The government spends billions of dollars each year on goods and services, and by tapping into this vast marketplace, small businesses can secure lucrative deals, gain steady income and heightened visibility. In this episode of The Agent of Wealth Podcast, host Marc Bautis and guest Richard C. Howard dive deep into the world of government contracts.
As a career military acquisitions officer, Howard oversaw $82B+ in DoD contracts, and has advised and trained over 400 companies as a consultant. He’s the CEO of DoD Contract – which guides, trains, and mentors small business owners and sales executives through the government sales process – and the host of DoD Contract Academy Podcast.
In this episode, you will learn:
- The benefits of selling to the US government as a small business.
- How small businesses can find opportunities to sell their products or services to the government.
- How small businesses can stand out in the government procurement process.
- How small businesses and startups can utilize the Small Business Innovation Research Program.
- And more!
Resources:
www.dodcontract.com | DoD Contract Academy (Podcast) | Usaspending.gov | Sam.gov | Small Business Innovative Research Program | Bautis Financial: 7 N Mountain Ave Montclair, New Jersey 07042 (862) 205-5000 | Schedule an Introductory Call

Disclosure: The transcript below has been lightly edited for clarity and content. It is not a direct transcription of the full conversation, which can be listened to above.
Welcome back to The Agent of Wealth. This is your host, Marc Bautis. I’m joined by a guest for today’s episode, Richard C. Howard. Richard is a leading authority on US federal government contracts. As a career military acquisitions officer, he oversaw $82B+ in DoD contracts, and has advised and trained over 400 companies as a consultant. Richard is the CEO of DoD Contract, which guides, trains, and mentors small business owners and sales executives through the government sales process.
Richard is the host of the DoD Contract Academy Podcast, and speaks extensively on the nuance of federal contracting strategy. Richard, welcome to the show.
Thanks for having me on, Marc.
I don’t think people even realize that government contracts are out there. Can you start off by explaining this market size, and some of the benefits of selling to the government as a small business?
The Benefits of Selling to The US Government as a Small Business
The US government is the single biggest purchaser of goods and services in the world. When people think about government spending, most immediately think of big defense contractors. But in reality, the government buys just about anything you could think of – from defense and weapon-related spending, to tai chi instruction, to commodities, to food. Think about it like this: Every military base is basically a small town, or city in some cases. All of the infrastructure that goes into that town or city is paid for by the government. And they have a mandate to buy from small businesses.
So whether you’re in – cybersecurity, accounting, legal, you’re selling food, you have a franchise, you have a training business – the government is most likely buying in your area. It is very rare that I find an area where the government isn’t spending money, so the spending is vast.
The government has to buy from small businesses, yet less than half of 1% of US small businesses are actually participating in the government contracting process, despite the high spending levels.
Alright, so there’s a lot of opportunity here. How does a small business find the contracts?
How Small Businesses Can Find Opportunities to Sell to The Government
Because we’re talking about the government, there is a lot of regulation that exists to ensure there’s fairness and that the public can see what the government’s doing. So everything the government spends money on – with the exception of a couple classified contracting avenues – is public knowledge.
So, as a small business owner, you should ask, “Does the government buy what I sell?” To find your answer, go to a website like usaspending.gov and begin searching public records to find out what the government spends on.
Whatever you sell, it probably falls under something called a North American Industry Classification Code, or NAICS code. When you go into usaspending.gov, type in what you sell under NAICS – for example, accounting. The website will suggest different codes that you would fall under. You can click on that, and sort it by small business spending.
You can quickly see how much the government spends on small business contracts in your industry and area of focus.
Are these contracts location specific? Does it help if a business is located near a military base, for example, or does it not matter?
It depends on what you’re selling. By the way, government contracts certainly extend past the Department of Defense and military bases. There’s lots of different federal agencies that spend money.
Okay so once a business owner discovers how much the government is spending in their niche, what’s the next step?
Once you know that the government buys what you sell – if it’s local, they buy it in your state, or if not, you can work anywhere – the next step is to register your company. You can do that at sam.gov. That’s where all registering and most of the solicitations take place.
So when you go to sam.gov, you’ll find instructions on the screen for registering. Of course, you need to have a legal business in the United States, and come ready to register with your EIN number.
All in all, the process takes a couple weeks sometimes, but at the end of it you’ll get what they call a CAGE code and UEI number – these are federal identification numbers for your business. Once you have those, you can start bidding on contracts.
By bidding, do you mean writing proposals?
Yes.
How Small Businesses Can Stand Out in the Government Procurement Process
What can a small business do to separate themselves from the others trying to do the same thing?
