You’ve won a federal contract—congrats! You’ve officially joined the world of government contracting, also known as “GovCon,” where opportunity is endless, paperwork is plenty, and compliance is king.
But here’s the catch: winning a contract is just the beginning. Keeping it—and thriving—requires understanding a whole universe of rules, regulations, and standards. And while the basics like SAM registration and invoicing are important, what trips up most GovCon businesses are the less obvious compliance pitfalls hiding in the shadows.
In this guide, we’ll cover the top 10 compliance mistakes that can derail your business faster than you can say “FAR clause 52.212-4.” All served up with real talk, some useful procurement news insights, and just enough humor to make the topic slightly less painful.
1. Ignoring the FAR (Because It’s Boring)
Let’s start with the big one: the Federal Acquisition Regulation, or FAR. It’s the massive rulebook that governs all federal contracts. Think of it like the Constitution of government procurement—except longer and with more subsections.
Too many new contractors skim over FAR clauses like they’re the terms and conditions of a phone update. But here’s the truth: noncompliance with FAR requirements can lead to contract termination, financial penalties, and even suspension from future bidding.
Procurement News Insight:
Recent procurement news highlights have shown an uptick in FAR-related audits, especially around labor compliance and subcontractor oversight. Staying up to date is no longer optional—it’s survival.
2. Cybersecurity? What Cybersecurity?
If you think cybersecurity is just for tech firms, think again. Even if you’re a janitorial service or a food supplier, if you handle government data—even indirectly—you have to follow CMMC (Cybersecurity Maturity Model Certification) requirements.
The government isn’t messing around. CMMC compliance is now a must for many contracts, and being unprepared can disqualify your business before you even submit a bid.
Pitfall:
Many small businesses delay cybersecurity upgrades because they assume it’s too expensive or “not urgent.” But nothing kills your contracting dreams faster than a failed security review.
Procurement News Insight:
The DoD’s CMMC 2.0 rollout has been dominating procurement news circles, especially since they’re starting to actively enforce it. Translation: get your cyber ducks in a row yesterday.
3. Timesheets: More Than Just Clocking In and Out
Government contracts often require precise time tracking, especially for cost-reimbursable or time-and-materials contracts. But let’s be honest: timesheets are nobody’s favorite task.
Still, if your team fudges hours or forgets to record tasks properly, it can trigger audits, payment delays, or worse—contractor fraud allegations.
Quick Fix:
Use DCAA-compliant time-tracking software and train your team like their jobs depend on it—because they kind of do.
Procurement News Insight:
The Defense Contract Audit Agency (DCAA) has ramped up audit frequency, especially for new contractors. This has been trending in recent procurement news because noncompliance costs the government big money, and they’re watching closely.
4. Subcontractor Chaos
Working with subcontractors is common, but many prime contractors get lazy with oversight. Spoiler alert: You’re responsible for your subcontractors’ compliance, too.
If they miss deadlines, violate labor laws, or mishandle data, it’s on your head.
Real Talk:
You might think, “Well, that’s their problem.” Nope. To the government, it’s your circus, your monkeys.
Procurement News Insight:
Several recent procurement news articles report prime contractors losing awards due to subcontractor mismanagement. Vet your partners like you’re hiring your future in-laws.
5. Misunderstanding Allowable Costs
In federal contracting, not every business expense is reimbursable. That $200 steak dinner for the team? Yeah, not an allowable cost.
Contracts, especially cost-type ones, only reimburse allowable, allocable, and reasonable expenses as defined by FAR Part 31. Misclassifying costs can lead to audit findings, repayment demands, or even false claims violations.
Business Tip:
When in doubt, ask a government contract accountant. Or at least consult the procurement news section on the SBA site—they publish updates and common violations regularly.
6. Proposal “Copy-Paste” Syndrome
We’ve all been there: rushing to meet a deadline, so we reuse a proposal from a past bid. But reusing outdated language, pricing, or compliance terms can be a disaster.
Each solicitation has unique requirements. Missing a small clause—or including the wrong one—can get your bid tossed before it’s even read.
Solution:
Create a proposal library, sure—but customize every single time.
Procurement News Insight:
Agencies are now using AI-assisted tools to scan for compliance in proposals. This is one of the hottest procurement news trends, and it means lazy proposals will get flagged fast.
7. Overpromising and Underperforming
The government remembers. If you say your software will process data 10x faster, or your team can deploy in 24 hours, you better deliver. Overpromising in your proposal is not just bad form—it’s a breach of contract.
Pitfall:
One failed performance can blacklist you across multiple agencies.
Procurement News Insight:
Multiple small GovCon businesses have been flagged recently in procurement news reports for inflating capabilities and then being unable to fulfill them. The lesson? Be ambitious, but honest.
8. Sloppy Invoicing
Incorrect, late, or vague invoices are a common (and costly) mistake. Government payment systems like Wide Area Workflow (WAWF) and IPPS-A require precision.
One wrong CLIN number or a missing performance period, and your payment could be delayed for weeks—or returned entirely.
Procurement News Insight:
Late payments caused by invoicing errors have become such a problem that some agencies are piloting automation systems. Keep an eye on procurement news updates to see if you can benefit from faster pay.
9. Ethics Violations (Even Unintentional Ones)
Bribery, conflicts of interest, gifts over $25—yes, even sending someone a Starbucks card—can be considered ethics violations in federal contracting.
Even more subtle mistakes, like hiring a former government official without a cooling-off period, can be flagged.
Pro Tip:
Train your team on federal ethics rules. And for goodness’ sake, no “fishing trips” to win business.
Procurement News Insight:
Government watchdogs have increased scrutiny on small GovCon firms, especially those new to federal contracts. Don’t let a well-meaning gesture make the procurement news for all the wrong reasons.
10. Failing to Keep Up with the Rules
Federal procurement rules change constantly. What was acceptable last year might not fly today. Think of it as software—except instead of updates every 6 months, it’s more like every 6 minutes.
Stay current with:
- Agency newsletters
- Procurement news blogs and alerts
- SBA and GSA updates
- Your local PTAC office (they’re gold)
Business insight: Compliance is not a one-time checklist. It’s an ongoing relationship with federal rules, and like any relationship, it needs attention.
Final Thoughts: Compliance Is Your Competitive Edge
You might think compliance is all about “not getting in trouble,” but it’s your biggest advantage.
Agencies want to work with businesses that are low-risk, well-prepared, and trustworthy. When you demonstrate deep compliance knowledge, you send a message:
“We’ve got this handled. You can count on us.”
So instead of treating compliance like an annoying chore, start viewing it as part of your value proposition. Because here’s the deal:
- Contracts come and go.
- Tech evolves.
- Prices fluctuate.
- But compliance is forever.
Keep an eye on the procurement news, stay ahead of changes, and use this knowledge to sharpen your edge.
