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Understanding the government bidding process
A diversified client base is essential for a pipeline of steady construction work, especially during economic slowdowns, which is why general contractors should consider competing for local, state or federal construction projects.
The federal government alone spends billions of dollars every year on construction, with about 25 percent of that set aside for small businesses. Structures, such as roads, bridges and sewers, are vital to the strength of a community. And despite popular belief, many governments still build infrastructure during economic downturns.
However, many general contractors don’t consider government jobs because they think the contracts only go to big firms or that the bidding process is just too complicated. A GC can definitely compete if it goes after projects that fit its expertise.
Although bidding can be time-consuming, the payoff can be steady work that is recession-resistant. Even if you are too busy right now to take on new work, that may change a year or two down the road—all the more reason to start preparing now so you can get that first government contract in the future.
1. Get Registered
Getting started is the easy part. GCs interested in bidding on federal construction projects need to:
- Obtain a Data Universal Number (DUNS), a unique nine-digit identification number from Dunn and Bradstreet
- Register with the federal government’s System Awards Management (SAM) database
- Complete an Online Representations and Certifications Application (ORCA) (part of the SAM registration process)
- If you qualify, certify with the Small Business Administration as a small business or a disadvantaged business
Work with a lender, if needed, to establish a source of working capital. “Most people don’t realize the government will not pay a deposit, so you need to be able to front the materials and labor costs until you are able to receive a draw from the grant,” said Leah Mowery, co-founder of Mowery Construction, a small firm in Akron, Ohio, that does a lot of business using Veterans Administration grants.
2. Know Your Target Market
It is critical to know your strengths and weaknesses as a construction firm. This allows you to bid to your strengths and reinforce any weaknesses by partnering with high-quality subcontractors in order to mitigate any perceived risks. Consider also marketing your company as a subcontractor, so you can be considered as a partner on larger projects.
Fully understanding the rules—for both bidding and the construction process—can also be a challenge for GCs. Procurement and general construction rules and regulations commonly become more complex as a contractor moves up the levels of government, from local to state to federal. “Similarly, the ability for contractors to receive clarification from public owners on requests for proposal [RFPs] can similarly become more difficult and less transparent as a contractor moves up the government levels,” said Jimmy Christianson, regulatory counsel for Associated General Contractors in Arlington, Virginia.
Christianson has found that contractors have the most difficulty understanding how various regulations impact the way a small business would perform work on a government job. “Small businesses generally do not have legal counsel on staff that can help them comply with the latest environmental, safety, health or other regulations that can impact the job, making it harder for them to put together accurate bids,” he said.
For any bid, GCs need to show they are qualified to perform the work, either as the project lead or as a subcontractor. It is not just a good price the government is looking for—it is also the qualifications of the team and the team’s ability to meet the timeline.
“That’s why it is essential to prequalify your subs,” said Christine Rahlf, associate director at Maxim Consulting Group in Milwaukee, Wisconsin. “That way, when bid day arrives, you can more easily assess the subcontractor quotation. Meet with preferred subs ahead of time and verify size and scope that the sub can perform, bonding capability, insurance coverage and bidding format, including unit pricing, scope exclusions, etc.”
3. Find Your Next Project
Contractors don’t have to start with big jobs. Instead, they should focus on projects that allow them to show off their skills and expertise, or sign on with a larger prime contractor as a subcontractor. Helpful sites for finding projects for bid include:
- Federal Business Opportunities (fbo.gov) sends out lists of new construction projects awaiting bid
- Procurement Technical Assistance Centers (aptac-us.org) provide low-cost assistance to firms interested in doing business with local, state and federal governments
- Daily Journal of Commerce (djc.com) is a newspaper based in Portland, Oregon, that features construction news and bid opportunities
- Govdirections.com (govdirections.com) is a research service that provides information on state and federal bidding opportunities (over 37,000 are currently listed)
- ONVIA.com (onvia.com) reports on the spending of more than 85,000 federal, state and local government agencies
4. Build Relationships
It can take a year or longer to win a federal contract, so perseverance is a necessity. Be responsive to all government requests and send back estimates quickly. “Always make sure the government agency is not waiting on you,” said Mowery. “Keep them updated and complete paperwork in a timely manner.”
To gain visibility, meet with the government decision makers in person. Contractors often assume that government contracting authorities have limited flexibility on procurement decisions, and must follow strict award criteria. “Although this can sometimes be the case, the contracting authority can often exercise business judgement, so face-to-face contact is just as important as if you were bidding private work,” said Rahlf.
Although winning a federal contract can be a long process, the potential payoff can be huge. “If you’re on top of your project, and follow the government’s guidelines, you will get more projects awarded to you,” said Mowry. Government reps can also be generous with referrals.
There is also the satisfaction of being part of a project that has a long-term, valuable impact to a community and its residents. For Mowery, that means building facilities for United States veterans.
“These men and women have sacrificed their bodies for our country,” she said. “They are our neighbors, and become our friends. The work isn’t just a job to us. It’s a labor of love. When you know you are making a difference in people’s lives, you gain so much more from the process—it makes it worth the wait.