Good question. This is really where most companies fail in selling to the government…
Once your business is registered through sam.gov, you will begin to see what’s called a request for proposal, or RFP. At that point, a business can begin writing a proposal. But, the government is very regulated in how they buy products and services.
For instance, if I saw an RFP come out that the government is looking to buy a $3 million landscaping contract for base X, I can’t just pick up the phone and talk to someone to get my questions about the contract answered. Now, if it’s a big contract, the government will answer most questions publicly through sam.gov. In those cases, you might get some answers that can inform your proposal.
But otherwise, you won’t be able to set up a meeting with a government worker. You won’t be able to develop a relationship…
So, before the RFP comes out, there’s something called the market research phase. Let’s say you’re a software developer, and the government is putting a command and control platform together, and you have a great user interface for that. Well, it’s during the market research phase that you can engage with the government if you really want to have a shot at landing the contract later on. Meaning, before the RFP comes out, we want to know who is doing the purchase, and we want to know the details of the opportunity ahead of time.
If you want to differentiate yourself from the rest of the herd, you want to look for things like a request for information or sources sought. When those come out, they’re squarely in the market research phase. At that point, you can set up a meeting with the government.
I recommend small businesses to respond to requests for information. They’ll answer questions like:
- How long have you been in business?
- Do you have past performance?
- What do you think of the approach the government wants to take?
And, you’ll be able to suggest things. For instance, when you register your business, there are different certifications. Examples include:
- Small business certification
- Woman-owned small business certification
- Disabled Veteran-owned small business certification
If you happen to have one of those certifications, you do have a leg up, because the government needs to set aside a specific percentage of contracts to those certified businesses.
But, back to the market research phase, you can actually recommend that the government lists the contract for a specific certified group. So, you’re helping the government write the solicitation, and you can give yourself a leg-up if you suggest a certification you have.
Okay, so you’re trying to influence the decision a little bit. Have you ever seen a case where a small business had a product or service that the government isn’t spending on, but they propose it to them?
Yeah, there are a couple of ways to do that. I would say if you take away one tip on selling to the government, it’s to get meetings and build relationships with the people that actually buy what you sell. There’s a lot of ways to do that, but mainly through research.
If your business sells a product or service that the government is not actively looking for, but you want to sell to the government, the government needs two things: A requirement, and funding.
The Small Business Innovation Research Program
If it’s an innovative solution of some kind, for example a patent, you can go after something called the Small Business Innovative Research Program, or SBIR. Any government agency that spends a certain amount of money in research and development has got to contribute to this program. So, the SBIR program spends about $4 billion a year on innovative research and development contracts with small businesses.
This is a way to basically propose your product or service to the government, because they have funding in the SBIR program. If the review panel thinks that what you have is innovative, and that it would achieve a government need, you can win one of those contracts.
Phase one of SBIR is kind of low dollar. Let’s say, for example, you’re creating a VR training system. In that case, phase one might just be a feasibility study. You might propose that the government uses a VR or augmented reality training system to help maintain or fix aircrafts, for instance. Well, that might resonate with the board. That first phase one event is probably going to be somewhere around $100,000-$150,000, which is small for government contracts.
But, what you’re really doing is:
- You’re establishing past performance with the government, because now you have a contract.
- They’re now going to help you find people in the government that would potentially sponsor you.
Now you can’t totally rely on the government SBIR office, you also need to put yourself out there to find a sponsor. If you find somebody willing to sponsor, but they don’t necessarily have to have money, they just sign a memorandum of understanding for you to go to phase two.
Phase two is to develop a prototype, or set up a demonstration. There could be a lot of different things that you’re recommending, but that’s the phase two piece.
The Small Business Innovative Research Program is really great for getting your feet wet. Even if you have a developed product but you’re modifying it for government use, that would also qualify for the program.
Going back to finding these opportunities, my father actually had a government contract through a larger corporation. He created a pellet that went into 50 caliber ammunition. He wouldn’t get the government contract himself, but General Dynamics or Olin would go through him to create this component of their contracts with the government. Are there opportunities like that out there?
Yes. That’s a really good point. There is a variety of ways the government can buy things from a small or large business owner. For example:
- Contracts.
- Subcontracting.
- Sole source contracts.
As a business owner, you need to understand how the government is buying what you’re selling. That’s something that you can do pretty easily with the research tools the government offers.
Let’s say you own a company that is licensed to do HVAC. Over time, you’ve built a relationship with the government office that purchases contracts in construction. From that relationship, you learn that next year, Hanscom Air Force Base is going to be building an office building, and you have interest in installing the HVAC system. But, you aren’t able to take the full construction contract.
