10 steps to winning a government contract - Step 6
Pricing it out
When you price out your bid, you get to be the expert - but that also means a lot of responsibility. Learn what you need to know to price out your bid to the federal government.
First, let's get the fantasy ideas out of the way. The 30-year-old stories about $200 toilet seats and $300 hammers are long gone. Actually, if you knew the real stories, you'd find them to be really depressing because they basically aren't true. Bidding to the government is competitive, and you have to believe that if you plan to be successful.
Let's start with the basics: If you can't make money on it, don't bid it.
Next, determine your true costs. A lot of bids you'll see won't give you much time to respond, so you'll be tempted to estimate your costs and just tack on a percentage or use a companywide rate. Don't do that — find out what your true costs are.
Use a costing method that applies to small business. One is activity-based costing (ABC), a cost-management method that lets you determine the actual cost associated with each product and service. It allows you to find out if you're really making any money on a particular job.
Then do the following:
- Read the bid carefully.
- Consider the entire scope of work (SOW). Read it carefully, and don't forget anything. Every factor that's part of the bid document pertains to what you need to bid on, so don't miss anything.
- Regarding pricing history, the federal government has a database cataloging what it has purchased in the past. You can get procurement histories by looking up the National Stock Number (NSN) at http://www.bidlink.net/nsn_search. This site has an award section where you can look up past procurements.
You also can call your local Procurement Technical Assistance Center (PTAC) to get technical information, awardees' history, and sometimes how the part is used.
- Cost out any special requirements, work with a packaging company that's familiar with military packaging, and remember that the military has special delivery needs. If the job has special requirements, consider that everyone is bidding on the same thing. That nice, clean part you're making might be dropped out of a plane at 10,000 feet and hit the ground at
25 miles per hour, or it might be stored in the open desert, where temperatures reach more than 100 degrees regularly, and be needed to work at a moment's notice.
- Think about quality requirements and if they'll add extra cost. Also find out about any necessary certifications.
- Profit is one of our favorite words. Keep in mind that the bidding process is very competitive. Even if you think that this bid is the one that was made just for you and no one else will ever bid against you, others will bid — and they might even think the same thing. Don't go overboard on profit; be reasonable.
- Do some research when you're looking at the bid history. If it's possible that the government will make more than one purchase in a year, save your bidding and see what the results will be; wait and be patient. If you can, check out who might bid and what they bid last time. Research also will help you establish a rate, or range, for yourself to help you decide whether or not
- And again, read the bid.
If you have questions, call the point of contact (POC) or buyer. Don't assume: Successfully bidding on federal contracts means that you must deliver on-time, quality products at the right price.
To find a PTAC, visit www.aptac-us.org, click on Find Your Local PTAC, and click on your state.
Jim Kleckner is a retired acquisition specialist from the Department of Defense and owner of Government Contracting Assistance, 2168 Spaulding Ave., West Dundee, IL 60118-3521, 847-426-7003, firstname.lastname@example.org.
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