By Derek Hoyt, Cofounder and CEO, GovSignals.
When the Department of Government Efficiency (DOGE) was introduced, many technology executives realized something important: Solely contracting with federal agencies is no longer a safe bet. While large government budgets have always seemed reliable, DOGE’s initiatives show that federal IT spending can be vulnerable to shifts in policy or budget cuts.
For tech firms that have built their revenue strategies entirely around federal contracts and are considering diversification, the state, local and education (SLED) markets deserve your attention—here’s how to get started.
The Risk Of Concentration
Reliance on one major customer segment poses a threat to any business. While federal work may once have seemed unassailable, we’re seeing the impact that funding slowdowns or shifts in priorities can have. When one large client accounts for the majority of a firm’s revenue, a single policy shift can cause disruptive losses. By strategically expanding into SLED, tech companies can spread out their risk, potentially stabilizing revenue over time.
Overcoming The Fragmented SLED Landscape
Federal contractors primarily rely on a single portal—sam.gov—to find all relevant solicitations. In contrast, the SLED landscape is fragmented. Each of the 50 states has its own procurement portal, and countless localities—like cities, counties and school districts—post on separate websites.
Moreover, some states work with commercial companies that charge fees simply to access bid documents. This patchwork forces business development teams to spend hours hunting for opportunities, creating login after login just to stay updated.
As the complexity of SLED can be daunting, it is recommended to start small and learn how SLED contracting works. Start with your current state of residence, sign up for their procurement portal and begin to understand how the state selects vendors. Once you understand a specific state, then you can expand to others.
When you’re ready for expansion, commercial SLED solicitation aggregators can also help centralize thousands of RFPs, giving companies a single dashboard of opportunities. These platforms often feature AI-driven filtering to match solicitations with a company’s specific capabilities, document hosting to help determine whether to sign up for a portal and better data organization that helps teams identify trends and strategic openings quickly.
Relationships Matter
At the federal level, it’s common for contractors to invest in relationships with program managers and contracting officers. In SLED, these connections are often even more crucial. Procurement rules and evaluation criteria vary by state, and the ability to communicate directly with key decision makers can make or break your bid. Establishing rapport early allows you to better understand local requirements and, in some cases, influence how solicitations are written.
A Four-Step Plan For Expanding Government Contracting Work Into SLED
1. Choose the right aggregator.
Look for a system that suits your budget and accurately curates opportunities in your focus areas. Picking the right aggregator can help free time to focus on relationship-building and proposal strategy—critical elements of success in the SLED space.
2. Pick five target states.
Instead of spreading yourself thin, pick five initial states with the best prospects. This might be due to ease of travel, strong local connections or known demand for your products or services.
3. Build local connections.
Seek out project managers and contracting officers who champion similar solutions. Look at trade shows, local networking events and direct outreach as ways to establish relationships and glean intel on upcoming opportunities.
4. Master the SLED proposal process.
SLED solicitations often rely on large requirement spreadsheets—sometimes with more than 200 features. Efficiently mapping your solution to each feature requires a strong knowledge management system.
To prepare, organize your content libraries so you can find previous proposals, write-ups describing your product and features and past performance examples of implementing your solution for other clients. Getting your internal library organized, whether it’s small or large, is essential to laying the foundation for successful proposal development. Once you are organized, consider using AI-driven proposal tools to cut down on writing time and reduce mistakes.
Watch Out For Legal Quirks
Unlike federal procurements, SLED contracts aren’t governed by the Federal Acquisition Regulation. Each state has its own regulations, meaning you must thoroughly review each solicitation’s terms—particularly around intellectual property and how data is managed. Don’t assume the rules you’re used to will automatically apply.
Final Thoughts
The SLED market offers an excellent opportunity for tech firms to diversify their revenue sources and hedge against uncertainties in federal contracting. At the same time, success here isn’t as simple as just paying a consultant or subscribing to a one-size-fits-all service. It requires a systematic approach: Invest in quality data aggregation, develop a sound knowledge management strategy and forge genuine relationships with state-level decision makers.
By taking these steps, you’ll be well-positioned to thrive regardless of how federal IT budgets evolve. With the right tools and relationships in place, the SLED market can become a core component of a stable—and more future-proof—business model.
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