Tips for Pricing Your Bid

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Up until about fifteen years ago, big steel, the aerospace industry, the shipbuilders, and most other big industry fleeced the government out of hundreds of billions of dollars in "cost overruns." They were able to do this because the government signed contracts allowing contractors to be paid on a cost-plus basis. The "plus" is what ultimately dented the U.S. Treasury. Expenses were inflated and fabricated; the government paid; the contractors danced down the yellow brick road all the way to the banks.

That situation no longer exists. The government now insists that you sign a fixed-fee-expense contract. One complete price for the entire project. The bottom line of your bid must include all labor, materials, overhead, profit, and all expenses. There can be no cost overruns after the fact. The government will not pay for them. This means that, whereas before the government took all the risk, now you, the consultant must take all the risk. Considering inflation and the fact that consulting cannot be planned ahead with anywhere near the accuracy of manufacturing, you stand a good chance of going right down the financial tube.

I could probably write an entire book about how to price a government consulting bid, but it would be foolish, because Howard L. Shenson has already written an excellent one about formulae for fee setting in both the public and private sectors. I recommend it highly. ("The Successful Consultant's Guide to Fee Setting."The Consultant's Library, Glenelg, MD. 1980) In any event, please factor in everything we have discussed in setting your fee, and please be careful.

Submitting Your Bid

Inflexibility is most apparent in the rules about submitting your bid on time, that is, before the time fixed for the opening of the bids. Be certain to mail your bid early and then allow for and assume every possible postal catastrophe.

You will not be held responsible for a postal delay if such case is proven, so send your bid certified or registered with a request for a return receipt. This will also exonerate you if a government agency mishandled your bid after receipt.

Be certain that you have adequate postage affixed to your bid. Government purchasing offices will not accept mail on which postage is due. (For God's sake, don't be chintzy at this stage of the game, after all you've been through!)

If you wish to modify or withdraw your bid as sub-mitted, the change or withdrawal must be received by the government office before the opening of the bids.

Again, if you use the mails or telegraph system, be certain to certify or register and get a signature of receipt. With regard to how many copies to send, where to send them, etc., just follow the directions on the invitation. These are usually stated in simple language.

The Waiting Game

In the non-wired situation, competition is very keen. For the sake of your other clients and your psychological health, you would do well to assume that you will not be awarded the contract. If you are given the award, let it come as a pleasant surprise. One aspect of a good consultant's genius is his acute power of mental projection; he is always three steps ahead in his internalized chess game. So it is common, during this waiting period, for the consultant to proceed with the project cerebrally. This is a total waste of psychic energy. Some egotistical consultants even adjust their calendars by putting prospective clients on "hold." This is utter foolishness. Turn your mind to other things, other projects, your regular consultancy, even to other bids (if you have the bug by now). But forget about the bid you submitted.

Let's be optimists and pretend that you are awarded your contract. (Congratulations!) Unfortunately, like all the foregoing advice, here is another warning. Your bid stated that your contract may at any time be reduced in size or terminated "for the convenience of the government." (By the way, would you have accepted such a con-tract in the private sector?) If this should happen, the government will settle with you financially for the amount of work you completed. The settlement will be based upon your actual cost figures. Therefore, always maintain accurate, complete financial records that are current during the entire life of your contract.

Best of luck. I hope you are awarded a government contract - if that's what you really want. Only ten percent of all consultants ever seek government work during their entire careers. There must be a reason.

Let me cite a couple of my own experiences with the government. In neither case did I solicit work or answer a bid. Both times the government contacted me first.

I was once solicited by a very large federal agency to submit a proposal for doing an extensive survey. The young lady who called introduced herself as their new evaluation officer. It seems that the agency had not evaluated the efficacy of its own work since its inception eight years before. (This should be somewhat disconcerting for you at the very least if you pay your taxes at all.) The first meeting took place in my office. She asked for a detailed budget forecasting all of my expenses and my exact profit on the project. This officer told me that the survey was to be in the form of an elaborate questionnaire (which I was to design), that the information required was to come from the realm of higher learning, and that once the contract was awarded in early June, the winning firm would have three months to gather the information, collate it, and write and publish a final analysis of the findings. I immediately told her that a questionnaire would be fruitless because (a) the halls of academe were virtually empty during the summer recess (for this one needs the wisdom of a consultant?) and (b) no one of any substance would give the enormous amount of time gratis to fill out such a questionnaire. This questionnaire would have undoubtedly run twenty pages to give us the statistical information required for meaningful evaluation. The federal "worthy" allowed as how this was all true. I suggested that there were other, more effective methods of getting the information. She asked that I detail my methodology in my proposal. "You want me to do all of this for nothing?" I asked incredulously. "Certainly," she said, "the other nominees are doing it." Well, I thought, maybe I was out of step with the world as far as government work was concerned. Let's give it a go and see what happens. After the official assured me that she was in complete agreement with me regarding the worthlessness of a questionnaire and that any firm that consented to do it that way would of necessity have to fictionalize a final report because of lack of information, I agreed to submit a detailed proposal and budget. I also made her aware of the enormous pressures imposed upon me by her limited time-frame to accomplish the work. She said that it couldn't be helped because that final report was needed by September in order to be incorporated into another larger report that had a steadfast deadline.

Two months past the award date, I heard nothing. I called her. She told me that "the committee" had decided in favor of another firm, but, and these were her very words "Thank you so much for helping us, Mr. Bermont. You know we did need several bids and it was so difficult to find anyone who was qualified to do this specialized kind of work." A wired contract! Well, I used the Freedom of Information Act to find out who got the job and under what conditions. It was awarded to a firm that proposed using a questionnaire. Also, that firm was given two months longer to accomplish the work.

On the other side of the coin, I was called one day by a government executive who asked if I would be willing to go to Denver on a given date, give a four-hour lecture at a seminar of 175 government people, and take on a one-hour question-and answer-period. He agreed to my daily fee plus expenses. I went. I worked. I was paid.
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