What Happens After You Place a Bid on a Government Contract?
What comes next after you bid? A look at how the evaluation process works and the factors that could influence who will win the award. If your business is awarded the contract, we provide some pointers on what to do immediately upon receiving a contract.
You have completed the work, gone through the steps and submitted your first bid for a government contract. Basically, once you are finished with your part of the process, it is time for the government buyer to take over and do its part. Once all of the bids are in, the buyer will begin evaluating all of the offers. Several factors influence which business will land the contract, and it's important that you understand how the evaluation process works. Ultimately the buyer will make a final decision on which company will be awarded the contract. Hopefully, that will be you!
And what if your company is the one that is awarded the contract? Then you can make use of some pointers on what to do immediately upon receiving a contract.
Bid Evaluation and Award
Once the government buyer receives all the bids, the evaluation and award process begins. Here is an outline of what happens.
Non-Negotiated Bids (IFBs): If the solicitation is an Invitation for Bid (IFB)—a non-negotiated, sealed bid situation where best valued bidder wins—the bid is opened and the information is recorded on what is referred to as a "bid abstract." This will be used as the bid history database. The abstract contains, in order of opening, the names of the bidding companies, the items being bid, the prices quoted, and any other information that the bidding officer deems relevant.
This is important information that could prove to be very useful to you, whether you get the bid or not. And since the information contained in the bid abstract is considered public information, you can get it just by asking. The government buying office will send you a copy of the abstract if you enclose a self-addressed stamped envelope along with your bid. You should also include a letter stating that you are requesting the bid abstract under the Freedom of Information Act. (See now, isn't the government helpful? You probably won't be able to get similar information from the private business sector at any time in the near future.)
Among the Business Tools are Sample Information Requests from Government Officials.
With this information in hand, you can see where you stand in the bidding process. If your price quote is in the upper third of the price ranking, you are outside the competitive range. If you find yourself in the middle third, you're getting there. If you are in the lower third, you are in the right place.
Remember that you will not win all bids. Figure that after you become an old hand at bidding, your rate will be, on average, about three out of ten. Take a look at the investment in time and money you put in going after a commercial contract. It's the same plan of action with the government.
Negotiated Bids (RFPs or RFQs): If the solicitation is negotiated, in other words, if it is a Request for Proposal or Request for Quote, the information on bidding companies, pricing, etc. is not public information. When the award is made, the name of the successful bidder and the contract price become public information.
Factors Affecting the Bid Outcome
Which factors do government buyers consider in looking at your bid and finally awarding the contract? Here are some of the most important:
Does Your Bid Meet All Essential Requirements? One of the first things that government buyers will do is make sure that your bid conforms to all essential requirements of the solicitation. Does your proposal meet the evaluation factors? Check them carefully. Remember, it's not what you want; it's what they want. This includes exact conformance to all the specifications, drawings, descriptions, and standards specified in the contract solicitation, as well as materials, delivery dates, packaging and marking requirements, past performance history, etc. Often, these factors are referred to as "Best Value."
Are You Capable? Buyers will also consider whether you are capable of performing and delivering on the contract. Just because you know in your heart that you can do the work is not enough for buyers. They will be looking at your technical capability and trying to make sure that you have the experience and know-how to do the work. Do you have the production capability? If the contract calls for 100,000 widgets and you have one drill press and a milling machine and a part-time retired guy . . . well, they might see a problem and you probably won't get the contract. Do you have a real place of operation? If you are manufacturing items out of your garage, then that could also be a handicap in getting a contract. Here's a major consideration: financial capability. For some reason, reasonable business people think that if they are in financial trouble, a government contract will be able to fix the situation and get them financially healthy again. Sorry, but if your business is in trouble, the last thing you want is a contract where the margins are tight and you might have trouble getting financial help to do the work. The government buying offices are not in the business of starting and financing a private company!
What's Your Performance Record? Another important consideration for buyers is your past performance record. If you didn't meet a deadline on your first contract or if you have a history of late deliveries on contracts, the government will not want to work with you. The government operates on strict schedules and when you don't meet one, the government tends to get very upset and never forget. Even in cases where price is a deciding factor, the government now factors in past performance in figuring out the real cost for an item.
You now can check your company's delivery status by going to the Business Partner Network (www.bpn.gov) website—the single source for vendor data for the federal government. The BPN search mechanism provides unprecedented access into several key databases across federal agencies (see Chapter 19, "Help from the Government" for more complete coverage on BPN). When you go to the BPN site, check out your past performance record.
