EDITOR’S NOTE: This article is excerpted from the Fall 2015 edition of FCICA’s The Flooring Contractor. See the full publication at digitaladmin.bnpmedia.com/publication/?i=270808.
Experience is a hard teacher because you get the tests first and the lessons come later (and that can be expensive).
Your objective and theirs differ: You want to make a sale and a profit, they want to do their job without violating acquisition regulations, satisfy their customer (the actual government user), avoid protests and extra paperwork; if they can make you happy (or at least not too unhappy) in the process, then so much the better. With the government buyer, you can make the best sales pitch in the world, but in order to turn that into a sale, you have to follow the rules and regulations. There seems to be one for everything when it comes to government work. That’s the first thing to understand, and if you’re not on the bid list, you have little chance to get that business.
Getting on the bid list may be as simple as asking that your company’s name be placed and providing basic information. Find out what criteria they use to select those companies that will receive an invitation. Some have their favorites and others use a strict rotation among “approved bidders.” A bid list will not be used if it is a large open bid; then it may be “advertised” so you need to know where it will be advertised. Then you’ll need to follow up and get a copy of the bid. No matter how good your prices, you have to respond to the bid exactly as the government has specified; a missing signature or bid bond, or lack of supporting documentation will make your bid non-responsive and it will be rejected. So will the late delivery of a bid past the closing time specified; no amount of arguing will help.
Read a government bid to ascertain whether it is a negotiated purchase (RFQ) or a formal bid (IFB), the expected scope of work, time for performance, and any penalty provisions. In addition, is this open to any business or only to Small Business or other special categories? I once lost a bid because I failed to catch the fine print that gave a small, disadvantaged business a 10% preference! If there is anything you don’t understand, carefully raise the question at the pre-bid conference, or direct it to the contracting officer. Are there any special cautions or concerns that are expressed by the government such as site access, restriction on personnel, work hours, environmental conditions, or time permitted for job completion? It’s helpful to remember the admonition of an old contracting officer who told me, “Just remember, Dave, the reason we have one page on the scope of work and 40 pages of rules and regulations, is so we can bury you if you don’t perform or tick us off.” I’ve never forgotten that and neither should you. Whether a bid is a Negotiated bid (RFQ) or a Formal bid (IFB) depends on the expected dollar value of the award and its complexity. In a lower value bid, say under $25,000, the contracting officer may generally state what the government wants to accomplish and allow you to offer a solution; with a large value purchase, the government already knows what the project should cost and has taken the time to spell out exactly what it wants to happen and expects you to adhere to that criteria. In a RFQ, you’d be expected to inspect the site during a visit, take measurements, and then offer a price to furnish and install. In an IFB, there may or may not be a formal site visit, but you are expected to offer pricing for exactly what the government has requested. If government has made a mistake, and you can show their error, then it may be grounds for a change order. If you are going to be a nice guy and point out an omission in the bid document, then this should be done during a pre-bid conference. If you are having a one-on-one meeting with the contracting officer, you may gently point out the error to him. You will gain his gratitude rather than his ire by making him look bad in a public setting.
Look good to the Contracting Officer by showing up on time for meetings, be prepared by having read the bid and ask pertinent questions. Here is your chance to do plenty of soft-selling of yourself, your company, and to look professional. A brochure, fact sheet, and a thank you card after the meeting is always appropriate. Be willing to answer questions and educate him so that he can do a better job. With RFQ opportunities, those that appear to be trustworthy professionals will get more chances to provide a bid than those who complain, don’t read the bids in advance, show up and ask stupid questions. When there is a healthy respect, your bids will get a second look. And if you were not selected for the bid, ask questions about why. “Joe, what could I have done better? Was my pricing off or was there something else that I should have made clearer?”
The most frustrating answer may be, “After a review of the responses, we felt the XZ company’s offer provided best value for the government.” It may be that XZ offered a quicker delivery/installation time, or better overall pricing, or just “looked better” to the contracting officer from an experience and references perspective. I once had a candid conversation with a buyer over a drink and asked why we had been so unsuccessful on several of the bids. He said, “We have a history with XZ and you’re not giving us enough good reasons to take a chance on you; so, sharpen your pencil if you want to get your feet wet or just hope that your competition screws up one of these days.” So, I mounted a campaign to get a few of the bids by low-balling some smaller projects and followed up with aggressive customer service. When there was a question or problem with an installation it was handled as a priority. Eventually, we became the go-to company for sensitive projects.
After the bid is in but before an award, you can always ask the contracting officer a few questions. This approach is the most successful when it’s unofficial. I generally found I could get answers over the telephone that I could never get in person. “Jack, how do we look on this Building 201 RFQ? Am I in the running? How close are we to your estimate? How do we compare to your other bids? Are there any particular questions about our offer or explanation that might be needed?”
“Well, you look pretty good and all the offers are within the government’s range; however, it looks like you are proposing to furnish more yards of carpet than other bidders. Any feedback on that?”
“Jack, I included the extra room that was clearly part of the project but was omitted on the drawings. Should I leave this in or should I amend my proposal? I know we looked at the room during the site visit.”
“Leave it in – I’d rather not have to deal with a change order. I’m sure we’ll be in touch.” And so we ended up getting the job; had I not asked the question, we would likely have been the high bidder and lost the project.
After the notice of intent to award OR the actual award is published, and it didn’t go your way, you may be thinking Protest. Just be aware that even threatening a protest is guaranteed to raise the blood pressure of the contracting officer. You can make life-long enemies by such a filing. Even if the government made a mistake in the award, I judge your chance of winning by less than 10%. It is much better to raise any concerns before an award is actually made as in the case outlined above.
Term Contracts are a way of life with federal, state, and local government and they may be an excellent opportunity for you. This is a way for the agency to outline what they’d like to buy, types of products, estimated quantities, installation, accessories, and get pricing for a specific length of time. Generally this is known as an indefinite quantity, indefinite purchase award. Usually in a one to five year term, the government will buy products and services, as needed at a fixed price per unit with no guarantee (or a very small one). The big advantage to the government is that once they make a term award, they can just issue orders and they don’t have to go out for bids again! No time-consuming bid documents, no protests. When they have a requirement, assuming funds are available, they just place the order. And if you work it right, the award of a term contract can be an annuity for you.
Delivering the job after an award is crucial to your financial well being. Document your work and any challenges. If hidden site conditions occur, you must be able to prove they were not known in advance or as part of the scope of work. Most buyers absolutely hate change orders because of the expense and extra work. When confronted with a job site condition, explain clearly what needs to be done, why it is not part of the original job, and offer to perform the work. Don’t tell them “No”; tell them how much it will cost, is a good approach to take. Be prepared to justify your prices. Some detailed contracts even spell out how you should charge: “Any change orders will be limited to cost plus ‘10 & 10’ – 10% for overhead and 10% for profit.” Of course, you develop the cost basis. The best advice on change orders comes from Sim Crisler, who said, “Don’t spend a dime until it’s signed.” The statement from the contracting officer or site supervisor, “Go ahead, we’ll take care of you,” generally means you’re not going to get paid. So get the contracting officer with the authority to sign off on any change in writing.
Future Work with the government can be profitable so long as you have patience and follow their rules. Aspire to be their go-to company for your products and installation. Investigate term contract solicitations. Look for local government, school systems, state contracts, or federal government installations in your geographic areas. Spend the time to cultivate business with such facilities. A government project can be a wonderful profit opportunity or your worst nightmare. If you have a specific question about this type of business, drop me a note at email@example.com.