Breaking the Catch-22: How to Win Government Contracts Without Past Performance

The $183 Billion Opportunity Most New Businesses Miss

In fiscal year 2024, the federal government awarded a record-breaking $183 billion in contracts to small businesses, marking the fourth consecutive year of growth. Small businesses received 28.4% of all eligible federal contract dollars—well above the government's 23% goal. Yet despite these staggering numbers, most new diverse business owners never see a dime.

Why? Because they don't understand how to navigate the past performance requirement strategically.

The federal government isn't trying to lock you out. In fact, regulations specifically address new businesses. According to the Federal Acquisition Regulation (FAR), contractors with no record of past performance are evaluated as "Unknown Risk"—not automatic disqualification. The key is knowing how to position your business and which doors to knock on first.

Strategy 1: Start with Micro-Purchases (The $10,000 Gateway)

Here's a fact that changes everything: 70% of all federal procurement transactions are micro-purchases—small buys under $10,000 processed on government purchase cards. These purchases:

• Require no competitive bidding
• Have no past performance requirements
• Are processed quickly, often within days
• Are made by individual contracting officers with purchasing authority

The Tampa Bay SBDC puts it plainly: "Winning a micro-purchase provides a small business with government past performance that can be put on their Capability Statement." One $5,000 sale to a federal agency creates a data point you can reference in future proposals.

Action step: Search SAM.gov for agencies in your industry, then call their small business liaison officers to introduce yourself. Ask specifically about upcoming micro-purchase needs. Government employees have authority to make these small buys and often prefer working with certified diverse suppliers.

Strategy 2: Subcontracting—The Backdoor to Prime Contracts

Subcontracting is the most proven path to federal past performance, and here's why: Large businesses are legally required to subcontract to small businesses.

Federal contracts awarded to large ("Other Than Small Business") companies above certain thresholds must include a small business subcontracting plan under FAR 52.219-9. These prime contractors set specific goals for subcontracting to:

• Small businesses (overall)
• Small disadvantaged businesses (SDB)
• Women-owned small businesses (WOSB)
• HUBZone small businesses
• Service-disabled veteran-owned small businesses (SDVOSB)
• Veteran-owned small businesses (VOSB)

• Search the SBA's SubNet database for posted subcontracting opportunities
• Use GSA eLibrary to identify prime contractors in your industry
• Attend industry days and procurement conferences to meet primes
• Research which companies hold major contracts with your target agencies
• Reach out to prime contractors' supplier diversity offices directly
• Register in prime contractors' diverse supplier portals

The math is compelling: A prime contractor with a $50 million federal contract might need to subcontract 20-30% to small businesses. That's $10-15 million in subcontracting opportunities—and they're actively looking for qualified diverse suppliers to meet their plan goals.

Pro tip: Don't just wait for SubNet postings. Proactively identify prime contractors holding contracts in your field, then reach out to their small business liaison or supplier diversity manager. Many subcontracting relationships form through direct outreach, not formal solicitations.

Strategy 3: The Mentor-Protégé Program (Borrow Experience, Build Your Own)

The SBA Mentor-Protégé Program is specifically designed to solve the past performance problem. Here's how it works:

A mentor (experienced contractor) partners with a protégé (your small business) to form a joint venture. Under SBA regulations, when this joint venture bids on contracts:

"A procuring activity must consider work done and qualifications held individually by each partner to the joint venture as well as any work done by the joint venture itself previously. A procuring activity may not require the protégé firm to individually meet the same evaluation or responsibility criteria as that required of other offerors generally."

Translation: The joint venture gets credit for your mentor's past performance. You can bid on contracts you'd never qualify for alone.

Even more powerful: Recent regulatory clarifications allow agencies to require protégés to demonstrate some past performance, but at reduced thresholds. For example, if a solicitation normally requires five contracts at $20 million each, the protégé might only need to show one or two contracts at $8-10 million. This creates a realistic on-ramp while you build experience.

Strategy 4: State and Local Contracts—Your Training Ground

Federal contracting gets all the attention, but state, local, and education (SLED) contracting represents a trillion-dollar market with significant advantages for new businesses:

• Faster awards and simpler procurement processes
• Fewer barriers to entry than federal contracts
• Less competition from national firms
• Many states prioritize small, minority, and women-owned businesses through set-asides

Municipal contracts, in particular, offer an easier entry point with fewer regulatory hurdles. Cities and counties need the same services federal agencies need: IT support, construction, professional services, supplies. But their procurement processes are often more straightforward.

Winning a $50,000 city contract creates legitimate past performance you can cite on federal proposals. Agencies understand that relevant experience is relevant—whether it came from federal, state, local, or even commercial work.

