My answer to Can you sell anything to the goverment?
Answer by Ken Larson:
There are many agencies and government prime contractors to whom you may be able to sell your products or services.
Like any other customer, the government expects you to finance your business, meet your payroll, pay your expenses and submit a bill for products and services delivered or rendered. The federal payment cycle is often 60 to 90 days, depending on whether or not you are a subcontractor to a prime corporation.
In federal government contracting you must also comply with the Federal Acquisition Regulation (FAR) and associated Cost Accounting Standards (CAS). Although these requirements are not "Rocket Science", they are different from commercial rules and generally accepted accounting practices (GAP). They have evolved over the years as the federal government has grown in the volume of goods and services it buys. Very few universities make FAR and CAS part of their curriculum and CPA's do not encounter them on a certification exam. Several articles at this site address the practical implications of FAR and CAS requirements for a small business.
The prudent, small businessperson reviews the potential impact of FAR and CAS on his or her business systems and processes before undertaking a government contract, particularly a cost plus or a time and materials contract. In many cases job cost accounting and long range budget planning are required to support pricing, overhead and general and administrative rates. Government contracts can run several months or even years.
Federal agencies form large-scale projects and use companies to service their needs by contracting specialized skills, sometimes bringing the contractors on site by labor category under time and material, cost plus or fixed rate contracts or by purchasing services or products at company facilities and remote sites.
In other cases, pre-established pricing and terms and conditions are negotiated with several suppliers in advance under omnibus contracts and separate delivery orders are issued competitively based on changing requirements. The General Services Administration (GSA) negotiates pricing and terms on multi-year schedules from which both federal and state agencies are permitted to buy.