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Why Does The Government Sometimes Use No Bid Contracts

The search for government contract opportunities sometimes reveals that there is no competition for a contract at all. Are you thinking how that could be? Well, you may come across a “no-bid” solicitation when you are discovering how to find RFP opportunities. No-bid contracts are just what they read as, and do not require multiple companies to bid because they are intended for a sole source. Thus, they require no bid.

Sound unfamiliar?

If so, your company is likely experienced with bidding on government contracts through the traditional request for proposal (RFP) bid process. These are much different than no-bid contracts, do not have the same purposes, and result in different outcomes.

Let us explore these differences next.

What is the difference between No-Bid Contracts and Competitive Bids?

Based on what we stated above, government agencies issue no-bid contracts for sole source opportunities. In these opportunities, the government is seeking a single, predetermined vendor to partner with for a specialized project or requirement.

Examples of this include:

  • In 2012, the Pentagon was one of several federal government agencies that leveraged sole source or no-bid contracts to gain vendor support.

  • Federal government agencies, such as the Pentagon, issued no-bid contracts to Lockheed Martin, Boeing, and Raytheon in 2012, totaling more than $41 billion in spend.

As you can tell, Defense agencies employ this no-bid option quite a bit. Though, the practice is not designated for just Defense agencies. State and local governments use the no-bid contract method as well. But why?

No-bid contracts are generally used to procure products or services for specialized projects, usually for matters of national security or urgency. It makes sense why the Defense side of the federal government would be so interested in this method.

Nonetheless, the no-bid contract is issued as a strict and heavily regulated process that must adhere to non-compete laws and other regulations. It shuts other businesses out for the benefit of the target vendor. Hmmm.

No-bid contracts certainly do not mirror the competitive bidding process. Competitive bidding, obviously, opens the door for multiple vendors to compete to win a government contract through government proposal writing and capture management.

Competitive Bidding

What then is competitive bidding? A competitive bid process is an arduous, but beneficial process that allows qualified bidders to compete to win a government contract. The competition is fierce. Deadlines are tight, and requirements are strenuous.

Sound better or worse than no-bid contracts? Trust us… there are several benefits to the competitive bidding journey for government contracts and understanding how to write a government contract proposal.

We will outline 5 pros to competitive bidding later.

Yet, in comparison to no-bid contracts, competitive bidding can take much longer to issue, evaluate, and complete. Thus, a quicker and transparent process, such as a no-bid opportunity is helpful during times of crisis and when an immediate solution is required.

Competitive bidding does have pros and we list them next. You decide which is better.

5 Pros of Competitive Bidding

#1. Your company can influence the RFP process.

One of the benefits of having an open and competitive bid process for government contracting is the ability to influence the RFP process in your company’s favor. Yes, it is possible. Often agencies have preferred vendors in mind for bid opportunities or are influenced to manipulate the RFP requirements so that certain vendors are the likely most qualified bidder.

#2. Small businesses gain the opportunity to compete.

Another great benefit to competitive bidding processes includes small business growth. Government agencies allot a significant percentage of business and contract wins for certified small businesses, including Minority-Owned Business Enterprises and Disadvantaged Business Enterprises. Small businesses can work with the federal government for large contracts when they discover how to bid on government contracts, participate in and win a competitive bid opportunity.

#3. There is no limit in RFP responses.

Any company can compete in bid processes for government contracts as many times as allowable for the respective agency. As long as your company meets government requirements, maintains an active business status, and meets qualifications, there is no limit to how many business proposals your company can submit. The more proposals your company submits, with strategy, the more experience your company gains. Not to be confused with the more likely you are to win. Quick tip: How to Improve Win Strategy for Government Contract Proposals

#4. The cost is reduced for the procuring agency.

More than one vendor means that there are more options for pricing. Vendors that compete in RFP response processes submit associated pricing that is competitive and reasonable in cost. The agency receives price proposals that save money, where as no-bid contracts make the agency subject to a higher cost from the single, targeted vendor.

#5. Use government proposal management software for an advantage.

Competitive bidding opens the door to modernized tools and processes for the proposal management process. Vendors use the best government proposal management software to improve team collaboration, capture strategy, and resource management during the bid process.


No-bid contracts have distinct purposes and value. They allow a government agency to receive urgent solutions when quick response is needed. No-bid contracts are different from competitive bidding, in that they do not allow small businesses or other sized companies to take advantage of government proposal writing software or to provide competitive solutions to government problems.

All in all, your company must take the time to plan, evaluate, and execute the right proposal management and capture management strategy for your next government bid opportunity.

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