Note to Contractors for 2012: Bid Carefully

Dear Government Contractor,

I know that I haven’t been sunshine and roses lately with my blog posts, but I am writing you this letter to let you know I am sorry.  Instead, I want to give you a bit of advice that may help this year be a better one for you.  As I noted above, “bid carefully.”  Now, let me explain by asking some rhetorical questions and filling in some blanks.

How long did your last proposal take to put together?  100 mahours? 200? More?  Ok, let’s make the math easy and say 100 manhours.  What was the average salary of the person working on the proposal?  $50/hour?  $100/hour?  Let’s go with $40/hour.  So, average cost of your last proposal, just on time preparing it was $4000.  Did you win?

If you answered “yes” to that last question, great!  The next question is much more difficult.  Is the project fully funded?  What I mean is that the RFP may have had these great aspirations (they often do) of the perfect what the project/program will work based on the perfect world and full funding.  Budget cuts prevent the perfect set of circumstances for government acquisitions right now and for the foreseeable future, so it may be worthwhile to add a question or two to your list when the RFP is open for discussion early on…

1.) Will this project be funded?

2.) Will it be funded in an amount close to the estimate the acquisition office gave in its proposal?

You may not get the answer right away, but at least you asked the question – it is always to your advantage to see if you can get this answer – especially under current circumstances.

So, back to our example and throwing in some more numbers (excuse me for being an accountant by training).  $4000 on preparation time plus expendable resources and delivery and “overhead” items like coffee and meals during the Red Team review… See how this all adds up?  You thought you were bidding on this great $10million deal that was going to last for 4 years, but come to find out after you win that the plan had to be downsized and the budget is now about $2million over 2 years – YIKES!

The bottomline here is that as the government cuts its spending, it would be wise to make sure that what you are spending your money on is something that the government is also willing to spend money on.

About Marty Herbert

With 13 years of government contract administration, analysis, finance, and audit experience, I have established a firm baseline in ethics and a specialization in government contracts that has prepared me to become a subject matter expert in my field. I am currently working on enhancing government contracts management and compliance through workflow tools and product offerings - attempting to make the process proactive as opposed to reactive.
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