Do you want to become a federal contractor? Federal government contracting is a proven way to earn fame and financial stability. The federal government spends billions of dollars every year on the construction of roads, schools, and other public infrastructure properties.
Winning a government construction contract is a boon because you can earn much more with virtually limitless possibilities for growth.
The U.S. government is the largest purchaser of products and services in the world. It’s generally believed that landing a government construction contract is a time- and effort-intensive process with low earning potential.
However, federal government contracting is a lucrative option for construction contractors. Federal contractors get to work with the best teams and make money while leveraging their construction expertise to change lives.
Taking on a contracting opportunity with the federal government takes patience, precision, and performance.
In this blog post, we provide a walkthrough on how to get government construction contracts.
- An overview of government construction contracts
- Some special provisions in government contracting
- Federal government contracting for large businesses
- Federal government contracting for small businesses
- How to become a federal contractor
An overview of government construction contracts
The government procurement departments are constantly looking for a variety of contractors, including general contractors, electrical contractors, roofing contractors, and landscape contractors. Government construction contracts offer long-term and stable work to start or sustain a business. You can apply for government construction work at any time.
The requirements for bidding on government contracts are different from private contracts. Price alone doesn’t qualify for bid approval for government construction bids. A governmental entity awards a contract based on key bidding factors, including past history with the agency, public construction experience, and government contracting expertise.
Types of construction contracts
The four types of common construction contracts include:
Lump Sum/Fixed Price Contract
The most common construction contract includes a total fixed price for all the construction work done and simplifies bidding for owners and general contractors (GCs).
While finishing under budget results in huge savings for a contractor, miscalculations or unexpected project changes can result in making less money on a project.
Unit Price Contract
Also known as a measurement contract, measure and pay contract, or remeasurement contract, a unit price contract divides the total project work into separate units.
While this commonly used contract increases transparency and simplifies invoicing, it’s difficult to predict the final contract value. Remeasurement can delay payment as well.
Also known as a cost-reimbursement contract, a cost-plus contract includes direct costs, indirect costs, and profit (a percentage of the project’s total price).
Due to the flexible nature of the contract, inaccuracies in the initial bid aren’t disastrous, but it may be difficult to justify certain indirect costs such as administrative expenses and mileage.
Time and Materials (T&M) Contract
A T&M contract is an agile contract that establishes an hourly or daily pay rate and accounts for unexpected delays/costs/changes to the scope of work over the course of a project.
While simple negotiations are possible, failure to provide accurate material costs upon project completion results in lower profit margins.
Project delivery methods in construction contracting
This delivery method refers to a single entity—the design-builder or design-build contractor—delivering the design and construction services. Instead of awarding separate contracts, a single contract is awarded to a design-build firm or a joint venture of architects and general contractors.
A design-builder may designate a construction manager to lead the construction activities of a design-build contract.
This delivery method features a single prime contract in which a construction agency has a contractual relationship with only a general prime contractor.
Sub-contractors assigned to the general prime contractor perform more subdivisions of work (electric, heating, HVAC, plumbing, etc.) under a single contract.
Construction Manager at Risk
This delivery method entails a construction manager to deliver a project within a pre-determined Guaranteed Maximum Price (GMP) based on the construction documents and GMP specifications.
If the project exceeds the GMP, the responsibility lies with the construction manager for any overages.
Some special provisions in government contracting
The wider scope of government contracting includes bilateral contract modifications such as making negotiated equitable adjustments or definitizing letter contracts and unilateral modifications such as making administrative changes or issuing termination notices.
As the government’s agent, only a contracting officer (CO) may execute, modify, or terminate a contract in the scope of his/her authority. While a contracting officer and a contractor sign a bilateral modification, only a contracting officer signs a unilateral modification.
In government contracting, an equitable adjustment is a contract adjustment pursuant to a changes clause and compensates a contractor for expenses incurred due to government actions or compensates the government for contract reductions.
