Sixty unpaid hours into a proposal, you realize you should never have bid this contract. A bid/no-bid decision framework prevents that mistake. The seven yes/no questions below take six minutes. Run them before the next 60 hours.
The short answer: A bid/no-bid decision framework is a short checklist you run the moment a solicitation drops. If you cannot answer yes to at least five of the seven questions below, do not write the proposal. Your time is a cost. Spend it on winnable work.
Why Most First-Time Contractors Skip This Step (and Lose)
New contractors treat every solicitation like a lottery ticket. The RFP (Request for Proposals) lands in the inbox, the dollar value looks attractive, and they dive into writing. Sixty hours later they have a proposal and maybe a 5 percent win probability. The math never made sense.
A proposal that takes 200 person-hours at a blended rate of $75 per hour costs $15,000 before a single page is printed. Experienced contractors spend six minutes on a bid/no-bid check before committing those hours. Capture management, the structured process of qualifying opportunities before the solicitation releases, exists precisely for this. Run the framework. Every time.
The Bid/No-Bid Decision Framework: 7 Questions, Scored
Score each question Yes (1 point) or No (0 points). Be honest. A generous answer to yourself now is an expensive proposal later.
1. Capability Fit: Can We Perform the Work Within the Limitations on Subcontracting?
Pull up the Statement of Work (SOW) and go line by line. Can your team perform the required work without exceeding the FAR 19.505 limitations on subcontracting? The rule is dollar-based, not labor-based, and it has three pieces you need to understand before you bid.
- The cap by contract type. For services and supplies, the prime small business will not pay more than 50 percent of the amount paid by the government to subcontractors that are not similarly-situated entities. For general construction, the cap is 85 percent. For construction by specialty trade contractors, the cap is 75 percent.
- The similarly-situated entity exception. Work performed by a similarly-situated subcontractor (another small business that holds the same set-aside qualification, e.g., another 8(a) firm on an 8(a) set-aside) does not count toward the cap. This is the most consequential rule for newcomers because it changes how you build your team. Teaming with another set-aside firm of the same program is the standard path through the rule, not around it.
- What “paid by the government” means. The rule measures dollars, not hours. If the contract is structured so that 60 percent of your direct labor hours come from a non-similarly-situated subcontractor but those hours represent only 40 percent of the contract dollars paid by the government, you can still comply with the 50 percent cap.
The rule applies to set-aside contracts under FAR Part 19 programs (8(a), Service-Disabled Veteran-Owned Small Business (SDVOSB), Women-Owned Small Business (WOSB), HUBZone). Violation can trigger default termination and referral for suspension (FAR 9.407) or debarment (FAR 9.406) in serious cases. If you cannot structure the work to stay within the cap (including any similarly-situated subcontractor participation), the answer is No. An honest No now is better than a compliance finding after award.
2. Capacity Fit: Can We Deliver Without Stopping Everything Else?
Capability tells you whether your team can do the work. Capacity tells you whether they can do it right now. Map every key person the SOW would require against current engagements. If delivering this contract means pulling your technical lead off an existing customer for three months, you have a capacity problem. If you win a contract you cannot staff, you are setting yourself up for a poor past performance rating, which follows you in CPARS for three years after contract completion (six years for construction and architect-engineer contracts) per FAR 42.1503(g).
Source selection officials weigh that record on every future proposal you submit, considering the currency and relevance of the past performance information under FAR 15.305(a)(2)(i). Capacity is a hard constraint, not a soft concern.
3. Customer Relationship: Have We Talked to the Program Office?
Contractors who win federal work consistently have one thing in common: they talked to the customer before the RFP dropped. Not a cold call. A substantive conversation with the program office, the Contracting Officer (CO), or the end user about their problem. If your first contact with this agency is the day the solicitation hits SAM.gov, you are already behind every competitor who started six months ago. Score this a No unless you have had a real exchange (not a sources sought response, an actual dialogue) with someone who owns the program.
4. Pricing Math: Does Our Price Land at or Below the Independent Government Cost Estimate?
The agency has already estimated what this contract should cost: the Independent Government Cost Estimate (IGCE). Triangulate it from prior awards on USASpending.gov and the labor categories in the RFP. Now calculate your fully loaded price: direct labor plus indirect cost rates (fringe, overhead, G&A) plus fee, with your wrap rate applied to all direct costs. If your number is 40 percent above the likely IGCE, you are not competitive regardless of your technical approach. Run this math before you commit to writing a single page.
5. Past Performance Fit: Do We Have 2 Relevant Past Performance References?
Section M of every competitive solicitation lists evaluation factors, the criteria used to score proposals and select a winner. FAR 15.304(c)(3)(i) requires agencies to evaluate past performance on most competitive acquisitions above the simplified acquisition threshold. Relevant is the key word. A $50,000 IT support contract is not relevant past performance for a $2 million cybersecurity operations center. You need at least two entries that map directly to Section M (similar scope, dollar range, and customer type). A thin past performance volume is a structural weakness that better prose cannot fix.
6. Schedule Fit: Do We Have 25 or More Proposal-Team Hours Per Week?
Federal proposals fail because teams underestimate the writing burden. A competitive proposal (technical volume, management approach, past performance narratives, price/cost volume, compliance matrix) requires sustained effort from solicitation release to submission. A realistic floor is 25 dedicated proposal-team hours per week: people blocked from other responsibilities to write, review, and revise. If you cannot honestly commit that bandwidth for the full proposal period, your submission will be thin and rushed. Score this Yes only if you have the bodies available and managed.
