How to Perfect Your Capabilities Statement: What Sets It Apart Sets You Apart to Land Federal Contracts

Why Do Companies Need Capabilities Statements for Government Contracting?

A capabilities statement is the central document a perspective government contractor should utilize when dealing with government procurement agents. This document details both why government procurement agents should do business with you, and how to do it. It essentially contains all of the key differentiators that set you apart from your competition, all of the information you might find in a business card, and any special designations or qualifications your firm might have.

This year the government is projected to spend more for federal contracting than at any time in US history. With hiring freezes and other pressures, however, fewer people are employed by the government to handle the workload. To be competitive in this market, federal contractors must know how to condense their story in a clear and concise manner, and target the information that is most important to a particular decision-maker. A capabilities statement can do just that, and is a critical tool to help you be as successful in government contracting, regardless of the size of the company you represent.

A good capabilities statement will not win government contracting business by itself, but it can serve as a door-opener, a way to obtain meetings with decision-makers, a valuable tool to use during those meetings, proof of your qualifications, a way to establish you as a low-risk contractor, and a reminder to represent you in the best light as you work to build relationships with government procurement agents. In short, it can set you apart from the competition. In contrast, a poor capabilities statement will shut doors on you, expose your weaknesses, prove that you are not competent, reveal a risk to hiring you, prove you don't understand the needs of the government procurement agent, and become an obstacle to building a good working relationship with federal procurement agents.

When to Use Your Capabilities Statements

  • When asked: Often times government procurement agents will ask for or even require a capabilities statement as part of a sources sought or RFI.
  • When being introduced: Any time you are introduced to a government procurement agent or a prime contractor for whom you are interested in doing subcontracting work, hand them this document. Think of it as your business card on steroids.
  • When trying to set a meeting: This document, if well done, is one of the best tools to use to get a procurement agent to take a meeting with you.
  • When you need validation: During your meetings with other contractors you might be working with or with government buyers, the document can help to remind both you and your target of demonstrable credentials, relevant awards, and any special status for which your firm qualifies.

What Is the Difference Between a Core Competencies Statement and a Capabilities Statement?

A decade ago, hardly anyone used capabilities statements for government contracting. On the other hand, business regularly used core competencies statements when dealing with one another, and the documents began creeping its way to government contracting. A cynic would argue that the only difference between a core competencies statement and a capabilities statement is the header on the top of the page. Or perhaps that a core competency statement is wrapped within government red tape in the center of a capabilities statement. In reality, however, the differences are important. They lie in the philosophy behind each document. Years ago, perspective government contractors would create a single core competencies statement for all government contracting opportunities. The goal of the core competencies statement was to be comprehensive. However, trying to be all things to all people, or at least all government procurement agents, turned out to be an ineffective strategy. A core competencies statement might list all of the goods and services that a firm could potentially supply to the government, in broad and general terms. The idea was to cover all of one's bases. Prospective government contractors would not want to miss an opportunity by leaving something out. They wanted the government procurement agents to understand the breadth of what they could do and to see the firm as the potential source for a wide variety of government contracting opportunities. Firms would often use the same core competencies statement with multiple procurement agents, for multiple jobs, in multiple departments or agencies. The philosophy was essentially that nothing should fall through the cracks because the document was designed to be so broad and comprehensive. That approach is deeply flawed, and does not address the concerns of a modern government procurement agent.

In contrast, a capabilities statement is diametrically opposed to this philosophy. Each capabilities statement should be written specifically to address the needs of each individual government procurement agent for each government contracting opportunity. They should be tailored to the specific requirements of the bid opportunity, and address, as specifically as possible, any concerns the government procurement agent has shared. They should focus on key differentiators that set your firm apart from other companies in the fulfillment of the specific bid in question. A capabilities statement that is built without the exact bid in mind, and not centered around key differentiators is an ineffective capabilities statement. If it sounds like we are recommending writing a large number of unique capabilities statement, that's because we are. However, by properly understanding the format and elements of a good capabilities statement, it is relatively quick and easy to tweak a capabilities statement for each unique bid opportunity.

