Understand The Mechanics Of The Government Contract Bidding Process
Once you have found a government contract that you might want to bid on, you should get the bid package and then ascertain the type of contract and bidding process involved. There are different types of contract arrangements in use, so be sure you understand exactly what you have to do to fulfill your obligations if you are awarded the contract. This can be difficult, because different buying offices using different terminology.
What is the next step if you find a bid that you are interested in? You will have to get the bid package . To get the package, you can do one of the following:
Once you get the package, review it carefully to determine exactly what the purchasing office wants to buy, and compare that with what your business is capable of delivering.
In addition, look at what type of contract is being sought. The three major contract varieties are fixed-price, cost-reimbursement, and special situation. This important because while you merely place a traditional bid for many contracts, there are other bidding techniques that come into use. Finally, make absolutely sure you understand the contract terminology. Unfortunately, the terminology used differs from one buying office to the next.
The Ins And Outs Of Governmental Construction Bidding
Government construction contracts can be extremely lucrative for commercial construction firms. In 2018, construction spending from federal, state, and local agencies totaled $307.1 billion dollars, with $21.3 billion coming from federal agencies and $285.8 billion from state and local agencies, according to data from the U.S. Census Bureau. Thats a 3.6% increase over the total public construction spending from 2017. Through August 2019, public construction spending has totaled $214.3 billion, which is on pace to exceed 2018s total.
Many construction firms rely on government construction contracts as their sole source of revenue, while others will bid on a mix of public and private opportunities. There are a number of regulations and statutes governing public construction contracting. These can vary greatly between agencies, so its important to understand which rules apply and carefully read all the bidding requirements when pursuing public construction contracts.
While an exhaustive list of all the regulations and statutes for all the federal, state, and local agencies would be nearly impossible to compile, there are some common requirements and practices that nearly all agencies follow. Heres a look at a few things to keep in mind when bidding on government construction contracts.
Are You A Small Disadvantaged Business
A small disadvantaged business isdefined as a firm that is 51% or moreowned, controlled and operated by aperson who is socially andeconomically disadvantaged. AfricanAmericans, Hispanic Americans, AsianPacific Americans, Subcontinent AsianAmericans, and Native Americans arepresumed to qualify. Other individualscan qualify if they show by a”preponderance of the evidence” thatthey are disadvantaged.Learn more about this.
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How To Bid For Government Contracts
There are a few key things you need to know to be successful when bidding for government contracts:
1. Know the market. The first step is to research the government contracting market and identify opportunities that match your businesss strengths. The best way to do this is to use a government contracting database, such as the ones offered by the US Small Business Administration or the Department of Defense. You will see Requests for Proposals , which announces a project, gives the appropriate detail regarding the objectives and outcomes expected, and solicits bids from qualified contractors.
2. Know the rules. The federal government has a complex set of rules and regulations that govern how contracts are awarded. Make sure you understand the basics of the Federal Acquisition Regulation before you start bidding on contracts.
3. Put together a strong proposal. When youre ready to submit a proposal, make sure it is clear, concise, and persuasive. Your proposal should demonstrate why your business is the best choice for the contract. Understand that simply being the cheapest bid will not guarantee success. For example, if a department is planning on having a complete cybersecurity solution installed throughout a premise, Cisco, a world-renowned provider of IT solutions and the backbone of the internet, is far more likely to be awarded the contract than Sony, which creates a suite of fantastic technology but is not known for IT solutions.
Find Your Naics Code And Business Size
Government contracts will ask that you submit your North American Industry Classification System code as part of your application. This code is used by the federal government to classify businesses for statistical purposes related to the U.S. business economy.
The NAICS Association website offers a free search tool that can help you figure out what NAICS codes apply to your business. Codes are categorized by what your business offers. For instance, the NAICS code 611430 applies to businesses that provide professional and management development training. It can take a little bit of work to find the right code for your business: some entrepreneurs prefer using the US Census Bureau code lookup tool to find the best code.
Once you have your code, check the SBA website to determine the small business size standard that applies to your specific NAICS code. Each industry has different standards for what qualifies as small. For instance, NAICS code 611430 shows that businesses must have sales below $7 million annually to be considered a small business. This will have relevance as you decide which contracts to bid on, as some contracts are only open to small businesses by the SBA/NAICS code definition.
There are a number of places to monitor for contract opportunities as the government releases requests for proposals.
