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5 Pricing Tips for the New Year

As we enter a new calendar year, we begin the madness of sharpening our budgets and pipelines.  Some of the focus ends up being on managing expenses and headcount, as it should, but often some quick and easy planning can help you to optimize your pricing strategy for the next year.

To get you started, here are five pricing tips for the new year:

  1. Contract Labor Bill Rate Review
    Have you had any staff turnover on your firm fixed price or time and materials contracts? If so, you may be able to capture some labor efficiencies by “greening” those positions and/or consolidating functions under higher bill rate positions. BONUS TIP: This is especially helpful if the contract is up for a re-competition and you’re the incumbent.
  2. Cost-Plus Contracts
    If your Cost-Plus contract is coming up for a re-compete, review all of the direct labor rates, and examine them against market rates (such as a survey or government rate data such as Bureau of Labor Statistics).  Bid market rates, NOT current employee rates.
  3. Subcontract Review
    Are there opportunities to bring in new subcontractors of the same quality/scope, but with better rates? This might be dependent on teaming agreements and workshare commitments. If the contract allows it, develop an active strategy around subcontractor selection and rates every year.
  4. Overhead & Infrastructure Review
    Facilities – this is a big one. Are there opportunities to renew different types of leases/facilities?  You may want to explore the trend of shared/co-working spaces. This solution can provide a lot of cost efficiencies if your contract/company policy allows it. Telecom expenses are also a major player. There are a multitude of new options that minimize the telecom costs for entire companies through third-party vendors and resellers, or cost sharing with other companies. Do your homework and save your company money in the long run.
  5. Beef Up Your Back Office Support
    Can you outsource major functions such as accounting, HR, recruiting, contracts? Believe it or not, this is becoming a good option for many mid-tier contractors. Use this opportunity to get lean without sacrificing quality and compliance standards.

The tips above are not a one-and-done type of deal. You should be reviewing internally each year as you plan operations and execution of contracts for the new year.  While much of this is common sense, seldom is it applied to affect pricing strategy/updates.  Use this information to bid sharper and smarter than your competitors and get the edge in pricing!

The Gift of Expertise

Note: This post was updated 12/13/2022

Ever feel like you have no clue how to solve a problem in your GovConor that there has to be an answer out there, you just don’t know how to find it?  Do you google randomly trying to figure it out, only to not be satisfied with the results?  Or (if you are like me), do you just want someone to freaking deal with it and tell you what to do in this circumstance?  Do you feel like you know it’s important, but there are a ton of things that you’d rather be doing or should focus on when it comes to your GovCon? Our GovCon experts at BOOST LLC can help you strategize a plan, figuring out exactly what should be an outsourced GovCon service and what should remain in-house. Your GovCon isn’t the same as a regular business, why use regular outsourcing services when we have experts in outsourcing GovCon services to ensure your GovCon gets the exact help it needs, at a price that works for your budget.

As you plan for 2022, be thinking about what expertise you need in the new year.  What will help move your GovCon forward and, more importantly, grow your profit?  What is worthy of your time and what isn’t?  When do you play it safe with an outside opinion?  (answer:  Anything with a ton of money on the line or employee issues – call the expert!).

Here’s a short list of items that folks waste time on by doing themselves for their GovCon instead of calling an expert to save a ton of time and in the right circumstances, a ton of money:

  • Affirmative Action Plans
  • Taxes
  • GSA Schedules
  • Employee handbooks
  • Policies and Procedures (to start)
  • CMMI/ISO certification
  • Office Space/Office Moves
  • FAR Compliance
  • Proposal Price/Cost Volume development and Analysis
  • Indirect Rates development and Analysis
  • Strategic Pricing/Price to Win Analysis
  • M&A (when you don’t have a shop of your own)
  • Website development
  • Complex IT Challenges
  • Bookkeeping
  • Graphic Design
  • Payroll

This holiday season, give yourself the gift of getting crap off your plate.  Budget for using an expert in one or more of these areas next year.  Reclaim your time and rest easy knowing that outsourcing GovCon services will provide a net positive!

If you need a referral or recommendation to anyone providing these services, just give us a shout.

Wrap Rate Government Contracting

Even if you are in a less competitive field or have a unique offering for a customer with a ton of funding, government contractors must monitor and maintain their wrap rates.

