Guide

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 RulesFederal Acquisition Regulation (FAR)State procurement codes (vary by state)Municipal/county procurement codes
Where to Find OpportunitiesSAM.gov (centralized)State procurement portals (50 different sites)City/county websites, regional co-ops
Registration RequiredSAM.gov (UEI, CAGE code)State vendor registration portalCity/county vendor registration
Size StandardsSBA size standards by NAICS codeState-defined (varies widely)Often none or follows state standards
Payment TermsPrompt Payment Act (30 days)30-45 days (varies by state)30-90 days (varies by jurisdiction)
Set-Asides Available8(a), SDVOSB, WOSB, HUBZoneState-specific preference programsLocal preference programs (if any)
Contract Dollar Range$10K to billions$5K to hundreds of millions$1K to tens of millions
Competition LevelNational (all US businesses)State-focused (in-state preference common)Local (strong local preference)
Compliance BurdenHigh (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.

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.