Don Mansfield Posted April 30, 2009 Report Share Posted April 30, 2009 Welcome to "Win the Government's Money!" The rules of the game are as follows: 1. You are a Government contractor and your goal is to make as much money as you can. 2. You are bidding on a contract that will cost you $1,000,000 to complete. 3. You must bid a single fixed-price to complete the contract. If you submit the lowest bid, you will win the contract. However, your bid price must be realistic or you will be found to be nonresponsible. 4. If you win the contract, your score will be your bid price minus $1,000,000. 5. After the winner has been decided, a random number will be chosen between $200,000 and $400,000. 10% of the random number selected will be added to the winner's score. Are you ready to play? If so, send me your bid through the messenger function by clicking on my name at the left. Don't post your bid here. You have until tomorrow at 11:00AM PDT to submit your bid. The results of the competition will be posted here. Good luck! Link to comment Share on other sites More sharing options...
Don Mansfield Posted May 2, 2009 Author Report Share Posted May 2, 2009 Ok, The bids are as follows: dgm $ 980,000.00 jljordan $1,008,402.66 brian $ 993,000.00 vbus $9,980,001.00 dgm wins! dgm's score is -$20,000. But now we will apply his bonus for winning. The random number chosen is 217884. dgm gets 10% of this amount added to his score. Thus, his final score is: -$20,000 + $21,788 = $1,788 Thank you for playing. Would you like to play another round? Same rules. Bidding closes on 5/4 at 4:30PM EDT. Good luck. Link to comment Share on other sites More sharing options...
Vbus Posted May 4, 2009 Report Share Posted May 4, 2009 Vbus Inc. has fired its proposal preparation team for submitting a errant price proposal that should have been $980,001 instead of $9,980,001. (We would have appreciated the opportunity for communications prior to award to correct this error in our price proposal as is described in FAR 15.306((3)(i).) Link to comment Share on other sites More sharing options...
Don Mansfield Posted May 5, 2009 Author Report Share Posted May 5, 2009 Vbus Inc. has fired its proposal preparation team for submitting a errant price proposal that should have been $980,001 instead of $9,980,001. (We would have appreciated the opportunity for communications prior to award to correct this error in our price proposal as is described in FAR 15.306((3)(i).) Vbus, you still would have lost. The good news is that you won round 2 with a bid of $975,000. Your bonus money is $26,771, which makes your score $1,771. Link to comment Share on other sites More sharing options...
Vbus Posted May 5, 2009 Report Share Posted May 5, 2009 The good news is that you won round 2 with a bid of $975,000. Your bonus money is $26,771, which makes your score $1,771. Just enough to hire on a new proposal preparation team. Is "Win the Government's Money" a lesson on risk, a new RFQ method, or just for fun? Link to comment Share on other sites More sharing options...
Don Mansfield Posted May 5, 2009 Author Report Share Posted May 5, 2009 Is "Win the Government's Money" a lesson on risk, a new RFQ method, or just for fun? In another thread, I wrote: The Government's rules require that price be a "significant" factor in source selection. When using sealed bidding, it is the only evaluation factor (plus price-related factors). When awarding a fixed-price contract, the Government generally doesn't care what the contractor's cost of performance will be, unless the offered price is alarmingly low.The Government has another rule that provides for pricing equitable adjustments based on reasonable costs of performance. If a change order causes the contractor to incur a cost increase, the price will be adjusted to account for a reasonable estimate of the cost increase, plus profit. If I'm a savvy contractor who knows these rules and wants to make money on a fixed-price contract where price was going to be a dominant factor in choosing who gets the award (and I anticipated a lot of change orders), wouldn't it make sense to offer a price as low as I could possibly stand (even below cost) in hopes that I could win the award and make up for any losses through equitable adjustments? Actually, I don't think you even have to be a savvy contractor. If I explained these rules to 10 strangers to Government contracting and asked them to come up with a strategy to make money, 9 out of 10 would probably choose to propose a low price in hopes that they would make up for any losses through change orders. Does this make them bad people? This seemed to upset some people, so I thought I would test my hypothesis. The rules of "Win the Government's Money!" are analogous to the situation I described. If you're the lowest without being too low, you win. You also get a bonus for winning, which represents the profit you would end up making on equitable adjustments. You don't know the profit you would make when you submit your bid, but you have an idea of a reasonable range. Some would argue that it's dishonest to submit a below-cost bid with the intention of making up for a loss through profits gained from equitable adjustments. I don't see such behavior as good or bad--I think that it is a logical consequence of the rules that govern the process. Link to comment Share on other sites More sharing options...
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