The True Cost of Proposals

© DigitalGenetics - Fotolia.com

© DigitalGenetics – Fotolia.com

I recently listened to an episode of the Contracting Officer Podcast, a show that talks about the government market from the contracting officer’s perspective and aims to make government contracting better, one contract at a time.

Hosts Kevin Jans (Skyway Acquisition Solutions) and Paul Schauer (CACI’s National and Cyber Solutions) discussed how much it actually costs to write a proposal for a government RFP. An important and much misunderstood topic!

The first key point they make about proposal writing is that even though it seems like a no-brainer that proposal writing would be part of what they call Zone 3 – The RFP Zone, it’s not (their “zones” are explained in earlier podcasts, but you should kind of get the picture from my emphasis in this post on qualification and capture).

“Proposal writing starts long before the RFP is released, before the draft RFP is released,” Paul explains. The process goes back to the Zone 2 (Market Research for their audience of contract folks, or what we industry folks would call capture – shaping the potential RFP), so that’s where the costs start as well.

This is an extremely important point that often the government does not appreciate. From the moment of market research, and sometimes even before when the true customer begins to think of the requirement, cost is beginning for industry. There is where you as the contractor begin answering the question, “Can we solve this customer’s problem?”

By the time a Request for Information (RFI) comes out, “the writing’s already started,” Kevin says, “And that’s why it’s so important that the investment in brain power, in resources, in time, and of course, in labor” has already started as well. Here again, while we’re talking about brain power, resources, time and labor, what’s really going on is relationships – a company building a picture of what the customer is looking for, based on how the customer describes it. This is the early stages, even before the RFI or market survey comes out. Remember that often the RFI is about set-aside issues, not about solution issues.

It’s important for both sides – government and industry – to understand the true cost of proposals. This gives the buyer and seller a level playing field as they communicate through the proposal process. Kevin says this is one of his favorite sayings: “Ambiguity in here is going to lead to mediocrity.”

This is perfect, yes indeed, ambiguity leads to mediocrity, but if ambiguity remains, it’s the industry’s fault for not asking all the questions for fear something will be revealed to competitors, and the government’s fault if they don’t answer by bringing new clarity to the question. Questions are good, not a forced delay and to be resented. Over-explaining can be costly as well, Kevin points out.

Paul says to compare this to hiring a contractor to put a new roof on your house. You might use any combination of marketing messages, past performance, and talking to friends, and then get quotes from several companies. They pretty much all do the same thing, so the quotes will be pretty simple.

“Think about it,” he says, “if you went out to all these companies and you said, ‘I need a 12-page proposal with double-spaced, 12 Times New Roman font on the whole thing, graphics have to be no smaller than 8 font, and you can’t use anything, but the primary colours,’ …. You wouldn’t get a single bid ‘cause nobody’s going to put in that time and energy.”

Contracting officers should remember that “the amount of proposal documentation that you have to submit could drive decision making on whether or not a company actually bids on your acquisition.”

Paul explains that the government team writing the RFP has to realize that they’re driving more cost to the taxpayers with their complex RFPs that take longer to respond to and evaluate. And this is a critical point – bad evaluation processes and lack of clarity drive up costs. So do all the regulations, and these lead to higher costs to the government.

Now LPTA has adjusted that, but the competitive pressure means less well-constructed proposals, and lower quality of responses, or lower quality of people you can afford for the prices bid. We can never forget the trade-off between price and quality.

In government contracting some inefficiency in the process is a given, with so many regulations in the FAR. But it’s those rules that give everyone an equal opportunity to bid, says Paul. Unfortunately, most of the inefficiency is actually self-inflicted – by the government as they write RFPs, and by contractors because they don’t do a good enough job evaluating their decision whether to bid on a contract.

“If you’re really having to force that language [while you’re writing an RFP], that should tell you something.” We’ve talked a lot on this blog about focusing your federal contracting efforts, and being able to answer these three key questions about your prospective customers:

  1. Does this customer have money allocated to solve this problem?
  2. Can your company solve this problem?
  3. Do you have the capabilities to win this job?

If you can’t answer yes to all three of those questions, don’t waste your time writing a proposal. Contractors should never forget that business development and proposal writing cost money, and there will be a single winner and many losers. Every loser needs clarity as to why they lost.


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