Bid Capacity for Government Tenders

What it is and why it exists

Departments do not want a contractor taking on more work than they can finish. Bid capacity is the mechanism — a calculated ceiling based on your past turnover, the value of work you have completed, and the work you already have in hand. Bid above your capacity and you are rejected regardless of your price.

The exact formula varies by department and is stated in the tender document. Broadly it takes your best annual turnover from recent years, applies a multiplier, adjusts for the contract period, and subtracts the value of work you are already committed to. That last part is the one contractors forget: winning a large contract reduces your capacity for the next one until it is complete.

Read the formula in the actual tender document rather than assuming it matches the last one. Departments differ, and so do individual tenders.

What improves it

• Completion certificates for finished work. Work you did but cannot evidence does not count — see completed work certificates. This is the most common self-inflicted limit.
• Audited accounts showing turnover properly. Understated turnover reduces capacity directly.
• Closing out completed work formally. Work in hand reduces capacity until it is recorded as finished.
• A joint venture where the tender permits it, since capacity can be combined within the tender's rules.
• Timing. Bidding for a large contract immediately after winning another may put it out of reach.

Written 5 September 2026. Government requirements and portal behaviour change — message us to confirm before you rely on any date or figure here.

Common questions