Companies can sometimes view this exercise as an annual corporate budget where you occasionally look at how you are doing and often look back and ponder, “What were we thinking?” This is not enough by a long shot.

The best practice is to review your financials each month and include an analysis of how you are performing. You should learn how to complete reviews monthly, make adjustments quarterly and consider a complete overhaul semi-annually to achieve your goals.

What Is a Wrap Rate?

Want an efficient way to determine the competitive cost of labor units before profit margins are added on? You can calculate the pricing of your services and products with wrap rate government contracting.

A wrap rate gives businesses insight into the pricing suited to buyers’ needs. The calculations can help companies decide if their proposal terms will be feasible or too high for the government to accept.

Additionally, the information can assist with forecasting and budgeting. As a result, businesses can plan how much to bid and predict where they stand compared to their competitors.

Calculating Wrap Rates

Calculating wrap rates for government contracting is essential for estimates. The calculation allows contractors to reflect their job costs on project bids accurately.

Generally, you multiply unit costs by the base pay of an employee. The result provides a unit of labor’s base dollar cost. Fringe, overhead and general and administrative (G&A) expenses are applied.

After determining the indirect costs, they’re added to the base dollar for hourly labor costs. Calculating the rates makes you better prepared to measure the actual costs of labor for future projects.

Benefits of a Wrap Rate Formula

An effective formula provides many advantages, including the following:

Effective Calculations

Save time and effort when you simplify the cost calculations for the prices in your proposals. The formula adds all indirect costs to get a single rate, so you don’t have to calculate each indirect expense separately.

Cost Visibility

Gain more transparency about indirect costs when determining the pricing for your proposals. The comprehensive view offers more clarity and accuracy so you can cover all necessary expenses when bidding on a government contract.

Easy Pricing Analysis

Analyze the impact of potential pricing changes so you can make informed decisions. The insight lets you determine the most cost-effective and competitive pricing strategy for your government proposals.

Compliance

Ensure compliance with cost accounting and pricing regulations with the calculations. The rates enhance the credibility of your proposals and minimize the risk of contract disputes or audits.

Flexibility in Developing Proposals

You can make adjustments to your direct costs and profit margins according to each contract’s requirements. The flexibility allows you to customize your pricing proposals to meet government agency needs while maintaining a beneficial pricing structure.

Ways to Lower Your Company Expenses

When evaluating your company’s performance and goals, consider the following:

  • Space: Do you really use it, do you need it and what is your company culture? Larger System Integrators are shedding their bloated infrastructure. Don’t build one unless you’ve got 5-year POP’s with all contractor site rates. And even then, keep it lean.
  • Wellness: When was the last time you competitively shopped your benefits? Or even your broker? Don’t get tied up in the same old “we only have a 2-5% increase, so that’s great” mentality. Depending upon your size, self-funding in some capacity may be of interest. Does anyone use the vision policy? What about dental? Have you considered reducing your contribution?
  • Training: With all of the online options these days, does your team really need individualized training or would an online package work? You could offer this benefit to more employees at a lower overall cost.
  • Education: Consider reducing the tuition reimbursement if very few people are using it. It’s nice to tout to potential new hires, but in reality, it’s not a deal-breaker. If it is, bonus the employee out to cover the costs.
  • Business development: Is the team on track to meet their goals this year, or has performance been underwhelming? It’s time to take stock of what’s working and address what isn’t working so you can make smart business choices and save money in the long run.

Achieve Your Goals With BOOST

Want to learn how to win and maintain more contracts in the GovCon industry? BOOST is ready to help! To learn about our consulting services, contact our team today!

Recruiting During Proposal Season

Editor’s Note: This Article Has Been Updated May 10, 2023

Soon proposal season will be upon us…along with writer’s block, visions of past performances dancing in your head, cost volumes, long nights and lots of coffee. But, the most enjoyable of all is resumes, sourcing, contingent offer letters and recruiting.

Government contracting recruiting is not like commercial recruiting.  The talent pool is small, the salaries are low, the lists of qualifications are long and the skill sets are specific. Proposal recruiting is its own version of fun with key personnel, vague requirements and candidates who get cranky when they hear you are recruiting for a proposal.

