Iowa Construction Bidding Process

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What is the Bid Process in Construction? 

The construction bidding process involves five steps: bid solicitation, bid submission, bid selection, contract formation, and project delivery. For a contractor in Iowa to achieve success in the construction bidding process, you need to plan and improve in each of these areas.  

If you’re a new contractor or are looking to secure more bids more often, follow our guide below.  

What Should a Construction Bid Include? 

Successful construction bids generally contain the total cost of building the structure, including expenses for subcontractors, general contractors’ costs, overhead profit, and scope of work. A bid will also need to contain information such as company details, the date, a clear definition of the work, and a project name. Without all of these elements combined, you may not meet the necessary standards.  

How Do You Estimate a Construction Bid? 

An accurate estimate is not only vital for winning a bid but it can also determine which Iowa Construction bonds you may need. A professional estimate will include:  

• Direct costs: This includes materials, labor, and equipment expenses tied directly to construction activities. 
• Indirect costs: Consider costs that don’t involve direct construction work, like permits, utilities, security, quality control, administration, and legal fees. 
• Labor hours: Wages paid to construction teams should be factored in, including potential overtime. 
• Subcontractor expenses: Don’t forget to calculate costs associated with hiring subcontractors for specialized tasks like plumbing, electrical work, or HVAC installation. 

What Are the Five Steps in the Process of Bidding? 

1. Bid Solicitation: This is when the project owner or general contractor invites contractors to submit bids. 
2. Bid Submission: Contractors prepare and submit their bids with all necessary details, such as pricing, scope of work, and deadlines. 
3. Bid Selection: The owner of the project will look over bids, including the contractor’s costs, qualifications, and the scope of work suggested. Based on this information, they will choose a bid they believe is best.  
4. Contract Formation: Once the project owner chooses a bid, they will set up a contract with the winning contractor.  
5. Project Delivery: At this phase, the contractor will begin work on the project and secure any further surety bonds they may need.  

What Licenses and Bonds Do You Need for Iowa Construction Bidding? 

Iowa does not issue a statewide “general” contractor’s license.  Instead, every construction firm paying more than $2,000 in annual wages must register with the Iowa Division of Labor’s Contractor Registration program and renew that registration yearly. Trade work that the state expressly regulates—such as electrical, plumbing, mechanical/HVAC, sheet metal, hydronic systems, or asbestos and lead abatement—also requires a separate license from the appropriate Iowa licensing board. A firm formed outside Iowa must 1) file a Certificate of Authority with the Iowa Secretary of State and 2) post a $25,000 “out-of-state contractor” bond when it registers. 

Before most transportation bids are accepted, contractors must be prequalified by the Iowa Department of Transportation (DOT). The resulting certificate sets both the types of work a firm may pursue and the maximum cumulative contract value it can hold at any one time. 

For virtually all state and local public improvement contracts that fall under Iowa’s competitive bidding statute, each bidder must provide a bid bond or other security equal to 5% of the bid. This guarantees that the low bidder will enter into the contract and furnish the required construction bonds. 

Once the contract is awarded, Iowa’s Little Miller Act (Iowa Code § 573.2) requires the prime contractor to supply a performance bond in an amount equal to the contract price on every public improvement project valued at $25,000 or more. The bond must be written by a corporate surety licensed in Iowa and guarantees both faithful performance of the work and prompt payment of subcontractors, suppliers, and laborers, combining performance and payment protection in a single bond. 

Together, Iowa’s registration, licensure, prequalification, bid security, and bonding rules ensure that public funds are protected and that every participant on a state or local project benefits from the engagement of a financially sound and experienced contractor. Partnering with a surety specialist like Surety Bond Professionals can help you obtain the necessary bonds quickly and at a competitive rate so you can focus on submitting winning bids rather than chasing paperwork. 

Common Mistakes Made While Bidding 

Even a well-prepared contractor can be rejected for a bid. Some common reasons this might happen are: 

• Incomplete documentation, such as proof of bonds and licenses. 
• Inaccurate cost estimates, where your estimate is much higher or lower than average. 
• Lack of experience, unproven track record. 
• Simple mistakes, like not following the guidelines for the bid strictly or missing paperwork. 
• Ambitious timelines, if your proposed timeline does not align with the average timelines submitted you may face rejection. 

State vs. Federal Bids? 

Understanding the difference between state and federal bids can help you stay compliant when you submit your bid. 

Topic	State	Federal
Procurement Laws and Regulations	State-specific procurement laws and regulations, varying by state.	Must comply with the Federal Acquisition Regulation, which is stricter and more rigorous.
Bonding Requirements	Often need state licensing and bonds like bid bonds and performance bonds.	Also needs bonds but is often required from a federally approved surety company.
Project Scope	Projects can range from small repairs to large public works in a specific area.	Contracts can be large-scale, spanning multiple states.
Set-Aside Programs	Some states have set-aside programs for small businesses, minority-owned, or veteran-owned businesses, but this varies.	The federal government has many set-aside programs for small businesses, veteran-owned, women-owned, and disadvantaged businesses through programs like 8(a) or HUBZone.
Competition	Often limited to nearby areas, reducing competition.	Open to contractors nationwide, increasing competition and opportunities.

