🏛️ Government Contracts for Contractors
Public works is a massive market — over $400 billion annually in the US. Government projects offer steady work, reliable payment (eventually), and long-term relationships. But the rules are different from private work, and the compliance burden is real.
Government work trades speed for certainty. You'll deal with more paperwork, slower decisions, and rigid processes — but you'll also get paid (government entities don't go bankrupt), build a track record, and access a market that many competitors avoid because of the complexity.
Types of Government Construction
| Level | Examples | Key Laws |
|---|---|---|
| Federal | Military bases, courthouses, VA hospitals, post offices | Davis-Bacon, FAR, Buy American, SBA programs |
| State | Highways, state buildings, universities, prisons | State prevailing wage, state procurement codes |
| Local | Schools, city halls, water/sewer, parks, fire stations | Local bidding requirements, local preference |
| Quasi-government | Transit authorities, port authorities, utilities | Varies — often follow state procurement rules |
| Federally assisted | HUD housing, EPA water projects, FHWA highways | Davis-Bacon + state requirements (double coverage) |
Finding Government Work
Federal Projects
| Source | What You'll Find |
|---|---|
| SAM.gov | All federal contract opportunities over $25K |
| USACE (Army Corps) | Military, civil works, flood control |
| GSA | Federal buildings, courthouses, border stations |
| VA | Hospitals, clinics, cemeteries |
| NAVFAC | Navy and Marine Corps facilities |
| USPS | Post office construction and renovation |
State and Local Projects
| Source | What You'll Find |
|---|---|
| State DOT websites | Highway and bridge projects |
| State procurement portals | Building construction, renovations |
| City/county purchasing departments | Local public works |
| Plan rooms (Dodge, iSqFt, BuildingConnected) | Aggregated bid opportunities |
| State architect offices | State building projects |
| School district websites | School construction and modernization |
Getting on Bid Lists
Most government agencies maintain prequalified bidder lists. To get on them:
- Register on SAM.gov (required for all federal work)
- Obtain a DUNS number (now UEI — Unique Entity Identifier)
- Get your NAICS codes right (construction codes: 236xxx, 237xxx, 238xxx)
- Register with state contractor licensing boards
- Apply for prequalification with agencies you want to work for
- Maintain your bonding capacity — most public work requires bid bonds
The Bidding Process
Sealed Bid (Invitation for Bid — IFB)
The most common method for public construction:
- Agency publishes the Invitation for Bid with plans and specs
- Contractors purchase or download bid documents
- Pre-bid conference (sometimes mandatory)
- Contractors submit sealed bids by the deadline
- Bids are opened publicly at the specified time
- Award goes to the lowest responsive, responsible bidder
"Lowest" doesn't always win. Your bid must be:
- Responsive — Meets all bid requirements (bid bond, forms complete, addenda acknowledged)
- Responsible — You're qualified (licensed, bonded, experienced, financially sound)
A lower bid can be rejected if it's non-responsive or the contractor is deemed not responsible.
Best Value (RFP — Request for Proposal)
More common for complex or design-build projects:
| Evaluation Factor | Typical Weight |
|---|---|
| Price | 30–50% |
| Technical approach | 20–30% |
| Past performance | 15–25% |
| Schedule | 5–15% |
| Small business participation | 5–10% |
Key Bidding Requirements
| Requirement | Details |
|---|---|
| Bid bond | Typically 5–10% of bid amount. Guarantees you'll accept the contract if awarded. |
| Performance bond | 100% of contract value. Guarantees you'll complete the work. |
| Payment bond | 100% of contract value. Guarantees you'll pay subs and suppliers. |
| Insurance certificates | GL, auto, workers' comp, umbrella — meeting agency minimums |
| Licensing | Proper state and local contractor licenses |
| Addenda acknowledgment | Must acknowledge all addenda issued during bid period |
Small Business Programs
The federal government targets 23% of federal contract dollars to small businesses. Programs include:
SBA Programs
| Program | Eligibility | Benefit |
|---|---|---|
| Small Business (SB) | Under SBA size standards (~$39.5M avg annual receipts for most construction) | Set-aside contracts, evaluation preference |
| 8(a) Business Development | Socially and economically disadvantaged owners | Sole-source contracts up to $4M, mentorship |
| HUBZone | Located in Historically Underutilized Business Zones | 10% price evaluation preference, set-asides |
| SDVOSB | Service-Disabled Veteran-Owned Small Business | Set-asides, sole-source (especially VA contracts) |
| WOSB | Women-Owned Small Business | Set-asides in underrepresented industries |
DBE / MBE / WBE Programs
State and local agencies often have their own diversity programs:
| Program | What It Means |
|---|---|
| DBE (Disadvantaged Business Enterprise) | USDOT program for transportation projects — targets ~10% of federal highway/transit $ |
| MBE (Minority Business Enterprise) | State/local programs for minority-owned firms |
| WBE (Women Business Enterprise) | State/local programs for women-owned firms |
| SBE (Small Business Enterprise) | Local programs for small firms regardless of demographics |
If you qualify for any of these programs, get certified. The process takes time (3–6 months typically), but the access to set-aside contracts and subcontracting opportunities is significant. Start with SAM.gov registration, then apply for specific certifications.