The Key Elements of Capabilities Statements

Your capabilities statement should consist of six sections, with an optional seventh section. The sections are as follows: (read more to see our sample core competencies statement…)

Sample Capabilities Statement


Your header should be a visually appealing introduction to the document. It should contain the following:

  • The document should clearly call itself out as a "Capabilities Statement"
  • Your company name
  • Your logo
  • Your slogan, tagline, or moto
  • Optional – consider putting the name of the agency or even the specific government contract you are attempting to win in the header

Contact Information

While this seems pretty straightforward, the contact information you need to include on your capabilities statement should be far more comprehensive than what you would typically put on a business card. This information should include any way that a government procurement agent might be looking things up in their databases. Be sure to include the following:

  • The name of the person on your team who will serve as the primary point of contact between your firm and the government agency
  • The direct phone number of the point of contact
  • The direct email address of the point of contact
  • The most relevant fax number
  • Website URL. It may make sense to have a dedicated landing page for government contracting. If you choose to do this, be sure that is the URL you put on all of your documentation.
  • Your DUNS Number
  • Your CAGE Code. Your CAGE code is important to assure government procurement agents you are properly registered. Prime contractors pursuing government contract work like to see their subcontractors and suppliers registered in SAM, as well.
  • Relevant NAICS and PSC Codes. Again, these are good signals to send to prime contractors and government procurement agents that you understand how the system works.
  • GSA Schedule Contract Number(s)
  • Similarly, if you are marketing to state and local governments, you should show your NIGP codes in your Capabilities Statement, because state and local governments use NIGP codes instead of PSC or NAICS codes.

Company Brief

The company brief should be just that – brief. This is a 10,000 foot snapshot of your company so that a buyer or prime contractor that does not know your firm can get a quick understanding of who you are. This should not be a big part of any capabilities statements, because it is one of the least important parts. You might consider including the following:

  • Number of employees
  • Financial stability
  • Age of company
  • Any Special Designations, such as HUBZone, Small Business Designation, VOSB, WOSB, etc.

Core Competencies

This is the part of capabilities statements that are most obviously and directly tied to the federal contract being bid on. This is typically the easiest section to write. Be sure to include your maximum capacity. If there are certifications that are required or assumed, be sure to list them here. This section obviously changes from one government contract to another.

Key Differentiators

This is both the most important part of capabilities statements, and also one of the most difficult for most federal contractors to write. This section needs to be subtly tweaked from bid to bid. If you have relevant patents, have special certifications or commendations, have won awards, or if members of your team have noteworthy achievements, list them here...but only if they can be of value to the buyer. For more details on how to perfect your key differentiators, see the "key differentiators" section below..

Past Performance

If we equate this document with a personal resume', this section is the "relevant work" history you would include, expecting your prospective employer to check each reference. This section of your capabilities statements should have the name, title, and contact information of two to five references, and a very brief description of the work you did for them. This is also a great way to prove your capacity. If you are bidding on a federal contract for 1000 widget and Company X can say what a great job you did providing 2000 widgets, that goes a long ways towards making a risk-averse government procurement agent feel confident you can handle the workload. For this reason, this section of each capabilities statement should be adjusted from bid to bid to include the contract or contracts most closely related to the contract you are trying to land. Everyone wants to include their biggest fan(s) in this section of the document, and you should. You should also, however, be sure to include at least one strong reference most closely mirroring the work at hand. Changing just one entry in this section of your capabilities statements can go a long way towards tailoring the document for each individual bid.

Optional – Success Story or Testimonial

While this is not a necessary or expected part of successful capabilities statements, some of our clients have found success by including a very short five sentence "case study" and/or quote to back up their claims. In the key differentiators section, you list the ways you have set yourself apart, and how that can benefit the prime contractor or government procurement agent. That is, at its core, hypothetical. In this section, you can show how your work has already yielded results for another business, agency, or procurement agent. If done well, and kept short, it can be a powerful addition.

