# A Small Software Company Bids On Two Contracts

A small software company bids on two contracts. If it wins the more significant contract, it expects to make \$50,000 in profit; if it wins the minor deal, it expects to make \$30,000 in profit. A small software firm predicts a 31% likelihood of winning the more significant contract and a 61% chance of winning the smaller one. The corporation won’t profit or lose money if it doesn’t win either contract.

## What Is The Anticipated Profit, Assuming The Contracts Will Be Allocated Independently?

### Example 1

Finding the total sum of each event’s probabilities, multiplied by the event’s value, yields the expected value.

The expected value formula is as follows:

Expected value = [P(A) * A] + [P(B) * B] + … + [P(N) * N]

where P(A) + P(B) + … + P(N) = 1.

So the expected profit would be:

Expected profit =[ P(\$30,000) * \$30,000 ] +[ P(\$15,000) * \$15,000 ] + [P(\$0) * \$0 ]

= [ .34 * \$30,000 ] + [ .55 * \$15,000 ] + [ (1 - .34 - .55) * \$0 ]

= \$10,200 + \$8,250 + \$0

= \$18,450.

As you can see, P(\$0) is obtained by finding the probability that the other events are not happening, which would be

1 - P(\$30,000) - P(\$15,000)

### Example 2

A man invests \$20,000 in a racehorse and enters it in two events. Then, to turn a profit, he intends to sell the horse. It will only be worth \$10,000 even if it wins one of the races. The horse winning the second one has a 20% chance in the man’s estimation.

Find the man’s anticipated profit if the two races are separate events.

#### Discrete Random Variable Expected Value:

Suppose that X is a discrete random variable with possible values in the domain,

xi∈A⊂R,beingindependentevents

The amount, which is the expected value of X,

E(X)=n∑i=1xiP(xi),

where P(xi) is the probability that X=xi,

The expectation of X, or the expected value of X, is the sum of the product of all possible values of X in its domain and the respective probabilities of the random variable X, assuming the events X=xi are independent of each other.

Let X be a discrete random variable assuming the profit values from the two contracts. Hence we will assume the values x1=50000,x2=20000x1=50000,x2=20000 with the probabilities,

P(x1)=0.3,P(x2)=0.7P(x1)=0.3,P(x2)=0.7

Then the expected profit would be:

E(X)=n∑i=1xiP(xi)=50000×0.3+20000×0.7=15000+14000E(X)=29000E(X)=∑i=1nxiP(xi)=50000×0.3+20000×0.7=15000+14000E(X)=29000

Assuming the values of the profit the man receives from the horse winning the races, let X be a discrete random variable. The horse is worth \$10,000 if it wins one of the contests. A 0.20 chance of the horse winning the second race is stated. Let’s call this occurrence “x=x2.

Other outcomes include the horse winning just the first race, winning both races, losing both races, etc.

Accordingly, let’s refer to these as x1, x3, and x4.

The odds of all the conceivable events listed above must equal one. The odds of the other three events would be if all four events above were assumed to be independent.

1−0.2=0.8

.

We divide this probability between the three events. Hence, we have the following:

P(x2)=0.2

P(x1)=0.8\3

P(x3)=0.8\3

P(x4)=0.8\3

The values assumed by the random variable X are the profit attained from each outcome of the horse’s performance. Hence, the expected yield would be:

E(X)=n∑i=1 xi(xi)

=(10000−20000)×0.8\3+(10000−20000)×0.2+(20000−20000)×0.8\3+(0−20000)×0.8\3

=(−10000)×0.8\3+(−10000)×0.2+(0)×0.8\3+(−20000)×0.8\3

=(−30000)×0.8\3+(−10000)×0.2

=(−10000)×0.8+(−10000)×0.2

= −10000×(0.8+0.2)

= −10000×(1)

E(X)= −10000

## Summary

Today’s technology makes it simple for a small group of people to build a small business or a startup with little upfront cash. As a result, hundreds of millions of small firms currently operate worldwide, accounting for nearly 90% of all global corporations.

## Concept Of Bid

A bid is an offer to carry out a contract for work, labour, or delivering supplies at a set price. Neither the offeror nor the offeree acquires any rights due to the bid before the offeree voluntarily accepts the proposal.

