Essential Tips to Avoid Government Contracting Scams and Spams

When small business owners register on the federal government's System for Award Management (SAM.GOV) or other government-related websites to pursue contracting opportunities, they often open themselves up to a new world of potential business. However, along with legitimate offers, they may also receive a barrage of scams, spam, and misleading solicitations. These scams often pose as official agencies or service providers, promising everything from exclusive access to government contracts to expedited certifications, all while aiming to deceive and exploit well-meaning business owners.

Scammers frequently target small businesses that are new to contracting, taking advantage of the complexities and unfamiliarity that come with navigating government procurement processes. In this article, we will provide practical advice on recognizing and avoiding scams in the federal, state and local government marketplace. This guide will help small business owners stay safe, informed, and confident as they pursue federal opportunities.

1. Identify Common Scams Targeting Small Businesses in the Federal Marketplace

To protect yourself and your business, start by familiarizing yourself with the most common scams in the federal contracting arena:

• Fake Contract Offers or Procurement Requests: Fraudulent emails and calls that appear to come from government agencies may offer what seem like legitimate contract opportunities, only to request sensitive information or upfront payments.
• Certification and Registration Scams: Some scammers will insist that certain certifications are required to do business with the government. While certain designations (like WOSB or HUBZone) are legitimate, scammers might promote fake certifications for a fee.
• Phishing Scams: These attacks may come through emails, text messages, or phone calls pretending to be from official sources. They often request sensitive information like bank details, passwords, or tax information.
• High-Pressure Sales Tactics: Some fraudulent service providers use aggressive tactics, offering exclusive access to contract listings or fast-tracked registration on sites like SAM dot Gov, often for an unnecessary fee.

By learning to spot these scams, business owners can act swiftly and avoid falling victim to them.

2. Verify the Legitimacy of Sources and Requests

If you receive any form of communication from an unknown source, especially unsolicited offers for a free consultation, take steps to confirm the legitimacy of the company offering its services:

• Confirm Through Official Websites: SAM and agency-specific procurement websites list all legitimate contracting opportunities. Cross-reference any proposal or request you receive with listings on these official sites.
• Analyze the Email Address: Legitimate government emails typically use “.gov” or “.mil” domains. Be cautious of emails coming from “.com” or “.org” addresses, which could indicate a scam.
• Use Trusted Verification Resources: The General Services Administration (GSA) and the Small Business Administration (SBA) offer resources to help verify procurement data, contracting information, and vendor registrations. State and some local agencies are also a resource in this area.

3. Understand Authentic Registration and Certification Requirements

One of the most common ways scammers target new contractors is by promising fast-tracked or exclusive certifications. Knowing what is truly necessary can help you avoid falling for these schemes:

• SAM Registration: SAM registration is required to do business with the federal government, and it is free. However, there is strategic information that needs to be communicated about your business during the registration process in order to create a useful profile. You may need help with this process. If you do, consult the SAM helpdesk or reach out to a trusted advisor for assistance. If you are approached by an unsolicited third party offering paid registration or renewal services, this may be a red flag to investigate before moving forward. Ask questions and check credentials before you hire an unknown company to help you.
• Certifications: Legitimate certifications, such as those for minority-owned, veteran-owned, and women-owned businesses, can often provide a competitive edge but are not always required for government contracts. These are offered by agencies and organizations like the Small Business Administration, state governments, and trusted organizations, like the WBENC and NMSDC, for example. Certification applications require that you provide confidential personal and business information to the agency or organization that will certify your business, or help you with the certification process. Understand and verify how your information will be safeguarded and kept confidential during the certification process, especially if you are using an unknown third party to manage your documents on your behalf.
• Certification Help and Support: For legitimate certifications, consult the government, agency or organizational website that offers the certification and critically assess if you can properly submit the application on your own. Agencies that offer certifications can provide clarification on the questions they ask and the information that they require, but they cannot tell you how to answer the questions. Your state's SBDC network may have specialists that can provide support in these other areas. If you need more help completing the application or simply want more administrative support and hands-on guidance, there are reputable specialty consultants and advisors that charge reasonable fees to support you and help you manage the application process.
• CAGE Codes: These identifiers are free through the SAM registration process. Scammers may try to charge for assistance, but obtaining these codes is free and straightforward.

4. Educate and Empower Your Team

Since scams often succeed when someone unknowingly provides information, training your team is crucial:

• Fraud Awareness Training: Regular training can help employees recognize scams, phishing attempts, and fraudulent solicitations. Focus on common red flags, such as urgent requests for sensitive data or unexpected payment demands.
• Encourage Verification Practices: Establish a company-wide policy for verifying all government-related communications. Designate a contact person who can review unusual or high-stakes requests.
• Open Communication Culture: Ensure team members feel comfortable bringing suspicious emails or calls to a manager for verification.

