When No One Bids: Helping Small and Rural Communities Build Competitive Markets to Deliver on Infrastructure

We often hear from government leaders, particularly those in small and rural jurisdictions, that they’re not getting enough qualified businesses to bid on their projects. Researchers Zachary Liscow, William Nober, and Cailin Slattery found that one third of state DOT highway projects studied received just two or fewer bids. Particularly in challenging markets, project managers may need to get creative.

Start by better understanding reasons for few bids, planning early with internal and regional partners, and consider new procurement strategies. Learn more about these steps below to package opportunities businesses are likelier to bid on and deliver quality projects on schedule.

Understand Why Businesses Aren’t Bidding

Bidding requires businesses to dedicate valuable time, accrue expense, and accept project-related risks. When public-sector construction follows seasonal patterns (related to weather, fiscal years, and access to public spaces), contractors may find their slate full and may skip a project that looks small, risky, far away, or unlikely to lead to future work.

Consider using targeted surveys, interviews, or listening sessions with select firms to uncover reasons for low competition. Firms seek to minimize risk and match projects to their capacity. A 2022 review of contractor bid/no-bid studies found that the top factors affecting contractors’ decisions to bid included contractual payment terms, project size, and the agency’s financial capacity, reputation, and payment history. Small businesses may not have the bonding capacity, insurance, and staffing to take on large projects; large businesses may not find small projects worth the effort.

Choose the Right Solution

To determine the right strategies, consider what the following challenges may suggest:

Outreach Strategies

Project managers often have an incomplete and reactive understanding of contractor availability, relying on past bidders lists for current outreach. For priority projects, teams should take a more proactive approach, strengthening bidders lists and creating multiple avenues for engagement. This can include identifying potential businesses through e-procurement platforms, bidder registries, industry directories, and regional trade associations.

Learn More: PPG developed a how-to guide on building a market landscape scan, a practical way to better understand your market, identify additional firms that may be interested in your project, and strengthen competition.

How-To Guide

Once businesses have been identified, procurement managers should directly share relevant opportunities through email or phone. Rather than expecting contractors to regularly visit a government website or e-procurement portal, effective outreach meets contractors where they are by engaging through trade associations and other industry- or region-focused organizations.

Governments can also increase visibility into upcoming projects through tools such as Capital Improvement Plans (CIP), procurement forecasts, or advance notices. For example, the City of Philadelphia’s procurement forecast offers a 12-18 month outlook on infrastructure opportunities from both city departments and external transportation, energy, and gas agencies.

Project Bundling

Project bundling (combining multiple similar projects into one contract) can improve efficiency and reduce costs. The FHWA offers guidance for when to consider project bundling and how to group projects, including by timing and geography. PennDOT was able to use these methods to bundle similar bridge projects, creating a standardized design for all bridges in the bundle, ultimately saving 50% in design and 15% in construction costs.

For a smaller city, developing a Capital Improvement Plan (CIP) that prioritizes upcoming projects can inform strategic bundling opportunities. Via cross-municipal coordination or with the support of a regional planning entity, multiple cities can consider bundling their contracts.

Bundled projects can be procured using a variety of solicitation methods, including RFP / RFQ / ITB processes, depending on project objectives and procurement requirements.  Once a bundle has been identified, agencies can select the delivery method that best aligns with the project goals, complexity, and risk profile. Partners for Public Good (PPG)’s Project Delivery Method Guide details how to choose between Design Bid Build, Design-Build, and Construction Manager at Risk methods in greater detail.

Note: When there is sufficient competition, PPG sometimes recommends unbundling contracts (breaking a large contract into smaller scopes) to expand the bidder pool and create opportunities for small and local businesses. The appropriate strategy depends on whether the market is constrained by project size or another underlying reason that businesses choose not to bid.

Strengthening Internal Processes

Contractors are unlikely to bid if they believe the project carries too much risk or when an agency has a reputation for slow decision-making, delayed payments, unclear requirements, or burdensome contract administration. Although some market conditions may be beyond an agency’s control, investing time in improving the contracting process can entice more bidders to compete.

For instance, by resolving past payment issues and committing to prompt payment timelines, bidders can expect to be paid on time. In writing results-driven solicitations, project managers can signal clear expectations around the work to be done and help businesses price projects more accurately. And by right-sizing insurance and experience requirements to the project’s complexity and risk, more bidders will be able to compete without compromising project outcomes.

Bench Contracts

Another approach related to bundling is to strategically use job order contracts (JOCs) and task orders to prequalify contractors for routine construction and maintenance. When JOC thresholds are sufficient, they can be used for significant projects and reduce procurement friction when new work is needed. In these cases, projects can be issued as job orders rather than undergoing a separate competitive solicitation.

Though there are many strategies to optimize pre-qualification, project managers should communicate clearly and transparently with contractors about the selection process and likelihood of future work.

Regional Planning and Coordination

Another strategy is to look at business availability as the challenge of not just a single jurisdiction, but the broader region. Through metropolitan or regional planning agencies or councils, small towns and cities can actively share upcoming work from their CIPs. For example, through publishing a shared calendar of planned projects and staggering projects throughout the construction season, a contractor may more easily bid on multiple projects; meanwhile agencies can consolidate business outreach and market research. Where these regional planning bodies identify sufficient shared need and the legal framework permits, the metropolitan planning agency (MPO), council of governments (COG), or a lead agency could issue a multi-project or multi-scope (bundled) solicitation for the work.

The Capitol Region Purchasing Council serves 150 towns and other entities in Conn., coordinating a JOC program among other services. While this approach can help attract more bidders and improve procurement efficiency, it requires significant coordination among participating agencies. Key considerations include determining which agency will lead the procurement, how contracts will be administered, and whether applicable laws allow joint purchasing.

Cooperative Contracts

For routine purchases, like commodities, standardized services, and vehicles, cooperative contracts can help a small jurisdiction increase its buying power. This may mean utilizing the state’s master contract list, a national or regional collaborative, or piggybacking off another agency’s existing contract.

Cooperative contracts tend to be most useful for common, repeatable, and clearly defined needs. GSA’s cooperative purchasing program, for example, allows state and local governments to buy from eligible categories of IT, equipment, and maintenance products and services. Cooperatives have been used when grantees of the same federal grant are looking to procure similar services and technology. This can be seen in the work led by Open Mobility Foundation on SMART grants. However, cooperatives often are less suitable for complex infrastructure projects or highly customized procurements where agencies may require greater flexibility in scope development, evaluation, and contract administration.

Find Long-Term Solutions

Delivering quality infrastructure projects begins with finding qualified businesses to do the work. Partners for Public Good works with local governments to diagnose their project delivery challenges and come up with solutions, including how to reach more bidders in challenging contexts. If you’re interested in any of the solutions shared here, reach out to schedule a conversation.