Government Contracts for Construction Companies: Getting Started

The Federal Construction Market Is Massive

The federal government is one of the largest construction buyers in the country. If you are a construction company looking for government contracts for construction, you are targeting a market worth tens of billions of dollars annually. Federal agencies build and maintain military bases, federal office buildings, courthouses, VA hospitals, national parks infrastructure, border facilities, and much more.

But federal construction contracting has unique requirements that differ significantly from commercial construction work. Bonding requirements, prevailing wage laws, specialized NAICS codes, and specific procurement procedures all create barriers that keep many construction firms from competing. This guide breaks down what you need to know to get started.

Construction NAICS Codes for Federal Work

Choosing the right NAICS codes is your first step. Federal construction opportunities are categorized under several codes depending on the type of work:

General Construction

• 236220 — Commercial and Institutional Building Construction (size standard: $45M)
• 236210 — Industrial Building Construction (size standard: $45M)
• 236118 — Residential Remodelers (size standard: $22M)

Heavy and Civil Engineering

• 237110 — Water and Sewer Line Construction (size standard: $45M)
• 237310 — Highway, Street, and Bridge Construction (size standard: $45M)
• 237990 — Other Heavy and Civil Engineering Construction (size standard: $45M)

Specialty Trades

• 238210 — Electrical Contractors (size standard: $19M)
• 238220 — Plumbing, Heating, and Air-Conditioning Contractors (size standard: $19M)
• 238310 — Drywall and Insulation Contractors (size standard: $19M)
• 238320 — Painting and Wall Covering Contractors (size standard: $19M)
• 238910 — Site Preparation Contractors (size standard: $19M)
• 238990 — All Other Specialty Trade Contractors (size standard: $19M)

Note that size standards for construction NAICS codes are based on average annual receipts. If your average revenue over the past three completed fiscal years is below the threshold, you qualify as a small business for that code.

Bonding Requirements

Federal construction contracts over $35,000 require surety bonds under the Miller Act. This is one of the biggest hurdles for small construction firms entering federal work.

Types of Bonds Required

• Bid bond: Guarantees you will honor your bid price if selected. Typically 20% of the bid amount.
• Performance bond: Guarantees you will complete the work per contract terms. Equals 100% of the contract value.
• Payment bond: Guarantees you will pay subcontractors and suppliers. Equals 100% of the contract value.

How to Get Bonded

Surety companies evaluate your financial strength, experience, and capacity before issuing bonds. To improve your bonding capacity:

• Maintain clean financial statements with strong working capital
• Build a track record of completing projects on time and on budget
• Work with a surety agent who specializes in construction
• Consider the SBA's Surety Bond Guarantee Program, which guarantees bonds for small contractors who cannot obtain them through regular channels. The SBA guarantees up to 90% of the bond, making surety companies more willing to issue bonds to smaller firms.

The Davis-Bacon Act

The Davis-Bacon Act requires contractors on federal construction projects over $2,000 to pay workers no less than the locally prevailing wages and fringe benefits. This is a critical compliance requirement.

What This Means for Your Business

• Prevailing wage rates are set by the Department of Labor for each geographic area and trade classification
• You must submit certified weekly payroll reports documenting that all workers are paid at or above prevailing rates
• Both your employees and subcontractor employees must be paid prevailing wages
• Violations can result in contract termination, debarment from future federal work, and financial penalties

How to Comply

1. Look up the applicable wage determination on SAM.gov (wage determinations are attached to each construction solicitation)
2. Classify every worker according to the correct trade category
3. Ensure pay meets or exceeds the published rate for that classification in that location
4. Submit certified payrolls using WH-347 forms (or equivalent) weekly
5. Maintain records for three years after project completion

Types of Federal Construction Contracts

Firm-Fixed-Price (FFP)

The most common type for construction. You bid a total price, and that is what you get paid regardless of your actual costs. This puts cost risk on you but offers the highest potential margins if you estimate accurately.

Design-Build

You handle both design and construction under a single contract. These are increasingly popular with federal agencies because they streamline the procurement process. Requires both design and construction capabilities (or a strong subcontractor/partner for the design portion).

Indefinite Delivery/Indefinite Quantity (IDIQ)

A master contract with a minimum and maximum dollar value. The agency issues task orders against the IDIQ as projects arise. These are valuable because once you win the IDIQ, you compete only against other IDIQ holders (a much smaller pool) for individual task orders.

Job Order Contracting (JOC)

Pre-priced contracts for smaller renovation and repair projects. Unit prices are established upfront, and the agency issues work orders as needed. Good for firms that specialize in renovation, repair, and smaller-scale construction work.

Where to Find Federal Construction Opportunities

Construction contracts are posted on SAM.gov like all other federal opportunities. However, there are some construction-specific sources to monitor:

• SAM.gov: All federal construction solicitations are posted here. Filter by your construction NAICS codes.
• Army Corps of Engineers (USACE): One of the largest federal construction buyers. Posts on SAM.gov but also has its own procurement forecast.
• Naval Facilities Engineering Systems Command (NAVFAC): Handles Navy and Marine Corps construction. Major source of construction contracts.
• General Services Administration (GSA): Manages federal buildings and leases. Regularly needs renovation and construction work.
• Department of Veterans Affairs: Building and renovating VA medical facilities nationwide.

Set-Asides for Construction Firms

Small business set-asides are common in construction. Many construction contracts under $4 million are automatically set aside for small businesses. If you hold additional certifications like 8(a) or HUBZone, you gain access to sole-source awards and restricted competition pools.

The Mentor-Protege program is particularly valuable for construction firms. Pairing with a large construction company gives you access to their bonding capacity, equipment, and past performance while you build your own.

Getting Started: Your Action Plan

1. Register on SAM.gov with the correct construction NAICS codes
2. Establish your bonding capacity with a surety company (start with the SBA bond guarantee program if needed)
3. Understand Davis-Bacon requirements for your trade and region
4. Build your capability statement highlighting completed projects, bonding capacity, safety record, and certifications
5. Start monitoring construction opportunities daily on SAM.gov
6. Consider subcontracting first to build federal past performance

Automate Your Construction Contract Search

Federal construction opportunities post daily on SAM.gov, and response windows are typically 30 to 60 days. Missing a solicitation by even a few days can mean not having enough time to prepare a competitive bid. GovRadar monitors SAM.gov daily and matches construction opportunities to your NAICS codes, certifications, and geographic preferences. Get your matched opportunities in a single daily email instead of spending hours searching manually.

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