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Smart Tips for Pricing Labor Rates

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. Access: Get access to labor survey databases. This can be costly, but there are options for buying reports or gaining access. Options include: using cost-sharing with other partners buying a license directly with companies such as Economic Research Institute (ERI), Mercer, Western Management Group, proprietary survey tools from BOOST etc,. These depend on their cost and your usage.  Do not rely on free sites such as salary.com or LinkedIn. It’s possible to review them and perhaps use them as a way to triangulate, but they should not be used as primary sources of information to justify your rates.
  2. Research: Use government sources such as the Department of Labor Bureau of Labor Statistics data tables. This isn’t the most accurate way to define your rates, but it can provide a good range to compare to the other data sources and provide fidelity. Additionally, peruse GS Pay rates and add them into your analysis.  Use these resources with caution. They’re not as refined as the commercially developed salary databases mentioned above, but sometimes the government does require you to bid within these ranges.
  3. Collaborate: Get your subcontractors on data calls. When developing labor rates, you’re often required to request rate data calls from your subcontractors.
    This does two things –

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.

Easy Tips for Competitive Data Gathering

As small business contractors, we know how tough it is to get daily operations up and running; let alone set up a proposal shop and to go after business.  Most often, it’s a one-person shop, hunting and gathering crumbs in the govcon jungle. This can obviously be very overwhelming and wasteful as time passes, but there are some quick and easy ways to be a bit smarter about planning your bids.

This industry, as we all know, is quite cutthroat, not just in price/rates, but also in partnerships/performance.  If you’re in the right place at the right time (read: right team/right contract), you can suddenly find yourself on a meteoric path to growth. However, most often you’re just trying to get a few contract full-time equivalents (FTEs) here and there until you get enough past performance or a wonderful set-aside contract drops into your view.

There are some ways you can make some intelligent bid/no bid decisions, and also sharpen your proposal approaches.  We recommend some free (elbow grease required) sources below:

  1. Free government sources
    1. Bureau of Labor Statistics – Includes cost of living tables, economic indicators, fringe and tax data. If you don’t study macro-economic trends, you could be missing the pulse of the market.
    2. DoL website – Also contains wage rate tables for Service Contract Act, by location. This can give you a good idea about how to modify and/or plan for benefits plans for nonexempt contracts. This can be a huge risk if not accounted for.
    3. GSA website – Includes various schedule rates and top-line data for companies, can be a good starting point to compare and contract. Sometimes the RFP requires you to bid in these ranges, so it’s good to have these as data points to triangulate your bid rates.
  1. Government funding/budget data
    1. Usaspending.gov – This website contains spending charts where you may find very useful trend information. It’s a good research site.
    2. Federal Procurement Data System – fpds.gov – direct source to get previous contract funding/obligation data, by company, by contract. This can be very useful to obtain trends and do some back of the envelope analysis.
    3. FBO.gov – may contain past government contract info, interested vendors, industry day info, etc.
    4. Industry Days – These are potential opportunities to attend in person or dial in. Ideal for intelligence gathering.
    5. Small Business Administration – sba.gov. This website contains some good information on how to gather competitive data and has a few tools to help gather free research.
  1. General Websites
    1. Glassdoor – employee reviews, can indicate benefits across companies, morale, contract headcount, job descriptions.
    2. LinkedIn – resume descriptions, contract sites, recruiting notes
    3. Corporate websites – often post job listings and sometimes provide benefits info. Read the annual reports for public companies; you can see trends within the financial reports and project out a feasible G&A rate for most of these companies.

 

Data gathering may be snore-inducing for some, but we have the connections to those who thrive on this type of hunting and pecking. If you would like an introduction or a roadmap to your best strategies for data capture, email BOOST. [email protected]