Complying with Ethics and Rules: 5 Government Contractor Dos and Don’ts


It can be a game-changer for your business when you’re awarded a government contract. But like anything when dealing with government agencies, there may be some red tape to work around.

As a government contractor, ethics and rules are essential. You don’t want to find yourself in violation of something simply because you didn’t know about it.

To stay within the framework of requirements when working with the government, make sure you know these dos and don’ts. As long as you’re in compliance and meet deadlines with a quality product, you could have an “in” with that agency — which might mean a lot more work in the future.

1. Do Understand the Contract Before You Agree

Working with the government has a lot of similarities to a commercial job. The authorized agent you work with is looking to hire quality suppliers for the best price.

As a small or medium enterprise, you’ve been certified to become one of these suppliers. But the legalese in the contract isn’t always the easiest to understand.

Who You’ll Be Working With

Unlike working with a commercial or private business, you can’t call the federal government and talk to just anyone about your contract. You’ll be dealing with authorized agents as the only individuals who have the authority to approve and make changes to the job.

Within federal contracting, there are three parts: procurement, administration, and termination.

Although the same person can do all three jobs, an official government officer handles each piece.

Procurement Officers

The role of a procurement officer is to ensure the following of all rules, regulations, and procedures. This person is who you’ll talk to throughout the procurement process, such as when you are negotiating the contract terms. They’ll make sure you’ve gotten clearance and approval for the job.

The procurement officer also verifies that funds are available to pay you and that you’re treated fairly and equitably as a contractor. Any time contract changes occur, the procurement officer will contact you about them.

Administrative Officers

The administrative role involves documentation about your contract, performance, and compliance, which the administrative officer handles.

When information is involved, this person is responsible for documenting it. They’ll specifically watch to see how you include other minority-owned and disadvantaged enterprises as your subcontractors.

In addition, they’ll record your current and past performance for future government officials to read.

Should you at any time slack on your commitments, the administrative officer’s role is to notify you immediately. And if the goals aren’t met when the contract is complete, this person is who you’ll talk to about the end results.

This might sound a little intimidating, and yes, they’re your “red tape” contract administration person. But if you have a mutually respectful relationship, they’re a good person to keep in contact with.

If you get off track on your deadlines, they’ll let you know quickly instead of waiting until it’s too late and you’ve “failed to comply.”

Termination Officers

If, for any reason, your contract ends in default or settlement, you’ll work with the terminating officer. This person has the right to terminate an agreement for “default or convenience” if it’s in the government’s interest.

This might happen if a conflict of interest appears or one of the federal agencies decides the service isn’t necessary any longer.

A notice of termination means that you’ll have to work with this officer to negotiate a settlement. You might receive partial payment after an audit and analysis of the contract terms.

Keep in mind that this termination clause doesn’t happen often. Preference goes to the small businesses in the contracting process. If the contract amount is under $5,000, they’ll usually let it run to completion, even if they don’t need the service. It’s more cost-effective that way.

Is Working With the Government Worth the Stress?

There are a lot of rumors about the hassle of working with the government. It’s true that it’s a separate ruling power and has rights that other businesses wouldn’t typically have.

You need to understand that the government can change the contract at any time, as long as the change is equitable to you as the supplier. You have to follow the changes, or the government can cancel the contract.

Also, the government can cancel an agreed-upon contract if the services or product are no longer needed. You’ll receive some reimbursement for costs you’ve already incurred, but you have no recourse for arguing for more.

But although these stipulations are essential to protect the government’s interests, remember that, as a small business, they want you to succeed. If it’s possible to let your contract run through completion, that’s what will happen.

There are thousands of businesses that contract with the government regularly. Occasionally, there’s a hiccup in their working relationship, but for the most part, it’s in everyone’s best interests for things to run smoothly.

You may also like: 5+ Federal Grants for Women Business Owners

2. Don’t Rely on Your “Normal” Procedures

Woman wearing hard hat and holding clipboard in a lumber warehouse

When it comes to working with the government, expect the unexpected.

Your standard policies and procedures work well with commercial enterprises, but you have to follow the government’s guidelines when doing business with them.

A Few Tips When Working with the Government

You could be audited at any time, although this is rare with small businesses. Like a Boy or Girl Scout, you should always be prepared before you enter negotiations and while you’re working on the contract.

Government procurement contracts start with a period of negotiations. But since the government employees you’ll be dealing with assume you’ve read every word of their proposal, it’s up to you to be ready.

Keep Detailed Records

Create a standard negotiation contract template that you’ll use when working with government entities. Include every decision made in the meeting in real-time.

Keep the records easily accessible, even if the other party doesn’t sign them. At least you’ll know what happened, and the documentation may help if there’s a dispute later.

Any time there’s a deviation from the contract, no matter how minor, send documentation to the contracting officer. Save all the records until you’ve been paid on the contract. Even then, think of your government documents like your tax returns, and hold onto them for a few years.

Bid Higher Than You’ll Accept

Here’s the Catch-22 of bidding for a government job. Yes, they’ll want to take the lower bids, but in the negotiation process, they’ll expect you to accept a lesser amount.

As a general rule, don’t enter with a bid that is already putting you on thin ice with making a profit. If you’re a prime contractor with the right certifications, you’ll have another chance to put in a more lucrative offer later.