Whether recruiting for a proposal or a funded job req, the usual question is whether you recruit with in-house recruiters or if you utilize an outsourced recruiting firm (or individual recruiting consultant). There are several pros/cons to consider when outsourcing:

Pros of Outsourced Recruiting

  • You can use recruiting support only when needed, which can keep costs down
  • Recruiting firms offer the benefit of an expanded network
  • The resources of a qualified recruiter result in finding candidates faster, also important in proposal recruiting
  • Recruiting firms can keep the client confidential in postings, which is especially beneficial in the intelligence community or when recruiting for proposals

Cons of Outsourced Recruiting

  • For proposal recruiting, you are expending costs that you may not recover
  • You still need to add the cost into the indirect rates
  • Outsourcing can add additional time to the process (i.e., bringing a recruiter up to speed, learning your culture, etc.)
  • Better upsell of your company when you directly deliver the message

There is no right/wrong answer when it comes to determining how you will conduct your recruiting.  Both insourced and outsourced offer benefits and advantages.  Outsourcing costs more, but allows you to focus more efforts on different areas (proposal writing, business development, etc.).  If you have the staff available, insourcing can save costs and give you more control over the recruiting process.

BOOST and Apertus Partners are conducting a workshop through the Loudoun County Chamber of Commerce GovCon Initiative on May 31st at 8:30 on Recruiting in the Intelligence Community.  Come join the discussion on recruiting challenges, case studies of successful internal recruiting from a local GovCon, the price of recruiting and recruiting diverse candidates in the Intel space. Ross O’Rourke from IC-1 Solutions will present on his company’s experience with internal recruiting in the intelligence community and Dat Nguyen, a BOOST recruiter, will speak on his experience with diversity recruiting in the intel space.

Register here.

ABOUT BOOST’S CEO, STEPHANIE ALEXANDER

Stephanie Alexander has been serving GovCons since 2002. With over 15 years of experience in the industry, Stephanie has a wealth of knowledge and expertise when it comes to navigating the complex world of government contracting.

Prior to starting BOOST LLC, Stephanie worked for a number of large and small government contracting firms, where she gained valuable experience in all aspects of the business, from bidding on contracts to managing employees and subcontractors. It was during this time that she identified a need for a company that could provide government contractors with the support and guidance they need to succeed in a highly competitive market, specifically in the realm of managed GovCon accounting.

Grow Your GovCon Business – BOOST LLC

Editor’s Note: This Article Has Been Updated November 29, 2022

The ubiquitous aspiration of many a small government contractor is the $100MN revenue mark followed by the sale of their business (no doubt at a lofty multiple) coupled with the purchase of a private tropical island complete with oceanside beverage service.  Much like an old wives’ tale, the reality in such assumptions is lacking but always makes for good fodder at a Tyson’s Corner M&A networking event.

Growing your GovCon

But as you grow your government contracting business, being an island unto your own is exactly the opposite of what your strategy should be. We all covet the position of being the Prime Contractor; subcontractors are always at a disadvantage when it comes to workshare, profitability and customer relationships. However, isn’t having a piece of something better than always going it alone, with zero to show for it?

The government contracting industry is awash with stories of mistreatment by partners, workshare-greedy primes and small businesses who think they simply can do it all.  Most have been subjected to an unfortunate teaming experience that has negatively influenced their thinking, or have bought into the idea that their company is the federal contracting equivalent of Superman and can do anything. Let me be the first to tell you, it’s not. It’s hard to do everything in GovCon, even more so as a small business. Teaming with others will allow you to CREDIBLY expand your capabilities, utilize other’s strengths and provide a more robust solution to the government.

Let Us Help Grow Your GovCon with our GovCon Accounting, GovCon HR, and Recruiting Services

Finding Partners for Your GovCon

How you choose to find and vet a partner is critical. Are you relying on your business development lead’s Rolodex (and why do we still say Rolodex)? Going to the same group of folks for the same boilerplate response is not innovative, nor compelling. Try relying upon a formulaic and methodical approach for teaming by expanding beyond your network to find other like-minded companies with the past performance or capabilities that you need for a winning bid. govmates, an online teaming platform for growing GovCons, can help with this. Once a potential teammate is identified, really vet the company.  Having a similar bidding style, rate structure and overall corporate culture is critical and will help in execution.

Start Using govmates Today

No one likes to go it alone.  There is safety (and revenue) in numbers, especially in the small business federal contracting community.

Need help finding a teammate?  Send me a note at [email protected]