7. Win-Theme Fit: Can We Name Three Specific Discriminators?
Before you write a single page, complete this sentence three times: We will win this contract because we [specific, verifiable claim] that [named competitors] cannot match. Discriminators must be specific (our team holds 11 of 15 required incumbents; we delivered this exact SOW at 18 percent under budget), defensible (backed by past performance or technical evidence), and truly unique (not things every qualified bidder can also claim). If you cannot name three real discriminators before the proposal starts, the work will read like every other submission on the evaluator’s desk. That is a No.
How to Score It
Add your Yes answers. Apply the ruling below. Do not negotiate with the rubric.
Score 7 of 7: Bid. You have capability, capacity, a customer relationship, competitive pricing, strong past performance, bandwidth, and a win strategy. Commit fully and write to win.
Score 5 or 6 of 7: Conditional yes. Identify which questions scored No and treat each as a named risk. Assign an owner and a mitigation before proceeding. Capacity or schedule gap? Name who you are adding to the team. No customer relationship? Assign someone to an agency meeting within two weeks. Weak past performance? Evaluate whether a teaming partner closes it. A conditional yes without named mitigations is just a rationalized yes.
Score 4 or below: No-bid. Stop. Archive the opportunity with notes on the gaps. Set a reminder to close those gaps before the recompete. Do not write the proposal.
What No-Bid Actually Means
A no-bid is not a defeat. It is a decision. You evaluated the opportunity against seven objective criteria, determined the probability-weighted return does not justify the investment, and chose to protect your team’s time for opportunities you can win. That is how serious BD (business development) shops operate.
A no-bid also generates intelligence. When you see who won the contract and at what price, check USASpending.gov. If the winner’s price was 30 percent below yours, you have a wrap rate problem to solve before the recompete. If the winner had 15 of 15 incumbents and you had none, you know what the relationship gap costs in practice. Log both findings. The goal is to write fewer proposals and win more of them.
Frequently Asked Questions
When should I run the bid/no-bid framework, before or after the RFP drops?
Run a preliminary version when the Sources Sought or Request for Information (RFI) posts, and the full framework the day the solicitation drops. Early analysis lets you start relationship-building and teaming conversations before the clock starts. Final scoring requires the actual solicitation because Section M evaluation factors and the SOW are not final until then.
What if we score a 4 but the contract value is very large?
Contract size does not change the math. A large contract you are unlikely to win is a larger waste of proposal resources. Start building toward the recompete now (close the relationship, past performance, and teaming gaps) rather than writing a speculative proposal.
Do we have to answer all 7 questions for every opportunity?
Yes. Skipping questions because the answers are uncomfortable is how 60-hour proposals happen. The framework only works if it is non-negotiable. Build it into your pipeline review as a standing agenda item the moment any solicitation enters your tracker.
Can a strong teaming partner compensate for our gaps?
Sometimes. A partner can close a past performance gap if their references are directly relevant and they are a named subcontractor in your proposal. A partner cannot close a capacity gap if neither of you has the bandwidth. And no partner substitutes for a customer relationship you have not built. One subtle benefit of teaming with another set-aside firm of the same program (a similarly-situated entity under FAR 19.505): their work does not count against your 50 percent (or 85/75 percent for construction) subcontracting cap, which gives you more structural flexibility in how you build the team.
How do we handle a no-bid when the agency is a customer we want to keep?
No-bid the solicitation and invest in the relationship instead. Send a brief note explaining you are not positioned to submit a competitive proposal this cycle but remain interested in the mission. Ask for a meeting on upcoming requirements. That conversation is worth more than a weak proposal.
What exactly is a similarly-situated entity, and why does it matter for the FAR 19.505 cap?
Per 13 CFR 125.1, a similarly-situated entity must satisfy two requirements at the same time. First, the subcontractor must share the same small business program status as the prime contractor on the set-aside. Second, the subcontractor must also be small under the NAICS code that the prime contractor assigns to that specific subcontract. For example, on an 8(a) set-aside where the prime assigns NAICS 541512 to a subcontract scope, the subcontractor must be both 8(a)-certified AND small under 541512 to be similarly-situated for that work. On a HUBZone set-aside, the subcontractor must be both HUBZone-certified AND small under the assigned NAICS. The same logic applies for WOSB and SDVOSB set-asides.
Work performed by a similarly-situated entity does not count toward the FAR 19.505 cap on the prime’s payments to non-similarly-situated subcontractors. The exception is what allows a small business prime to build a deeper team than the 50 percent cap alone would suggest, without violating the rule. The two-part test matters because a subcontractor that holds the right certification but is not small under the assigned subcontract NAICS will count against the cap.
The bid/no-bid decision framework is your first and cheapest quality gate. Six minutes of honest scoring protects hundreds of hours of proposal labor. For a deeper look at what happens after you decide to bid, start with how to write a government contract proposal.
Before the proposal, make sure you know how to read an RFP. Section M evaluation factors and the SOW in Section C are the two documents your bid/no-bid analysis depends on most. And if you want a pipeline of qualified opportunities before solicitations release, read the guide to capture management for government contractors. If you decide to bid and lose, see our companion piece on why small businesses lose their first federal contract for the three failure modes to fix before the next bid.