What I recommend you do is look through a website like usaspending.gov to see which construction companies have done that type of work with the government – illustrating past performance – and reach out to them about this upcoming opportunity. The fact that you’re bringing them this opportunity sweetened the pot for them to work with you, involving you in the project.
If you reach out to three companies like that, you’ll get at least one or two bites to form an agreement and go after a large contract together. That’s very helpful for a small business, because the big company can handle the proposal writing, and so on.
Artificial intelligence is all the rage right now. Do you see AI being used to uncover some of these opportunities, or to help small businesses in this process?
It’s interesting that you bring that up. Two of my recent episodes on the DoD Contract Academy Podcast were about AI in the government space.
One of them is called Govly, which uses artificial intelligence and machine learning to enable government contractors, OEMs, and distributors to accurately plan for government purchases years in advance
The other is called Rogue, which is an AI tool specifically designed to help businesses write proposals for government contracts. It kind of works like ChatGPT.
Business Financing and Government Contracts
What happens if a business needs financing to fulfill an order from the government?
First, it depends on the contract. If it’s a SBIR contract, where the business is developing something for the first time, then you can win the contract before you have to start development. But those are research and development contracts.
So let’s say you win a small services contract that involves employing 20 people. The small business will have to pay those individual employees before the government pays the small business. That’s because there’s about a 90 day turnaround time on invoicing to the government.
Now, there are certain financing houses set up specifically for government contractors. One thing to know is once you win that government contract, it’s one of the most secure contracts you’re going to have. So a lot of banks know they can count on the government paying the business.
That’s also one of the reasons companies go after government contracts – because it increases the value of your company.
Are Government Contracts Recession-Proof?
In addition to AI, the other thing that we’re constantly hearing about is this looming recession. At a high level, how is government spending compared to other industries?
Government spending is more stable. I always recommend that business owners – small or large – have one stream of income from commercial sales and another stream of income from government sector sales. The government is spending year over year, whether there’s a recession or not.
But I would say that the government experiences difficulties in different ways, and typically at different times.
Usually, if you have a three-year government contract, for example, you’ll receive that funding month over month. Now, there are times when the government shuts down, or when there is sequestration. The government can terminate a contract for convenience. But if they do, there are regulations to protect the companies that held the government contract.
That’s good. Well, we’re just about out of time. Richard, thank you for joining me today. You did a great job explaining how businesses can leverage government contracts as well as how to navigate the government procurement process. What’s the best way for our listeners to contact you or learn more about your advisory coaching services?
Your listeners can go to dodcontract.com to schedule a consultation. On the website, we also have courses available. And of course your listeners can check out my podcast, DoD Contract Academy, on whatever platform they like to listen on.
Great, we’ll link to those resources in the show notes. Thanks again, Richard. And thank you to everyone who tuned into today’s episode. Don’t forget to follow The Agent of Wealth on the platform you listen from and leave us a review on the show.
When Congress passed the SECURE Act in late December — during the busiest time of year for most people — they gave Americans only two weeks to wrap their heads around the upcoming changes.
Catch up on the act’s biggest changes in this episode with Marc Bautis. Today, he discusses the SECURE Act’s most important features to uncover the possible impacts on your financial plan. Marc also shares new planning opportunities that have arisen from this act.
In this episode, you will learn:
- How the age limit has changed for contributions to retirement accounts
- Guidelines for withdrawing money from your IRA without being penalized
- Whether you can only use 529 plan money for post-secondary education
- How to inherit an IRA without tax consequences
- And more!
Tune in now to learn about the SECURE Act’s biggest changes and what they might mean for you.
Resources:
Bautis Financial: (862) 205-5000 | Marc Bautis’ Email
The secure act is a big deal. Changes like this only come every 10-15 years. On today’s show we are going to break it down and discuss the most important features of the Act and what planning opportunities we can take from it.
Not only was the SECURE Act a big change, it became a law in mid-December with the changes taking place two weeks later on January 1st, 2020. So there was very little time to prepare for it.

There was a lot of good intention with the bill and it is really geared toward making it easier for people to save for retirement and give people more control over their retirement accounts.
I talk to a lot of people who love getting a tax deduction for their retirement plan contributions, but they some of the restrictions on retirement accounts
- They have to wait until age 59 ½ to access the funds
- At age 70 ½ they are forced to start withdrawing money from their retirement accounts.
I think the government took note of that and tried to make some changes in hopes of getting more people to save for themselves when it comes to retirement. And that’s definitely a good thing.
