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lotus

Cost of selling to the government

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The cost of selling to the government is quite high.  In the end, I suspect the government pays those costs.  What systemic changes can be made to reduce the costs of selling to the government?

A rule of thumb the Director of Business Development at my company cites is that a proposal will cost 2% to 3% of the revenue from the contract.

If only 5 competent competitors are competing (i.e. the PWin is 1/5, or 20%), that would be 10% to 15% of revenue is spent on proposal costs.   

Then there are other selling costs, too such as pre-RFP work.

 

 

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lotus,

I suspect you are asking the right question to the wrong audience. There is nothing that anybody here can do to reduce your company's proposal preparation costs. Rather, I suggest you ask the question internally -- "What changes can WE make to reduce the costs of government proposal preparation?"

To your other point, yes. The government pays those costs, whether high or low.

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If the Government complied with the Paperwork Reduction Act (PRA) when drafting solicitations, I think there would be a reduction in bid and proposal costs.

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1 hour ago, lotus said:

What systemic changes can be made to reduce the costs of selling to the government?

 

The overwhelming major of what the Government buys today are commercial items, even when we COs make the mistake of classifying them otherwise.  If you work for DOD, maybe you buy some non-commercial items here and there, and big ones at that.  For civilian agencies, acquisition of non-commercial items should be quite rare.

That said, I recently went through my agency's acquisition regulations (on my day off mind you), reading each one along with their prescriptions.  I was [not] surprised how many clauses and provisions are prescribed for all actions regardless of conditions or dollar-amount.  Lest we forget, we still employ teams of people to devise this additional language--2080 hours a year minus leave time, God bless them.  Please do not misconstrue my words as I am not attacking policy folks, who we so often need.  The point I make is how many clauses abound, which is to say extraneous language, that is either already encapsulated in the standard commercial clauses, statutes otherwise incorporated per the Christian doctrine, or which should be widely-known and self-evident, e.g., thou shall not steal.  When I put together solicitations, I try to consider that each page adds time and costs, for both sides.  Although we talk a good game, contracting offices continue to put out 150+ page solicitations.  Concerning my point about the ubiquity of commercial item purchases, I include the following FAR citation as a reminder--

12.301 -- Solicitation Provisions and Contract Clauses for the Acquisition of Commercial Items.

(a) In accordance with 41 U.S.C. 3307 contracts for the acquisition of commercial items shall, to the maximum extent practicable, include only those clauses --

(1) Required to implement provisions of law or executive orders applicable to the acquisition of commercial items; or

(2) Determined to be consistent with customary commercial practice.

 

The FAR is clear, when another part of the regulation tells us something that contrasts with FAR part 12, the latter takes precedence--fairly straight forward.

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The 809 panel clearly recognizes this and strived to make improvements in their report.  

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