• Register with your state's small business certification program
• Sign up for bid notifications on your state's procurement portal
• Attend local procurement fairs and matchmaking events
• Connect with your city and county purchasing departments
• Target school districts, transit authorities, and special districts

Strategy 5: Leverage Commercial Experience Strategically

Don't have government experience? Your commercial work still counts—if you position it correctly.

The FAR explicitly allows new businesses to "use their relevant commercial or prior work experience in their proposal." The key word is relevant. Your commercial experience must be:

• Similar in scope to the contract you're bidding
• Similar in complexity and dollar value
• Documented with verifiable references

When writing proposals, translate your commercial experience into government language. Use the terminology from the solicitation. Map your project outcomes to the evaluation criteria. Be specific about results: cost savings percentages, efficiency improvements, project completion metrics.

Strategy 6: APEX Accelerators—Free Expert Help (Formerly PTACs)

APEX Accelerators (formerly Procurement Technical Assistance Centers) are perhaps the most underutilized resource for new government contractors. Funded by the Department of Defense, these centers provide free, one-on-one counseling from experienced procurement professionals.

With over 300 local offices nationwide, APEX Accelerators offer:

• Registration assistance (SAM.gov, certifications)
• Bid matching services tailored to your capabilities
• Proposal review and preparation help
• Marketing strategies for government agencies
• Quality assurance plan development

Many successful government contractors credit their APEX advisor with helping them win their first contract. These advisors understand your local contracting landscape and can connect you with opportunities that match your experience level.

Find your local APEX Accelerator: Visit aptac-us.org or contact the SBA.

The Corporate Alternative: $1 Billion+ in Diverse Supplier Spend

While you're building federal past performance, don't overlook the corporate market. Fortune 500 supplier diversity programs represent massive opportunity:

• 85% of Fortune 500 companies have supplier diversity programs
• Billion Dollar Roundtable members (Walmart, IBM, Verizon, CBRE, and 27+ others) each spend at least $1 billion annually with diverse suppliers
• Walmart alone spent over $13 billion with diverse suppliers in 2023

Corporate contracts build your capacity, revenue, and—yes—past performance that federal agencies recognize. Many diverse suppliers use corporate work as their runway to federal contracting.

The Numbers Don't Lie: It's Worth the Effort

Consider the 8(a) Business Development Program statistics:

• The federal government's goal is to award 5% of all prime and subcontracting dollars to small disadvantaged businesses
• During one administration, SBA supported over $132.61 billion in federal contracting dollars to small disadvantaged businesses—a 36.6% increase from the prior administration
• Program improvements increased annual certifications from about 500-600 to over 900 approved firms

These aren't abstract numbers. They represent real contracts going to businesses that learned to navigate the system strategically.

Your 90-Day Action Plan

Here's a realistic roadmap to your first government past performance:

• Week 1-2: Verify SAM.gov registration is complete and accurate
• Week 1-2: Schedule a meeting with your local APEX Accelerator
• Week 3-4: Identify 10 prime contractors in your industry and reach out to their small business offices
• Week 3-4: Register for SubNet and set up bid match alerts
• Week 5-6: Research state and local procurement portals for your area
• Week 5-6: Attend at least one industry day or procurement event
• Week 7-8: Submit your first micro-purchase pitch to at least 3 agencies
• Week 9-12: Apply to 2-3 mentor-protégé programs if eligible

The catch-22 feels insurmountable until you understand that thousands of businesses break through it every year. They don't have a secret—they have a strategy. Now you do too.

How long does it take to build enough past performance to win larger contracts?

There's no fixed timeline, but most contractors need 2-3 years of progressively larger contracts to compete for substantial prime opportunities. However, through mentor-protégé joint ventures, you can access larger contracts much sooner while building your own track record. The key is starting somewhere—even a $5,000 micro-purchase counts.

Can I use past performance from a different industry?

Generally, past performance should be "relevant"—similar in scope, complexity, and dollar value. However, transferable skills matter. If you're an IT company bidding on a healthcare IT contract, your general IT experience is relevant even if it wasn't in healthcare. The key is framing your experience to address the specific requirements in the solicitation.

What if my company is brand new with zero clients?

Start with micro-purchases and subcontracting. Consider whether key personnel (including yourself) have relevant experience from previous employment that can be cited. Some agencies also accept experience from predecessor companies or affiliates under common ownership. Your APEX Accelerator can help you identify the best strategy for your specific situation.

Does commercial past performance carry the same weight as government past performance?

Government past performance is generally preferred because it demonstrates familiarity with federal requirements, but commercial experience absolutely counts—especially for new contractors. The FAR explicitly allows citing commercial experience. Focus on making your commercial experience clearly relevant to the contract requirements.