Selling to State and Local Governments

Rules that apply

Each state and city sets its own

Federal Miller Act bonds

Construction over $150,000

Federal payment protection

Over $35,000 up to $150,000

Federal bid guarantee

20% of bid, up to $3 million

Performance and payment bonds

100% of contract price each

Sourcewell agency membership

Free

How State and Local Buying Differs From Federal

State and local governments buy a huge range of goods and services, from road salt and police cars to software and consulting. They are a large market, and many small businesses find them easier to start with than federal agencies. The work is often closer to home, and the buyers may already know your company.

The biggest difference is that there is no single rulebook. Federal agencies follow the Federal Acquisition Regulation, but each state writes its own procurement code. Cities, counties, school districts and transit agencies also set their own policies within state law. Registration, bid forms and dollar limits change from one government to the next.

Many ideas carry over, though. Most governments use small purchase limits, formal bids above those limits and requests for proposals for complex services. Many also have their own small, minority or disadvantaged business programs with separate certifications.

State Procurement Portals

Every state has a central procurement office, and most post their bids on an online portal. Examples include Cal eProcure in California, eVA in Virginia and the Electronic State Business Daily in Texas. These portals list open bids, past awards and statewide contracts that agencies can use.

Larger cities and counties usually run their own portals, and many use shared bid-posting platforms. A good habit is to make a list of the governments you want to sell to and find the purchasing page for each one. Most let you sign up for email alerts by commodity code, so new bids come to you.

Watch for statewide contracts as well. A state purchasing office often awards one contract that every state agency, and sometimes every city and school district, can order from. Getting on one of these contracts works much like a single large bid. The portal lists when each statewide contract is up for a new solicitation, so you can plan ahead and be ready when it opens.

Vendor Registration

To bid or get paid, you register as a vendor with each government. Registration usually asks for your legal business name, tax ID number, address, contact person and the commodity codes for what you sell. Many states use NIGP codes, a common system for classifying goods and services. You will also submit a W-9 form, and some governments ask for proof of insurance or a business license.

If you hold a small business or minority-owned certification with the state, list it in your vendor profile. Some states accept certifications from other programs and others run their own. Keep your registration current, because many systems send bid alerts only to active vendors.

Cooperative Purchasing Contracts

Cooperative purchasing lets one government solicit and award a contract that other governments can also use. It saves buyers the time of running their own bid when a competitive contract already exists. For suppliers, winning one cooperative contract can open sales to many public agencies at once.

Sourcewell is one example. It is a service cooperative and a unit of local government created under Minnesota law. It runs public solicitations, scores proposals on published criteria with price counting for 40 percent of the score, and awards national contracts. Government and education agencies register for free, and each agency decides whether a contract meets its own rules.

NASPO ValuePoint is another example. It is the cooperative purchasing program of the National Association of State Procurement Officials. A lead state runs each solicitation and signs master agreements with the winning suppliers. Each participating state then signs a participating addendum that sets its own terms and names which agencies may buy. Other cooperatives also operate, and many states and large cities let local agencies use their contracts too.

Bid Bonds and Performance Bonds

Construction work and some service contracts require surety bonds. A bid bond promises that if you win, you will sign the contract and provide the other required bonds. A performance bond promises the work will be finished, and a payment bond promises your subcontractors and suppliers will be paid.

Bonds come from surety companies, usually through an insurance agent who specializes in bonding. The surety reviews your finances, experience and work in progress before setting how much bonding it will provide. The premium is a small percentage of the contract amount and depends on your credit and history. SBA's Surety Bond Guarantee Program helps small businesses get bonds by guaranteeing part of the surety's loss.

States set their own bond rules, often in laws called Little Miller Acts. These laws set the contract size at which bonds are required and the bond amounts. The amounts appear in each bid package, so you can plan your bonding before you bid.

The Miller Act for Federal Construction

For federal construction, the Miller Act sets the bond rules. A federal construction contract over $150,000 requires both a performance bond and a payment bond. Each bond is normally 100 percent of the original contract price, plus 100 percent of any later increases. This threshold was not changed by the October 2025 inflation adjustment.

For federal construction contracts over $35,000 and up to $150,000, the contracting officer requires payment protection. That can be a payment bond, an irrevocable letter of credit, a tripartite escrow agreement or certificates of deposit. When a federal bid requires a performance bond, it also requires a bid guarantee of at least 20 percent of the bid price, up to $3 million.

Free Help to Get Started

APEX Accelerators help with state and local contracting as well as federal work, at no cost. They can show you where your target governments post bids and help with registration. Many state procurement offices also hold free vendor training and reverse trade shows where buyers explain what they need.

Starting with one state and two or three nearby cities is a manageable plan. As you win work, you build references that help with larger bids and with cooperative contracts later.

Sources

https://www.acquisition.gov/far/subpart-28.1
https://www.acquisition.gov/far/28.102-1
https://public-inspection.federalregister.gov/2025-16412.pdf
https://www.sourcewell-mn.gov/sites/default/files/2025-10-29/CP_Reference_Guide_0925_web.pdf
https://www.naspovaluepoint.org/?p=1368

Checked October 2026. Thresholds and rules change; each source above is the official page.