What You Need to Know About Government Bids

In the United States, procurement laws require government entities to seek bids for large-scale projects, more or less costing $ 10,000 (this amount varies by state), from contractors to perform work for them. Government bids—let’s simply call them bids—are offers in the form of proposals or solicitations from companies who are able and willing to do work for a government agency at particular price. How this works is simple:  the government entity will put out a call for price quotes from companies, companies will respond, and from those responses the government will choose which to accept.

The process of bidding is akin to a reverse auction where the contractors are competing to provide a particular service for the lowest price. The lowest bidder doesn’t always win, however. The price is just the first factor government entities weigh in; they’ll have to bring in other determinations into the equation at some point after reviewing the bids. These include work methodology, conflict of interest, and the company’s track record.

There are basically three types of bids: the request for proposal (RFP), request for quote (RFQ), and invitation for bid (IFB). It is imperative for companies to know the difference among the three to ensure that they are putting up the bid most appropriate to the call. Essentially, these three types of government bids differ in terms of request and requirements.

The IFB, as its name suggests, is an invitation to contractors to submit a proposal on a particular project that is within their capacity to pursue, or on a product that is within their resources to provide. For acquisitions involving $ 100,000 or over, the IFB is the most competitive method of landing government contracts. More focused on price than any other factor, the IFB includes information on the required items in the contract, the quality of each item, and the specific time and delivery methods of these products and services. As there is a degree of certainty involved in the part of the government entity, accomplishing the IFB can be as easy as filling out government bid-package forms. This, however, doesn’t imply that contractors can be complacent about the IFB. In fact, the opposite is required of them. It is the government after all who will be reviewing the package.

On the other hand, government agencies aren’t always very sure about how they will go about a project—this where RFPs are most appropriate. This is especially true if the government body not only demands a potential solution, but a solution with a reasonable and concrete cost estimate. Although the government furnishes standard forms for the RFP, contractors are also still required to provide their own. The proposal must include information on personnel, management plans, drawings, and other details that will prove relevant and essential to your claim in being able to efficiently handle and carry the project through.

Many confuse the RFQ as one and the same thing with the IFB. Although both have to do with price more than anything else, the RFQ is more often used to confirm current market pricing. Given this, the quote doesn’t really stand as a binding offer and cannot be chosen by the government body. To make the offer binding, a Standard Form 26 would have to be accomplished. This form constitutes of the signatures of both the contracting representative and the contractor.