A Contracting Officer’s Guide to Getting Stronger Proposals; Lower, More Realistic Pricing; and...

A Contracting Officer’s Guide to Getting Stronger Proposals; Lower, More Realistic Pricing; and Better Performance from Contractors

April 16, 2013

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IntroductionsRed Team Federal and Red Team Consulting

About Red Team Federal. . .

Red Team Federal (“RTF”), a division of Red Team Consulting, LLC, is an economically disadvantaged woman-owned small business that provides acquisition strategy and planning, federal procurement training, and contract management support. Our Federal Government experience spans a broad array of industries and marketplaces. We are a Prime on the GSA MOBIS contract, in Acquisition Support and Training.

RTF’s major areas of support include: Pre-Award/Post-Award Contract Support Acquisition Strategy and Planning RFP Development Cost Estimation Performance Based Contracting Source Selection Support Federal Procurement Training

About Red Team Consulting . . .

Red Team Consulting is a woman-owned small business providing a wide range of consulting services in support of federal contracting activities. Our mission is to help our clients grow. Red Team and Red Team personnel have supported over a thousand federal procurements across nearly every agency in the federal government. We have maintained an extremely high win rate since the company was founded in March of 2004.

Red Team’s major areas of support include: Fully outsourced proposal development and

management Strategic capture management and planning Proposal writing Price strategy and Price to Win Training and seminars Outsourced contract and program

management

This presentation contains proprietary information and may not be distributed or reproduced without express written consent from Red Team Federal

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IntroductionsSpeaker

Jeffrey Shen EVP of Red Team Over 15 years of federal contracting and program management

experience Involved in the award of over $20B of contracts Delivered business strategy, technology solutions to the Federal

Government and Fortune 500 companies worldwide Former V.P of Sales and Marketing for a $300 million integrator. Mentored/trained many successful sales executives, project

managers, and technical staff Active leadership role in industry organizations Frequent speaker on federal contracting, business development,

and government ethics


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Agenda

Part 1: Facts About the Industry Proposal Process Quiz Proposal Functions Industry Realities Cost Realities Proposal Solution Realities

Part 2: Guidance Based on Industry Realities Incumbents vs. Non-Incumbents Solicitation Development

SOW/PWS Other Technical Management Past Performance Cost/Price

Part 3: Modeling and Gaming Example


5This presentation contains proprietary information and may not be distributed or reproduced without express written consent from Red Team Federal

Part 1: Facts About the Industry Proposal Process

Part 1: Facts About the Industry Proposal Process Quiz Proposal Functions Industry Realities Cost Realities Proposal Solution Realities

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Facts About the Industry Proposal ProcessQuiz

How much do well-prepared companies spend (internally and externally) on average when pursuing a $100 million, single award IT contract with a 100 page count for the Technical, Management, Past Performance, and Price Volumes?

A. $25,000 - $50,000

B. $50,000 - $125,000

C. $125,000 - $250,000

D. $250,000+

Which resource is least likely to contribute to a small business set-aside proposal effort?

A. Professional proposal writers

B. Business development staff

C. Corporate executives

D. Billable staff

E. Technical subject matter expertsThis presentation contains proprietary information and may not be distributed or reproduced without express written consent from Red Team Federal

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What percent of the proposal development team typically reads the RFP from front to back?

A. 10%

B. 25%

C. 50%

D. 100%

At what point does a pricing team typically address the pricing requirements on a proposal with a 30 day response timeframe?

A. Immediately when the RFP drops

B. Within five days the RFP drops

C. Within the first two weeks of the RFP drops

D. During the last two weeks of the response


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How long before the due date do contractors typically complete the proposal?

A. The day it is due

B. One day before

C. Three days before

D. One week before

Companies ask questions during the Q&A period of a final solicitation period because:

A. They want to clarify a section of the RFP

B. They are trying to change a requirement or instruction in the RFP that favors their company

C. They might not have read the RFP front to back

D. They just don’t know any better

E. All of the above


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The Joy of Proposals…


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Facts About the Industry Proposal ProcessProposal Functions

Capture Management Win Strategy and themes Teaming development Competitive analysis Price to win Marketing and

communications

Proposal Management Proposal schedules Compliance matrix Annotated outline Color reviews Proposal strategy Overall proposal compliance

Other Proposal Functions Capture analysis Pricing strategy Pricing management Costing build-up development Technical writing Volume leadership Proposal coordination Subject matter expertise Editing Desktop publishing Graphics designing Production Business development support


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Facts About the Industry Proposal Process Industry Realities

Resources: People who work on proposals typically have other roles within the company There is declining number of strong proposal professionals Due to lack of resources, companies are bidding fewer contracts

Process: Many companies do not often follow a uniform process Corporate bureaucracy causes delays Reliance on teaming partners creates a disjointed proposal effort

