One page, one hour, one decision
A firm with no proposal staff pays for every bid with the owner's nights and the estimator's week. Each bid you chase pulls those hours from jobs that are already paying you. A good bid decision takes about an hour, fits on a page, and gets written down so you can check it against the result later.
Deciding not to bid is the cheapest decision a small firm makes all year. It costs an hour, and it keeps your best people on work that pays. What follows is a scorecard for that hour, with the questions behind each line. The weights below are a working starting point. Adjust them after you have scored a dozen bids and compared the scores to the outcomes.
Deciding not to bid is the cheapest decision a small firm makes all year.
Put the owner, the estimator and whoever would run the job at one table. Bring the solicitation and every amendment, your job list for the last few years, your current backlog and your surety's latest letter. Read the evaluation section aloud first, then the scope. Score each line together, write the reason beside the number, and stop when the hour is up. A bid that needs more than an hour of debate usually has a missing fact. Name that fact, name who will find it, and decide by a set time tomorrow.
The scorecard, line by line
Score each line from 0 to its weight, using the questions in the sections that follow. A line you cannot answer scores low, because what you do not know about a job is itself a risk.
Fit to work you actually do
Fit is the heaviest line because an evaluator will test it directly. Have you done this kind of work, at roughly this size, recently, and for a buyer like this one? List the two or three jobs you would cite as past performance before you score the line. If you cannot name them in a minute, the bid will struggle.
Size matters in both directions. A firm whose largest job was $400,000 will have a hard time arguing for a $6 million contract, and a firm built for large work may lose money on a small one because its overhead does not shrink to fit. Be honest about the top of your range, and score a job above it as a stretch.
Capacity and bonding
Look at who would actually run this job and what they are doing the week it would start. A win that takes your only superintendent off a paying project is a bad win. Check the labor, the equipment and the cash you would carry until the first payment arrives.
Bonding is a hard limit on federal construction. Federal law requires performance and payment bonds on construction contracts over $150,000, and construction contracts between $35,000 and $150,000 require payment protection in a form the contracting officer selects. Call your surety before you score this line. Ask for the single-job and aggregate limits you have available today, and whether this job fits under them with the work you already hold.
Cash is the line owners most often score on hope. Work out how many weeks of labor and materials you would carry before the first progress payment lands, and compare that with the credit you have today.
If your surety will not stretch far enough, the Small Business Administration's surety bond guarantee program covers contracts up to $9 million, or up to $14 million for federal contracts when a federal contracting officer certifies that a guarantee is necessary. Application takes time, so raise it early if a job depends on it.
Competition and the incumbent
Find out who holds the work now and what it cost. Federal award data on USAspending.gov and SAM.gov will usually show the incumbent and the award value, and for state and local jobs the agency's board minutes or bid tabulations often do the same. Read the last solicitation if you can find it.
An entrenched incumbent with a good record is hard to beat on a qualifications-weighted award and easier to beat on a low-price award. An incumbent with a lapsed contract, a change in scope or a new agency requirement leaves the door open. Score this line on what you learned, and treat a bid where you know nothing about the field as a low score.
If the job is set aside, check that you qualify and count who else does. A set-aside narrows the field to firms like yours, while full and open competition brings in firms that have never heard of you and do not need to.
What you know about the buyer
Have you talked to anyone at this agency before today, delivered work to them, or attended an industry day? Do you know why they are buying and what went wrong last time? A firm that has spoken to the buyer writes a different proposal from a firm reading the solicitation cold.
Solicitations often arrive with a question period. Use it, and treat the absence of any earlier contact as a real weakness on this line.
How the award will be decided
Read the evaluation section first. Under the FAR overhaul's source selection text, the lowest price technically acceptable approach awards to the lowest evaluated price among proposals that meet the minimums and "does not permit tradeoffs." The tradeoff approach lets the government pay more for a stronger proposal, where the benefits of the higher price merit the added cost. Most state and local bids have an equivalent choice between low bid and best value.
Match the method to your strengths. If you are the low-cost producer, a price-decided award favors you. If you win on quality and your costs run higher, a low-bid award will likely beat you before you begin, however good the work is. Score this line by how well the method rewards what you are actually good at.
Margin at a price that can win
Most firms estimate their cost and add a markup. Reverse the question. Find what this work has sold for recently, take that as the price that can win, then subtract your real cost. What remains is the margin you would actually earn.
If that number is too thin to justify the risk, the job does not get better by bidding it. A bid priced above the market loses. A bid priced into the market with no margin wins a job you will regret.
The cost of the bid itself
Estimate the hours honestly, including your own. Here is the arithmetic on a small job. Say a bid takes 60 hours at a loaded $75 an hour, or $4,500, and the job would pay $10,000 in profit if you win. You need to win that kind of job 45 percent of the time just to break even on bidding it. That is a high bar, so small jobs with heavy paperwork deserve a skeptical look.
The same arithmetic on a job that pays $150,000 in profit needs only a 3 percent win rate. Size matters for the cost of bidding as much as for the work.
A worked example
Take a 40-person facilities firm looking at a $1.8 million, three-year maintenance contract at a base an hour away. It has done this work for two other bases, so fit scores 20 of 25. Its supervisor would need to move from a contract ending in spring, so capacity scores 15 of 20. The incumbent is well regarded and the competition is unknown, so that line scores 6 of 15. Market prices leave a workable margin at 12 of 15. The firm has never spoken to this buyer, for 3 of 10. The award is a tradeoff that rewards its record, for 8 of 10. The bid is modest, for 4 of 5. The total is 68.
That lands in the middle band. The one thing that would change the answer is a conversation with the facility manager at the site visit next week. The firm goes, and it bids only if the visit confirms the scope and shows the buyer is open to a new provider.
Conditions that end the discussion
Some answers stop the scorecard, however high the total would be.
- You cannot meet a mandatory requirement: a license, a certification, a set-aside you do not qualify for
- Your surety will not write the bond
- You cannot produce the required past performance or the required key person
- The proposal is due sooner than you can actually read and answer it
- The job would put more than you can afford to lose at risk on a single contract
Reading the score and deciding
Add the lines and use three bands. Write the score and the decision on the page, and file it with the solicitation.
- 70 or higher: bid, and put your best people on it
- 50 to 69: a real conversation with whoever would run the job. Name the one thing that would have to change, and bid only if you can change it this week
- Under 50: no bid, and write down why
Review the file every six months. Compare your scores with what you actually won and lost, adjust the weights, and your judgment gets sharper with every bid you do not have to chase.
Frequently asked questions
The owner, with the estimator and whoever would run the job in the room. The person who would have to deliver the work needs a vote, because they know what the calendar really looks like.
Only if you can name what you would learn or gain and it is worth the hours. A debrief, a question answered or a relationship with a contracting office can be real value, so write it down. A bid that loses without teaching you anything is an expense.
Within a day or two of reading the solicitation. Every day you wait comes straight out of the writing time, and a late decision is often a decision made for you.
Then capacity was scored too generously. Rescore that line with the real calendar in front of you, and get outside help only if the job justifies the cost.