You’ve submitted what you believe is a winning proposal, put your best offer in, followed all the requirements, and thought you had a great chance to beat the competition. But you lost! You’ve banged your head on the desk, maybe used some “colorful” language, resisted the temptation to fire the proposal writers, now what? Move on to the next one and hope to do better next time? Well maybe but first you have work to do. Doing the same thing over again and expecting a different result is neither smart nor productive.
First you have to figure out why you lost. The very first thing you want to do is ask for a debrief. Under FAR 16.505(b)(6) if the winning bid is above $5.5M, the government is required to give one in most cases. Note this is not your bid price but the price of the award to the successful offeror. DO NOT DELAY! You have just 3 days after receipt of the award announcement to request a debrief. This is your opportunity to get as much information as you can. Research debriefs and understand what to expect and how to prepare to get the most out of them. Even if it’s obvious that your price was too high, you may learn something that will help you next time.
Armed with the information from the debrief, assemble your proposal team and analyze everything you know about your offer as compared to the successful one. Most of the time, but not always, the winning price will be lower than yours. If you were deemed technically unacceptable or lacking, that is a different topic for discussion. If you were not the lowest bidder, focus on the price. The major components of price are direct costs, indirect costs and profit. How much difference was there between your bid and the winning bid? If it was a small amount, look at what you can do to sharpen your pencil and get below that price. A little savings here and there might make the difference. If your price was substantially higher, you need to take a good look at what you might have missed.
Run your pricing model through various scenarios to see what kind of reduction it would take to get to the winning price. A reduction in hours and/or lower salaries might generate some savings but is unlikely to get your price down to half of what you bid if there was that kind of difference between yours and the winner (unless you totally misunderstood the requirement). Likewise, materials, travel and other direct costs are not likely to make a huge difference. You might gain a few bucks by negotiating with suppliers but again that isn’t going to add up to a big number. It is more likely that your pricing structure and indirect burdens are not in line with the marketplace. If you are competing with companies who have low overhead and G&A rates, you have to address those costs to figure how to be competitive. Make sure you are not including items in your indirect costs that are specific to a single contract or business area. That adds cost to a new opportunity it does not gain the benefit from.
Most importantly, don’t hesitate to get the help of a professional who understands the financial aspects of government contracting. It’s a whole different animal than the commercial marketplace.