Getting Government Contracts

Understanding Bid Packages for Government Contracts

You've learned about a government contracting opportunity that seems perfect for your business. Now the key to nailing it down is to thoroughly read the bid package and understand the pricing/bidding requirements. Here's what you need to look for when you review the bid package.

As a small business owner, you can't afford to ignore the possibility of government contracts.

Contrary to what you might've heard, government contracts can be a steady source of income for small companies. It might surprise you to learn that many government agencies are even required to award a percentage of their contracts to small companies.

But if you haven't bid on a government contract before, the bid process can be a little intimidating. Identifying government contract opportunities is tricky enough. Navigating the complex world of government bid packages can sometimes make you wonder whether it's worth the effort.

For the majority of small businesses, it is worth the effort. After you have located a contract opportunity that appears to be a good match for your company's products or services, here's the process you'll need to follow next.

Step #1. REQUEST a bid package.

Most bid packages can be downloaded from the Internet. However, you need to be careful to make sure you download the right bid package since many have similar contract numbers. Also, make sure you download any amendments that have been added to the contract.

Step #2. REVIEW the bid package.

Government contract bid packages typically fall into one of three contract categories (or pricing arrangements) based on the amount of risk the government is willing to assume:

  • Fixed-Price Contracts – The contractor agrees to fulfill the contract at the awarded price, assuming total responsibility for the profit or loss that is generated from the contract. This is the most common type of government contract for small businesses.
  • Cost-Reimbursement Contracts – The cost is determined when the project is finished or at some point during the process of its completion, and is based on the actual costs generated by the performance of the contract. The risk in these arrangements is primarily carried by the government.
  • Special Situation Contracts – More rare contract types in which the government pays the contract based on time and labor or some other special pricing criteria.

Step #3. COMPLETE the bid package.

Using the bid package you receive from the government, the final step is to complete it and submit it in a timely fashion.

Even though the bid package may essentially be a fill in the blank form, the government considers it to be a binding contract so you'll want to make sure you agree with everything it contains.

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