Government Freight Contracts Offer Alternative Path for Small Carriers

Government freight contracts represent a significant opportunity for small trucking carriers seeking alternatives to volatile spot markets, according to industry experts. Federal, state, and local government entities collectively purchase more transportation services than any private shipper in the United States, with portions specifically designated for small businesses with fewer than 500 employees and less than $30 million in annual revenue. These contracts can provide stability through longer-term agreements and consistent revenue streams.

The government contracting process requires specific preparation and understanding of federal systems. Carriers must register with SAM.gov to obtain a Unique Entity ID, prepare capability statements detailing their equipment and service areas, and develop appropriate pricing templates. Some contracts are exclusively reserved for businesses with certifications such as Woman-Owned, Veteran-Owned, or Minority-Owned status, creating additional pathways for qualified carriers to secure government work.

Despite the opportunities, government contracting presents distinct challenges for small carriers. Payment cycles typically extend to Net 30, 45, or even 60 days, requiring businesses to maintain sufficient cash flow to cover operational expenses before receiving compensation. The registration and bidding processes involve complex documentation, and invoicing must be submitted through specialized government systems like Wide Area Workflow or Integrated Payment Processing.

Industry specialists recommend several entry strategies for carriers new to government freight. Starting as a subcontractor to an established prime contractor can provide experience while minimizing administrative burdens. Beginning with local government contracts often involves less complexity and faster payment cycles. Small, short-term federal contracts offer opportunities to understand the process before committing to larger agreements. The Department of Defense, Department of Energy, and Department of Veterans Affairs represent the largest spenders on transportation services.