### “Bid” For Contracts Comprises

• Subcontractor A engages in “bid peddling” when they decide not to submit a bid, wait for subcontractor B to pay for the estimate and submit an offer, and then make a lesser offer to complete the work. Additionally, this enables subcontractor A to escape the estimating fees that subcontractor B has already agreed to pay.
• When a general contractor requests lower bids from other subcontractors after obtaining one from a particular subcontractor, this practice is known as “bid shopping.”
• “Bid rigging” occurs when rival businesses agree to boost their product or service pricing to increase profits. According to the Sherman Antitrust Act, bid rigging is illegal.

## Techniques For Collecting (Bidding)

In the construction industry, there are six different types of tendering procedures.

1. Open bidding
2. Selective single-stage procurement
3. selective tendering in two stages
4. selective bidding for design and construction
5. Negotiation
6. joint endeavours
7. A competitive auction

### Open Solicitation

In this approach, the client solicits bids and advertises them. Any contractor that chooses to submit a quote may do so by invitation.

### Selective Single-Stage Procurement

The client has chosen a few contractors and requested quotes from them. Most of the time, contractors are selected based on their prior expertise or application materials.

### Selective Tendering In Two Stages

Negotiated tendering is another name for it. Pre-selected contractors are first asked to provide their pricing guidelines, and then the client will ask them to produce designs based on these price levels.

### Selective Bidding For Design And Construction

The client chooses one or more contractors and requests that they produce a design and a business proposal at the same time.

### Negotiation

Utilised primarily for specialised tasks like elevators. The client frequently uses this kind of contractor and is their preferred contractor for this kind of work. Here, the contractor submits their expenses, and the client negotiates the charges before awarding.

### Joint Endeavours

JVs are frequently utilised for intricate and sizable undertakings.

## Various Types Contract

You can contract in various ways to increase your chances of receiving federal government grants.

### Set-Aside Contracts For Small Businesses

The government restricts competition for some contracts to small firms to help level the playing field for these companies. These contracts, known as “small company set-asides,” aid small companies in bidding for and obtaining federal contracts.

Competitive and sole-source set-aside contracts are the two types of set-aside agreements.

#### Contracts With A Competitive Set-Aside

The government reserves the contract solely for small enterprises when at least two small businesses can complete the task or supply the required goods. It occurs automatically for all government contracts under \$150,000, with few exceptions.

Any small firm can apply for some set-asides, but others are only available to those participating in SBA contracting support programmes.

#### Contracts For Sole-Source Set-Aside

The majority of contracts are competitive. However, this isn’t always the case. One type of contract that can give without a competitive bidding process is a sole-source contract. It typically occurs when a single company is the only one capable of carrying out the terms of an agreement.

### Programs For Set-Asides For Government Contracts

Small firms in specific socioeconomic categories are eligible for some set-asides. By taking part in one of the SBA’s contracting support programmes from the list below, you can submit a bid on these set-aside contracts:

Contracting Programme percentage
Enterprise Development Every year, the federal government aims to give small, disadvantaged firms at least 5% of all federal contracting money.
Hub Zone The federal government makes an effort to give HUBZone-certified small firms at least 3% of all federal prime contracting funds each year.
Women-Own Small Bussiness, The federal government makes an effort to give women-owned small companies at least 5% of all federal contracting funds each year.
Service Disabled The federal government makes an effort to give service-disabled veteran-owned small companies at least 3% of yearly federal procurement money.

## Summary

When submitting a bid for a contract, you should try to finish it well before the final submission. The strain and stress may be lessened as a result. Even in the best cases, tenders can be lengthy and complicated, so you should give yourself plenty of time. Planning early might help protect your reaction if unanticipated delays occur.

## FAQS

Here are some questions

### Q.1 What are the four steps involved in a bid?

• Steps for Contract Bidding Planning and Research. You must conduct your due diligence before placing a bid.
• Send in the offer.
• The presentation.
• Getting the Job. Getting the Bid. Getting the Tender. Getting the Proposal.

### Q.2 How should a contract bid be written?

When writing your initial offer, keep these five points in mind.

An information packet isn’t a bid. It serves as a persuasive technique.

