Lucrative procurement opportunities abound with a variety of government agencies. The trick is knowing not only how to find these opportunities, but how to submit an effective bid.
Unlike a Request for Proposal (RFP), an Invitation for Bids (IFB) is a procedure set up by government agencies to award contracts to the lowest bidder. A savvy businessperson can benefit from this process by knowing which government agencies and contracts you should pursue, as well as how to structure a bid so that it has the highest chance for success.
First of all, what exactly are the differences between bids, proposals, and quotes? Quotes are similar to bids but they are not legally binding. Proposals fall under the heading of negotiation because they invite a discussion on how the job should be done. When a government agency asks for a bid, it knows exactly what it wants and is at the stage of trying to secure the best price for the contract.
The type of product and service provided by the government contract determines whether it is a proposal or bid. A city that wants to build a new downtown plaza might ask for proposals from companies. The job is fairly open ended and could be done in a variety of ways. When the Planning Department issues an RFP, they are asking for plans as well as price.
However, a different example would be when a military base wants to replace the carpet in its barracks. In this case, the job has already been done at least once, when the carpet was originally installed. The agency that handles this contract knows exactly what is desired, and in issuing an IFB is looking to secure the best price possible from a company capable of installing the carpet.
Agencies generally issue an IFB on contracts of $100,000 or more. The steps involved in responding to an IFB are:
- Government agency advertises an IFB through sources such as the U.S. Commerce Department’s Commerce Business Daily and FedBizOpps, as well as a host of city and county government Web sites. The invitation gives the specifics as to what is required in the contract.
- Companies fill out the required paperwork and submit what is known as a “sealed bid” to the issuing agency before the due date.
- A government official opens all bids at a designated time, and they are read aloud and recorded. The contract is usually awarded to the lowest bidder.
- Awarding agencies determine whether a company is capable of fulfilling the contract. Small businesses are sometimes sent to the SBA to request a Certificate of Competency (COC), which states that the business is capable of performing the job. Learn more about COCs on the SBA’s Web site.
The IFB form is detailed and must be filled out accurately. Because the selection criteria are based primarily on price, you should make sure your bid is competitive. All past bids are a matter of public record and are available for your inspection. Take the time to examine these before making your bid. The time and effort involved in the IFB process dictates that you are selective and go after the contracts that best fit the strengths and capabilities of your company. It’s imperative that your bids are realistic.
Before pursuing an IFB, evaluate your company objectively. Is your company capable of doing the job that is being contracted? Nothing would be worse than being awarded a contract and then not being able to do the job. Unfortunately, it would probably be your last government contract.
By bidding on contracts and securing jobs that your company can do well, you show the contracting agency that you are capable of doing the job. This puts you first in line the next time the contract is awarded.
For more information on the procurement process, be sure to read Government Contracts for Small Businesses.