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Public Works Contracting – Is It for You?

Government construction contracts exist at two levels: federal and local. Public Works (PW) contracts are awarded based on the lowest bid price for most federal, state, and local governments. But with recent emphasis on Diversity, Equity, and Inclusion (DEI), government agency DEI requirements are impacting American business practices like never before, particularly in the PW construction industry. PW contracting has become saturated with the certification process for small businesses. We now have numerous categories, such as Disadvantaged Business Entity (DBE), Women Business Entity (WBE), Service-Disabled Veteran Business Entity (SDVB), and many others.

These certifications have one “identity” in common: representing a disadvantaged business entity that must bid on PW contracts for income. However, as the old saying goes, “Here is the rest of the story.”  

First and foremost, let me state upfront that I am not against anyone being allowed to compete in this industry. However, the advantages of being certified can be confusing. Legions of small contractors are lining up to be certified as DBE. Then, after spending their time and valuable dollars getting certified, they find it extremely difficult to even bid on these jobs, let alone win a contract. While being a certified DBE firm will not guarantee that you win a contract, it will make your firm more attractive to Prime Contractors (GC) looking for viable and competitive DBE subcontractors. Certification can be a great place to start, but it’s only one piece of the PW story.

In my 33 years of advising and counseling small contractors on public works, I have heard the same comments repeatedly:

I didn’t realize it was so difficult.”

No one told me it required so much cash up front.”

I didn’t realize I had to have all this insurance.”

Where do I find these jobs to bid?”

I have been certified for three years now and have yet to win a contract.”

“I have been submitting bids to many Primes and I never receive a callback.”    

PW works contracting is so different from private, commercial contracting that small firms trying to enter this market find it difficult to manage estimating, bidding, and project management requirements. Another significant problem contractors experience is the cash flow issue they frequently encounter.

So does that mean that small start-up firms should not even try? Of course not.  

The answer to the problem is simply education, experience, and financial preparation. Your company must have sufficient operating capital and credit, building construction experience, and, most of all, the knowledge of how to estimate and price your bids appropriately and stay competitive. 

If deficient in these areas, you are not ready for public works contracting.

As a newly minted construction contractor who wants to start bidding on California Public Works projects, as a GC, or as a subcontractor, you need to know about some protocols and procedures that come into play.  

You must have the proper contractor’s license, be registered with the Division of Industrial Labor (DIR), and pay the registration fee – $400 (annually). These are an absolute prerequisite before even bidding on a job.

In addition to licensing and DIR registration, the following apply to every PW contract above $25,000:

  • Prevailing wages (i.e., union scale) are required for ALL your construction trade workforce, period – without exception. Prevailing Wages apply to both general and subs. Your certified payroll must be submitted weekly to DIR to confirm the prevailing wage rate payment. You cannot pay workers on a “piece-work” basis.
  • If bidding as a General Contractor or Prime, you must post payment and performance bonds if the contract exceeds $25,000. Again, no exceptions.
  • You must bid per the contract documents (plans and specifications) without qualification or modification, and you must submit the bid on the Bid Form provided by the awarding authority.
  • Progress payments during the project’s life are paid monthly in arrears, with no upfront deposit. So, for your first progress payment, you will carry all costs for at least 45 days, assuming the government/Prime/GC pays within two weeks after invoicing. 
  • If you are bidding as a subcontractor, be aware that many Prime GCs who build public works are signatory union contractors. To be awarded your subcontract, you may be required to sign a one-time Project Union Agreement.
  • You must comply with Apprenticeship regulations as applicable to your trade.
  • Basic insurance requirements include Workers’ compensation, public liability, property damage, automobile coverage, and pollution coverage. These are required on all public works contracts by ALL contractors working on the site.

As you can see, these conditions vary significantly from private commercial work, are entirely different, and are much more stringent than residential construction. But you can succeed if you know what it truly takes to do Public Works contracting and comply with these procedures. It can be daunting, but that is why Norcal APEX Accelerator is here!

If you are looking for help with government contracting or want no-cost help to find contracting opportunities, please contact your Norcal APEX Accelerator counselor for assistance or apply for services today!

If you have more questions, please contact us at or 707.267.7561

Authored by: Ed Duarte, Norcal APEX Accelerator PW Specialist