Why the $2 Trillion SLED Market Is the Best-Kept Secret in Government Contracting

When most contractors think "government contracting," they think federal. SAM.gov, FPDS, DoD, DHS, VA. But there's a market nearly twice the size of the entire federal contracting market that most small businesses completely ignore: State, Local, and Education (SLED) contracting.

With over $2 trillion in annual contract spending across 100,000+ government entities, SLED is the largest government contracting market in the United States. And unlike the federal market — where competition is fierce, procurement cycles are long, and clearances are often required — SLED offers faster awards, less competition, and a far more accessible entry point for small businesses.

This guide covers everything you need to know about SLED contracting: the market structure, how to find opportunities, the California SLED market specifically, and a concrete action plan for entering the SLED market in the next 90 days.

What Is SLED Contracting?

SLED stands for State, Local, and Education — the three categories of government entities below the federal level that procure goods and services from private contractors.

Together, these entities spend more on contracts annually than the entire federal government. And unlike federal contracting, SLED procurement is highly decentralized — each of the 100,000+ SLED entities has its own procurement rules, portals, and contracting officers. This decentralization is both the challenge and the opportunity.

The $2 Trillion Market Opportunity

To put the scale of SLED in perspective: the entire federal contracting market is approximately $700 billion annually. The SLED market is nearly three times that size. Yet the vast majority of government contractors focus exclusively on federal.

The numbers tell a clear story: SLED is a larger market with faster awards and less competition. The reason most contractors ignore it comes down to two misconceptions: (1) that SLED is somehow less prestigious or lucrative than federal, and (2) that the decentralized nature of SLED makes it too complex to pursue efficiently.

Both misconceptions are wrong. SLED contracts can be just as large and lucrative as federal contracts — California alone spends over $15 billion annually on IT and professional services. And the decentralization that makes SLED seem complex is actually what creates the opportunity: most of your competitors aren't there.

Why Small Businesses Should Enter SLED Before Federal

For small businesses with no past performance, SLED is the optimal entry point into government contracting — not federal. Here's why:

SLED vs. Federal: Key Differences Every Contractor Must Know

While SLED and federal contracting share many similarities — competitive bidding, past performance requirements, compliance obligations — there are critical structural differences that affect your strategy.

Procurement Regulations

Federal contracting is governed by the Federal Acquisition Regulation (FAR) — a comprehensive, uniform rulebook that applies to all federal agencies. SLED contracting is governed by individual state procurement codes, local ordinances, and institutional policies. California, for example, operates under the California Public Contract Code. Texas uses the Texas Government Code. Each state has its own rules, thresholds, and procedures.

This means you cannot apply a one-size-fits-all approach to SLED. You need to understand the procurement rules for each state and locality you're targeting. The good news: most state procurement codes are publicly available and significantly simpler than the FAR.

Cooperative Purchasing & Piggyback Contracts

One of the most powerful features of SLED contracting is cooperative purchasing — the ability for multiple government entities to "piggyback" on a contract awarded by one entity. Organizations like NASPO ValuePoint, OMNIA Partners, and Sourcewell maintain cooperative purchasing agreements that thousands of SLED entities can access.

Getting on a cooperative purchasing contract is like getting on a federal GWAC — once you're on the vehicle, any participating entity can buy from you without a separate competitive procurement. A single cooperative contract can generate revenue from hundreds of government entities.

Certifications & Preferences

SLED entities have their own small business and diversity certification programs, separate from federal certifications. California, for example, has the DVBE (Disabled Veteran Business Enterprise) program, the SB (Small Business) certification, and the MB (Microbusiness) certification — all administered by the Department of General Services.

Many SLED solicitations have mandatory participation goals for certified small and diverse businesses. Getting state-level certifications can give you a significant competitive advantage and may even be required to respond to certain solicitations.

How to Find SLED Opportunities

Unlike federal contracting, where SAM.gov is the primary (though incomplete) source of opportunities, SLED opportunities are scattered across hundreds of different portals. Here's how to navigate them efficiently.

State Procurement Portals

Every state has a primary procurement portal where state agencies post solicitations. These are the starting point for any SLED strategy. California uses Cal eProcure; Texas uses ESBD (Electronic State Business Daily); New York uses NY State Contract Reporter. Registering on your target state's portal is the first step.

Local Government Portals

Cities, counties, and special districts typically post solicitations on their own websites or through third-party platforms like DemandStar, BidNet Direct, or OpenGov. The challenge is that there are 90,000+ local government entities in the United States, each with its own procurement process.

The practical solution is to focus on the largest local government entities in your target geography — the top 20–30 cities and counties in your state — and register on their procurement portals. These entities have the largest budgets and the most frequent procurement activity.

Cooperative Purchasing Platforms

NASPO ValuePoint, OMNIA Partners, and Sourcewell are the three largest cooperative purchasing organizations in the United States. Getting on one of their master contracts gives you access to thousands of SLED entities across the country. These are highly competitive to win but represent enormous long-term revenue potential.

The California SLED Market: A Deep Dive

California is the largest SLED market in the United States, with over $15 billion in annual IT and professional services spending alone. For Southern California-based contractors, the California SLED market represents an enormous opportunity with significant geographic advantages.

Key California SLED Procurement Vehicles

State Procurement Portals: A National Reference

Here are the primary procurement portals for the largest SLED markets in the United States. Register on the portals for your target states before pursuing any opportunities.

Using SLED Contracts to Build Federal Past Performance

One of the most strategically important aspects of SLED contracting is its role as a past performance builder for federal contracting. Federal contracting officers can and do accept SLED past performance as evidence of relevant experience — particularly for contracts in the same NAICS codes and at similar dollar values.

The strategy is straightforward: win 3–5 SLED contracts in your target NAICS codes, document them thoroughly in CPARS-equivalent formats, and use them as past performance references when pursuing federal prime contracts. This approach typically takes 12–18 months but creates a foundation that would otherwise take 3–5 years to build through federal contracting alone.

When documenting SLED past performance for federal use, include: the contracting entity's name and contact information, the contract number and period of performance, the dollar value, a description of the work performed, and measurable outcomes (on-time delivery, customer satisfaction scores, cost savings achieved). The more specific and quantifiable your past performance documentation, the more credible it will be to federal evaluators.

Your 90-Day SLED Market Entry Action Plan

Here's a concrete, actionable plan to enter the SLED market and win your first contract within 90 days. This is the same framework we use with new clients at TheGovConBD.

The Bottom Line

The SLED market is the single best-kept secret in government contracting. It's twice the size of the federal market, offers faster awards, requires less documentation, and faces significantly less competition. For small businesses with no past performance, it's the optimal entry point. For established federal contractors, it's an untapped revenue stream that can double their government contracting footprint.

The contractors who ignore SLED are leaving billions on the table. The ones who embrace it — who understand the procurement rules, register on the right portals, get the right certifications, and build relationships with state and local contracting officers — are building government contracting businesses that are more resilient, more diversified, and ultimately more valuable than those that focus exclusively on federal.