How to Start a Construction Business in Government Contracting

Federal construction is a massive market — but it has unique requirements that stop most contractors before they start. Bonding, certifications, and compliance are the barriers to entry. This video shows you how to clear them.

From the Army Corps of Engineers to GSA, federal agencies spend billions on construction. Learn how to position your business to capture this work.

What You Will Learn

• Construction Market Overview — Size and opportunity in federal construction
• Bonding Requirements — Bid bonds, performance bonds, and payment bonds
• Getting Bonded — How to qualify for surety bonds
• Required Certifications — Licenses, safety, and compliance requirements
• Bidding Strategies — How construction bids differ from services
• Key Agencies — Where to find construction opportunities

The Bonding Requirement

Federal construction contracts over $150,000 require bonds under the Miller Act:

• Bid Bond — Guarantees you'll honor your bid if selected (typically 20% of bid)
• Performance Bond — Guarantees you'll complete the work (100% of contract value)
• Payment Bond — Guarantees you'll pay subcontractors and suppliers (100% of contract value)

Without bonding capacity, you cannot bid most federal construction work — it's the single biggest barrier to entry.

How to Get Bonded

Surety companies evaluate contractors based on:

1. Character — Your reputation, references, and industry experience
2. Capacity — Can you actually perform the work? Equipment, personnel, expertise
3. Capital — Financial strength, typically 10:1 bonding capacity to working capital

Start with the SBA Surety Bond Guarantee Program — they guarantee bonds up to $10 million, making it easier for small contractors to get bonded.

Construction-Specific Certifications

• State contractor licenses — Required in the states where you'll work
• OSHA certifications — Safety training requirements vary by contract
• Davis-Bacon compliance — Prevailing wage requirements on federal projects
• 8(a) certification — Significant advantage for construction set-asides
• HUBZone — Many federal construction projects in HUBZones

Key Agencies for Construction

Army Corps of Engineers (USACE)

Largest federal construction buyer. Infrastructure, dams, flood control, military construction. Very competitive but massive volume.

General Services Administration (GSA)

Federal buildings, courthouses, land ports of entry. Construction services schedule available.

Department of Veterans Affairs

Hospital construction and renovation. SDVOSB set-asides are common.

Navy Facilities Engineering Command (NAVFAC)

Naval base construction and maintenance. Multiple award construction contracts (MACC).

Construction Bidding Differences

• Sealed bidding is common — lowest price technically acceptable wins
• Site visits are often mandatory before bidding
• Detailed cost breakdowns required (not just total price)
• Schedule of values drives progress payments
• Subcontracting plans required for larger contracts

Getting Started

1. Get licensed in your target states
2. Build relationship with a surety company
3. Start with small contracts (under $150K doesn't require bonds)
4. Use SBA Surety Bond Guarantee Program for first bonded contracts
5. Consider subcontracting to build federal past performance