The government construction contract realm is worth about $270-billion dollars, with a near-guarantee of payment for your work. From public schools to county courthouses, to airports and interstates, government construction contracts can be incredibly lucrative for commercial contractors.
But breaking into the public sector can be tough. Here are some tips to help strengthen your bid.
Start with the paperwork.
There is a lot of red-tape involved in bidding on a public sector project. This first step can trip up a lot of contractors. Get in front of the required paperwork by creating a list and tackling one item at a time. The government has set out steps for the documents and certifications needed to apply for public projects. They include:
Identify your NAICS Code, which will put your company into a particular industry classification.
Determine the size of your company using the SBA website’s size standard tool. A quarter of all government contracts must be awarded to small businesses, so if you qualify as one, that can give you an edge.
Register with Dun & Bradstreet to obtain a DUNS number, which allows you to submit bids for public contracts in your area.
Sign up with the Central Contractor Registration (SAM) database, in order to register and track those government jobs.
Join FedBizOpps.com, which delivers new relevant RFPs and contracts available for bid.
Look for subcontracting opportunities on government projects using the SBA’s SubNet database.
Connect with a Procurement Technical Assistance Center (APTAC) where you can sign up for classes, work with a counselor and attend networking events.
Show your government experience online.
Make sure you are well-represented online and that your website is current, with language specifically geared to government agencies. This is key since, beyond the information you submit, decision-makers will frequently vet a company by looking at their online presence.
If your company has worked on other public projects, be sure those are visible on your site and link to a case study with details that back up your bid if possible. If you don’t have any public projects to showcase, look for projects similar to the one you are bidding on.
Place your government and public projects in your online portfolio. Include great photos and descriptions of the work performed. Make sure your gallery is easy to find and navigate. Consider grouping or tagging your government projects by categories like schools, municipalities, and emergency response stations.
Keep an eye on your competition.
Keep your finger on the competition’s pulse by tracking contractors, contracts and future projects online. A little bit of research can give you a better idea of what your competitors are doing and help you gain an edge in positioning your company. The U.S. General Services Administration has recently merged several sites into one easy-to-use interface: https://beta.sam.gov/. This site houses information on governmental design and construction, policies and compliance, environmental laws and regulations, and more.
Focus on your reputation and past performance.
Proving that you are an established business and financially stable is essential to securing a bid. Make sure you are cashflow positive and that your financials are in order. An outside consultant or a CPA can be invaluable if you are unsure of your standing. Ultimately, the company that offers the most competitive bid with a strong track record of finishing high-quality jobs on time will secure the bid.
Click here to learn how a Financial Capability Letter can strengthen your government contracting bid.
Triple-check your bid amounts.
It can be tempting to lower your bid amount in order to beat out your competition and win the job. Remember that public entities will scrutinize your bid, and most will weed-out those that are unrealistically low.
Even if you were to get the job at unrealistically low price by dropping your profit margin you are adding unnecessary risk to the job, especially when a weather delay or unforeseen setback occurs, preventing you from being able to do the job as originally planned. It’s better to wait until the right bid goes through at a price that is appropriate to the job.
Bidding is all about the numbers. Make sure yours are accurate.
Get a free Margin versus Markup guide here.
Be sure to have adequate funding in place.
One of the most challenging parts of securing a bid is proving that you have the money to do it right. Lacking the cash and mobilization capital to cover expenses like permitting, surety bond premiums, material, and labor can be a big hit to your company’s bottom line before the project has even started.
Over the last several years, many commercial contractors have scraped by with whatever cash they have until they submit their first pay app. Then, they seek out other ways to finance the project, some of which often result in an impossible cycle of debt.
You can avoid that debt whirlpool by securing funding upfront to cover early expenses. Securing funding before the project starts strategy allows contractors to build the cost of the capital into their bid rather than have it come out of their profit margin later on. Companies that secure a loan in advance can bolster their bid by providing the property owner with a pre-approval letter.
Be realistic and meet expectations.
Being awarded and then failing to perform on the first project because you took on a one that was too large or too challenging will make it unlikely for you to secure another public bid in the future. The construction industry relies on word-of-mouth and reputation, even in the public sector. Don’t burn your first opportunity by shooting for the moon and falling flat.
Plan for your first public project to be well within your business’s comfort level and capability. Be accurate and upfront with your bid, get the work done, and meet expectations at every step. The reward will be the larger project you win the next time, and the next.
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