Furthermore, an executive order prevents disruptions in federal services in the event of a federal service contract transitioning from one contractor to another. The new contractor will have to offer jobs to the previous contractor’s qualified and trained employees to do the jobs.
Federal government contracting for large businesses
Government construction jobs are quite different from private sector construction jobs. Ensure proper timekeeping, accounting, estimating, and purchase systems prior to bidding on federal government construction contracts.
Sometimes, it’s necessary to receive security clearances for workers before bidding on a federal construction project.
The federal construction contracting process is a rigorous and rewarding way to choose the lowest responsive bidder who can successfully complete the project within budget in the recommended timeline.
As the government sales process is governed by stringent regulations and typically lasts longer than an average sales cycle, be well prepared prior to pursuing federal contracting opportunities.
In general, it’s not easy to gain government contracts for construction without agile systems capable of addressing Federal Acquisition Regulation (FAR) and potentially Cost Accounting Standards (CAS).
Although the lack of such agile systems presents a significant barrier to winning government work, a construction company can establish approved systems that meet government expectations.
Exploring opportunities in the federal marketplace is certainly profitable for business growth. But, have you thought about participating in set-asides for women-owned, veteran-owned, and other types of businesses?
It would be a good idea to enable your construction company to provide expansion opportunities for such set-aside partnerships to amplify business success.
Don’t forget to do the work well to secure a high rating from the federal government. The penalties may be severe if your work does not meet quality or timing requirements, or violates any applicable construction law. So, focus on delivering great work and addressing government concerns quickly.
Despite a contractor’s best efforts, government contract problems may arise that need to be solved efficiently by a trusted and reliable authority. In the case of contract disputes, one of the Boards of Contract Appeals or the Court of Federal Claims settles disputes between government contractors and executive federal agencies.
Federal government contracting for small businesses
Law requires the U.S. government to provide growth opportunities for small businesses. According to the U.S. Small Business Administration (SBA), a significant portion (23 percent) of federal government contracting dollars is earmarked every year for small businesses.
Small businesses can also form a joint venture to compete together for certain reserved government projects.
If a small business wants in-depth information on how to get government contracts for construction, it can visit the website listed above for the resources and support to start, grow, expand, and recover in the world of federal construction contracts.
If your business needs more room to flourish, explore federal government contracting for small and specialized businesses. The U.S. Small Business Administration announced that the federal government awarded a record-breaking 26.01 percent or USD 145.7 billion in contracting to small businesses.
SBA Administrator Isabel Guzman said, “We know that there’s much more to do to ensure all of our small businesses can get contract-ready and have the opportunities they need to engage with the world’s largest customer. We’re committed to increasing these opportunities and lowering barriers to give our small businesses a chance to grow their revenues through contracting.”
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.
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.
Some specialized business categories include:
- Women-owned businesses
- Native American-owned businesses
- Veteran-owned businesses
- LGBTQ-owned businesses
- Rural businesses
- Minority-owned businesses
Other contracting assistance programs include:
How to become a federal contractor
You will need to be fully qualified to navigate the vast federal government contracting landscape. Every federal contractor must comply with the Code of Federal Regulations (CFR). Start small and dream big to thrive in the federal construction space. We’ll show you how to become a federal contractor to bid on government contracts.
Register as a contractor
Government contractors are divided into two major categories:
Prime contractors – Bid directly on projects and win contracts from government agencies.
Subcontractors – Join prime contractor teams by virtue of specific skillsets/product or service offerings.
A large or small business has to register as a contractor before doing business with the federal government. Timely registration is the key to success.
Federal Tax ID
Your federal Tax Identification Number (TIN) or Employer Identification Number (EIN) works like your social security number. Even if you’re a sole proprietor, it’s essential to apply for your federal tax ID here.
Obtain a Dun & Bradstreet’s Data Universal Numbering System or D-U-N-S number (a unique nine-digit identifier) for your business here.
You can get the North American Industry Classification System (NAICS) codes for your products and services here. Federal statistical agencies use this system as the standard to classify business establishments for collecting, analyzing, and publishing statistical data.
