Get in touch with BOOST LLC’s pricing team today!
Get in touch with BOOST LLC’s pricing team today!
Get in touch with BOOST LLC’s pricing team today!
If you’re bidding on any government contract these days, whether it’s a Firm Fixed Price or Cost Plus, there is almost always a requirement to demonstrate and justify how your labor rates were developed. Many companies may end up bidding existing employee rates (that’s fine, but may not be the smartest approach), or using free online sources such as salary.com. We recommend a few better approaches to refine and really sharpen the bid rates. Note here that there is, of course, a cost to obtain good data. Good data paves the way for good analysis.
Here are BOOST’s top three tips to develop and bid smart labor rates (that you can justify to the government and intelligently execute):
1. Ensures that you’re performing a proper subcontractor rate analysis as a part of the FAR requirements.
2. Provides actual data points from various companies in the scope of the contract/work to be performed.
In a way, this is actual live market data, that you can use to compare and refine your rates. This is an often-overlooked strategy because it’s very time-sensitive. Furthermore, you don’t usually get the data in enough time to make actual pricing comparisons and decisions on your rates. This is why a proper timeline and pricing schedule must be implemented. That’s a story for another day!
Pricing is a monster all on its own, but with these smart tips you can start to tame the beast. The pricing experts at BOOST are experienced in helping to support your strategic pricing needs. Contact us today to better prepare and price your proposals.
Well, the proposal was submitted, the “all-nighters” are done, the proposal team has celebrated either with a big happy hour or a 48-hour night/day of sleep, and all is well. It seems that way at first until the pricing specialist wakes up in the middle of the night dreaming of errors and mistakes or compliance issues (I can only speak about myself, I’m sure the rest of the proposal team has the same sort of nightmares!). One way to avoid having post-proposal-submission-anxiety is to document and save records of everything in your pricing files. This is critical not only for your mental health, but for the corporate audit risk as well. DCAA can and will come back at any point to conduct audits of how the proposal rates were developed. Here are some quick tips to be prepared and to alleviate any post-proposal submission stress (I’ve named this condition PPSS):
Overall, be smart, save all the relevant documents, versions and files in an archive folder. Don’t alter the files, lock them down and only give access to parties that require it. This is your audit folder, this should provide all the clarifications and corrections to DCAA, should they audit your proposal. This also provides a good way to review any proposal related mistakes or for a regular after-action review. This will also help you (yes, you the Pricing team), get a good night’s rest because you’ll have all the history saved and be able to check on mistakes or errors or compliance issues that might be keeping you up. You can only prevent mistakes in the future if you know what happened. This audit file can also be used during a re-compete to pull historical data or historical assumptions that might form the pricing strategy for your new bid. Basically, always prepare and keep an audit folder after your proposal is submitted.
Proposals are challenging, but the hard work makes the win so much sweeter. Let BOOST LLC help you with your pricing strategy. Email [email protected] and schedule a consultation today.
Why a proper pricing proposal schedule matters.
You’ve been preparing and actively developing capture strategies for an upcoming bid and eagerly awaiting the draft or final RFP to drop. Finally, it drops! All proposal functions swing into action. The proposal manager’s first job is to develop a schedule and hold everyone accountable to it. Very seldom do we get a proposal manager to ask us for a “Pricing Schedule”. However, we always insist. Here’s why:
Price/Cost volumes these days require a lot more facilitation and coordination with other volume leads than most people realize.
We have seen many cost volumes developed in a rush in the final days of the proposal stage, and this puts the entire proposal at risk. Mitigate this by being aware of missed opportunities to refine/review a smartly developed and compliant proposal. With good schedule management, the pricing volume can be a proper, accurate and complete document that will be a part of the winning proposal. Don’t make your pricing volume the reason for your proposal loss.
BOOST has pricing experts at the ready, but don’t wait until it’s too late. (See point b, above.) Get connected with us now so that when you need us you already have our number on speed dial. [email protected]
All right govcons, here’s another fancy schmancy phrase that is pretty common in our industry and yet nobody really knows what this mysterious thing is. Price to Win (PTW)! What? Does anyone truly have a guide to THE winning number? Think about that for a second. The answer is a resounding NO. If someone did, they would be richer than Jeff Bezos. So, what is the number or how can we at least get close? After working on and consulting with the Price to Win gurus in the industry, it’s safe to say that Price to Win isn’t a miracle cure to your pricing problems.
Now, don’t go blaming your pricing team because of these losses. Trust us, it’s not them, it’s you, the Capture Team. A winning price is achieved by thoroughly analyzing competition, acquisition trends, budgets, price and capabilities tradeoffs. We can’t forget an accurate cost proposal development. (Notice that the cost proposal development is only one part of this process.) This process is essentially the concept of “Price to Win”. PTW informs your pricing decisions.
A PTW process should begin the minute you identify an opportunity. It should be integrated into your bid/no bid decision. You must understand the competitive landscape at that time of opportunity, and what it’s likely to be by the time the Request for Proposal (RFP) actually drops. This can be quite a long window of time (a year to two in some cases). This is why Price to win is an iterative process. You must keep an eye on the ball because the landscape changes quite a bit in our industry. A current competitor might be your teammate and a current teammate might suddenly become a competitor if there is M&A activity (which is a huge trend).