3. Do Get to Know the FASA and FARA

The United States government is full of laws that affect how businesses run. The U.S. General Services Administration (GSA) and the Small Business Administration oversee these laws.

A few of them pertain directly to you as a small business owner working with the government.

In particular, you should know about the Federal Acquisition Streamlining Act of 1994 (FASA) and the Federal Acquisition Ruling Act (FARA).

How the FASA Affects You

As a contractor, the FASA has a massive impact on your small business interests in relation to working with the government.

Initially, the FASA repealed and modified over 225 statutes, making the federal procurement process easier. At its inception, everything had to be done by hand.

The shift in technology meant a major overhaul was necessary. Thus, the 1994 FASA was born, followed by its 1996 counterpart, to tweak a few things.

Bringing the government contracting work into the 21st century also meant reevaluating how minorities were viewed. For your small business opportunities to contract with the government, this new law was crucial.

A few of the distinctive new additions you get to enjoy because of the FASA include:

  • Simplified acquisition procedures for “small purchases” between $3,000 and $100,000, improving contract opportunities for small and minority-owned businesses
  • The use of credit cards for all purchases under $3,000, saving paperwork and reducing the time spent waiting on approval to buy from small, local businesses
  • An established list of preferred brands and sellers as part of federal acquisition regulation, streamlining sales with already-established businesses to buy a commercial item rather than having anything specially made

All of these seemingly minor changes were advantageous to small business contractors. Instead of the procurement process being full of annoying hoops for contractor employees to jump through, now, anything under $100,000 falls into this law.

The FARA Affects You, Too

Another law that impacts you as a small business owner is the FARA, nicknamed “the Bible” of federal government contracting. This 53-part document houses all the rules that govern contracting and the necessary forms and clauses.

To work with the government, you’ll need to have a rudimentary knowledge as to what is in the FAR. It’s a guide that shows you what is expected of good business practices for the officer and the contractor.

When you hear the phrase “abide by the book” in government contracting, it’s more than a figure of speech. Your contractors will be referring to this guide for every step they take.

The more you understand the document, the better prepared you’ll be when you enter into negotiations.

See also: 11+ Small Business Grants for Minorities

4. Don’t Forget to Read the Code of Conduct

As you work with the government, your best friend will be the Contractor Code of Business Ethics and Conduct.

Since it’s not the most reader-friendly document out there, we’ll break it down for you here.

Definition of Terms Used

You’ll see a few terms in the Code of Conduct that have definitions specific to working with the government.

Here are the essential words and terms you should know:

  • Agent is anyone who has the authority to act on behalf of the government.
  • Full cooperation means that you must disclose to the government any information they ask for if it pertains to law enforcement, auditing, or investigating.
  • Principal is the person with the primary management or supervisory role within a business entity.
  • Subcontract is the contract you enter into as a subcontractor with a promise to give supplies or services.
  • Subcontractor refers to the entity that is furnishing the supplies or services.
  • United States can refer to any of the 50 states, the District of Columbia, or any of the outlying areas owned by the U.S.

With those terms in mind, it’s time to break down the expected ethics and violations.

Ethics and Violations

When you’re approved to work with the government, your officer must provide you with a written copy of the Code of Business Ethics and Conduct. Every employee or subcontractor you work with has to have a copy as well.

In summary, this document states that it’s up to the contractor to watch for and report criminal conduct. As well as promote a culture that encourages ethical behavior and legal compliance.

You must report any violations. However, as part of the compliance program, reasonable steps should happen to ensure everyone has adequate training. A timely refresher as to what the proper standards include doesn’t hurt either.

Violators will receive disciplinary action for improper conduct. It’s also a violation if you should have known the improper conduct was occurring and failed to take reasonable steps to prevent it.

The federal government frowns on fraud, bribery, gratuity violations, favoritism, and conflict of interest. Even a minor offense can be cause for contract termination. But as long as you’re documenting your procedures and remaining ethical, this part isn’t a concern for you.

5. Do Learn the Art of Communication

Woman on phone in office sitting at desk and writing on paper

Communicating with a government agent has nuances you’ll need to learn. Be very careful about what you say or write and how you say it to avoid violating any ethics.

When it comes time to talk to or meet with your officer, the more you can have in written form, the better.

Simple, But Important, Tips

You don’t need to be overly cautious. Just try always to have something to back up what you do or say, and avoid on-the-spot surprises if you can.

For instance, don’t meet with your contact until you’ve completed the work you’re about to discuss, and you have a written statement explaining the next part of the project.

Don’t offer a lunch meeting, “gifts,” or anything that could be seen as a potential bribe or solicitation for favoritism.

When communicating, always make sure to record and save the calls or emails. Since the government agent needs this as their backup as well, clarify this point at the start, so you both understand everything you say and do is a matter of record.

It’s not paranoia to want to cover your bases. It’s smart business thinking when you’re dealing with the government.

Discover: Simple Small Business Solutions You Actually Need


Landing a contract with the government can transform your business.

And once you do?

All that’s left is to make sure you’re in compliance and meet your deadlines with high-quality work. Keep this list of Dos and Don’ts handy and refer to it as needed.

However, federal employees and government personnel are only one side of the coin. The private sector is also full of other people who want to support you and see you succeed, too!

As you build your network, it’s essential to work with other small and minority-owned businesses, like Now.

Now can help you increase working capital, help with cash flow management, and even get you accelerated invoice payments.