Government contracts can be a lucrative, reliable path for growing a trade construction business.
But it takes a lot of work upfront to get your company ready to do business with government clients.
Here are five tips to help subcontractors get their businesses ready.
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Have a Structured Process for Navigating Opportunities
A government contract could mean federal-level work, or it could mean work for a municipal client. The opportunities come in all shapes and sizes, but you need to be able to find and sort through those opportunities.
A methodical approach works best. Construction trade contractors should check the following resources to find opportunities for subcontracting work:
- SubNet. This is a database of jobs posted by larger contractors who need trade specialists on a given construction project.
- The Directory of Federal Government Prime Contractors with a Subcontracting Plan. Each year, the U.S. Small Business Administration puts together a comprehensive list of general contractors that work with the federal government and have plans in place to subcontract work during the government’s fiscal year.
- USASpending.gov. This site is maintained by the federal government and acts as an open-source database of all federal contracts. Here, you’ll find a list of all the prime contractors that award subcontracts to local trades businesses.
- SAM.gov. This is another site maintained by the government that lists procurement notices from federal contracting offices.
Get familiar with each of those databases, and check in regularly to spot new opportunities.
To apply for federal construction contracts, you will need to create a profile at SAM.gov. That profile should include a capabilities statement, Wil Chan at Next Insurance writes.
“When writing your capabilities statement, describe your construction company’s strengths memorably,” Chan says. “Tout your previous projects, especially if you’ve had prominent clients. List any relevant construction certifications you have. Mention whether your business qualifies as owned by a designated ‘special interest groups’ like women, disabled veterans, disadvantaged people, or people in historically under-utilized areas. Qualifying as one of these groups can be a significant advantage in bidding.”
Be Ready to Price Your Services Competitively
As a rule, government contracts “go to the lowest responsive, responsible bidder,” the U.S. General Services Administration writes. On bigger projects, the government uses more complex methods for assessing proposals, but price remains a major factor.
That price sensitivity extends to the subcontracts that prime contractors award. Trade contractors who know how to set competitive prices, without undervaluing their work, will have an advantage.
This means subcontractors should be selective in what they bid on. “[C]hannel your energy into picking the best federal government contracts that require your company’s strengths and expertise,” writes the team at The Potomac Officers Club, a membership organization for executives who work in government contracting. “Choose a federal contract that not only plays to your strengths but also gives you room to grow.”
Be Diligent in Writing Your Proposal
When you find an opportunity that is a good match for your company’s capabilities, you can start thinking about what your proposal might look like.
FedBiz Access has a helpful list of the three types of solicitations you will see for government contracts:
- Request for proposal (RFP). This is used for bigger contracts and leaves room for vendors and the government agency to negotiate the terms.
- Request for quotation (RFQ). This is a simpler procedure used for contracts below $150,000.
- Invitation for bid (IFB). This is a procedure in which the price and terms of the bid are submitted directly, and there’s no negotiation between vendor and government agency.
When responding to an RFP, be ready to do your homework. “If you just skim through the RFP, chances are you’ll overlook something,” Cielo Cinco at GovCon Wire writes.
“No matter how small of detail it may seem, it can either make or break your proposal. The government receives countless contract bids for their different projects. If they saw that your proposal didn’t follow their strict instructions, they wouldn’t think twice about tossing your proposal into the rejected pile.”
Cinco also underscores how important it is for your proposal to address the specific needs the government outlines in its RFP. “When the procurement officers read your proposal, they want to see a specific plan on how you intend to fulfill the contract requirements. If your plan of action is too vague, they will think you don’t have what it takes to deliver the task.”
Know Local Prevailing Wages
Government contracts must meet numerous regulatory requirements, one of which is outlined in The Davis-Bacon and Related Acts (DBRA).
The DBRA forces vendors to pay prevailing local wages on government construction projects, and on projects of a certain size workers are guaranteed time and a half on overtime hours.
“Threshold amounts vary from state to state and the prevailing wage will differ based on where the project is taking place so it’s important to note when they apply and what those amounts are so they can be incorporated into your bids,” writes Kendall Jones, editor in chief at ConstructConnect.
The Federal Government Earmarks Money Each Year for Small-Business Contracts
U.S. law requires the government to award contracts to small businesses. Nearly one-quarter of federal government contracting money is set aside each year for small businesses, the team at Blackridge Research & Consulting writes.
This gives trade construction professionals an important path into securing government work. “When starting out in the bidding process for construction projects, consider set-asides or sole-source contracts because contracting officers may use such contracts to help government agencies meet their small business contracting goals,” the Blackridge team says.
“Rather than placing a bid in a full and open competition likely to attract heavy competition from well-established construction firms in the bidding process, a small business can bid on local construction jobs or projects dedicated to specialized business categories to get a foot in the door and establish credibility.”
How Construction Project Management Software Can Help
It’s not easy putting together a competitive government contract bid. Your numbers need to be watertight, and you need to know precisely how much the work will cost so you can set a competitive price.
Construction project management software like eSUB Cloud supports this work in a number of ways:
- It lets you centralize your construction project data so it’s accessible for everyone, whenever they need it.
- It helps you create systems for documenting everything, which is important because government agencies require heavy documentation. That habit of documentation is also helpful because there will inevitably be changes and delays, and solid documentation puts you in a position to weather those changes.
- It gives you a right-sized tool for managing work that’s separate from whatever software the prime contractor is using. This gives you total control over your own team’s data, which is useful if disputes arise with the prime contractor.
To learn more about how eSUB’s platform can support your bids on government contracts, schedule a demo today.
Images used under license from Shutterstock.com.