Unique Aspects of the Iowa Construction Bidding Process 

1. State-level credentials and business registration: Iowa does not issue a statewide general-contractor license. Instead, any construction firm that pays more than $2,000 in annual wages must register annually with the Iowa Division of Labor’s Contractor Registration program. Trade work that the state regulates also requires an independent license from the appropriate state licensing board. A company formed outside Iowa must obtain a Certificate of Authority from the Iowa Secretary of State and file a $25,000 out-of-state-contractor bond when it registers, guaranteeing payment of Iowa taxes and unemployment contributions. In addition, contractors must secure any city or county licenses, registrations, or building permits required where the project is located. 
2. Building codes and plan review: Iowa has a limited statewide building code. The State Building Code Bureau has adopted the 2015 International Building, Residential, Existing Building, Fire, and Energy Conservation Codes (with Iowa amendments) and enforces them on state-owned buildings, projects built with state appropriations, a long list of healthcare and educational facilities, and in communities that choose to adopt the State Code. Most larger cities and counties adopt newer editions (often the 2021 ICodes) by local ordinance. Before preparing plans or specifications, contractors should confirm which edition applies and whether any local amendments or state-approved variances affect the project.  
3. Environmental and water resource permits: Construction that disturbs wetlands, streams, floodplains, or other sensitive resources may require approvals from multiple agencies. Discharges to waters of the United States trigger a Clean Water Act § 401 WaterQuality Certification from the Iowa DNR, and most work in a regulated floodway or along Iowa waterways needs a Floodplain Development Permit from the DNR’s FloodPlain and Dam Safety Section; many projects also require a companion § 404 permit from the U.S. Army Corps of Engineers. All state, federal, and local clearances must be in place before land-disturbing activity begins. 
4. Insurance requirements: Under Iowa workers’ compensation law, nearly every employer—even one with a single employee—must carry workers’ comp insurance or obtain approval as a self-insured employer. Iowa does not impose a blanket mandate for commercial general liability coverage, but public owners, private developers, and many local contractor registration programs routinely make CGL a prerequisite for award or permitting. 
5. Public works bidding and prequalification: State and local construction is governed chiefly by Iowa Code chapter 26 (Public Improvement Bidding). A governmental entity must advertise and award the contract through sealed competitive bidding for vertical public improvement projects with an estimated cost exceeding the current competitive bid threshold ( $139,000 for 2025). Projects below that figure but above the competitive quote threshold require at least two written quotes. Highway and bridge work led by the Iowa DOT requires contractors to hold an active prequalification certificate. 
6. Bid security and final bonds: Iowa’s Little Miller Act requires bonding on nearly all public improvements: 

• Bid security. Every bidder must file a cashier’s/certified check, share draft, or bid bond equal to 5% of the bid with its proposal. Failure to enter the contract or furnish final bonds allows the project owner to retain the security. 
• Performance/payment bond. A contractor awarded a public improvement contract valued at $25,000 or more must furnish a single bond in an amount equal to the contract price. The bond guarantees both faithful performance and prompt payment of subcontractors, suppliers, and laborers. Contracting authorities may impose the same requirement on smaller projects. 

Together, Iowa’s registration, licensure, environmental compliance, insurance, bidding, and bonding rules protect public funds and ensure that every participant on a state or local project benefits from the engagement of a financially sound, safety-conscious, and experienced contractor. 

Iowa Bid Network 

In Iowa, contractors and suppliers find state and many local bidding opportunities through the Iowa Management of Procurement and Contracts System (IMPACS) and its public “Bid Opportunities” site ( bidopportunities.iowa.gov ). IMPACS posts every competitive solicitation issued by the Department of Administrative Services (DAS) and other executive branch agencies, including Invitations to Bid, Requests for Proposals, Requests for Quotes, and Requests for Information, along with all addenda, bidtab results, and award notices. 

Vendors that register in IMPACS can create commodity code profiles and receive email alerts whenever new solicitations match their services or supplies. The same portal also houses statewide master agreements and links to solicitations hosted by universities and other exempt bodies, giving suppliers a one-stop dashboard for most executive branch opportunities. Transportation and highway projects are advertised and let separately by the Iowa Department of Transportation (DOT) through Bid Express. 

Because IMPACS, Bid Express, and their related state procurement sites are designed for government-to-business (G2B) and business-to-business (B2B) transactions, they do not accommodate consumer sales or peer-to-peer transactions. 

Succeed in the Iowa Construction Bidding Process 

To succeed in the Iowa construction bidding process, you need accurate estimates and documentation as well as a solid grasp of the requirements and nuances of state vs federal bids. 

However, one of the most important components of your bid is securing the right surety bonds, such as bid bonds, performance bonds, and payment bonds. When you choose a reliable surety bond agency, you can feel confident that your bond will meet all legal and regulatory requirements. At Surety Bond Professionals, we know the challenges you may face and are here to support you with all your bond needs.  Contact us today for a quote. 

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