The Past Performance Information Retrieval System (PPIRS) contains report cards assessing a vendor's past performance in doing business with the government. It is made available to government source selection officials who use the information as one of several factors in determining which company should be awarded a new contract. Contractors are encouraged to validate their own past performance information and to refer to records in PPIRS when preparing proposals.
To access PPIRS, the contractor must register a past performance point of contact in the Central Contractor Registration profile and generate a Marketing Partner Identification Number (MPIN). Your CCR POC is the only person with access to your company's active registration, therefore you need to contact your CCR POC to establish the MPIN. Contractors may then log onto PPIRS using their DUNS number as a user ID and their MPIN number as a password. It takes about a week to update PPIRS with newly activated MPIN numbers. New information is made available every Thursday morning.
Contractors who have successfully obtained an MPIN may find that there are no records available on them in PPIRS. This is either because the contractor has no contracts meeting the thresholds for report cards (in DoD, $1 million for services and information technology and $5 million for systems and operations support; $100,000 for federal agencies) or because the reports have not yet been written. Contractors are encouraged to contact their buyers to ensure that the reports are written.
Do You Have Adequate Quality Control?Government buyers want assurance that you will provide a quality product. You may not need to go all out and get certified under strict international quality standards, but you should have a good, well-documented quality control program that tells all of your customers, including the government, how you guarantee that you will provide quality products and services.
Computer-Based Awards Here's a little secret for you: You know that "good ol' boy network" you hear about so much? Well, for many buying agencies, there's no such thing because new technologies allow for more buying decisions to be made automatically by computer software. For example, some 85 percent of the procurement at the Defense Supply Center Columbus is done without human input.
The DLA-BSM Internet Bid Board System (DIBBS) is a web-based application that allows you to:
- view and submit quotes
- view Request for Proposals (RFPs)
- view long-Term contracts & EMALL opportunities
- access award information
- view provisions, clauses and packaging specs
- view price history
- view technical data
- access Acquisition Forecasts
- access the Automated Best Value System (ABVS), your Performance Score used in award decisions
- access DoD Procurement Gateway at http://dibbs.dscc.dla.mil
- access award information
- view provisions
The Business Clearance Memorandum (BCM) is the Contracting Officers tool by which he or she demonstrates the fulfillment of statutory and regulatory responsibilities and sets forth business decisions for approval. (FAR 1.602-1(b). BCMs provide an audit trail for post award review and service as key evidence to support the contracting officers decisions in the case of disputes or reviews.
|BCM Clearance Documents |
| ||Contract Actions ||Required Clearance Documentation |
|Non-Commercial ||Micro-purchase threshold to $100k ||Simplified Acquisition Documentation Record |
|Greater then $100k ||BCM under FAR Part 15 |
|Micro-purchase threshold to $1m for contingency operations ||CKO Simplified Acquisition documentation record |
|Commercial ||Micro-purchase threshold to $10k ||Simplified Acquisition documentation record |
|Greater than $100k up to $5.5m ||Streamlined BCM using SAP under FAR |
|Micro-purchase threshold to $1m for Contingency Operations ||CKO Simplified Acquisition Documentation Record |
|Greater then $1m up to $11m for Contingency Operations ||Streamlined BCM using SAP under FAR Subpart 13.5 |
|Greater then $5.5m pursuant to FAR Part 15 ||BCM Under FAR Part 15 |
Additional Influencing Factors—The Government-Established Competitive Range
The government will, before discussions, establish a competitive range and document the decision and the rationale in a Pre-negotiation BCM. Why does the government do this? If it does not properly establish a competitive range the offerors improperly eliminated from the competitive range could file protests, the offerors could, in retrospect, revise or modify their offers to such an extent that their offers would have been the best value to the government.
The government may eliminate an offer from the competitive range without evaluating that offer's proposed cost/price if the Government determines that the offer is excessively or grossly deficient. That usually means that the offeror's technical proposal contains one or more deficiencies or failed to meet the material solicitation requirement or the stated mandatory requirements.
It would be wise to review the FAR clauses that cite the factors for evaluation.
As always, the contracting officer will look at past performance as an indicator/filter of how well you might or will perform on a solicitation. So if you mess up on a contract and say, "hey, it's a government contract, who cares," know that the next time you bid, they will be looking at what you did in the past.
