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The Necessity & Benefits of Capability Statements for Businesses in the Government Sector

Author: TeamingPro Staff

Over the years, Government contracting has become an extremely competitive marketplace. Did you know the United States government is the largest global purchaser of services and goods? Each year it awards billions of dollars in annual contracts for a multitude of different products.

The United States government partners with companies of all sizes. They deal with mega-firms that have thousands of employees and micro-firms that have an employee size of just one. Since there are thousands upon thousands of different companies competing for government contracts, as a small business owner, you want to do everything you can to stick out from the crowd in your industry.

All small businesses looking to develop a positive and lasting impression with federal agencies should develop the following 4 key factors:

  1. Familiarize yourself with the agency you are looking to target. Find out what they do, where they do it, why they do it, and how they do it. Also, determine if they have any project forecast
  2. Always carry business cards that display your UEIS, NAICS, and/or CAGE codes
  3. Have a practiced 30-second elevator pitch ready to go at the drop of a hat
  4. Have a capability statement

In this article, we are going to solely focus on #4 from above: Capability Statement. We will outline what a capability statement is, what a capability statement template should look like, and capability statement best practices.

What is a Capability Statement?

Think of a capability statement as the resume for your small business. It should act as a blueprint for your business's services and/or products. It provides detailed information to potential clients to help them make the choice to utilize your business for their needs.

A capability statement is often presented to new supplies or vendors to encourage building relationships. The federal government uses capability statements to compare businesses in the same sector. In other words, it’s used to size you up against your direct competitors.

The size of your capability statement will depend on your company and the way you intend on utilizing it. Your capability statement could be as small as a couple of paragraphs or as long as several pages. Think of your capability statement as a living document that will change, evolve, and be adjusted multiple times.

Information You Should Include in Your Capability Statement

While capability statements are a must-have for all small businesses, there is not a singular capability statement template that encompasses all. As each small business is different, so is each capability statement. There are, however, basic elements of a capability statement template that each business should include. These elements are listed below:

  1. Core competencies
  2. Past performance
  3. Differentiators
  4. Corporate data
  5. Contact information

It is important to note, that your capability statement should be company branded with your company logo and any other standard operating business marketing elements.

Core Competencies

The first part of your capability statement template should be your core competencies. This should include a brief introductory statement on your company’s knowledge, resources, skills, and capabilities. After your introductory statement, you should include a bullet-point list. These should clearly outline your company’s strengths and be tailored to your business’s specific needs.

Past Performances

The second section of your capability statement template should be past performances. This should include a list of previous clients with whom you have completed similar work. These should be prioritized by the agency and in the order of federal, state, local, and then commercial. It is important to include a specific contact person for the previous client. It should include the previous person’s contact name, title, email, and phone number. If the prior client’s project does not relate to the targeted agency’s needs, do not list it.


The third section of your capability statement template should be differentiators. This is where you should identify what sets you apart from your competitors. It should also include how this difference will benefit the target audience. Highlight what is unique about your business. Focus on what, why, and how your business can do it better, cheaper, and faster. It is important to relate these key differentiators to the target agency.

Make sure your differentiator's section can answer the following questions:

  1. Why do your services stand above the rest?
  2. How specifically is your business best suited to the needs of your target agency?
  3. Why are your products or services a better solution than others that are available on the market?

If you do not clearly communicate answers to the above questions, it will be impossible for your target agency to choose your business over a competitor. It is a common misstep for businesses to not address this section of the capability statement template to the best of their ability. Not utilizing this section properly may be a reason why your business is not receiving accepted project bids.

Corporate Data

The fourth section of your capability statement template should encompass company data. It is important to only include pertinent company history. Examples include:

  1. Company size
  2. Number of employees
  3. Revenue
  4. Geographic service area
  5. Pertinent Codes (UEIS, NAICS, socio-economic certifications, State & Federal contract numbers, etc)
  6. Notable accomplishments relating to the target agency

Readers of your compatibility statement will undoubtedly visit your website to gather company information. You want to make sure your website is continually being updated and has a government-focused area.

Contact Information

The fifth and final section of your capability statement template should be your contact information. This should include the company name, the specific name of your company contact, their email address, their phone number, and the company website. Make sure to include a quick link to your website for online communications. Your entire contact line needs to be visible on every page of your capability statement (if it is multiple pages long).

Capability Statement Best Practices

Above we have intertwined best practices for each individual section of the capability statement template. There are a number of other best practices that you should take into consideration when creating your capability statement template. We have included these best practices below:

  • Do not include long paragraphs
  • Use only short and concise sentences
  • Include strong keyword bullet-point lists and/or tables
  • Make the entire document visually appealing to the eye
  • Have a non-biased party read, review, and provide feedback prior to delivering to the client
  • Each potential agency, contractor, vendor, or client should have its own capability statement crafted
  • Design each capability statement for each potential client by aligning with their mission and/or the specific opportunity presented
  • Distribute as a physical document or PDF only

It is also important to properly format the Capability Statement template. Since this document will be reviewed by those in the government contracting sector, you want to show you have knowledge of the contracting process. Make sure to title the document using “Capability Statement”. Also make sure you use the following section labels, “Core Competencies”, “Past Performance”, and “Differentiators”. Your capability statement should not include any fluff. Leave excessive adjectives and detail out of your verbiage. Be clear, direct, and professional.

Does My Business Need a Capability Statement?

Your business absolutely needs a capability statement. This is a crucial document of your small business. It allows you to professionally and concisely present your business to decision-makers in the federal government. A capability statement is a key building block to developing relationships with important federal representatives. It provides a detailed description of services and goods your business can provide. When utilized correctly, a capability statement can be the single most important tool that allows your company to get ahead of the competition.

A well-crafted capability statement will allow your business to effectively achieve the following:

  • Explaining the benefits and features of your business
  • Showcasing how your business will help solve the target agencies problem
  • Highlights your business’s qualifications, skills, and prior experience to attract new clients and win projects
  • Easily respond to requests to tender without a period of delay

Capability Statement for the Government Sector

Capability statements are a must-have for any business looking to work in the government sector. Competition in the government sector is at an all-time high. More and more companies are trying to move into and stay in the government sector as government contracts are reliable, stable, and usually successful. Fewer people are being employed by the government to handle acquisitions and outreach. As such, businesses looking to breach the government sector must know how to get their brand in front of the limited number of government representatives in a rememberable way.

Remember a well crafted Capability Statement template is crucial to gaining government contracts and should always include the following:

  1. Core competencies
  2. Past performances
  3. Differentiators
  4. Corporate data
  5. Contact information

Good luck out there!
- Your friends at TeamingPro.