Pricing Is Too Important to Be Last

Regardless of the evaluation criteria, most awards are heavily based on price. New bidders in the government marketplace too often wait too long to begin working on their price proposals. It’s true that developing the technical solution must come before you can get too deep into the details of your price but there are things you can and should do in the early stages of your proposal.

First, review and understand the pricing requirements. That includes reviewing the government pricing template if one is provided. The window of opportunity for asking questions is usually narrow so you want to make sure you understand exactly what is required. It’s not unheard of to have format and formula issues in spreadsheets. You don’t want to be right up against the proposal due date trying to figure out what to do when there are issues in how the template is calculating your price. Put some sample numbers in there; check to be sure the totals reflect what you expect. Know what is and isn’t to be included in your price – taxes, travel, program management, and other non-labor, non-materials costs. If it’s not clear, ask a question.

If the government has not provided a pricing template, begin early to develop one  – especially if you don’t have one from a prior proposal. Get help if you are new to government pricing. There are things the government will expect to see, if not in the initial submission then later during the evaluation or negotiation process. You don’t need your actual numbers to build a template.

Whether or not the government has provided a spreadsheet, it’s important to determine early on what you are going to use to build your cost, particularly your indirect rate structure. If you don’t have approved rates, you’ll want to be sure your accounting system is set up to allocate costs in a way that provides a means to calculate indirect rates for fringe, overhead, G&A, etc. Even if you don’t have to disclose this in your proposal, the government has the right to audit your proposal prior to award or post-award.

If there is a price proposal narrative required, that too can be started early in the proposal process. You won’t have the Basis of Estimate information yet, but you can describe your accounting system, your rate structure, and other “boilerplate” information that will support your pricing methodology. The better you describe this, the more confidence the evaluators will have in your price.

Pricing government work can be complicated, and you’ll want the final days of your proposal preparation to run scenarios and sharpen your pencil to get the most competitive price. If you haven’t got a good start on your narrative and a good pricing template, you’ll be taking valuable resources away from the activity that will best ensure you can submit a winning price. Price is too important to be the last thing you work on.

Comments on Pricing Is Too Important to Be Last

  1. Kevin Jans says:

    This is a great article Christi. Let’s create a podcast to expand on it and give more examples. Also, are there any members out there who would like Christi and I do a longer form training on this, maybe a webinar with some templates?

    1. Roger Jackson says:

      Webinar with templates would be great!

  2. Steve Lucianetti says:

    Most contracting officers when they get proposals do not turn to the technical section. They look to see “how much?” It is human nature to want to know what something cost. COs are focus on getting a fair price, not just a low price, but prices that are poorly explained will raise flags as to the “risk” in selecting that contractor and their ability to perform.

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