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Since the federal and state governments are among the largest consumers of services in the United States, it’s no surprise contractors would target them as potential customers. Further fueling the attraction is the American Recovery and Reinvestment Act that has allocated nearly $840 billion dollars for upcoming infrastructure and development enhancements.
Steady workflow, guaranteed compensation and substantial contract amounts are just a few of the perks enticing construction companies to seek out government contracting business. Wondering how you can not only get in on the action, but be successful? The construction CPAs at Doeren Mayhew offer best practices to improve your chances at securing governmental business:
1. Get on the government’s radar. To even be considered for governmental construction work, you must register with the states in which you would like to do work. The requirements of each state and your sector of construction can play a role in the length of the application process.
Regardless of the state, the application tends to be lengthy and require company information such as your experience, applicable licensing, employee credentials, references and financial health. There may be a fee associated with each application, varying from state to state.
Where do you sign up? Contractors in the road and transportation sector most likely need to complete a prequalification application form with the state’s Department of Transportation. Contractors in all other sectors wanting to become a vendor to the government will need to apply with the state’s agency that handles facilities construction. If you are looking to secure federal governmental work, follow the necessary steps with the U.S. General Services Administration.
2. Don’t lapse on your renewal. You’ve made it through the gauntlet and joined the ranks of the prequalified construction vendors, but keeping your position is critical. Most states, as well as the federal government, will require you to renew your registration on an annual basis with the appropriate agency. Letting this lapse reflects on your company’s ability to manage its operations seamlessly and potentially harms your ability to successfully gain governmental business in the future.
3. Understand your market’s needs. Knowing what and how the government buys is essential in securing governmental work. Do market research by searching governmental contracting opportunities on federal and respective state agency websites. Determine which bids are appropriate for your business and scope out how your competition on prequalified vendor lists might be. More than likely, you have run into them in a bidding process before and know their approach, giving you a competitive edge before placing the bid.
4. Put your best bid forward. Bid accuracy and quality is fundamental. Price does count when working with governmental agencies. Review past jobs similar in scope to ensure you aren’t overlooking special considerations. Have your best people review the requirements and maintain a high level of oversight on the bid process. Be careful not to sell yourself short by underbidding.
5. Stand out from the competition. Price is always a motivating factor when looking at governmental bids due to often restricted budgets, but it’s not the only factor that comes into play. Governmental entities like to reward work to those they deem as responsible vendors. What makes a responsible vendor? A stellar performance record, healthy financial status, proven history of good business ethics, access to the appropriate equipment to perform the job and having good operational controls in place are all just a few things that can help you stand out amongst your bidding competition.
6. Don’t forget to network. Build relationships with governmental decision makers any chance you get. Your company may look great on paper, but taking the time to invest in the local community and build personal relationships with decision makers really makes you memorable. Additionally, reach out to other prequalified vendors in sectors that complement your services to find out what they have done to be successful in the past and potentially build alliances. A relationship built today may develop into a job or referral tomorrow. The Association of Procurement Technical Assistance Centers is also a great tool to help you network and stay at the forefront of governmental contract bidding.
7. Ensure you can get the bonding lines in place. The biggest risk the government faces in choosing a construction vendor is the possibility the contractor will fail to deliver on its agreement. Having sufficient bonding for projects will provide the government with the assurance it needs to feel protected against unwanted interruptions and contractor defaults.
8. Deliver on your promise. The best way to continue to secure governmental contracts is to develop a proven, positive track record with them. When given the opportunity to complete government work, make it a top priority to keep the project running smoothly and timely, delivering on all the promises you made. This will put you at the forefront on any subsequent bids you submit.
Following these eight best practices will maximize your opportunities to be successful in governmental bidding. But be patient – governmental contracts take a long time to procure. On average, it can take 18 to 24 months to secure a contract, but the payoff is normally worth it.
This publication is distributed for informational purposes only, with the understanding that Doeren Mayhew is not rendering legal, accounting, or other professional opinions on specific facts for matters, and, accordingly, assumes no liability whatsoever in connection with its use. Should the reader have any questions regarding any of the news articles, it is recommended that a Doeren Mayhew representative be contacted.
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