How to bid on government construction contracts

Government construction runs from a small repair job to a new building. It comes with rules most other bids do not have: bonds, prevailing wages and strict bid forms. Learn them before your first bid, because a missing bond can sink an otherwise good price.

The codes and size standards

Construction falls in NAICS sector 23: building construction (236), heavy and civil engineering (237) and specialty trade contractors (238). The code on each notice sets the size limit for that bid. Some examples, with SBA's size standards in annual receipts:

Size standards change from time to time, so check the current table before you bid. Federal buyers also tag notices with product and service codes: category Y for construction of structures and facilities, and category Z for maintenance, repair and alteration. See NAICS codes and size standards.

Bonds on federal jobs

The Miller Act sets the federal bond rules.

• Over $150,000: you must furnish a performance bond and a payment bond. Each is generally 100% of the original contract price.
• Over $35,000 up to $150,000: the contracting officer picks two or more kinds of payment protection, such as a payment bond or an irrevocable letter of credit, and you furnish one.
• Before work starts: bonds are due before you get the notice to proceed.
• Bid security: when a performance bond is required, the solicitation usually asks for bid security too, such as a bid bond. The amount is 20% or more of your bid price, up to $3 million. In sealed bidding, missing bid security generally means your bid is rejected.

A surety company decides whether to bond you, based on its credit, capacity and character requirements. Start that conversation long before you bid. SBA backs bid, performance and payment bonds from certain sureties for small businesses, on contracts up to $9 million, or $14 million for federal contracts.

Bonds on Texas public work

Texas has its own bond law. A Texas governmental entity must require a performance bond on a public work contract over $100,000, and a payment bond over $25,000. For cities, and certain joint boards, the payment bond line is $50,000. Each bond is in the amount of the contract and must come from a corporate surety.

Davis-Bacon wage rates

Federal contracts over $2,000 for construction, alteration or repair, including painting and decorating, of public buildings or public works in the United States are covered. Laborers and mechanics on the site must be paid at least the prevailing wage rates set by the Department of Labor.

• The rates are in the solicitation, as a wage determination for the type of construction and the area. Wage determinations are also published on SAM.gov.
• Price labor from those rates, trade by trade, plus fringe benefits.
• Plan for the paperwork. You submit certified payrolls every week that work happens, each with a statement of compliance.

Where to find construction bids

• Federal: SAM.gov Contract Opportunities. Filter by NAICS sector 23 or your six-digit codes, and by place of performance. See How to search SAM.gov for contract opportunities.
• Texas state agencies: the Electronic State Business Daily (ESBD), and the state's bidders list for invitations. See Texas state bids: the ESBD and the CMBL.
• Local buyers: cities, counties and school districts post on their own portals and sites.
• As a subcontractor: primes on large jobs need trade partners. See Teaming and subcontracting.

Federal construction notices state the job's size as a price range, such as $1,000,000 to $5,000,000, never the exact government estimate. Use that range to match jobs to your bonding and your crew.

Site visits

When a federal construction solicitation includes the site visit provision, offerors are urged and expected to inspect the site. Some schedule an organized visit with a date and meeting place. Go, walk every area in the drawings, and send your questions in writing before the deadline.

Limits on subcontracting

On a small business set-aside, a general construction prime may pay no more than 85% of what the government pays it, not counting materials, to subcontractors that are not similarly situated. For specialty trade contractors the limit is 75%. Plan to self-perform real work.

Common mistakes

• Bidding before you have a surety relationship and a bonding line.
• Pricing labor below the wage determination.
• Missing an amendment that changes drawings, quantities or the due date.
• Bid security that is missing or below the required amount.

In Victavio

Victavio finds construction bids that match your codes and places, on SAM.gov and the Texas ESBD, and reads the files with you, from the bid schedule to the wage determination. You decide what to bid, and you sign and submit it yourself.