• A bid ought to be tailored to the client.
• A proposal should show how you will add value.
• Detail is where the devil is.
• And keep in mind.
• The final word

### Q.3 QuickBooks for small businesses costs how much?

\$30/month. Tools for simple accounting with a single-user licence. \$55/month. Up to three users can access all Simple Start capabilities and bill and time management.

### Q.4 What systems are required for small businesses?

EVERY firm, regardless of size, requires methods for tracking customers and following up with them. A CRM (Customer Relationship Management) software solution is typically required. To-do lists are necessary for everyone. Information Management.

### Q.5 What makes a programme necessary for my business?

The programme is crucial for automating organisational chores and reporting any delays or progress in those processes. It increases the effectiveness and efficiency of the company’s operations. The programme streamlines processes and lessens workload.

### Q.6 What takes place during a bid?

Bids enable people to purchase products and services through auctions and other venues. It is a competitive procedure in which two or more parties compete by increasing the price they are willing to pay to acquire the item.

### Q.7 What is the process for contract bidding?

You fill up the bid contract and all other necessary paperwork, including the estimate of your fee for the job. It is then sent to the party requesting a sealed envelope. Each bid has a submission deadline.

### Q.8 What differentiates tendering from bidding?

In essence, a tender is a method of purchasing products. It is a request for the tender and the project acquisition procedure. They are both linked yet also very different from one another.

### Q.9 What’s a formal bid?

Written solicitations are used to acquire formal bids. Written bids must be submitted by a specific day and time. The Purchasing Department opens the requests to the general public. The Purchasing Department is in charge of keeping track of written bids and bid summaries. Purchasing.

### Q.10 What is the formal term for requesting quotes?

A request for quotes (RFQ), also known as an invitation for bid (IFB), is a procedure in which a business requests price estimates and recommendations from a limited number of suppliers and contractors in exchange for the opportunity to complete specific tasks or projects.

## Conclusion

The owner may consider the contractor’s experience and reputation when evaluating bids. Therefore awards may not always be granted based on the lowest bid.

A Small Software Company Bids on Two Contracts?A Small Software Company Bids on Two Contracts and Could Be the Next Big Thing, reports The Wall Street Journal. One of these contracts could be the start of something big for this small software company. It has already worked with some big companies in the past but nothing as big as these two contracts that have come up recently.

## A Small Software Company Bids On Two Contracts

Although it’s still too soon to know if they will really make it big, there are many ways that they could. One thing is for sure: they have positioned themselves at a unique advantage among other small companies. You see, a small software company is one of those companies that is still in startup mode.
• And for such companies, every milestone reached could potentially play an important role when it comes to taking them to higher levels. Just take as an example how another small software company went from bidding just two contracts to winning multiple contracts in just a few months.

• Now we all know that software is a very hot commodity in today’s market. But aside from knowing that, there are also a number of other factors you must consider when choosing whether to work with a small software company or not. You see, working with an established software firm can have its advantages over working with a new one but it would be hard to tell if it’s worth trading off your partnership with them.

## How To Bid On Corporate Contracts

• Businesses compete for contracts based on their strengths, experience, and past performance. To win contracts, you’ll need to use your business plan as your guide. When writing a business plan, think about how well you can fulfill each aspect of an RFP (request for proposal) issued by a prospective client or employer. Make sure you not only provide your company information but also state how you meet all of their requirements.

• Once you know what information you’ll need, check to make sure it’s all in your business plan. The best way to do so is by writing your own RFP based off of those of prospective clients. The first thing an RFP will ask for is a company profile—including financial data (balance sheet, income statement), as well as information about how long you’ve been operating, who owns or runs your company (names, titles), and how many employees work there. Next will be a description of why they should choose your company over others that are bidding on their contract. Here you can point out unique strengths such as certifications or awards that set you apart from competitors.

• Finally, your RFP should list what will happen if you win a contract. The potential employer will want to know that you’ll be able to deliver what you promise, so be sure to include information about your reputation for following through with projects in a timely manner, as well as references from previous employers or clients.

• We all know about Google, Facebook, or Twitter. But smaller software companies have made just as big an impact as their bigger counterparts. If you’re a small software company with a powerful and innovative product, consider bidding on government contracts to bolster your reputation and revenue stream. A small software company bidding on these contracts can be just as powerful as Google or Facebook.

