Contracting Officer Podcast Slides Knowledge Insights From Contracting

Contracting Officer Podcast Slides Knowledge & Insights From Contracting Officers 1

Episode 025 What Does a Proposal Really Cost? Original Air Date: May 4, 2015 Hosts: Kevin Jans & Paul Schauer 2

Formatting notes • Hyperlinks: Blue font indicates hyperlinks – presentation must be in ‘Slide Show’ mode to activate the link • Red bold font indicates a point of emphasis • Green bold font indicates CO’s personal comment or perspective 3

Introduction • Purpose of this podcast: To explain and highlight some of the costs of proposals, why proposals feature these costs, and the impact that these costs have on proposals and the companies offering them • We did not know how much proposals cost when we were COs 4

What is a Proposal? • FAR Part 15 and FAR Part 12 (mostly) • FAR Part 8: GSA competitive • GWACs – Government-wide Acquisition Contracts • Not a “quote” • A document that requires “thinking” from both Government and Industry 5

When do Proposals (and Costs) happen? • Acquisition Time Zones (from Podcast Episode 003) • Execution Time Zones (from Podcast Episode 084) • Requirements Zone • Kick Off Zone • Market Research Zone • Performance Zone • RFP Zone (proposal zone) • Re-compete Zone • Source Selection Zone • Wrap-up Zone 6

Why are Proposals important? • It is how buyer and seller communicate!!!!! • “Ambiguity leads to mediocrity” • Then • It takes LONGER for both sides • It costs MORE for both sides • May drive companies away from the Government market (quite different from standard commercial marketing/advertising pitches) 7

Why are Proposals important? • It’s the system we have • Some inefficiency is a given (we use the FAR – Government regulations drive inefficiency) • Most inefficiency is self-inflicted • We were never taught this stuff • Government contracting personnel get trained on how to EVALUATE proposals, not how to prepare them… the process is actually very complex and intensive 8

Why Should Government Care? • More investment (expenses) by industry (means higher cost to taxpayers) • Government does not see the proposal process efforts and costs • Longer response times for Industry, longer evaluation periods for Government • Increases overhead costs • Reduced mission capability • Use the 99% rule. Ignore the news. 9

Why Should Government Care? • May drive good companies elsewhere • Some random examples of proposal costs • 4 hours / page to WRITE • 3 hours / page to REVIEW • 3 hours / page to EDIT, add graphics, other ‘production’ processes 10

Why Should Industry Care? • It’s how they win!!!!! • Bid & Proposal (B&P) costs are allowable: FAR 31. 205 -18(c) • Indirect cost • So…every dollar spent increases the price charged on contracts • Impacts competitive position 11

Why Should Industry Care? • So…. B&P budgets are tightly controlled • Impacts the bid decision • Proposal effort too great for return? May pass up an otherwise promising opportunity to allow other bids • Resource limitations – There is only so much: • Brain power • Time • Capability • Money (of course) 12

Summary • Proposals come with significant costs: • Time • Effort • Expenses • Opportunity cost of what else you could be doing 13

Summary • Government does not see those costs until the proposal is received • Need to better understand them while drafting RFP • These costs are allowable, so taxpayers’ cost increases • Industry must do Cost-Benefit Analysis for each Proposal • “The juice may not be worth the squeeze” • May pass on opportunities if proposal costs are too high 14

Contact us • We are on Linked. In, Twitter and Facebook • We also started the Government Contracting Network Group on Facebook. Join us there! • Send your topics to paul@Contractingofficerpodcast. com • For Community support, contact Shelley Hall at shelley. hall@skywayacquisition. com 15