Other tips

Above all else, always stay focused on the needs of the government procurement agent. Use appropriate jargon and abbreviations buyers are familiar with. Do not use long sentence or paragraphs. In stead, use bullets, simple tables, and short phrases. Your capabilities statement should be no longer than 1 page, though you can use both sides if necessary. Sections should be easily identifiable, highlighted, and easy to read. If printing, use high quality paper. If sending electronically, be sure to send in pdf format.

Discover the needs of the government procurement agent – Buyers will tell you what they want if you listen and ask the right questions. Ask about the evaluation criteria. How much emphasis should be placed on your cost and how much on other criteria? Are they having trouble meeting goals for a specially designated category, such as giving 23% of their government contract awards to small businesses? Are they having issues with timely fulfillment of contracts? Let them tell you their concerns, frustrations and what criteria are most important to them in making this decision.

What are Key Differentiators

Key differentiators are those relevant factors which separate you from your competitors for a specific government contract. A key differentiator accomplishes two things. First, it tells what you do better than most, if not all, of your competitors for government contracting. This really is your chance to brag about your team. Second, it specifically relates to the business at hand and shows how those differences make you a better choice for this specific bid.

Are you struggling with this? Think about why other government agencies, or your largest clients, have chosen to do business with you, and how that can help the agency you are talking to. Your differentiator must not only separate you from the competition, but must also must tie directly to the objectives of the government procurement agent.

Most of all, focus on how you can solve problems for the agency. A little research in the PartsBase Government Data database, and asking the right questions, can help you understand the needs of the agency, and meet them. Research the history of their federal contracts in the PartsBase Government Data database. Look for trends. For example, maybe you noticed that rather than placing a single 5000 piece federal contract, the government procurement agent creates five 1000 piece federal contracts. There is a reason they are making so much extra work for themselves. Why? Were they having trouble getting timely fulfillment of orders in the past? If so addressing timely shipping could be the most important differentiator. Are they trying to meet multiple goals, such as having both veteran-owned and woman-owned businesses receive federal contracts? If so, and you can meet multiple criteria they are trying to achieve, your firm may be eligible to land a larger share of the business. You will also simplify things for the government procurement agent. If their concern is quality, show how your quality control team can consistently eliminate that problem.

Once you know what a buyer wants, give it to them. For example you may say your company provided X goods and services to enable the effective use of A, B and C. That may mean nothing to a buyer. But if you say it is so effective it reduced costs by $X for another business or agency, you have clearly made the case for yourself. Point out specifically how these differentiators will benefit the agency.

  • Being in business for 20 or 30 years is not a key differentiator. Showing how your decades of experience has led to industry-leading, proprietary processes is a key differentiator.
  • Being a family-owned business that takes great pride in their work is not a key differentiator. Having mom and dad develop an incredibly stringent quality control system which has been improved upon for the last several years, and insurers 99.9% flawless, on-time delivery is a key differentiator.
  • Being friendly, or providing great customer service is not a key differentiator. Consistently getting good scores from government procurement agents is a key differentiator.
  • Incorporating environmentally friendly, green technologies is (in most cases parentheses) not a key differentiator. Showing that reducing waste by recycling and using renewable energy enables you to provide a product at a lower price without sacrificing quality is a key differentiator.
  • In many cases, government satisfaction with a product is essentially "written into" an RSQ. As such, a product warranty it's not a key differentiator. Winning industry awards is a key differentiator.
  • Location can be a key differentiator, either due to convenience, speed of shipping, or location in a HUBZone.
  • Your people, their training, certifications, prizes and awards could be a key differentiator.
  • Patents and proprietary tools are often strong differentiators.

It is best to have two to five strong key differentiators, and not water down your selling points with weak claims.


At the end of the day, even the best capabilities statements are not going to land federal contracts by themselves. They are, however, incredibly useful tools. A properly formed capabilities statement can set you apart from your competitors. Remember to focus on these three things:

1- Be sure to include all relevant information, such as contact information, special status designation, etc.

2- Your capabilities statement should be built around key differentiators.

3- Unlike the old fashioned core competency sheets, each capabilities statement should be custom tailored to the government contracting opportunity you are attempting to land.

Keep these things in mind and your core competency statements will open a lot of doors in the world of government contracting.