How to Price a Government Contract Bid

Pricing a government bid is not the same exercise as quoting private work, for three reasons that catch new bidders out.

**You cannot negotiate afterwards.** In most competitive public procurement the price you submit is the price evaluated. There is no round of haggling, no opportunity to sharpen once you learn where you stand, and generally no chance to correct an error in your favour after closing.

**The price format is prescribed.** Solicitations usually specify a pricing schedule — unit rates, fixed deliverable prices, per-diem rates by role, or a combination. Pricing in a different structure than the one required is a compliance risk, not just an inconvenience.

**The evaluation method determines what "competitive" means.** Under lowest-compliant-bid, only price separates qualified suppliers. Under a heavily technical best-value formula, a higher price can win. Pricing without knowing which regime applies is guessing.

]

The most common pricing failure is starting from what the supplier thinks will win rather than from what the work costs. That produces bids that are either uncompetitive or unprofitable, and often both across a portfolio.

Build the cost base first, from the scope as written.

**Direct labour.** Hours by role, at loaded rates that include employer costs — not base salary. Read the scope for effort you have not counted: mandatory meetings, reporting cycles, site visits, mobilisation and demobilisation.

**Subcontracted scope.** Get written quotes, and confirm they are valid through the contract award date rather than only through bid closing. A subcontractor quote that expires before award is one of the more expensive surprises in public bidding.

**Materials and equipment.** Priced against current supply, with an explicit view on how long that pricing holds.

**Compliance costs.** Insurance at the required limits, bonding, security clearance administration, any certifications the contract requires you to maintain. These are frequently omitted at bid stage and then absorbed from margin.

**Contract-specific overhead.** Reporting, invoicing to the buyer's format, audit obligations, meeting attendance. Public contracts commonly carry more administrative load than equivalent commercial work.

• ✓Hours by role at loaded rates, including all employer costs
• ✓Subcontractor quotes in writing, valid through award
• ✓Materials priced with a stated validity period
• ✓Insurance at the required limits, not your current limits
• ✓Bonding costs where required
• ✓Clearance and certification maintenance
• ✓Reporting, invoicing and meeting time
• ✓Mobilisation, demobilisation and travel
• ✓Contingency proportionate to scope risk[/Checklist

]

Once you know what the work costs, the question becomes what it is worth in this market. Guessing is unnecessary, because Canadian public procurement publishes the answer.

Award notices identify the winning supplier and the awarded value. Federal proactive disclosure publishes contract data on a recurring basis, generally in bulk downloadable form. Together these let you build a picture of what comparable work has actually gone for, rather than what you imagine it goes for.

The useful analysis is narrow. Filter to contracts genuinely similar in scope, buyer type, region and period, then look at the spread rather than the average. A range of eight comparable awards tells you far more than a single headline figure.

Three cautions apply.

**Awarded value is not final value.** Amendments, options and extensions may change what is ultimately paid. Treat awarded value as a reference point.

**Scope differences move prices more than suppliers expect.** Security requirements, service levels, geography and schedule can each shift a price materially. A contract that looks comparable on its title may not be.

**Old awards are weak evidence.** Labour and material costs move. A 2019 award is a data point, not a target.

With a cost base and a market range, the remaining decision is margin — and the right answer depends on how price is scored.

**Under lowest compliant bid**, price is the only differentiator among qualified suppliers. Margin discipline matters, but so does knowing your walk-away point before you start. Bidding below cost to buy a reference is a decision some suppliers make deliberately; making it accidentally, because the number felt necessary, is how firms lose money on public work for years.

**Under a weighted best-value formula**, work out what a technical point is worth in dollars. If technical is weighted 70 and price 30, the return on strengthening the response is often higher than the return on cutting price — and unlike a price cut, it does not follow you into delivery.

**Where subcontractors carry significant scope**, work backwards. Start from the target bid, subtract your required margin, overhead, materials, insurance, bonding and contingency, and the remainder is the maximum you can pay a subcontractor. Comparing that figure against the quote you hold is a far more reliable check than adding a percentage to whatever the subcontractor asked for.

]

Pricing errors at submission are common and rarely recoverable.

**Use the prescribed schedule exactly.** Complete every line. Where a line does not apply, follow the instruction for that case — an unexplained blank can be read as an incomplete bid rather than a zero.

**Check arithmetic independently.** Where unit rates and extended totals both appear, solicitations usually state which governs if they conflict. That rule will be applied, whichever way it cuts.

**Confirm what is included.** Taxes, travel, disbursements and optional years are all frequent sources of misreading. State inclusions where the format allows.

**Keep the technical volume free of pricing** where separate envelopes are required.

• ✓Prescribed pricing schedule used, every line completed
• ✓Arithmetic checked by a second person
• ✓Unit rates and totals consistent
• ✓Tax and disbursement treatment matches the instruction
• ✓Optional years or quantities priced where required
• ✓No pricing information in the technical volume
• ✓Subcontractor quotes valid through award
• ✓Submitted with time to spare before closing[/Checklist

]

Price public bids from the cost base up, not from the number you hope wins. Build direct labour, subcontracted scope, materials, compliance costs and contract-specific overhead from the scope as written. Then use award history as evidence rather than guessing what the market pays, filtering narrowly for genuine comparability and reading the spread rather than an average. Set margin against the actual evaluation method: under lowest-compliant-bid price is everything, while under a technically weighted formula effort on the response often returns more than a price cut. Where subcontractors carry real scope, work backwards from the target bid to a maximum subcontractor budget. And treat the pricing schedule as a compliance document — most pricing losses at submission are format and arithmetic failures, not strategy failures.