Federal/State Contracts refer to legally binding agreements between government entities—either at the federal or state level—and private sector contractors for the procurement of goods, services, or construction. While both types of contracts serve public-sector missions, they operate under distinct sets of rules, regulations, and authorities. Contractors interested in doing business with the government must understand the differences in structure, compliance requirements, and procurement strategies used at each level.
In the context of GSA and the broader U.S. procurement landscape, federal contracts are governed by uniform national standards, whereas state contracts vary across jurisdictions. Vendors may pursue one or both pathways depending on their market strategy and capabilities.
Federal Contracts Overview
Federal contracts are governed by the Federal Acquisition Regulation (FAR) and issued by executive agencies such as the Department of Defense (DoD), Department of Homeland Security (DHS), General Services Administration (GSA), and many others. These contracts are used to fulfill agency missions and are subject to national policies on competition, small business participation, cybersecurity, sustainability, and more.
Key characteristics of federal contracts include:
- Standardized regulations under the FAR and agency-specific supplements (e.g., DFARS, GSAM)
- Governmentwide contract vehicles such as GSA MAS, GWACs, BPAs, and IDIQs
- Robust compliance requirements including security standards, labor laws, and reporting obligations
- Use of SAM.gov as the central portal for contract opportunities and contractor registration
- Eligibility for small business set-asides and socio-economic contracting programs
Contractors must register in SAM.gov, obtain a UEI and CAGE Code, and may need certifications or clearances depending on the contract scope.
State Contracts Overview
State contracts are governed by the individual laws and procurement regulations of each U.S. state. While states share some procurement practices with the federal government, their systems tend to be more decentralized and may involve various departments, agencies, and public institutions, including local governments and school districts.
State contracts typically involve:
- State-specific procurement portals for bids and registration (e.g., Cal eProcure in California, Texas SmartBuy)
- Less uniform regulatory frameworks, with rules varying widely by jurisdiction
- More localized opportunities tied to regional infrastructure, education, healthcare, and public services
- Participation in cooperative purchasing programs, such as NASPO ValuePoint or GSA’s Cooperative Purchasing Program
- Fewer centralized contract vehicles, although some states maintain master contracts or preferred vendor lists
Vendors often need to register as approved suppliers in each target state, and may have to meet additional requirements such as state tax registration, in-state presence, or local business certification.
Federal vs. State Contracting: Key Differences
While both federal and state contracts serve public needs, there are several important differences:
- Regulatory authority: Federal contracts follow national regulations (FAR), while state contracts are based on individual state procurement codes.
- Scale and scope: Federal contracts tend to be larger in value and broader in geographic scope, whereas state contracts are often more localized and narrowly focused.
- Registration processes: Federal vendors must register in SAM.gov, while state vendors register through state-specific systems.
- Oversight and enforcement: Federal contracts involve oversight by agencies like the GAO or IG offices, while state contracts are subject to local procurement boards or auditing bodies.
- Market approach: Successful vendors often tailor their offerings, certifications, and pricing strategies separately for federal and state markets.
Conclusion
Federal/State Contracts represent two parallel but distinct government procurement systems. Understanding their differences is essential for contractors looking to expand their government business footprint. Federal contracts are governed by national acquisition standards and offer centralized access through platforms like SAM.gov and GSA Schedules. State contracts, while more varied, present abundant opportunities for regional engagement and localized services. Vendors that navigate both systems effectively can diversify revenue streams and strengthen their positioning in the public sector marketplace.