Your Past History As a Contractor
How do does the government access risk on past history? This chart is out of the Army source Selection Manual. As you can see, they take a great deal of effort to look at your past history and how it might affect an award.
|Excellent ||Essentially no doubt exists that the offeror will successfully perform the required effort based on past performance. Risk level: very low. |
|Good ||Little doubt exists that the offeror will successfully perform the required effort based on past performance. Risk level: low. |
|Adequate ||Some doubt exists that the offeror will successfully perform the required effort based on past performance. Risk level: moderate. |
|Marginal ||Significant doubt exists that the offeror will successfully perform the required effort based on past performance. Risk level: high. |
|Poor ||It is extremely doubtful that the offeror will successfully perform the required effort based on past performance. Risk level: very high. |
|Unknown ||The offeror has little or no relevant past performance upon which to base a meaningful performance risk prediction. |
In addition, the Contracting Officer will also look at a comparison of price, cost, cost realism, and profit analyses.
- The price analysis involves evaluation of an offeror's price to determine if it is fair and reasonable. It always involves some sort of comparison with other prices, such as competing offers and previously proposed prices for similar items.
- The cost analysis is a review of the separate cost elements of the proposal to determine if the costs are in line with what they should be, assuming reasonable economy and efficiency.
- The cost realism analysis focuses on an independent evaluation of the specific elements of the offer to determine whether they are realistic, reflect a clear understanding of the requirements, and are consistent with the method of performance and materials described in the proposal.
- The profit/fee analysis is the process of examining whether the proposed profit or fee is reasonable in light of the associated risks.
The Contracting Officer is responsible for deciding if an offer is fair and reasonable and if a "prudent" person would pay the same for a product or service under a similar market condition. Most companies will never run up against this situation, but if you do, this will give you a taste of what they are looking for and also give you a link to where you can get more information.
Remember, information and intelligent bidding will bring you success, bidding off the cuff and not knowing your costs, if you can actually do the work, who you can partner with and many other factors will only lead you to wasting many hours bidding with no success.
Pre-Award Surveys Assess Your Ability to Fulfill a Contract
The government's responsibility in evaluating a bid is to determine, first of all, the responsiveness of an offer to the solicitation. This is more of a technical process and consists of checking all the paperwork and making sure there are no unacceptable deviations. The government must then determine whether the proposed winner is responsible and capable enough to handle the contract.
To help make this determination, the government might perform what is called a Pre-Award Survey (PAS). The PAS is made in sufficient depth to assure that the proposed award winner has the ability to meet the requirements of the solicitation. It may involve a full government team coming out to check a company's capabilities first-hand, or it may entail nothing more than taking a look at the pertinent information about the company to determine if it is able to go ahead with the contract.
Among the Business Tools are:
All of these pertain to Pre-Award Surveys. They are in Adobe Portable Document Format (.pdf), and you will need the free Acrobat Reader to view and print the file.
Preparing for the Pre-Award Survey
If you are the proposed winner of a government contract, there are certain things you can do to prepare for the pre-award survey to help ensure a favorable outcome for your company. The following is a checklist you can follow:
- Select the person who will meet with the government survey team. This person should be empowered to speak for the company and should be completely familiar with the details of the solicitation and of your company's offer.
- If relevant, make available one or more technicians to answer questions.
- Identify any disparities that may exist between the solicitation and your company's offer that should be resolved during the initial meeting with the survey team.
- Think about how you can demonstrate actual technical capability, or the development of technical capability, on the proposed contract.
- Get your production plan ready and available for review by the survey team.
- Make sure your plant facilities and equipment are available and operable. If they are not, be prepared to demonstrate that they can be developed or acquired in time to meet proposed contract requirements.
- Be prepared to show that you can meet the transportation, packaging, packing and preservation conditions of the solicitation.
- If industrial security clearance is required under the proposed contract, be prepared to show it.
- Make sure that your labor resources have the proper skills or that personnel with the needed skills can be hired expeditiously.
- Gather and make available to the survey team documentation, such as previous government contracts or subcontracts or commercial orders, to demonstrate a past satisfactory performance record with regard to delivery, quality and finances.
- Look over your production plan and make sure that you can demonstrate a capability to meet contract schedules.
- Gather financial documentation for the team financial analyst, including the company's current profit and loss summary, balance sheet, cash flow chart and other pertinent financial information.
