How to Provide an Accurate Estimate on a Federal Construction Contract

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Generating accurate estimates is essential for any contractor. The only way to remain profitable is to have firm control of costs. Usually, when you run into cost overruns or delays, you can renegotiate your contract, but that’s not the case with a federal construction contract. The rules differ when bidding on federal construction contracts, and you need to understand those rules before you bid. There are prerequisites to bidding. You need to have subcontractors and suppliers lined up, and there are safety and security considerations. As with most government procedures, the bidding process is complex, but it can also be extremely rewarding. That’s why it pays to take steps to ensure you provide an accurate and compliant construction bid.

The Benefits of Government Work

There are many reasons to pursue federal construction contracts. First, you will have fewer competitors. Second, the bidding process is more complex, and many contractors don’t want to try to understand the rules and regulations. Fewer competitors means a greater chance of winning the contract.

Second, the more government contracts you bid on, the easier the process becomes as you understand the bidding protocols. Eventually, you could become a preferred vendor, giving you access to more government contracts with fewer competitors.

Third, government agencies pay on time, unlike commercial contracts. Once the bid is approved, you can be sure the money is available, and you will be paid according to the contract terms, with no concern about chasing late payments.

Finally, federal construction contracts tend to pay more—typically about 10 percent higher than commercial contracts. And once you crack the code on estimating and bidding for government construction contracts, you can create an ongoing pipeline of federal business.

The Unique Aspects of Bidding Federal Contracts

The Federal Acquisition Regulation (FAR) and the Defense Federal Acquisition Regulation Supplement (DFARS) give you most of what you need to know. If you are a small business, you must also comply with the government contracting requirements set by the Small Business Administration (SBA). FAR/DFARS requirements cover a range of issues, including safety and quality control, inspections, sourcing, performance, and more. There are new security rules, and FAR 52.204-21 outlines the requirements for contractors’ information systems, including transactions with government systems. Because more approvals and transactions are being handled electronically, complying with these security standards has become increasingly important.

You also must meet the regulations for subcontracting work, including calculating and validating the percentage of work given to your subcontractors. You must have at least three qualified subcontractors when bidding on any federal construction contract. Each one of those subcontractors must meet the same federal guidelines.

As the primary contractor, you must sign a form stating that you have met all the requirements. That includes your subcontractors. If one of your subcontractors proves non-compliant, it could jeopardize the entire

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Important Facts About Federal Contracts

Contractors who have never bid on a federal project often have misconceptions about the process. Here are just a few of the harsh truths to anticipate:

  • The government won’t help you. When preparing a federal construction contract, you will get no assistance, including help clarifying the request for proposal (RFP). You must work with what you are given.
  • You can’t renegotiate the final contract. Even if materials costs or other variables change, it is virtually impossible to modify a government contract once it is signed. That’s why it pays to be meticulous during the
    bidding process.
  • RFPs are not standardized. Each government agency and department has its own requirements and processes. Approach every government bid without preconceptions and read the requirements carefully.
  • Permitting is not required on federal property. Construction projects on federal property are subject to federal regulations. That means local building permits aren’t needed.

Winning a Federal Contract

We can’t cover all the considerations that go into bidding on a federal construction project here. However, there are some basic rules to follow:

  • Scrutinize the RFP. When bidding on any federal, construction project, it’s essential to study the RFP. Be sure you understand the details of the project. Some RFPs are less detailed than others, so be sure to include exceptions and fill in the gaps as part of thebid to minimize risk. Build in contingencies and an extra margin of profit to cover the unexpected.
  • Know your subcontractors. You need to include at least three subcontractors as part of your bid, including an outline of each subcontractor’s work and associated costs. You also need to have accurate specifications and costs from suppliers because material costs are locked when the contract is signed.
  • Review your safety standards. Safety protocols are required for every RFP, but they will vary with each government agency.
  • Have a strong team of estimators. Your best strategy for winning a profitable government contract is to start with accurate estimates. Consider yourself ahead of the game if you have an experienced team of estimators.

Your bid submission should be absolutely accurate. If your bid is accepted, then you may be ready to negotiate some of the terms in the contract, but it’s best to spell out everything you can in the bid to simplify negotiations and protect yourself.

Get Expert Guidance

Preparing a bid on any federal construction contract can be daunting, but you don’t have to go it alone. Companies like Bold Concepts can walk you through the process and show you how to prepare a winning federal bid.

Bold Concepts has been helping contractors with federal bids for more than 30 years. We can show you how to read a government RFP, estimate costs, and comply with regulations. We also can help draft the scope letter, which outlines the terms of the contract and serves as a safety net for your profits. And we can show you how to include estimates as part of the contract and submit the bid.

Federal construction projects can be rewarding and open the door to ongoing work. To become a successful bidder, you must understand the intricacies of the government bidding process. Bold Concepts can show you how it’s done and educate you on handling federal construction bids. And Bold Concepts is always there to provide support when you need it.