We can break the bill up into two categories.
- Quality of Life Changes
- Regulatory Changes
Elimination of Age Limits on Traditional IRA Contributions
Before the SECURE Act, once you turned 70 ½ you could no longer contribute to your Traditional IRA. This change is to make Traditional IRA contributions more inline with employer sponsored plans. With 401k plans you have always been allowed to contribute past age 70 ½. Even with a Roth IRA you have always been allowed to contribute past age 70 ½ as long as you have earned income.
Previously once you turned 70 ½ you were not able to contribute to a traditional IRA anymore. Again, it’s the government saying that people are working and living longer and that it’s good to put money into an IRA. Now if you are over 70 ½ you can still put money into your IRA.
This also helps someone who is working part time in retirement still be able to save money in an IRA.
The one caveat is that you have to have earned income to contribute to the IRA. If you are retired and not working, you’re not able to contribute.
Change in Required Minimum Distributions
The next important change of the SECURE Act is that the required minimum distribution age has been increased by 18 months. It went from 70 ½ to 72. And this one I’m ] seeing so far in the short time that it’s been in place, is the one change that people are liking the most. People do not like the government telling them when they have to start taking money out of their retirement accounts.
Does it make that big of a difference? It’s only 18 months. It doesn’t make that big of a difference and the IRS will still collect their tax, , but people just seem to like the fact that yes, they now have another 18 months, that they don’t have to listen to what the government requires them to do. And it’s growing tax deferred for that extra 18 months.
The other piece of it that’s good is they got rid of this funky half year. Explaining to people that even though they were 70, they didn’t turn 70 ½ until the next year so they could hold off on taking an RMD was cumbersome.
RMD Overview
A quick overview on RMDs. Every year that you were working and putting money into your IRA or 401k you were getting a tax deduction.
Once you now turn 72 the IRS says it’s time for them to start collecting their tax. They force you to take money out. Which then shows up as ordinary income on your tax return.
There is a calculation that’s done each year to determine how much of an RMD you have to take out. The calculation looks at the balance of the IRA on January 1st and your age and determines your RMD. You have until December 31st to take that money out. You could always take out more, but that’s the minimum that has to come out each year. That process repeats every year for the rest of your life. As you get older you start having to take more money out.
Changes to the 10% Early Withdrawal Penalty Exception
This change impacts someone who needs to withdraw funds from their retirement account prior to age 59 ½. That age is enforced by the government. They claim that they are giving people a tax deduction for saving money in a retirement plan but they want people using those funds for retirement not as a piggy bank. If you take out money prior to age 59 ½ not only will you have to pay taxes on it, but also a 10% early withdrawal penalty.
Prior to the SECURE Act there were only a couple of exceptions to the 10% early withdrawal penalty.
- The most frequently used exception was for a first time home purchaseThe first one was for a first time home purchase.
- The second one was if you had medical expenses over a certain percentage of your income.
It either of those two situations occurred, you still had to pay tax on the money you took out of your IRA or 401k, but you didn’t have to pay the 10% early withdrawal penalty.
With the passing of the SECURE Act there are a couple of additional exceptions to the 10% penalty.
- The birth or adoption of a child. You are allowed to withdraw $5,000 penalty free. It’s great for people starting a family. They may miss some time from work due to the birth or adoption and it’s a way to help and give people more control over their accounts. Being able to offset some of those costs, that’s a great benefit.
Changes to 529 College Savings Accounts
Now you are able to use your 529 account to pay up to $10,000 of student loans. This is on top of the significant change to the 529 as part of the 2017 Tax Cuts and Job Act where you can use $10,000 a year to pay for private school prior to college.
I think the government is recognizing that there is a student loan problem and hopefully this change can help with giving people more flexibility to address that. Whenever I talk to someone about saving in a 529 there used to be some hesitancy because they were pigeonholed into what it could be used for. I think with the changes it’s making people more at ease with utilizing a 529 because it can be used for more things. there’s a little bit of hesitancy because. 529’s can still be a great estate planning tool.
How a 529 works
You contribute money to a 529 account and as long as it’s used for one of these qualified expenses you do not have to pay tax on any of it.
- College
- Private middle and high school
- Student Loans
The next change with 529’s they should look at is adding some flexibility with the investments inside them. 529’s are similar to 401k’s in that there is a menu of investment options that you can pick and choose from. It would be great to get it to how an IRA works where you have an almost unlimited menu of investment options to choose from to put together a strategy that works for you.
Changes with Employer Retirement Plans
Changes occuring in the SECURE Act weren’t limited to just IRA’s. There were some that impacted employer plans like 401k’s.