- Prepare a listing of available tools and equipment for the team production specialist.
- Make sure that plans are in place for vendor supplies and materials or subcontracts to assure that the final delivery schedule can be met. Make sure that these plans are verifiable.
- Review any technical data and publications that may be required under the proposed contract and make sure you understand them.
- If the contract is a type other than a firm-fixed price or if you have requested progress payments, prepare adequate accounting documentation for review by the audit agency representative of the team.
- Review your quality control program and make sure that it is workable and consistent with the quality requirements stated in the contract. Be prepared to go over the details with the survey team.
- If government-furnished equipment, property or material is involved in the proposed contract, make sure you have established procedures in accord with the regulation stated in the contract.
- Prepare any other information or data that might be pertinent in assisting the government team.
As you become more experienced in the government market, you will find that all this takes less and less time. As with anything new, there's a learning curve.
What if you get turned down? There may be a "second bite of the apple" for you if your company is a small business and gets turned down on the Pre-Award Survey. If you can convince the Small Business Administration that you can do the work, the SBA could decide to back you and issue you another pre-award, known as a Certificate of Competency. The Certificate of Competency is like a bond and will allow you to receive the contract. If you're not sure how to go about applying for a Certificate of Competency, contact your local PTAC for assistance.
You've Won the Contract! What's Next?
What happens next if your company is the one that is awarded the contract? After you have congratulated yourself, what should you be doing and thinking about? Simply put, it is now up to you to fulfill the requirements of the contract, whether it's to produce a product, provide a service or build a structure.
Although it is impossible to cover the infinite variety of situations that might be involved in any given contract, we can offer a checklist of the actions you need to take immediately upon receiving a contract. The items on the checklist may seem obvious to you, but most companies get into trouble simply because they fail to do the obvious.
Contract Performance Checklist
- Reread the Contract. You probably hoped that you had heard the last of this, but here we go again. The first thing you should do upon being awarded a contract is to read, read, read the provisions. Recheck your delivery dates, packaging requirements, reports you may be required to submit, and delivery destination. Make sure you haven't missed something — let's hope you are not surprised at what you may find.
- Record Important Contacts. Look on the face of the contract and jot down the name, address, telephone number, and e-mail address of the following contacts so you will have the information handy for on-going reference:
- Procuring Contracting Officer (PCO)
- Administrative Contracting Officer (ACO)
- Paying Office
- Government Inspector (You should be contacted by this individual. This might be a local person who will work with you to get the contract completed. If it is a military contract, the local Defense Contract Management Agency (DCMA) should be a big help to you. Think of these people as part of your management team to help complete the contract.)
- Don't Take Unnecessary Actions. If the PCO or the ACO directs you to take a specific action, you must do so. But don't act on anyone else's direction! If you do, you will be liable for any costs or consequences that may result. Only the PCO, ACO, Contracting Officer's Representative (COR) or the contract itself can authorize you to take any action.
- Resolve Any Questions. If you have any questions about what a specific provision means or if you find any inconsistencies in your contract, contact the Contracting Officer (CO) immediately and ask for a meeting or "post-award conference." Open the lines of communication and develop a good working relationship right away. If you are really new to the process, ask for all the assistance that the CO is willing to give you. There is no question that is too "dumb" or "embarrassing;" what is really embarrassing is not performing on the contract. Address any problem right away before it gets out of hand.
- Keep accurate, timely and well-documented records. Even in this paperless society, a paper trail is important. You have no case if you can't prove what was said and done. We have found that simple misunderstandings can easily degenerate into a "he said, she said" sort of situation where no one wins and the relationship with the government people becomes, shall we say, "touchy."
- Determine internal responsibilities. Make sure your people understand what is to be done and in what time frame. This will help ensure that everything goes smoothly and that delivery is made in accordance with the terms of the contract.
- Issue orders and plan production. Place any long lead items on contract immediately to ensure that there will be no holdup with production.
- Produce/provide the service. If everything was planned out properly, this part should go relatively smoothly. If not, don't forget to keep the Contracting Officer informed. If you see that delivery under the contract may be affected, seek an extension before the due date to avoid being delinquent.
- Review your quality control program. Make sure procedures are in place and are adequate to guarantee that the quality of the item will meet government requirements. If necessary, update your procedures and your manual.
Copy this checklist, and then put it and all other information in the work order or folder. If you miss something, this will make it easier to go back and make changes.
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