5. Exercise Caution with Unsolicited Offers

Unsolicited offers for government contracts or “exclusive” registration services are often scams. Here are some ways to protect yourself:

• Question High-Pressure Sales Tactics: Scammers often create a false sense of urgency to push businesses into making fast decisions. If you receive a high-pressure call about a government-related opportunity, take time to verify its legitimacy.
• Avoid “Exclusive” Access Fees: Government contract information is public. SAM and other state and federal websites do not charge fees for accessing contract details. If a company is requesting payment for contract lists, check it out thoroughly before you invest any money.
• Check Contract Details: If you receive an unsolicited contract offer or RFP, scrutinize the details. Government contracts are usually very specific, while scam documents may be vague or overly broad.
• Submissions: RFP's and contracts require that you provide highly confidential business (and sometimes personal) information to the agency or organization that will evaluate your offer. Before you use an unsolicited or untested third party to manage and submit your RFP's and contracts on your behalf, verify and understand how your highly confidential information will be safeguarded and kept confidential during the submission and retention process. You or your company designate should be a direct contact for the agency, not a CC/BCC.

6. Spot Red Flags in Communications

Fraudulent communication often includes indicators of its illegitimacy. Here’s what to look for:

• Vague or Generic Language: Legitimate government communications are generally specific about the terms, scope, and requirements. Emails with vague language, such as “great business opportunity,” should raise suspicion.
• Unexpected Requests for Payment or Sensitive Information: Government agencies do not request payments for RFPs or other contract opportunities. Additionally, sensitive data like bank information or social security numbers should never be shared through unofficial channels.
• Suspicious Attachments or Links: Scammers often use malicious links or attachments to collect sensitive information. If you receive a file from an unknown source, verify it before downloading or clicking the link.

7. Know Your Rights and Legal Resources

Understanding your rights as a business owner is essential in avoiding scams. Here’s how:

• Use Freedom of Information Act (FOIA): Federal contracts and procurement data are publicly available under FOIA. If someone claims to offer "exclusive" contract information, this is likely a red flag, as such information is usually publicly accessible.
• Whistleblower Protections: Reporting fraudulent activity can protect you and others from falling victim to scams. The government offers protections for whistleblowers, so don’t hesitate to report suspected fraud.
• Seek and Use Legal Advice, if Warranted: Knowing the basics of contracting and when to reach out for legal assistance can help you recognize suspicious demands and questionable contractual terms. If you are in doubt about any aspect of an agreement, have an experienced attorney review the offer for inconsistencies or abnormalities.

8. Utilize Technology and Fraud Detection Tools

Cybersecurity technology can be instrumental in identifying and preventing scams. Here are some tools you may want to consider:

• Email Filtering and Authentication: Use filters that detect suspicious senders or spam, and enable identity verification features when possible. Many business email platforms offer security settings to detect phishing attempts.
• Multi-Factor Authentication (MFA): Adding an extra layer of security to your accounts can prevent unauthorized access if your business handles government data.
• Data Encryption and Protection Software: Encrypt sensitive data and ensure that employees use secure networks, particularly when handling government-related business data.

9. Report Scams Promptly

Reporting scams not only helps protect your business but also prevents others from becoming victims:

• Federal Trade Commission (FTC): The FTC has an online reporting tool that tracks fraud and helps small business owners navigate similar issues.
• Agency Inspector General Offices: Many federal and state agencies have dedicated Inspector General offices that investigate procurement fraud. Reporting suspected scams to these offices can provide valuable insights into current fraudulent tactics.
• SAM.gov: SAM has a fraud prevention team available to assist businesses that encounter potential scams. Reaching out to them directly can help validate questionable solicitations.

10. Stay Informed about New Scams and Fraud Trends

Scam tactics evolve over time, so staying updated on new techniques can help you avoid falling for them.

• Government Webinars and Training: Agencies like the SBA and GSA offer webinars on government contracting and fraud prevention. Attending these can improve your understanding of legitimate business practices.
• Industry Newsletters and Alerts: Subscribe to newsletters from reputable industry organizations that regularly share updates on scams and fraud alerts.
• Join Professional Networks: Many industry associations have peer groups where small business owners discuss the challenges they face in federal contracting. These groups can offer valuable information and resources on avoiding scams.

Conclusion

Navigating the government marketplace can open up valuable opportunities for small businesses, but it also brings an increased risk of scams and fraud. By recognizing common scams, verifying sources, understanding legitimate requirements, educating your team, and implementing robust security practices, small business owners can protect themselves against fraudulent schemes.

Remember that scammers prey on inexperience and a lack of knowledge about government processes, so staying informed is your best defense. Leveraging official resources, building internal safeguards, and reporting suspicious activity are essential practices to ensure your business remains safe as you pursue opportunities in the federal marketplace. With vigilance, careful verification, and proactive fraud prevention, you can safely navigate this landscape and make the most of the legitimate opportunities that federal contracting can offer.

#governmentcontracting #corporatecontracting #samdotgov #certification #businesssupport #contractsecurity

About the author: Joanne Tica is the managing principal of Certified Impact (IN/IL WBE, DBE, WOSB) and Minerva League Business Services (WBENC WBE, WOSB). She is an adult and community education specialist (TESOL certified), focused on helping entrepreneurs, small business owners, and emerging middle market companies with certification and government/corporate contracting readiness and strategies for success, as well as the development of workforce and training systems for small businesses.