To compact soil, and add moisture, it needs to be dug up and mixed, and then put back in place in layers. The thickness of the layer depends on how you are going to compact it. On commercial jobs, like roads and parking lots that I was on, it was built up in just a few inches and then gone over with a sheepsfoot vibratory roller. This goes on all day, day after day, until it's built up to where it needs to be. Even with a water truck adding water, and loader mixing the dirt, a dozer spreading it, and a huge sheepsfoot vibratory roller compacting it, it's still very hard to pass the test when working on a small area.
As a home owner, you will never get full compaction. You can get something that's workable, but most of the time, it's never even close. If you can drive over the soil with your tractor front tires, and a full load of dirt in your loader, and the soil doesn't settle, or sink it from the weight of your tractors, you need to keep working it. Once you get it hard enough to support the weight of your front tires with a load of dirt in the bucket, that's about as close as you can hope for.
How far away from the edge of the pad where the shed is going to be built is the retaining wall? The retaining wall is where you will have your biggest issues. Compacting next to the wall is even harder then compacting a small area. The farther away you have the retaining wall from the building, the most compaction you will get in the soil under the building.
Railroad ties do not last very long when they touch soil. Railroads put them on top of a bed of rock that allows water to drain so they don't sit in water after it rains. The wood used for railroads ties is considered junk wood that isn't good enough to make real money. The tar, or coating, or whatever is used on them will remain in place as the wood rots out on the inside. The bugs will eat it out from the dirt side and the railroad ties will look fine for years, but then one day, you will see something odd about them and realize that there isn't anything left inside of them. Cement retaining wall blocks when installed properly will last a lifetime, railroad ties will last a decade.
Deep footings around the walls, or setting treated posts in the ground will compensate for soil that isn't compacted fully.
In all likelihood, just pouring a concrete slab on the soil after you've driven over it a bunch of times with your tractor will give you something that should be fine. A shed is not a house, and expectations are not the same. Get it as good as you can and realize that it might need some maintenance in the future.
Rebar in the slab, resting on chairs, is the standard for a proper concrete slab. Anybody that pretends to pull up the rebar while pouring should not be hired. Anybody that suggest using wire instead of rebar, or fiber instead of rebar, should not be hired. Those are fine when added to rebar, but they will never replace rebar. The biggest mistake in pouring concrete is adding too much water so it flows easily. The concrete should pile up on itself when poured, and fight you when spreading. If it flows like soup, it's too wet and it will crack!!!! Cracks happen because of too much water. Rebar holds it together and adds strength, but too much water will still crack the concrete.
A slump test is easy to look up online. Knowing what slump is will stop them from adding water to the mix. Every crew will try to add water, it makes a huge difference in how much easier it is to spread.
