What is a Government Bid?

One of the essential steps on your journey to win government contracts is simply determining how to find opportunities and bid on them. The government may issue many types of contracts, each with advantages and disadvantages for both the contractor and the government customer.

A bid is an offer or proposal submitted in response to a request for quotation (RFQ) or invitation to bid (ITB). These bids are typically for a contract for goods, services, or construction. Public entities such as federal, state, and local government agencies often issue government bids. These bids solicit competitive offers from potential suppliers so that the government can select the best possible value for the services or products it needs.

Below, we've outlined the basics of government contracting that businesses new to contracting need to understand to learn how to sell to the government and how to bid on government contracts, including the most common types of bids and opportunities that exist and the next steps that your business should take.

Government bids are typically issued through a competitive process that requires potential suppliers to submit their offers and qualifications in response to an invitation to bid (ITB). The ITB outlines the scope of work, requirements, and other details of the project or contract. Potential bidders must submit their proposals, including pricing and additional required information, according to the deadline specified in the ITB. After bids are received, government agencies review and evaluate them to determine which offer meets their needs at the best value.

Understanding Bids and Contracts

Understanding the distinction between bids and contracts is essential for any company hoping to win more government bids.

A bid is a formal offer made by a company in response to a request from a government agency, while a contract is an agreement between two parties that outlines the terms and conditions of the contract.

Understanding the differences between bids and contracts and the various types of bids and contracts is critical to ensure that all parties agree on the terms. Additionally, it is important to ensure that all contracts comply with applicable laws and regulations.

What is Sealed Bidding?

Sealed bidding is a type of procurement process government agencies use to purchase goods and services. The process involves inviting potential suppliers to submit sealed bids in response to an invitation for bid (IFB). Government agencies review the bids and select the supplier offering the best value. Sealed bidding is often used when purchasing commodities, such as construction materials, fuel, and office supplies. It is a highly regulated process, with specific requirements and deadlines that must be followed.

Sealed bidding is popular for government agencies because it provides several advantages. This procurement process helps ensure fairness and transparency by allowing all potential suppliers to submit an offer. It also eliminates potential conflicts of interest, as the government agency does not have to negotiate with suppliers. Additionally, it allows for competition among suppliers, leading to better prices and quality products.

What is an Open Bid?

An open bid invites suppliers to submit proposals for a project or contract without prior solicitation from the government agency. Open bidding is used when the government agency does not have enough information about the project or its requirements to issue an invitation for bid (IFB). This process allows potential suppliers to submit their offers and qualifications without restrictions. The government agency then reviews all proposals received and chooses the one that offers the best value.

Open bidding is advantageous for government agencies because it allows for a more comprehensive selection of potential suppliers. This process also helps ensure that all bidders are given a fair chance to bid on the project, eliminating potential conflicts of interest from negotiations. Additionally, open bidding can reduce the time spent on the procurement process.

Once a federal government agency has determined a need for a particular good or a service, it conducts program management activities and develops an acquisition strategy. This strategy involves determining which contract type best suits the government's needs. Most government contracts over $250,000 go through a competitive bidding process by a contracting officer.

This process can be conducted either through sealed bidding or negotiated procurement. The federal government generally posts its competitive bids on sites like beta.SAM.gov.

The Two Major Categories of Federal Contract Bids and Opportunities

There are many types of Government contracts, but the most common contracts belong to two general categories: fixed-price contracts and cost-reimbursement contracts. The contract type defines the expectations, obligations, incentives, and rewards for the government and the contractor during an acquisition. The contract type also determines:

• The degree and timing of the responsibility assumed by the contractor for the costs of performance
• The amount and nature of the profit incentive offered to the contractor for achieving or exceeding specified standards or goals

Fixed-price contracts are used by all federal agencies and generally provide a firm price for the work completed or items supplied. However, an adjustable price level is sometimes used for a ceiling price, a target price (including the target cost), or both.

Cost-reimbursement, or cost-plus, is a type of contract where a contractor is paid for all of its allowed expenses up to a set limit, plus additional payment to enable the company to make a profit. Cost-reimbursement contracts carry additional obligations for the contractor in accounting for the costs they seek for reimbursement.

How to Sell to the Government Using Other Methods

The federal government commonly uses several other contracting methods and vehicles . Some methods will be a better fit for some businesses depending on the types of products or services that they offer.

Two of the most commonly used methods are Indefinite Delivery/Indefinite Quantity (IDIQ) contracts and opportunities offered as a part of the GSA Schedules long-term government contract vehicles (sometimes called Multiple Award Schedules or Federal Supply Schedules).

Whichever type of government opportunity you are targeting, you need to know how to find government contracts to grow your business to government (B2G) sales. Government contracts can be found on government websites and in market intelligence platforms like GovWin IQ that cover the entire public sector. To find government contracts that fit your business, you must identify your target market, your target industries, and your company's core competencies. This will help you narrow your search to opportunities that give you the best chance to win more government business.

When submitting a bid on a government contract, it is essential to understand what the government agency is looking for and how your company can best meet its needs. Once you've identified the types of government contracting methods and vehicles, you should follow these steps and take action.

1. Select the methods outlined above that best suit your business. Determine whether you are best suited to pursue an IDIQ contract, an opportunity offered as part of the GSA Schedules vehicles, or narrow down which agencies you want to target.
2. Determine which socioeconomic categories, if any, fit your business. These might include designations like women-owned (WOSB), service-disabled veteran-owned (SDVOSB) or minority-owned (MOSB). These categories can give you a significant advantage. For many types of contracts, agencies are often required to set aside part or all of a contract for one or more of these business categories. Similarly, large prime contractors are often required to submit subcontracting plans that require them to utilize small businesses of various socioeconomic categories in carrying out their contracts.
3. Identify the opportunities your business wishes to bid on - and pursue them. You can find those opportunities through tools like GovWin IQ, the industry's leading platform to help you find federal contract bids and gain awareness of upcoming opportunities well before the solicitation is released.
4. Research the project and be prepared.  Ensure you understand the scope of work, requirements and expectations of the project before submitting a bid.
5. Be thorough in your bid response, look organized and showcase your experience. Highlight your company's expertise and reputation in the industry and any relevant certifications or awards you may have. Showcase your team's qualifications and how they make you the best choice for the project. Ensure your bid offers a competitive price without sacrificing quality or services.

These tips can help you stand out among other bidders and increase your chances of winning a government bid.

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