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Basics of Federal Contracting Series, Part I – Proposal Basics

This is part one of a series on the basics of Federal Government Contracting. Stay tuned for Part II – Pricing Methods, next week.

The purpose of this article is to briefly discuss pointers on preparing a successful government contract proposal. This article will also discuss contract pricing related to government contracts.

Preparing a response to a government procurement request is an important task, which should be approached with diligence and professionalism. Writing a successful proposal is about doing knowing the objective of the solicitation, preparing and responding clearly and appropriately, aligning your proposal with the government’s needs and articulating what makes you the best solution provider. These elements are critical to successful proposal writing.

First, it is crucial to carefully read the solicitation, including all applicable schedules, clauses and attachments. The solicitation is designed to provide prospective bidders with all of the information needed to write a successful proposal. The agency that prepared the solicitation expects you to read and follow it carefully. The reality is, if you do not comply with all requirements in the solicitation, your proposal may be deemed “nonresponsive”.  Also of equal importance is to review and understand the FAR regulations governing the specific type of solicitation. FAR regulations are completed and it is always best to have a team of people who are well versed to assist with proposals.

A good proposal will clearly articulate how the bidder can solve the problem or fill the need outlined in the government’s solicitation. Understanding the government’s needs is important. Even more important, however is how your company plans to execute or deliver an appropriate solution. It is, after all about convincing a government review panel that your proposal solves a specific problem or need and is the best fit.  Your proposal must be clear, concise and be able to substantiate the work to be performed. Some of the mistakes to be avoided are (1) mistakes in understanding the solicitation request and overall regulations that come into play (2) incomplete or late submission (3) unclear objectives and focus; too much fluff and not substance (4) not understanding best value considerations (5) unrealistic pricing (6) failure to address evaluation factors and (6) errors in the submission.

Contract pricing is an important aspect of procurement and a particularly important component in developing a strategy to win federal contracts. There are two factors that should be taken into consideration when discussing contract pricing and these are:

Government’s perspective- Understand that the federal government wants an optimal deal which is fair and reasonable for which the contracting officers and agencies conduct considerable market research.

Contractor’s perspective-A small company wanting to do business with the government is responsible for developing a contract pricing strategy that is reasonable, competitive, but profitable. Pricing therefore becomes one of the most important variables in a proposal.

 

The pricing you propose in response to a government solicitation will be influenced by your ability to negotiate or not negotiate as some contracts are negotiable contracts while others are sealed- bid contracts. The FAR states that any contract awarded using other than sealed bidding procedures is considered a negotiated contract. Procedures for contracting by sealed bidding (FAR 14) require the government to evaluate bids without discussions and award to the responsible bidder whose bid, conforming to the invitation for bids; will be most advantageous to the government considering only price and price related factors. Negotiations are not permitted prior to the contract award.

Procedures for contracting by negotiation (FAR 15) permit negotiations prior to contract award. However, a solicitation under procedures for contracting by negotiation may or may not actually include negotiations.

The four types of contract pricing are (1) product pricing (2) service pricing (3) best value pricing and (4) lowest price technically acceptable.

  • The formula for product pricing is a sum of material costs, labor costs, estimated overhead expenses and profit margin. [Product pricing= Material Costs + Labor Costs + Overhead Expenses + Profit].
  • The formula for service pricing is based on the sum hourly overhead expense, hourly wage and profit. [Service pricing=Hourly Overhead Expense + Hourly Wage + Profit].
  • “Best Value” refers to competitive, negotiated procurements in which the Government reserves the right to select the most advantageous offer to the Government by evaluating and comparing factors in addition to cost or price. “Best Value” procurement enables the Government to purchase technical superiority even if it means paying a premium price.
  • “Lowest price technically acceptable” is where a contract award is made solely on the basis of the lowest evaluated price of proposals meeting or exceeding the acceptability standards for non-cost factors.

As discussed above, writing a government contract proposal requires a thorough understanding of various agency rules and FAR regulations. The Attorneys at Randolph Law have extensive knowledge and understanding of the FAR regulations and can assist you with submitting a successful proposal.