• A small software company is generally defined as having anywhere from 5 to 500 employees. That’s far more flexible than Google or Facebook, which had 10,826 and 20,275 employees respectively in 2018. These two companies earned \$111 billion and \$40 billion last year. Will your company earn similar revenue streams? Maybe not today but if you keep innovating—and bidding on contracts—it could happen next year.

• Here are a few of our favorite small software companies: Small Software Companies with Innovative Products: The following five small software companies have made a big impact on their respective industries by developing innovative products that have changed lives for millions of people around the world. If you’re looking for an industry to innovate in, consider these five choices

## Small CRM Companies

• CRM stands for Customer Relationship Management, which is a great term to use when bidding on CRM-specific contracts. Though these aren’t huge contracts, they’re highly valuable to customers because small companies don’t often have a CRM in place. More than likely, you’ll be up against bigger firms that want your business—so if you can come away with both bids, it could be just what your company needs to take off.

• CRM systems are software packages that help companies manage their customers, from building a database of leads to tracking sales trends. A CRM system also helps you track emails sent to your leads so that you can make follow-ups based on responses. This ensures that nothing falls through the cracks and that your business doesn’t lose touch with customers it’s already working hard to acquire.

• If you win both bids, there’s a good chance that you’ll have enough work to keep your company running for several months. This is an excellent way to prove to potential clients that you have your act together. In other words, if they see what a well-oiled machine your business is now, they’ll come back later when they want something bigger—and they might refer their friends at other companies too.

## How Does A Small Business Bid On Government Contracts

• As a small business, getting started on government contracts may seem overwhelming but it does not have to be that way. Although there is no one sure-fire method for how small businesses can get their foot in the door of government contracting, there are some tried-and-true methods that work best. This article will give you some great ideas to help you out.

• The first step is to find out where these contracts are posted. As a small business, you have better chances of scoring a deal if you locate government agencies that provide their contractors with access to a website so they can post their contracts and awards.

• The second step is to do some research about your competitors. As a small business, it is better if you find out who is already doing business with these government agencies so that you will have an idea of what they are offering to their customers.

## What Does It Mean To Bid For A Contract

• When you bid for a contract, it means you are competing with other companies who have also submitted bids to supply a product or service. Before you get too excited about submitting a bid, make sure that there is money available in your budget to pay for any materials or labor required to complete a successful bid.

• If you don’t already have a competitive edge or unique approach to a contract, it can be difficult to win. Make sure that your bids are tailored to each client’s exact needs. This can mean adding more value than what is required in your bid.

• You should also consider making your bid conditional upon a number of factors. This will allow you to adapt quickly to changing circumstances and will increase your chances of winning. For example, if there is an issue with delivery time, you can offer to provide additional resources or manpower if required. The best way to ensure that your bids are successful is by creating strong relationships with clients before they need your services. It’s much easier for them to choose you over another company when they already have experience working with you in some capacity, even if it’s not directly related to what they need right now.

## Is A Bid A Contract

• Just because a potential client has accepted your bid doesn’t mean they’re locked into working with you. They can still cancel their contract at any time, meaning you could end up investing valuable time, energy and resources into an opportunity that doesn’t pan out in the end.

• Make sure you understand what their expectations are for a bid so that you can accurately estimate timelines and costs. You don’t want to be in a situation where you’re happy with your bid, but they expect far more work or value than you anticipated.

• Ask what other contracts they’re considering, if any. If you’re not their top choice, it might be better to find out right away rather than continue to waste your time in a bidding process that won’t lead anywhere. You also have a chance to differentiate yourself from competitors by making an emotional connection—something that can help win business down the line.

