Veteran Business Contracts: 2026 Challenges

Michael “Mac” McMillan, a former Marine Corps logistics officer, stared at the rejection letter from the Department of Defense. His small, veteran-owned cybersecurity firm, CyberGuard Solutions, had just lost out on a critical contract with the Marine Corps Systems Command, a contract he felt they were perfectly qualified for. “Another one slips away,” he muttered, tossing the letter onto his cluttered desk in his Raleigh, North Carolina office. Mac knew his veteran business had the talent, the dedication, and the unique understanding of military needs, but cracking the code of federal government contracts felt like an uphill battle. How could a small enterprise, even one led by an experienced veteran, effectively compete for lucrative federal procurement opportunities?

I’ve seen Mac’s frustration many times. As a consultant specializing in helping veteran-owned businesses, I often encounter this exact scenario. Veterans possess an incredible work ethic, leadership skills, and a deep sense of mission, all invaluable assets in the business world. Yet, the labyrinthine world of federal contracting can be intimidating. It’s not enough to be good at what you do; you also have to be good at navigating the system. The federal government is the largest buyer of goods and services in the world, spending hundreds of billions annually. A significant portion of this is earmarked for small businesses, and specifically for veteran-owned firms. The question isn’t if the opportunities exist, but how to seize them.

Mac’s initial mistake, and a common one, was diving straight into bidding without fully understanding the landscape. He had registered with the System for Award Management (SAM), which is non-negotiable for any entity wanting to do business with the federal government, but he hadn’t fully leveraged his veteran status. “I figured my service spoke for itself,” he told me during our first consultation at a coffee shop near the North Carolina State University campus. That’s a noble thought, but the federal procurement system is built on specific designations and certifications.

The first, and arguably most critical, step for any veteran entrepreneur eyeing federal contracts is obtaining the correct certification. There are two primary certifications for veteran-owned businesses: Veteran-Owned Small Business (VOSB) and Service-Disabled Veteran-Owned Small Business (SDVOSB). While both offer advantages, the SDVOSB designation provides access to more set-aside contracts, meaning contracts specifically reserved for businesses with that status. For example, the Department of Veterans Affairs (VA) operates its “Vets First” program, which gives contracting preference to SDVOSBs and VOSBs. According to the VA’s Office of Small and Disadvantaged Business Utilization (OSDBU), the VA awarded over $5.4 billion in prime contracts to SDVOSBs in Fiscal Year 2023 alone. That’s a massive pie, and you need the right fork to eat from it.

I remember working with Sarah, a former Army medic who started a medical supply company in Fayetteville, NC. She had the VOSB certification but was struggling to win bids. After reviewing her case, I immediately advised her to pursue the SDVOSB certification, as she had a service-connected disability. The process, managed by the VA’s Center for Verification and Evaluation (CVE), can be rigorous, requiring extensive documentation and sometimes an on-site visit. It took Sarah almost six months to complete, but the payoff was immediate. Within a year of receiving her SDVOSB status, her company secured three direct contracts with VA hospitals in the region, totaling over $2 million. It’s an investment of time, yes, but one with a significant return.

For Mac, the path was similar. He had a service-connected disability from his time in Iraq, but he hadn’t thought to pursue the SDVOSB certification, believing it was “too much paperwork.” We immediately started the application process. While that was underway, we focused on strengthening CyberGuard Solutions’ profile. A crucial element here is the capability statement. Think of it as your business’s resume for government agencies. It needs to be concise, compelling, and clearly articulate your core competencies, past performance, differentiators, and relevant NAICS codes. Agencies are looking for specific solutions to specific problems, and your capability statement should speak directly to that.

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We also spent considerable time researching the Federal Acquisition Regulation (FAR). This isn’t light reading, but understanding the FAR is non-negotiable for successful federal contracting. It dictates everything from contract types to ethical conduct. Many small businesses, even veteran-owned ones, get tripped up by compliance issues. I always tell my clients, “The government doesn’t care if you’re a veteran if you can’t follow the rules.” The official FAR website is your bible here. It’s dense, but knowing where to find relevant sections can save you immense headaches.

