The Development Source
In bidding on proposals, pricing to win is critically important because price is a significant aspect of today’s evaluations of government proposals. Although government agencies may talk and write about “best value” in their Requests for Proposals (RFPs), often the government’s final decision comes down to pricing.
When “best value” fails to separate competitive bidders, price will become the determining factor. If three businesses have approximately the same evaluation scores, the lowest reasonable bid will be awarded the contract. Consequently, pricing must be an important part of your win strategy.
According to Tony Richter, the president of Richter Company, which provides competitive price assessments to large companies, to develop a competitive price bid you should collect competitive information. Richter provides the following advice about developing competitive bids by gathering historic data and current information:
According to Constable and Richter, bidders are becoming more aggressive about pricing, so you must too. As a result, many companies are cutting their overhead costs and indirect cost rates. They also are eliminating middle managers from their bids. This means that employees in indirect labor positions are being let go as firms try to price their bids as low and competitively as possible.
However, there is a danger in bidding low. The lower the bid, the higher the risk. Government evaluators are wary of bids that seem too low and that reduce the overall workload in ways that may jeopardize the contract.
Whatever your price bid, you must demonstrate that you understand the problem identified in the RFP and that you have a technically acceptable solution with no features that increase your cost.
Work to keep your price low, but stay within the government’s acceptable price range, which may appear in the RFP. Stay within the lower part of the price range and demonstrate to evaluators that you can deliver more value than your competitors at an acceptable cost.