## Bidding Contract Sample

• Here is a sample of a bid contract: Bid Contract Agreement SampleThis is an agreement by _____, dba _____ (hereinafter Bidder), to submit a bid to provide goods and services, hereinafter referred to as the Product, for _(Name of Employer). This Bid constitutes part of a binding contractual offer by Bidder (the Offer) made pursuant to,and contingent upon acceptance of such Offer by Employer.
In consideration of Employer’s receiving or accepting Bidder’s Offer, Bidder agrees to be bound by all terms and conditions of any Purchase Order issued hereunder. Any reference in such Purchase Order to a purchase order agreement (PO) is hereby deleted.
• Bidder agrees that if Employer accepts Bidder’s Offer, then all terms, conditions and provisions of such Offer will be a part of a binding Contract to which Bidder is irrevocably bound. Employer expressly acknowledges that no waiver or breach by Employer with respect to any provision of an Offer will constitute a waiver or breach with respect to any other provision, including provisions contained in future offers.

## Summary

A small software company recently won bids for two contracts, one for a mobile app and another to develop an interactive educational platform. With these projects under its belt, a-small-software-company is ready to expand its business by adding staff and pursuing more contracts. These development projects have not only demonstrated that a-small-software-company has what it takes to be competitive in the software industry but also showed that it may be an up-and-coming big player in 2014.

## FREQUENTLY ASKED QUESTIONS (FAQS) :

### 1. How do you bid on a company?

There’s no one right way to bid, but there are some general rules to follow. For starters, you’ll want to take a look at all of your competitors—similarly-sized businesses that also specialize in tech services. Compile a detailed list of your company’s strengths along with strategies for overcoming any weaknesses. Your final proposal should address each of these areas and give potential clients a clear idea of what they can expect from working with your business.

### 2. How do I bid a tender?

You don’t. Unless you’re a government contractor, bidding for a government tender is typically impossible. The tender process is highly regulated and not open to outsiders. Instead of trying to be awarded a contract through a tender process, it’s better to get an inside look by networking with people at higher levels within your company or industry.

### 3. How do you write a bid for a contract?

The first step in bidding on a contract is to research what’s required. In a bid for a contract, you need to identify what exactly you’re offering. If it’s not clear from your research or contract documents, ask for clarification.

### 4. What does bidding a contract mean?

Bid means to offer for sale at a stated or advertised price. A bid is typically in response to an open call for proposals. When you bid on something, you are promising that you are willing to do whatever it takes (within reason) to win what is being bid upon in exchange for a promise that you will be paid if your company’s offer is accepted by whoever holds rights over what you are bidding upon.

### 5. What is the difference between tendering and bidding?

Tenders are requests for a supplier to submit an offer, whereas bids are submitted by suppliers once they have been invited to do so. The difference is often made clearer by using a concrete example: If you invite bakers to bid on supplying you with cakes for your wedding, that’s essentially tendering (i.e., asking for offers). If you buy all your ingredients and then decide which recipe to try out, that’s also tendering.

### 6.What is an example of bidding?

A bid is essentially a proposal to provide something, most typically a project or contract, for another party. The process of bidding usually requires writing up a document detailing what your firm will do if they win said bid (the scope of work), how much it will cost them (the budget), when you’ll be done by (the completion date) and some sort of guarantee that if you don’t deliver on time or within budget, that they won’t get charged additional fees.

### 7. What are the methods of bidding?

There are two main methods of bidding: an invitation-to-bid process and a request for proposal (RFP). An RFP is by far more common, and many companies like to use an RFP when they have never worked with a potential vendor before. For new businesses without a track record, it can be difficult to persuade clients to send out bids rather than using an RFP. An RFP gives companies requesting services more control over who they work with since they will review all responses themselves.

### 8. How many minimum bidders are required for tender?

The answer to that question is determined by a number of factors. One way of determining how many minimum bidders are required for tender, is by doing a little research. I did just that, and found out in some countries there are even mandatory requirements from government agencies as to how many minimum bidders there should be for a tender. Here is a list of those requirements

### 9. Can two bid be accepted?

A small software company, started by a team of former staff members of ABC Inc., will soon be accepting two bids for contract work. The bidding companies, XYZ Inc. and PQR Corp., each want to pay A Small Software Company (ASSC) \$1.2 million over 18 months to develop a special piece of software that would help their client companies manage their inventory more effectively. The contract could be worth more than \$2 million if either XYZ Inc. or PQR Corp.

## Conclusion

A small software company bidding on two contracts may be in a great position to make a big splash with its next product. If you’re considering a new software development company, keep an eye on A Small Software Company. They may be able to deliver something spectacular.