Another often-overlooked resource is the Procurement Technical Assistance Center (PTAC). These centers, funded by the Department of Defense, offer free, personalized counseling and training to businesses interested in government contracting. They can help with everything from SAM registration and certification applications to bid preparation and understanding solicitations. In North Carolina, Mac connected with the North Carolina PTAC office in Raleigh. Their advisors were instrumental in helping him refine his capability statement and navigate the nuances of specific solicitations. They are an invaluable asset, and frankly, it’s foolish not to use them.

Beyond direct prime contracts, subcontracting offers a significant entry point for veteran businesses. Large prime contractors often have small business subcontracting goals, and they actively seek out certified VOSBs and SDVOSBs. This is where networking becomes paramount. Attending industry days, matchmaking events, and conferences where prime contractors are present can open doors. For instance, the annual SBA National Small Business Week events often feature panels and opportunities to connect with larger firms and government buyers. Building relationships with small business liaison officers (SBLOs) at prime contractors is also a smart strategy.

Mac initially resisted networking. “I’m a tech guy, not a schmoozer,” he’d say. But I explained that it wasn’t about schmoozing; it was about building trust and demonstrating capability. He started attending virtual industry days hosted by major defense contractors like Lockheed Martin and Northrop Grumman. He focused on understanding their needs and how CyberGuard Solutions could fill specific gaps. He even secured a few informational interviews with SBLOs. This proactive approach eventually led to a breakthrough.

Six months after our initial meeting, Mac’s SDVOSB certification came through. Armed with a polished capability statement, a deeper understanding of the FAR, and newfound connections, CyberGuard Solutions was ready to re-engage. I advised him to focus on smaller, less competitive contracts initially, to build up a strong past performance record. This is a critical piece of advice: don’t chase the biggest contracts right out of the gate. Start with smaller wins to demonstrate your reliability and expertise. Government agencies, like any client, prefer to work with businesses that have a proven track record.

The turning point for CyberGuard Solutions came when a prime contractor, Tech Solutions Inc., won a large cybersecurity contract with the Department of Homeland Security. Tech Solutions Inc. had a mandate to subcontract a certain percentage to SDVOSBs. Mac, through his earlier networking efforts, had already established a rapport with their SBLO. He presented a compelling case for CyberGuard Solutions to handle a specific component of the project: securing network endpoints. His military background, particularly his experience with secure communications in hostile environments, resonated strongly. The contract was for a modest $300,000, but it was CyberGuard Solutions’ first significant federal subcontract.

This initial subcontract was a game-changer. It provided valuable past performance data, which is gold in federal contracting. It also gave Mac and his team direct experience working within the government’s stringent security and reporting protocols. They delivered exceptional results, on time and within budget. This success story became a powerful testimonial for future bids. I cannot overstate the importance of delivering flawlessly on your first few contracts. Your reputation is everything in this ecosystem.

Within another year, CyberGuard Solutions, now a seasoned SDVOSB, successfully bid on and won a prime contract directly with the Marine Corps Systems Command, ironically, for a project similar to the one they had initially been rejected for. This time, their proposal was meticulously crafted, their SDVOSB status was clearly highlighted, and their past performance, including the DHS subcontract, spoke volumes. The contract was for $1.2 million over two years, a significant leap for the company. Mac’s journey underscores a fundamental truth: persistence, strategic planning, and leveraging available resources are far more effective than simply hoping your service record will open doors.

For any veteran thinking about entering the federal contracting arena, my advice is clear: get certified, educate yourself, and network relentlessly. The opportunities are there, but they require a proactive and informed approach. Don’t let the complexity deter you. Break it down into manageable steps, seek expert guidance, and build your business one successful contract at a time. The federal government wants to do business with you, but you have to show them you’re ready.