Now more than ever, as the U.S. government pours billions of dollars into the nation’s infrastructure, contractors must think strategically about how to increase their chances of winning lucrative government contracts. The goal is to find quality projects that fit the company’s expertise and growth plans and require limited resources so the cost of acquiring new business goes down while profits increase. Which Way to Go: Bids, RFPs or RFQs?
Most construction companies find hard money bids to be the best, or at least the easiest, way to win government projects. The obvious downside of bidding this way is that low price is the only way to stand out from the competition. Requests for proposals (RFPs) allow contractors to differentiate on criteria beyond price; however, the emphasis on design typically limits these opportunities to firms with architecture and engineering capabilities.
One way to avoid complex RFPs and highly competitive bids is to participate in a request for qualifications (RFQ). Many government agencies want to have a small cadre of contractors at their disposal to work on everything from building maintenance to smaller construction projects, such as installing a curb or repairing a damaged building. They achieve this by putting out RFQs to build a list of qualified contractors.
A typical RFQ considers a contractor’s past projects, business approaches and clients, among other factors. A contractor that gets on an agency’s qualified contractor list by participating in an RFQ is pre-qualified to bid on appropriate opportunities as they arise, without any time-consuming preliminary processes. Statutory requirements limit the size of projects that can be awarded this way, but the ceiling can be as high as $250,000 or more at many agencies. Gathering Owner/Agency Intelligence
After finding government projects, gather background information on the owner/agency. To do so, consider the following questions:
- Who at the agency is responsible for approving procurement projects? Who would participate in the evaluation and decision-making process? How do these government decision-makers view the contractor? Do they favor value more than price?
- What types of projects has the agency completed in the past? What major issues might impact the agency, such as trends, internal pressures and preferences? What procedures does the agency follow? What are its ordering/acquisition practices? Does the agency issue RFQs and, if so, what is the price ceiling on those projects? Which government agency-related documents can the contractor access?
- When will the government RFP be released? Will there be a government bidder’s conference or site visit? What is the schedule for the contract award and project start date? Does any historical information indicate a pattern of RFP solicitation?
- What is the size of the contract and the agency’s budget? What are the specific requirements (e.g., equipment, technology, resources and staffing)?
The answers to these questions provide insight into how to approach an agency, as well as allow contractors to assess whether a contract is worth pursuing. Gathering Competitive Intelligence
If a contractor decides to pursue a project, it should gather background information on the agency’s previous government contractors. Specifically, consider the following:
- Who currently is performing work for the agency, and who has it worked with in the past?
- What is the common denominator among previous contractors? What do competitors offer in their bids?
- What are the strengths and weaknesses of potential competitors? How does the agency view these companies?
- Can the contractor gain information on the competition’s pricing? How does their pricing compare to similar work by the contractor?
Developing Effective Bid Strategies
Knowing the contractor’s strengths and having a portfolio of references are key components in the development of a government bid strategy. The project must be a good fit, based on the contractor’s background and expertise. If a substantial portion of the contract depends on other skills (such as those of a landscape architecture firm), consider partnering or subcontracting opportunities as part of the bid strategy.
Questions to consider before pursing a government project include:
Obtaining Government Market Intelligence
- What is the contractor’s technical experience performing the same or similar work? How do the contractor’s strengths align with the agency’s evaluation criteria?
- How will the agency benefit from any partnering arrangements? Will partnering improve the contractor’s evaluation ranking?
- What aspects of the offering differentiate the contractor from the rest of the competition? How will the contractor demonstrate that its services bring the best value to the agency?
- What are the chances of not being able to deliver within budget? What are the chances of the work not being profitable?
A barrier to winning U.S. government contracts is the difficulty of gathering market intelligence. Government agencies are required by law to post information about such contracts; however, determining where the information is posted can be daunting. There is no guarantee contractors will be able to find what they need among hundreds of web pages or various posting sources.
One way to speed up the information-gathering process is to use a government market intelligence service, which can provide the details needed to quickly and effectively prioritize, qualify and convert government contracting opportunities. It is even possible to have the service provide daily government contract alerts geared to the contractor’s business and market area. A small investment in government market intelligence can help a contractor more strategically respond to government bids, RFPs and RFQs.