Government contract pricing when preparing a proposal can be stressful and confusing. Nowadays, federal contracting agencies resort to lowest price technically acceptable contracts. Although you may think that your pricing is fair and reasonable, you then find out that your competitor’s pricing is lower.
Government contract pricing, from the agency’s side should start with reputable market research. However, what the commercial sector may demand your specific services or products often does not match the government’s pricing, commonly referred to as the independent government estimate.
- The key to government pricing and bidding on government contracts is to discuss the minimum profit that your company can survive firm.
- Avoid the costly mistakes when bidding. This can lead to severe consequences during the performance stage.
Government Contract Pricing and Bid Evaluations
Note that in fixed-price government contracts, the general rule is that when bidders submit a low bid, they should bare the risk of loss. So long as there is no obvious risk to the government, your chances of winning are high.
However, government contract pricing involves both price reasonableness and price realism. These are two areas that government contractors should be aware of. See the difference between the two pricing concepts. They both set the tone for whether your pricing proposal gets the final pile for consideration.
Lowest price technically acceptable bidding: Government contract pricing for these types of bids pay very little attention to low price proposals. However, the key is to make sure that your technical proposal is acceptable. If it is not, then the source selection board will not get to the second step- your low price.
Negotiated government contracts: When the government RFP evaluation is based on stated weighted factors in the solicitation, government contract pricing is taken more seriously by the agency. However, even in negotiated procurements, and despite lower-scored technical proposals, agencies still can go to a lower-priced bidder. The key is to read the RFP evaluation criteria.
Government contract pricing when bidding on federal contracts is all about stating your bottom line price. If you are unsuccessful in winning the award, then this can be a lot better than finding your company experiencing performance problems.