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Contracting Officer Podcast
Slides
Knowledge & Insights From Contracting Officers
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Episode 025
What Does a Proposal Really Cost?
Original Air Date: May 4, 2015
Hosts: Kevin Jans & Paul Schauer
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Formatting notes
• Hyperlinks: Blue font indicates hyperlinks – presentation must be in
‘Slide Show’ mode to activate the link
• Red bold font indicates a point of emphasis
• Green bold font indicates CO’s personal comment or perspective
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Introduction
• Purpose of this podcast: To explain and highlight some of the costs of
proposals, why proposals feature these costs, and the impact that these costs
have on proposals and the companies offering them
• We did not know how much proposals cost when we were COs
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What is a Proposal?
• FAR Part 15 and FAR Part 12 (mostly)
• FAR Part 8: GSA competitive
• GWACs – Government-wide Acquisition Contracts
• Not a “quote”
• A document that requires “thinking” from both Government and Industry
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When do Proposals (and Costs) happen?
• Acquisition Time Zones
(from Podcast Episode 003)
• Execution Time Zones
(from Podcast Episode 084)
• Requirements Zone
• Kick Off Zone
• Market Research Zone
• Performance Zone
• RFP Zone (proposal zone)
• Re-compete Zone
• Source Selection Zone
• Wrap-up Zone
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Why are Proposals important?
• It is how buyer and seller communicate!!!!!
• “Ambiguity leads to mediocrity”
• Then
• It takes LONGER for both sides
• It costs MORE for both sides
• May drive companies away from the Government market (quite different
from standard commercial market marketing/advertising pitches)
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Why are Proposals important?
• It’s the system we have
• Some inefficiency is a given (we use the FAR – Government regulations
drive inefficiency)
• Most inefficiency is self-inflicted
• We were never taught this stuff
• Government contracting personnel get trained on how to EVALUATE
proposals, not how to prepare them… the process is actually very
complex and intensive
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Why Should Government Care?
• More investment (expenses) by industry (means higher cost to taxpayers)
• Government does not see the proposal process efforts and costs
• Longer response times for Industry, longer evaluation periods for Government
• Increases overhead costs
• Reduced mission capability
• Use the 99% rule. Ignore the news.
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Why Should Government Care?
• May drive good companies elsewhere
• Some random examples of proposal costs
• 4 hours / page to WRITE
• 3 hours / page to REVIEW
• 3 hours / page to EDIT, add graphics, other ‘production’ processes
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Why Should Industry Care?
• It’s how they win!!!!!
• Bid & Proposal (B&P) costs are allowable: FAR 31.205-18(c)
• Indirect cost
• So…every dollar spent increases the price charged on contracts
• Impacts competitive position
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Why Should Industry Care?
• So….B&P budgets are tightly controlled
• Impacts the bid decision
• Proposal effort too great for return? May pass up an otherwise promising
opportunity to allow other bids
• Resource limitations – There is only so much:
• Brain power
• Time
• Capability
• Money (of course)
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Summary
• Proposals come with significant costs:
• Time
• Effort
• Expenses
• Opportunity cost of what else you could be doing
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Summary
• Government does not see those costs until the proposal is received
• Need to better understand them while drafting RFP
• These costs are allowable, so taxpayers’ cost increases
• Industry must do Cost-Benefit Analysis for each Proposal
• “The juice may not be worth the squeeze”
• May pass on opportunities if proposal costs are too high
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Contact us
• We are on LinkedIn, Twitter and Facebook
• We also started the Government Contracting Network Group on
Facebook. Join us there!
• Send your topics to [email protected]
• For Community support, contact Shelley Hall at
[email protected]
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