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Factors Affecting The Bid Outcome
Which factors do government buyers consider in looking at your bid and finally awarding the contract? Here are some of the most important:
Does your bid meet all essential requirements? One of the first things that government buyers will do is make sure that your bid conforms to all essential requirements of the solicitation. Does your proposal meet the evaluation factors? Check them carefully. Remember, it’s not what you want it’s what they want. This includes exact conformance to all the specifications, drawings, descriptions, and standards specified in the contract solicitation, as well as materials, delivery dates, packaging and marking requirements, past performance history, etc. Often, these factors are referred to as “Best Value.”
What’s your performance record? Another important consideration for buyers is your past performance record. If you didn’t meet a deadline on your first contract or if you have a history of late deliveries on contracts, the government will not want to work with you. The government operates on strict schedules and when you don’t meet one, the government tends to get very upset and never forget. Even in cases where price is a deciding factor, the government now factors in past performance in figuring out the real cost for an item.
The DLA-BSM Internet Bid Board System is a web-based application that allows you to:
Government Contracts Favor Small Businesses
Of the approximately $500 billion that the U.S. government spends annually on federal contracts, its also their goal to allocate 23% of those funds to small businesses. Now, that might not sound like a huge figureâbut in what other bidding scenarios do you have any sort of guarantee that the prospect will choose a small firm like yours over a much bigger company? In private industry, thatâs virtually unheard of.
Whatâs more, through the Federal Procurement Data System, you actually have the ability to identify government agencies that arenât yet meeting that 23% target. If you respond to a request for a proposal from an agency in this circumstance, youâre almost guaranteed preferential consideration over non-small business firms.
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Youre Bidding Too High Or Too Low
In this line of trade, knowing how to price your goods and services right is an essential skill.
If you bid too high, its pretty much guaranteed that the government agency will ignore your proposal since your proposal value exceeded their budget in mind. However, pricing your proposal too low is not a sound strategy either. The agency will deem your proposal too risky and unrealistic since they have no guarantees of the quality of ludicrously cheap goods and services.
The government agency aims to hire a contractor who can deliver quality service at a reasonable price. To help you know the optimum pricing range, you can look at the similar contracts awarded they have before. You can check out the details of previously awarded contracts by the government at the USASpending.gov website.
To put it simply, perform a market research to know the right price range of the contract. Then, think of a competitive contract value that is high enough to ensure profits and quality operations but still low enough that you are within the federal agencys preferred spending range.
How To Get A Government Contract
Once youre qualified and have completed the registration process, heres how to submit a strong bid for a federal government contract.
By: Emily Heaslip, Contributor
Government contracts come in different forms, and knowing how to prepare your bid can help you secure this type of lucrative business opportunity.
The federal government is a huge potential customer for small businesses. A federal contract can be a good opportunity to boost revenue for your business, especially since the government is obligated to award a large percentage of contracts to small companies.
Heres how to prepare your business to bid a government contract.
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How To Bid On Government Contracts
This article was co-authored by Lahaina Araneta, JD. Lahaina Araneta, Esq. is an Immigration Attorney for Orange County, California with over 6 years of experience. She received her JD from Loyola Law School in 2012. In law school, she participated in the immigrant justice practicum and served as a volunteer with several nonprofit agencies.There are 8 references cited in this article, which can be found at the bottom of the page.wikiHow marks an article as reader-approved once it receives enough positive feedback. In this case, 86% of readers who voted found the article helpful, earning it our reader-approved status. This article has been viewed 360,143 times.
Each year, the U.S. federal government spends hundreds of billions of dollars purchasing products and services. Of that amount, small businesses receive almost a hundred billion dollars in contracts.XResearch source With the right preparation, you can submit a well-reasoned bid that might land the government as one of your clients.
Bidding On Government Contracts The Winning Way
March 15, 2021 by Duane Craig
Construction services make up a large share of government requirements at all levels, and there are many types of jobs contractors can bid on. To get the work, you need to be regularly bidding on government contracts. Bidding means responding to requests for proposals, or RFPs. By making your RFP response timely, complete and descriptive, you can improve your chances of winning government contracts. Heres how.
A government agency will release an acquisition plan that specifies the work required and its budget. While developing the AP, the agency also does vendor outreach to locate interested contractors. Next, the agency releases an RFP. You can find these RFPs at government bidding websites and at your local and state government agency procurement offices. Once you find the RFPs that fit your expertise, you are ready to start bidding on government contracts.
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How To Win A Government Contract Bid In 10 Steps
The federal government is one of the best clients a small business can have the opportunity to deal with. Awarding more than hundreds of billions worth of government contracts, the U.S. government can be a stable source of income for small businesses out there.
If you are an aspiring government contractor who wants to make it big in the field, then you should start learning how to nail down an effective contract bid!
