Compliance Mistakes That Can Cost You a Government Contract

Winning government contracts can be a competitive and complex process. Many contractors, even experienced ones, make compliance mistakes that can disqualify their bids or lead to legal and financial penalties. Understanding these common errors can help contractors secure more contracts and maintain a strong reputation in the industry.

This guide covers the most frequent government contract compliance mistakes and how to avoid them.

1. Failing to Meet Good Faith Effort Requirements

Many government contracts require contractors to make a Good Faith Effort (GFE) to include Disadvantaged Business Enterprises (DBEs) and Minority/Women-Owned Business Enterprises (M/WBEs) in their bids. Contractors often fall short in:

• Not contacting enough DBE/M/WBE businesses.
• Failing to properly document outreach efforts.
• Not following up with businesses that express interest.

To stay compliant, contractors should:

• Use official DBE and other certified business directories to find qualified subcontractors and suppliers.
• Maintain detailed records of all outreach attempts.
• Follow up with potential subcontractors and provide enough time for bid responses.

For a full overview of GFE compliance outreach options, visit our Good Faith Effort Documentation Services page.

2. Submitting Incomplete or Inaccurate Bid Documentation

Government agencies have strict requirements for bid submission. Common errors include:

• Missing required forms or signatures.
• Providing incorrect pricing or budget estimates.
• Not including required certifications or licenses.

To prevent these mistakes:

• Double-check all submission deadlines and required documents.
• Review bid packages multiple times before submission.
• Use a compliance checklist to ensure all requirements are met.

For additional bid preparation resources, check out our Trade Journal for the latest industry updates.

3. Misclassifying Workers and Subcontractors

Many contractors unknowingly misclassify employees and subcontractors, which can lead to legal and financial consequences. Errors include:

• Treating employees as independent contractors.
• Failing to pay proper wages under prevailing wage laws.
• Not verifying subcontractor compliance with labor laws.

To avoid these risks:

• Follow IRS and Department of Labor guidelines for worker classification.
• Ensure compliance with Davis-Bacon and other prevailing wage laws.
• Require subcontractors to provide proof of compliance before hiring.

4. Ignoring Reporting and Record-Keeping Requirements

Many government contracts require ongoing reporting and compliance tracking. Common mistakes include:

• Not maintaining timesheets, payroll records, and expense reports.
• Failing to submit required progress reports.
• Losing track of subcontractor compliance documentation.

To prevent issues:

• Use contract management software to track and store records.
• Assign a compliance officer to oversee documentation and reporting.
• Set up automated reminders for report deadlines.

5. Non-Compliance with Safety and Environmental Regulations

Government contracts often have strict safety and environmental requirements. Contractors risk fines and disqualification if they:

• Do not follow OSHA safety standards.
• Fail to comply with EPA environmental regulations.
• Ignore state-specific safety and labor laws.

To stay compliant:

• Train employees on federal and state safety regulations.
• Conduct regular safety audits and inspections.
• Implement environmental impact assessments when required.

Final Thoughts

Avoiding compliance mistakes is essential for contractors looking to win and maintain government contracts. By understanding and addressing these common issues, businesses can improve their success rate and reduce legal risks.

For additional compliance support, explore Compliance News’ contractor resources and Government Services to stay compliant and competitive.