You can obtain the Standard Industrial Classification (SIC) System codes here. The U.S. government assigns SIC codes to identify the primary business activity.
Size Standards Tool
If you want to qualify as a small business, use the Size Standards Tool for federal contracting opportunities.
Now, you can register your business in the System for Award Management (SAM) database. However, if the registration is not done correctly or vital information is missing, your company may not show up in the system or become disqualified for contracts.
If you’re new to SAM or find the registration process difficult to complete, you can avail of USFCR services to quickly and efficiently register your business in a risk-free manner. As a trusted third-party government registration firm, the US Federal Contractor Registration (USFCR) handles the detailed and time-consuming task of System for Award Management registration.
You are all set with the required documentation on record to explore federal contracting opportunities.
Identify potential opportunities early
Increased spending on government construction jobs presents a strong growth curve for contractors. Once you identify federal contracting opportunities, the sky’s the limit because the more you apply, the more you win.
If you want to get hold of government contracting jobs, research the federal marketplace and take advantage of SBA resources. Government agencies also use multiple databases to search for contractors. Government agencies use the Dynamic Small Business Search (DSBS) to find small business contractors for upcoming contracts.
Are you looking for subcontracting opportunities? Visit SubNet—a directory of federal government prime contractors with subcontracting plans. The U.S. Department of Defense (DoD) has a similar directory of large prime contractors to find subcontracting opportunities.
Apart from government databases, you can count on a reliable lead generation platform to find a host of federal government construction projects in your area/nearby locations. If you’re wondering how to get on construction bid lists, take a look at the most comprehensive database of construction projects.
In addition, think over construction business loans or construction equipment financing to boost your financial resources before going ahead with bidding on a federal government construction project.
The U.S. General Services Administration (GSA)
If you’re interested in the United States General Services Administration schedule opportunities, make sure to study the GSA programs on the way to becoming and succeeding as a GSA vendor. Do you know that the Forecast of Contracting Opportunities Tool is an acquisition planning tool that provides information on potential federal contracting opportunities?
The GSA-administered System for Award Management (SAM) website, SAM.Gov, is the official U.S. government system for assistance listings, contract opportunities, contract data, federal hierarchy, entity information, entity reporting, and wage determinations.
Visit SAM. Gov—a comprehensive database of significant contract awards, government solicitations, excess property sales, subcontracting and foreign business opportunities with the federal government.
Play to your strengths
Approach a federal construction project with caution as non-performance after winning a contract could put a dent in your business reputation or restrict your future work. Federally funded construction projects provide a huge scope for advancement but be on guard for project requirements beyond your business capabilities or construction experience.
Any construction project demands experience, expertise, and empathy. Unless you understand your customer’s requirements precisely, you won’t be able to leverage your capabilities to execute the construction project well on time and grow your construction business.
It’s not worthwhile to continue pursuing a project that is clearly way out of your league. Move on to another federal government project that is a good fit for your competencies. Gradually, you will be regarded as a trusted contractor for federal construction projects.
Assess pre-qualification and pre-bid meeting requirements
Review the bid solicitation terms and conditions thoroughly along with the scope of work to avoid surprises later in the bidding process. Weigh in the pros and cons of an opportunity and assess the bidding requirements in detail ahead of placing your bid on a public construction project. This assessment is especially important for a newly joined construction firm.
Ask the designated contracting officer for timely clarification if you have any questions.
Public agencies prefer to prequalify contractors for large or expensive projects. Prequalifying is done on a project-by-project basis or for a specific project as decided by a public agency. Therefore, be sure to consider any pre-qualifications or prerequisites prior to submitting your bid to avoid disappointment at the time of bidding.
A project owner may hold a pre-bid meeting or site visit to provide an opportunity to contractors and subcontractors to understand the project requirements better. Not attending a mandatory pre-bid meeting may make a contractor ineligible to bid on a project and miss out on important addenda to the bid or bidding documents sent to the attendees.
