Federal Government Pricing For Defense Contracts

Federal Government pricing for defense contracts can be a nightmare for contractors that are not familiar with bidding on federal contracts. Even the larger and more experienced companies performing DOD contracts see the landmines when they engage in bid protest litigations. 

For example, inadequate federal government pricing can to proposal exclusion from the competitive range or  sometimes frankly being thrown out as being non-compliant.

What is the Agency’s Obligation for Federal Government Pricing

The first point is that a procuring government agency must give enough detail in the solicitation to allow you to compete intelligently and on a relatively equal basis.

Furthermore, in order for you to adequately propose competitive government pricing, the RFP specifications must be free from ambiguity and describe the contracting agency’s minimum needs accurately.

• Failure to properly state its requirements can lead to a bid protest.
• The agency does not have to eliminate your risk or clarify every uncertainty.

Note: If you find issues in the solicitation terms, you must challenge the terms in a pre-award protest. See also commercial items and government’s market research requirements.

Various Pricing Proposals to Watch For in Defense Contracts

Lowest price technically acceptable. Your approach to formulating federal government pricing for these type of defense contracts can be very tricky.  When submitting price proposals, the lowest price gets the award once the agency makes a pass/fail technical acceptable determination.

• Although contractors would love to win each contract, federal government pricing for this type of bid should not be so low as to actually impact your ability to perform.

Negotiated Procurements. Here, you have more flexibility to focus on profits. However, this type of solicitation has weighted factors. Government pricing is one of those weighted factors. The agency typically evaluates negotiated procurements on a “best value” basis. In addition, agencies can actually award to a high-priced proposal, so long as there is documented value by the Agency.

• When considering your approach to pricing proposals for defense contracts, you may want to consider the approach of getting moderate profit margins and not overpriced.
• The government generally has is its own government pricing and independent estimate. This used to gauge offerors for reasonableness.

To find out more about general federal government pricing principles for defense contracts, call our government contract consultants at 1-866-601-5518.