North American Industry Classificationsystem
The SIC will be replaced by thesix-digit North American IndustryClassification System code. Thenew NAICS system was developed toreorganize business categories on aproduction/process-oriented basis. Thepurpose behind the creation of the NAICSclassification system is specificallyfor governmental regulations and censusreports. To determine your NAICS code,clickhere.
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Where To Find Government Contracts
There are many ways to locate potential federal contracts. We cover these in full in our article How to Become a Government Contractor, but you should begin by registering with the General Services Administration and on SAM.gov.
This will allow you access to the governments system for awarding contracts, and youll be able to search for opportunities that fit your business.
If you want to be part of a large contract that alone you could not fulfil, you can look at the options for becoming a subcontractor. You can find a directory of these on the GSA site, but you should also check out SubNet to see a range of opportunities for your business.
You will need a NAICS number to become a government contractor. There are many other legal requirements to be eligible. Check out our article for full information on becoming a government contractor.
Additional Resources For Government Contracts
We hope this has been a useful primer on how to obtain government contracts for small business, but theres certainly more to be learned within this expansive and complex industry. Fortunately, the SBA and other federal agencies have gone to great lengths to provide valuable resources for small business owners interested in federal contracts. Here are a few of the most useful resources we recommend.
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How The Government Buys
The government buys many of the productsand services it needs from suppliers whomeet certain qualifications. It appliesstandardized procedures by which topurchase goods and services. That is,the government does not purchase itemsor services in the way an individualhousehold might. Instead, governmentcontracting officials use proceduresthat conform to the Federal AcquisitionRegulation.
The FAR is a standardized set ofregulations used by all federal agenciesin making purchases. It providesprocedures for every step in theprocurement process, from the timesomeone in the government discovers aneed for a product or service to thetime the purchase is complete.
The FAR can be accessed electronicallyatwww.acquisition.gov/browse/index/far.
As of October 1, 2001, the governmenttransitioned from Commerce BusinessDaily to Federal BusinessOpportunitiesto “post” all procurement opportunitiesexpected to exceed $25,000. FedBizOppsis a web-based application and is thegovernment-wide point of entry tocommunicate its buying requirements topotential suppliers. This very importantwebsite can be accessed atFedBizOpps.
When the government wants to purchase acertain product or service, it can use avariety of contracting methods.Simplified acquisition procedures,sealed bidding, contracting bynegotiation and consolidated purchasingvehicles are key contract methodologiesused to purchase products and services.
How Do You Price A Government Contract
There are various ways you can price a government contract however, your price might not be guaranteed by a contracting officer if you did not thoroughly research and prepare for it. You can dive deep into the above-mentioned websites, looking for how often quality won out over price or vice versa and paying close attention to the details.
Even though the price is slightly more than other bidders, certain federal contracting officer regularly awards prime contractors with the best solution. Other contracting officers choose to find small business contractors that offer the lowest price while still being technically appropriate. Here are more reminders on pricing a government contract.
- Bid aggressively if you want your first federal contract. But keep in mind that your first federal contract might not bring in a lot of cash. Nonetheless, you will earn valuable past performance and experience, as well as contacts with procurement officer/s who will remember you for future, more large deals.
- Consider basing your price on the prize from the previous year.
- Increase your bids as you gain more previous experience.
Remember:
- Read the full bid a second time. You cant afford to overlook anything or fail to follow instructions precisely.
- Double-check your bid with a friend or colleague. Check for spelling mistakes and double-check that youve answered all of the questions and submitted all of the needed information.
- Make use of your bid template to save time in the long term.
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How To Win Government Contracts
To win a government contract, first, you need to bid on it. Here is the step by step on how to do this.
Find the contract your business could complete. You can look on the Government Procurement website to determine which contracts are available and when they close. When you have found a contract, read the request for proposal , Request for Quotations , Invitation for Bids
Make sure you understand what the government is seeking. The invitation will also tell you how to submit your bid. Do not make the mistake of bidding on a contract that is only partially a match for the services your business provides or is too big for you to handle. Offers are not accepted blindly, so make sure that any contracts you bid on match your business interests well to ensure the best chance of success.
Check the submission guidelines and follow them precisely. The government is very specific about what they want and how they want to receive it. Please make sure you include everything required and submit it by the deadline. If your bid is not complete or arrives late, it will be disqualified.
You will be competing against other businesses for the contract, so make sure your bid is competitive. Research what other companies are charging for similar services, make sure your offer is lower or equal to theirs or show that additional benefits would come from working with you. The government is looking for the best value, not necessarily the lowest price.
