How to Win State and Local Construction Government Contracts

Government contracts can be lucrative opportunities for construction businesses looking to expand their client base and increase revenue. State and local government agencies often have large-scale construction projects that require the expertise and services of qualified contractors. However, winning these contracts can be competitive and challenging. Let’s dive into the current market conditions and trends and tips on how to win these types of contracts.

Current Construction Market Conditions

The current construction market conditions and industry trends are characterized by a mix of challenges and opportunities. Understanding the market conditions and how to sell into these accounts is essential for construction companies seeking to capitalize on government contracts.

Recovering From the Pandemic

The COVID-19 shutdown and government staff shortages from the pandemic slowed most of the small projects that required a lot of staff time per dollar being spent, while simultaneously maintaining the pace of big pre-planned and pre-funded projects while new stimulus money helped with any budget shortfalls. However, the 2020 pandemic barely impacted spending on government structures. In fact, spending plateaued in 2020 and 2021 and saw a return to growth of around 7% in 2022. Overall, we are in a very healthy market for contractors and design firms.

Stimulus Will Drive Purchasing and Priorities

The federal stimulus, including the Infrastructure Investment and Jobs Act (IIJA), the American Rescue Plan Act (ARPA) of 2021 and the Inflation Reduction Act of 2022 impacts state and local government spending, especially in the construction industry. Overall, the stimulus funding will provide a safety net of consistency in SLED procurement for several years despite a possible recession.

How to Sell Construction to State, Local and Education (SLED)

Selling construction services to state, local and education governments can be a rewarding endeavor for construction companies. These public entities often require construction projects ranging from infrastructure development to facility renovations. However, navigating the procurement processes and winning government contracts can be complex and competitive. Here are some effective strategies to help you navigate the process effectively.

1. Research and Identify Target Governments: Start by researching and identifying the state, local and education governments that align with your expertise and service offerings. Look for upcoming projects—both proposed and approved, infrastructure plans or government initiatives that require construction services up to five years in advance. Consider the geographical area, size of the government entity and its specific needs and priorities.
2. Understand Government Procurement Processes: Each government entity has its own procurement processes, regulations, and fiscal year calendars. Take the time to understand the specific rules, procedures and documentation requirements for bidding on government contracts. Familiarize yourself with the bidding timelines, prequalification criteria and evaluation methods used by the government agencies you are targeting.
3. Build Relationships and Network: Networking and relationship-building play a crucial role in approaching governments. Attend industry events, government conferences and business forums where you can connect with government officials, procurement officers and influential decision-makers. Actively engage in conversations, demonstrate your knowledge and expertise and seek opportunities to build genuine relationships based on trust and mutual understanding rather than hard selling.
4. Monitor Government Opportunities: There are various tools available to stay informed of new business opportunities, like GovWin IQ. Monitor government websites, public notices and procurement portals where they publish requests for proposals (RFPs) or invitations to bid. Subscribe to relevant newsletters, follow government social media accounts and join industry associations to receive updates on upcoming projects and contract opportunities.
5. Attend Government Vendor Outreach Events: Many government entities organize vendor outreach events, information sessions or workshops to engage with potential contractors. These events provide opportunities to learn more about the government's needs, meet key decision-makers and gain insights into upcoming projects. Participate in these events to network, ask questions and present your company's capabilities.
6. Collaborate with Local Partners: Consider collaborating with local partners who have experience working with government agencies. Local partners can provide valuable insights into the government's expectations, preferences and processes. Teaming up with established local contractors or subcontractors can enhance your chances of securing government contracts and demonstrate your commitment to local engagement. Be sure to line up your teaming partners early. The best partners will already be teamed by the time a bid document is released.
7. Submit Strong and Compliant Proposals: When responding to RFPs or invitations to bid, thoroughly review the requirements and evaluation criteria. Develop a well-structured proposal that clearly addresses the government's needs, outlines your approach, demonstrates your qualifications and showcases your competitive advantages. If you must submit company financials, be sure to use construction accounting software like Deltek ComputerEase to have the detailed reports they are looking for. Ensure compliance with all the required documentation and submission guidelines. If you are not compliant, you can instantly become disqualified.
8. Follow Up and Maintain Relationships: After submitting a proposal or engaging in discussions with government representatives, follow up and provide any additional information they may request. Keep the lines of communication open and maintain regular contact, providing updates on your company's activities, new projects and relevant industry insights. Building and nurturing long-term relationships can lead to future contract opportunities, and you could potentially become a go-to source for advice when they have questions.

Approaching governments requires patience, persistence and a commitment to understanding their unique requirements and processes. By following these steps, you can enhance your chances of successfully selling your construction services to state, local and education governments.