Selling to the Federal Government Landing government contracts is tough--but it can be done. Learn from these entrepreneurs and Uncle Sam could become your biggest client.

For Liz Lasater, founder of Red Arrow Consulting, a supply-chain management and logistics company in Issaquah, Washington, the federal government is in some ways her ideal customer. Her small firm probably wouldn't survive without contracts from government agencies, she says, and as the defense budget rises, Uncle Sam offers a seemingly inexhaustible supply of new deals. If Lasater, 42, performs well, government agencies will be more loyal, less demanding clients than their private-sector counterparts. "Government can deliver enormous volume," Lasater says. "Almost no one in the private sector [can] match it."

At the same time, the government is Lasater's most difficult client. "You have to have a lot of capital to wait out the process of getting approved to fill a contract," Lasater says. "Then you have to figure out which contracts you can really compete for, and which are already reserved for large companies." She sighs. "It can be very frustrating."

Lasater's problems wouldn't shock most small businesses trying to win federal contracts. Despite promises over the past five years by government agencies to make the contracting process more accessible and more transparent to small businesses, recent reports show that only limited progress has been made. To many small businesses, accessing contracts still doesn't seem worth the effort and cost required to play the game. And in the wake of Hurricane Katrina, which devastated many small companies along the Gulf Coast, small-business advocates argue that few reconstruction opportunities have gone to entrepreneurs. Still, as Lasater knows, entrepreneurs willing to brave a contracting system that seems tilted in the big boys' favor can prosper.