Compliance Requirements
Government work comes with significantly more compliance than private work:
Labor Compliance
| Requirement | Trigger | Details |
|---|---|---|
| Prevailing wage | Federal funding (Davis-Bacon) or state funding | Pay minimum wage rates by trade classification |
| Certified payroll | All prevailing wage projects | Weekly payroll reports (WH-347 or state forms) |
| EEO compliance | Federal contracts over $10K | Equal employment opportunity — no discrimination |
| Affirmative action | Federal contracts over $50K | Written affirmative action plan required |
| Drug-free workplace | Federal contracts over $100K | Written policy and employee awareness program |
Reporting and Documentation
| Requirement | Frequency | Form |
|---|---|---|
| Certified payroll | Weekly | WH-347 (federal) or state form |
| EEO workforce reports | Monthly or per contract | SF-1391 or agency form |
| DBE utilization reports | Monthly | Agency-specific |
| Progress reports | Monthly | Agency-specific |
| Safety reports | Per incident | OSHA 300 log + agency forms |
| Apprentice reports | Monthly | DAS-140/142 (CA) or state forms |
Buy American / Build America
Federal projects may require:
- Buy American Act — Manufactured goods must be produced in the US (for direct federal construction)
- Build America, Buy America Act (BABAA) — Infrastructure projects using federal funds must use US-made iron, steel, manufactured products, and construction materials
- Trade Agreements Act — Some exceptions for products from designated countries
Getting Paid on Government Work
Government payment processes are slower but more predictable than private work:
Federal Payment Timeline
| Step | Typical Timeline |
|---|---|
| Submit pay application | Monthly (per contract schedule) |
| CO review and approval | 14–30 days |
| Payment processing | 14 days after approval |
| Total typical cycle | 30–45 days |
| Prompt Payment Act interest | Accrues after 14 days from approval |
Retainage on Public Works
| Level | Typical Retainage | Release |
|---|---|---|
| Federal | 0–10% (often reduced to 0% after 50% complete) | At substantial completion |
| State | 5–10% (varies by state) | 30–60 days after completion |
| Local | 5–10% | Per contract terms |
The federal Prompt Payment Act requires agencies to pay within 14 days of approving an invoice, or interest accrues. Many states have similar laws. Know your rights — and assert them if payment is slow.
No Mechanic's Liens on Public Property
You cannot file a mechanic's lien on government property. Instead, your remedy is a payment bond claim (Miller Act for federal, Little Miller Act for state). This is why payment bonds are required — they protect subs and suppliers.
| Protection | Private Work | Public Work |
|---|---|---|
| Mechanic's lien | Yes | No |
| Payment bond claim | If bond exists | Yes (required by law) |
| Stop notice | Some states | Some states (CA, others) |
Change Orders on Government Work
Government change orders follow stricter processes than private work:
Federal Change Order Process
- Contracting Officer (CO) is the only person authorized to modify the contract
- Changes must be within the scope of the contract (or risk a cardinal change)
- Pricing is typically cost-plus with auditable costs
- The CO may issue a unilateral change order — you must proceed and dispute the price later
- Claims for disputed amounts go through the Contract Disputes Act process
Pricing Government Changes
| Cost Element | What's Allowed |
|---|---|
| Direct labor | Actual prevailing wage rates |
| Materials | Actual cost with receipts |
| Equipment | Actual cost or established rates |
| Subcontractor costs | Actual costs (sub must provide breakdown) |
| Overhead | Negotiated rate (typically 10–15%) |
| Profit | Negotiated (typically 10% on own work, 5% on sub work) |
| Bond premium | Actual additional cost |
Government agencies typically do not allow the markups common in private work (15-20% OH&P). Federal agencies often cap overhead and profit. Know the contract terms before pricing changes.
Claims and Disputes
When you can't resolve a dispute through normal channels:
Federal (Contract Disputes Act)
- Submit a written claim to the Contracting Officer
- CO must issue a final decision within 60 days (under $100K) or a "reasonable time"
- Appeal to the Board of Contract Appeals or Court of Federal Claims
- Must continue performing during the dispute (no work stoppage)
State and Local
- Varies widely by jurisdiction
- Most require written notice of claims within specified timeframes
- Many require mediation or arbitration before litigation
- Some states have claims boards similar to federal process
Tips for Success in Government Work
Do
- Start small — bid smaller projects to build your track record
- Build relationships with Contracting Officers and project managers
- Invest in compliance systems — it's the cost of entry
- Document everything — government disputes are won with paper trails
- Attend pre-bid conferences — critical intelligence and networking
- Pay attention to small business goals — they create opportunities
- Join relevant associations (AGC Government Division, etc.)
Don't
- Don't underbid to "buy" work — government work is hard to make money on with thin margins
- Don't ignore change order procedures — verbal authorizations are worthless
- Don't miss deadlines — bid submissions, claims notices, and certified payroll are all time-sensitive
- Don't assume private work rules apply — government procurement is a different world
- Don't skip the pre-bid walkthrough — you can't claim "unforeseen conditions" for things you should have seen
Related Resources
- Prevailing Wage Guide — Understanding wage requirements
- Certified Payroll Guide — WH-347 and filing
- Bonding Guide — Bid, performance, and payment bonds
- Insurance Guide — Meeting agency requirements
- Change Orders — Managing changes
- Union Construction Guide — Working with unions on public projects