A lot of businesses enter the government contracting arena with the expectation of the "$1000 mousetrap" that is, the idea that government work is a cash cow that can be milked by exorbitant over-pricing. They are often given a rude awakening when they find that profit margins on government contracts are often quite slim, and may have a cap as low as 10%. In a slow economy or a competitive industry, bidding wars drive prices and profit margins to new lows. With this kind of bid environment it becomes more and more important to track your government bid efforts, your successes and your failures, in order to run the tightest ship possible.



Tracking the Government Market

When it comes time to ask, "Is this government bid strategy successful?" an important follow-up question is, "Compared to what?" Success compared to this time last year is all well and good, but it's one small piece of a much bigger picture. To get a more complete idea of how your business is faring, establish benchmarks for your industry and market. Tracking against these benchmarks, especially over time, is a good way to find areas to improve, as well as to track the health of the contracting landscape as a whole.

Conduct market research on other companies of your size, in your area, and in your industry. Chances are, your company is already aware of who its major competitors are. How successful are they in the market? Compared to your company? Compared to industry standards? Tracking down this kind of data can take a lot of time, and it can be difficult to make the case for taking up an employee's valuable time. Instead, consider purchasing business intelligence from a government information service. You can track the contracting activity of buyers as well as competing contractors specific to your area and industry. From there, you can use your market research to track overall trends and bid competitively.

Government Bid Success Metrics

Make sure that tracking is in place so that every government bid you submit, whether you win it or not, contributes to your overall government bid strategy. Tracking success factors allows you to trim the fat and work more efficiently. Some success metrics to track include:

* Job cost

* Profit margin by client and type of job

* Ratio of bids submitted to bids won

* Percent of returning clients

* Time spent per bid

* Time spent per job

Once you've amassed some data, areas for improvement will start to appear. Do you have clients who send a lot of work your way, but at low profit margins? Do you consistently submit bids to certain agencies or on certain projects that are rejected? Which projects have the highest profit margins? Which take the longest to complete? With this data you can begin to hone your government bid strategy to target the highest-profit projects. Set minimum requirements that a job has to have before it is worth the time and money it would take to pursue or complete it.

Cutting Costs to Reduce Your Government Bid

Being better informed about the government bid landscape can make a huge difference, but it's still important to be able to enter a competitive bid. Data tracking can also help shine a spotlight on hidden operational costs, costs that can be cut without sacrificing value to the customer. Track worker efficiency, keeping an eye out for times of day or types of projects that seem to cause productivity to dip. Keep equipment well-maintained; maintenance expenses usually end up costing less than the loss of productivity caused by shoddy equipment. Have project managers keep detailed records of every step of the contracting process. You may be surprised at the hidden places where time and money are wasted.