Comply with federal regulations
According to Jack A. Callahan, Construction Industry Leader, “The level of the regulatory requirement depends on the type of opportunity being pursued.”
While the Federal Acquisition Regulation and the Defense Federal Acquisition Regulation Supplement apply to many federal agencies, individual organizations set their own rules to get contractor bids.
Furthermore, a construction contractor can be awarded opportunities under Part 12 (Acquisition of Commercial Items) of Federal Acquisition Regulation (FAR) or FAR Part 14 (Sealed Bidding). There are additional requirements for the award made under FAR Part 15 (Contracting by Negotiation).
Apart from the Truth in Negotiations Act (TINA) risk that relates to submitting certified cost or pricing data, the False Claims Act risk relates to a contractor facing the consequences for submitting inaccurate information.
Getting a government contract holds a lot of promise but also carries unique risks. The federal procurement world offers a slew of breakthrough opportunities to small businesses and big construction companies. Fair and open competition, competitive prices, and legal compliance are just some of the key factors relevant to federal contracting.
You need to adhere to the rules outlined in the government agency’s RFQ or government RFP because the federal government expects contractors to abide by the rules governing the purchase of products and services.
The contract bids for construction are evaluated carefully prior to determining the lowest responsive and responsible bidder for awarding the federal construction project. A contracting officer may consider debarment for non-responsive contractors to protect the federal government from abuse, fraud, and waste.
Follow federal contract laws
Whatever contract you bid on in the public sector, it’s crucial to comply with federal contracting rules. A contracting officer is equipped with the necessary resources and statutory knowledge to deal with defaulters.
While a performance bond acts as a surety bond to make a contractor perform their obligations under a contract, a payment surety bond assures payment to all labor/material suppliers.
When it comes to contract law, nothing works like compliance.
Some major government contract laws include:
The Miller Act protects the interests of suppliers and subcontractors. It necessitates prime contractors to furnish a payment bond for contracts above $100,000 in the construction, alteration, or repair of federal buildings. Other payment bonds apply for contracts between $30,000 and $100,000.
The Davis-Bacon and Related Acts ensure locally prevailing wage rates for mechanics and laborers employed by contractors and subcontractors working on assisted or federally funded contracts above $2,000 for the construction, alteration, or repair of federal buildings or public works.
McNamara-O’Hara Service Contract Act (SCA)
The McNamara-O’Hara Service Contract Act requires contractors and subcontractors working on prime contracts above $2,500 to pay local wage rates and fringe benefits to service employees, or the rates (including prospective increases) included in a previous contractor’s collective bargaining agreement (CBA).
Visit the official U.S. Department of Labor website for further information on the Davis-Bacon and related acts.
Write and submit your bid
Presenting a well-crafted bid instead of a rushed bid in the competitive bidding process improves your chances of winning a government construction contract. Writing and submitting a government contract bid is no easy task. It takes time to create a meticulously crafted bid package. Think about your value proposition and how your business can fulfill the government’s need for a product or service.
Do you want to gain a leading edge without compromising on bid quality? If you need assistance with bid submission or the proposal-writing process, you can choose from a variety of professional bid training and proposal writing services for your business. After all, you don’t want to miss out on a contract because of an incomplete bid or bidding mistakes. Finally, you need to review your bid carefully before submitting it.
Government contracting jobs are hard to procure, but they offer lucrative growth opportunities to construction business owners. So, don’t leave money on the table when you have time and resources to bid on construction contracts for government projects.
In an increasingly competitive industry, contractors are vying with each other to grab a share of the federal construction contract dollar pie. Along your journey of becoming a sought-after federal contractor, you will benefit from tailor-made market research and consulting services for your business.
If you’re looking to stay a step ahead, we can help. Get in touch with us for government construction project leads, competitor analysis, custom research, and much more. We make sure to put your vision first and achieve the desired results.
When you need a steady flow of challenging yet creative construction projects, take the opportunity to go further with federal government contracting. The opportunity may be knocking at your door. Be the one to tap into unlimited potential. The next government construction contract can be yours!