- Federal set-aside programs (8(a), SDVOSB)
- Centralized opportunity search (SAM.gov)
- Prompt Payment Act protections
- Long-term IDIQ and BPA vehicles
Can You Do All Three?
Yes. There is no rule preventing a business from pursuing federal, state, and local contracts simultaneously. Many established contractors diversify across all three levels to reduce risk and maintain steady revenue.
However, each level requires its own registration, compliance processes, and opportunity monitoring. The administrative burden adds up. Contractors who spread too thin across all levels without adequate staff or systems often underperform compared to those who focus their efforts.
A practical approach is to establish a strong foundation at one level, build processes and past performance, then expand to additional levels as your capacity grows. Many contractors start locally, add state contracts within a year, and pursue federal opportunities once they have a track record.
Tip: Keep separate tracking for each level. Federal contract compliance (FAR clauses, cybersecurity requirements, cost accounting standards) is significantly more demanding than state or local requirements. Mixing compliance frameworks leads to errors.
Why This Matters for Contractors
Total government spending in the United States exceeds $10 trillion annually when federal, state, and local spending are combined. Federal procurement alone accounts for over $700 billion. State and local governments collectively spend even more.
Understanding the differences between these markets allows you to target the opportunities that best match your capabilities, certifications, and growth stage. A contractor who understands all three levels can identify the fastest path to revenue and build a diversified government client base over time.
Related Resources
Explore tools and guides for each government contracting level
State Contracts
Browse state-level government contract opportunities
All Contracts
Search federal and state opportunities
SAM.gov Registration Guide
Step-by-step federal registration walkthrough
Government Contracting 101
Beginner guide to government contracting fundamentals
SAM.gov
Official federal opportunity and registration portal
NASPO ValuePoint
State cooperative purchasing organization
Frequently Asked Questions
Common questions about federal, state, and local government contracting
Is it easier to get started with state or federal contracts?
State and local contracts are generally easier to enter. Registration is simpler, contract values are often smaller, and the compliance burden is lower. Many contractors build past performance at the state and local level before pursuing federal work. Federal contracts offer higher dollar values but require SAM.gov registration, more certifications, and compliance with the Federal Acquisition Regulation.
Do I need a SAM.gov registration for state contracts?
No. SAM.gov registration is only required for federal contracts. Each state has its own vendor registration portal. However, some state contracts funded with federal pass-through dollars may require SAM.gov registration or a Unique Entity ID (UEI), so always check the solicitation requirements.
Can I bid on federal and state contracts at the same time?
Yes. There is no restriction on pursuing contracts at multiple government levels simultaneously. Many established contractors maintain active registrations and pursue opportunities across federal, state, and local markets to diversify their revenue and reduce dependency on any single source.
Do state governments have set-aside programs like the federal government?
Many states do have their own small business preference programs, but they are not the same as federal set-asides. State programs vary widely. Some states offer percentage preferences for in-state businesses, minority-owned businesses, or veteran-owned businesses. These state certifications are separate from SBA federal certifications.
Where do I find local government contract opportunities?
Local government opportunities are posted on city and county procurement websites, regional purchasing cooperatives, and sometimes state-level portals. There is no single national database for local contracts. Some platforms aggregate local opportunities, but coverage varies. Start by checking the purchasing or procurement page of your target city or county government website.
Search Federal and State Contracts in One Place
GCFinder aggregates federal and state government contract opportunities so you can find, track, and bid on opportunities at every level.