Government construction contracting offers significant advantages for many businesses. They can be lucrative projects if you can win them. To help you, here’s a guide on how to bid on government construction contracts.
Why Bid on Government Contracts?
Some small business, particularly those ran by women or minorities, can see many great benefits from government contracts. Every year, the federal government allocates a certain percentage of contracting funds to small businesses. Five percent of that amount is set aside for companies owned by women and 25 percent for minority-owned businesses.
Additionally, the Small Business Administration (SBA) administers federal small business construction contracting programs in which small construction companies (i.e., average annual receipts of $14 million to $35.5 million) compete only with other small businesses.
Still, government contracting is not for every construction company. Finding and bidding on government opportunities requires a significant effort, and the capture rate isn’t particularly high, especially for small companies bidding against much larger companies in “full and open competition” situations. Depending on your goals and your company, your chances may be better in more specialized construction categories.
Federal vs. State Construction Contracting
You may stand a better chance bidding on public works projects sponsored by your own state government than on federal contracts. There are similar set-asides for small and women- and minority-owned businesses at the state level.
Each state has its own process for soliciting, reviewing, and awarding construction contracts, but they’re all modeled on the federal process, more or less. So, in this article, we’ll describe the federal construction bidding process. Once you understand that, you can take a closer look at what your own state’s processes entail.
Bidding on Federal Contracts
Here’s what you need to know about bidding on federal construction contracts:
Register Your Business
First, you must obtain a DUNS number, which is required for all businesses that contract with government agencies. You can get a DUNS number free of charge from the Dun & Bradstreet website. A separate DUNS number is required for each location your business maintains.
Then, find your NAICS (North American Industry Classification System) code. The SBA uses this code to determine which companies qualify as small businesses. You’ll need to use it when locating bidding opportunities. The NAICS codes are established by the U.S. Census Bureau and are available through its website.
You will need to enter your DUNS number and NAICS code when you register with the federal government’s System of Award Management (SAM), which is the federal repository of information on potential bidders and the services they offer. SAM registration is mandatory for contractors and recommended for subcontractors because larger companies, as well as government agencies, search SAM for potential bidders.
If you want to receive notices about upcoming “full and open competition” contracts, register your business with the Federal Opportunities (FedBizOpps) website. FedBizOpps publishes announcements of upcoming federal contracts valued at $25,000 or more. The federal government’s Contracting Opportunity Finder allows you to apply certain filters to search for suitable contracting opportunities for your construction business.
Preparing Your Bid
Read the instructions for bidding on any federal contract very carefully. Failing to meet a single requirement can torpedo your bid. If there is anything you don’t understand, reach out to the contact person identified in the bid solicitation. If a pre-bid conference is scheduled for potential bidders, it’s a good idea to attend if possible.
Follow the bid instructions exactly. They will tell you what must be included in your bid package and how and when it must be submitted. Some solicitations require submission of separate technical and management proposals as well as a price proposal. DO NOT miss the submission deadline, or all of your work preparing your bid will have been for nothing.
Obtaining Required Surety Bonds
The solicitation will identify any surety bond requirements that must be met by bidders. A bid bond may or may not be required. All construction projects subject to the Miller Act (those valued in excess of $100,000) require both performance and payment bonds.
It can take anywhere from 30 to 120 days for the Contracting Officer to review and respond to all bid submissions. The award decision takes into account each proposal’s responsiveness, technical acceptability, and pricing, as well as references attesting to past performance. You will be notified by the Contracting Officer as to whether your bid has been accepted or rejected, though in some cases, you may be asked to provide additional information or to enter into a negotiation of contract terms.
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