Auto Enrollment Cap
401k plan sponsors can auto enroll employees into the company’s 401k plan. This means that instead of an employee having to opt into the plan to participate, they are automatically enrolled. If they do not want to participate in the plan they have to take the action of opting out. Auto enrollment was done to promote saving for retirement. I usually see employers opting in employees at a 3% contribution rate. The employers usually add an auto escalation feature that each year increases the employees contribution by 1%. So the first year the employee is in the plan, they are automatically in at 3%. Next year it automatically increases to 4%, and the year after to 5%. Once the automatic increase hit 10%, it had to stop. The SECURE Act allows the automatic increase to go up to 15%.
When I talk to people about 401k’s, the first question I receive is how much should I put into it. I tell them that if you start in your 20’s saving 10% of your salary each year to your 401k, you should be fine for retirement. But for someone who doesn’t start saving until they are in their 30’s and 40’s the percentage they need to save is usually much higher than 10%.
How Will The SECURE ACT BE PAID FOR
Most of these changes are positive for people, but that means that there is a cost associated with them. Allowing people to take deductions on their IRAs past 72 and not having to claim RMD’s for an extra 18 months means less revenue for the IRS. The government wanted to make this a revenue neutral bill so there was a change that was introduced that takes away the Stretch IRA. By taking away the Stretch IRA strategy it will generate the revenue needed to pay for the other changes.
The Elimination of the Stretch IRA
When a non-spouse beneficiary inherits an IRA they have to start withdrawing minimum distributions from it. However they are allowed to stretch those distributions over their lifespan.
As an example if a parent passes away in their 60’s and passes their IRA to their daughter who is in their 30’s, the daughter would have to take out a little bit from the IRA each year. But they are allowed to keep the majority of it in the IRA to grow tax deferred. The daughter’s lifespan may be another 50 years, so it is growing tax-deferred over a significant period of time. That’s how the Stretch IRA worked prior to the SECURE Act.
With the SECURE Act, that inherited IRA has to be depleted within 10 years. So now the IRS is guaranteeing that they’ll collect the full tax on that IRA within 10 years, and not have to wait 30, 40, 50 years to get it.
Most people won’t like this change because they are losing control over the account, being forced to deplete it in 10 years. But there are planning opportunities that arise from this
The new rule says that it has to be fully withdrawn by the 10th year. Your options include:
- Withdrawing the whole IRA immediately as soon as you inherit it
- Spread out the distributions evenly over the 10 years
- Do nothing for 9 years and withdraw the entire IRA in year 10
Advisors have to help figure out what is the best option to take. You usually will want to smooth your income out meaning that you don’t want the distribution to put you in a higher tax bracket or subject you to AMT, additional Medicare surcharges, …
If we look at this at a high level, most people die in their 70’s, 80’s, or 90’s, where they most likely leave money to their kids who are probably in their 50’s or 60’s. When you are in your 50’s and 60’s you most likely are in your peak earnings you. If all of a sudden you start having to deplete a $1 million IRA in 10 years, you have to figure out what’s the best way to do it so you don’t get crushed with taxes.
Maybe someone who is 62 inherits an IRA and plans on working another three years until 65. They may want to hold out three years before taking any distributions. And then at age 65 they spread out the distributions over the remaining seven years. It will get combined with Social Security and any pension they are receiving to determine what the tax would look like, but it is most like better than taking it in years where they are also drawing an income.
If you are inheriting it at age 50, a totally different strategy may make sense.
We approach it by taking a systematic approach to that decision and by looking at different scenarios. We have software that can calculate what it looks like and what is the best option to take in terms of your taxes.
One more thing on the stretch, IRA that I wanted to talk about is that it is important that you name a beneficiary on your IRA. If you do not designate a beneficiary, you don’t even get 10 years to distribute the IRA. You have to fully distribute it in 5 years. It’s important that you name a beneficiary and if you don’t it will go through probate and your will will dictate where it goes. If you don’t have a will the state will dictate who gets it.
But to take advantage of the stretch IRA, which is now a 10 year stretch, you have to name a beneficiary.
One thing to note is that the rules with a spouse stay the same. The spouse is not subject to the 10 year distribution.
When a spouse inherits an IRA, it gets transfers into an IRA in their name and the RMD’s are based on their life expectancy.
Just like we found out with the passing of the Tax Cuts and Job Acts of 2017 (TCJA) there will be planning opportunities that arise from the SECURE Act. I tried to cover the major changes at a high level, but it probably makes sense for everyone to take a deep dive to see which changes you can take advantage of.