As we’ve highlighted in our Circle of Pricing before;
Price to Win – this is a bottom-up build based on the draft RFP documents and final RFP documents. The end result is to model the Total Evaluated Price (TEP).
The inputs into the TEP (for example, the technical solution), are determined during the Competitive Analysis. The outputs of the Price to Win analysis are to recommend specific strategies identified in competitors that can be incorporated into your internal pricing strategy. Price to Win should provide you with a comparison of labor categories, location, etc. that are being priced by your competitors. You can use this information against your approach and make adjustments to your solution and to your pricing.
The smartest way to conduct a thorough Price to Win analysis (that includes competitive assessments, buying trends, market cost estimation) is to hire the experts. Hiring industry experts provide a very good lens to obtain a robust view. You can have your internal team conduct this, but you may want to consider outsourcing. A subject matter expert will have a better finger on the pulse of the market. It’s worth the investment to use these experts and outsource your Price to Win function to capture the market analysis with an unbiased view.
If you’d like to learn more about how this looks for your business, contact BOOST! [email protected]
The govcon industry has its own sub-industry – the proposal industry. There are many companies, and thousands of professionals (if not more) dedicated to this profession of proposals and business development in the govcon sector. It’s an intense career path, and it challenges professional sanity to quite an extent. This is not due to the difficulty of putting a proposal together, but because the government (yes we’re going there), makes the entire process extremely cumbersome and unnecessarily complicated. You can debate the necessity of providing cost data in 5 different formats all you want. There are brilliant proposal writers, managers and growth executives that are often caught in frustrating proposal hell because their product, aka the proposal, isn’t a function of their actual talent. Instead, it is a collection of documents that are much less of a sales pitch with compliance matrices and solutions weaved in. Sometimes things can be made a bit easier.
There is hope! Some easy pitfalls to avoid, at least when it comes to the pricing volumes include:
To mitigate these common mistakes we suggest that you should:
This process will give you enough time to prepare and submit questions to the government to help clarify issues ahead of time. These 4 steps will help you to create the shell of the cost volume early on and the pieces will fit in better as you coordinate and facilitate the volume development.
As an understatement, pricing is difficult. Luckily you have BOOST pricing specialists in your corner. Let’s connect today and get ahead of these common mistakes so you can win more work! [email protected]
Over the past decade or so, we’ve all been whacked by this beast of a trend called “Low Price Technically Acceptable” (LPTA) evaluation criterion. It’s where the government looks at one thing and one thing only. Namely, your price. The lowest price to be clear. As long as all of your other volumes meet the basic criteria to “pass” the gates, the evaluation comes down to who has the lowest price proposal. Yes, ladies and gentlemen, we are now talking about a government that has and is acquiring national security services/items by trying to shop at “Walmart” or “Amazon” (whichever is cheaper). Let that sit for a minute.
It is unlikely that this trend is going to change quickly, in fact, it will probably be around for a few more years. It’s smart to start bidding and optimizing your pricing strategy in a holistic way. The best approach isn’t to cut rates across the board), but also to understand what happens to your business and to the market when everyone finds themselves in the same boat.
Let’s dive in to the term “strategic”. This means you need to approach each and every bid, whether it’s an LPTA or a best value or other type of evaluation, with a healthy amount of preparation. You must review all of your contracts, your pipeline, your teammate rates, your teaming commitments, your HR policies, recruiting capabilities, and your mission and strategy in whole. Is going after low price contracts going to keep you in line with your corporate strategy? Are you going after these bids to increase revenue so that you have a great top line figure, and perhaps aim for an acquisition? Are you bidding for past performance? Depending on your intent to bid, you should shape your pricing approach accordingly.
Strategic pricing should be a very integrated and well thought out function of your organization that involves smart capture practices to smart financial planning. Your pricing team should be a part of your bid/no bid decision phase, and they should also be advisors to your financial and executive teams to submit smart, effective, and winning proposals.
Various approaches to lower your rates can include:
These are some quick and dirty ways to start sharpening your pencils for the next few bids. As you build your strategic pricing capabilities for the long term, keep simple strategies in mind, but also know that it takes a while to actually become a smart bidder. It’s not just about the mechanics of preparing a cost volume, but a multitude of factors. Your pipeline strategy, new cost centers, perhaps new divisions, new targets for M&A activity, new bids that might diversify your portfolio, all of these impact the growth of your business. If you bid with the right intent, your strategy should follow as such.
If you’re questioning your current strategic pricing strategies, connect with those in the know. BOOST LLC has experts to assist you in managing this part of your proposal routine. Connect today at [email protected]
GSA: Schedule 738X GS-02F-007GA
NAICS: 541219, 541611, 541612, 541618, 541990, 561110, 561499, 611430
Email: [email protected]
Address: 12110 Sunset Hills Road, Suite 600, Reston, VA 20190