Time: Due to other commitments/priorities/poor planning, the proposal effort starts

the moment the RFP comes out or weeks after the RFP release Most proposals are completed last minute

Budget: Many small businesses don’t properly budget their bid and proposal costs to

pursue several contracts a monthThis presentation contains proprietary information and may not be distributed or reproduced without express written consent from Red Team Federal

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Facts About the Industry Proposal ProcessCost Realities

Cost of Capture Realities Companies spend hundreds of

thousands of dollars on small to medium-sized procurements and millions of dollars on large procurements


Delays or missed deadlines in the procurement process greatly impact industry

Financial impact New business pursuit impact

Companies record bid and proposal costs as allowable expenses in their G&A. This affects their wrap rates, causing labor rates to be higher. The ultimate result is that the government pays more.

An RFP that hits release timeframes and is easy to understand and respond to will cost a company much less to pursue.

Some companies will determine ways to

recover cost as part of their proposal

development strategy

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Work Hard, But Work SMART…


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Facts About the Industry Proposal ProcessProposal Solution Realities

Prime offerors combine their experience with their partner’s experience to address requirements and they present this as “Team experience”, but sometimes the prime has limited experience with the actual work required.

Many companies do not use their corporate certifications such as CMMI or ISO in day to day operations. The corporate or technical

certifications described in proposals are sometimes not relevant to the division submitting the proposal.


Companies don’t actually follow the program management

methodologies they write about

Companies will do everything they

can to make their past performance appear “relevant”

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Facts About the Industry Proposal ProcessProposal Solution Realities

Some companies rely solely on the SOW/PWS and ignore the instructions and evaluation criteria.

There are some companies who possess limited technical experience and will hire outside help to develop their technical approach.

Many small businesses do not understand how to price contracts. Many also utilize incorrect cost data to calculate rates.

On pricing evaluations, companies will find ways to manipulate the pricing model.


Large businesses have the capability to beat small businesses on price based on their ability to allocate

corporate costs


Part 2: Guidance Based on Industry Realities

Part 2: Guidance Based on Industry Realities Incumbents vs. Non-Incumbents Solicitation Development

SOW/PWS Other Technical Management Past Performance Cost/Price Modeling and Gaming

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Guidance Based on Industry RealitiesIncumbents vs Non-Incumbents

Incumbents work years in advance of their contract closure to try and “influence” the contract to them. Tip: Work closely with PMO to ensure that they do not perform

anything within a closed architecture that does not allow new competition.

If the re-compete RFP comes out looking very similar to the original RFP, industry perceives that this is set for the incumbent. Tip: Communicate openly that the government is looking for new ideas,

innovations, and processes for the re-competed requirement.

If the RFP requirements change significantly, companies think the incumbent is not well liked and want change. Tip: Communicate that the RFP change is not indicative of incumbent

performance and indicative of updated requirements and processes.


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Guidance Based on Industry RealitiesSolicitation Development - SOW/PWS

Instructions requiring a response to the PWS/SOW can be confusing. Ensure that the PWS is logically organized. Delineate what portions of the PWS require a response. Avoid duplication of response requirements. Correlate the page limit restrictions to the detail in the PWS.

SOWs/PWSs sometimes don’t change in re-compete contracts. Tip: Technologies, processes, and best practices change in 3 to 5 year

cycles. Industry won’t provide an innovative solution if the requirements haven’t changed. Take the time to update the SOW on a re-compete contract.


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Guidance Based on Industry RealitiesSolicitation Development – Other Technical

Companies are hesitant to offer any technical innovation in their proposal for fear of increasing their overall price. Tip: Allow bidders to show some technical innovation and creativity that will

ultimately benefit the government.

Some solicitations require bidders to have a portal or web system to manage the project. To evaluate all bidders fairly, require that everyone put in a link to their “live” portal so they can evaluate it.

Incorporate some measure of risk/reward and metrics into evaluation. Require companies to propose measures and metrics for financial incentives and disincentives for their work performance. Evaluate based on those metrics


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Guidance Based on Industry RealitiesSolicitation Development - Management

Corporate certifications such as CMMI or ISO are not often used in day to day operations. Tip: Require that companies explain how they have used their certifications

internally or on prior projects.

If a solicitation requires a management methodology, companies will make one up if they don’t have one. If they do have one, they don’t always follow this methodology post-award. Tip: In the instructions for the management portion, ask for examples where

they’ve used their management methodology successfully on prior projects.


Require companies post-award to update their contract reporting requirements to include how

they are using their management methodology and certifications

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Guidance Based on Industry RealitiesSolicitation Development - Management

Companies will propose key personnel that they don’t have or personnel that they know are not going to be available Tip: Request signed offer letters or signed contingent hire letters to show their

commitment to the position. Tip: Do your research on key personnel. Identify background and current job

and assignment.

If recruiting and retention are required in the proposal response, require innovative recruiting methods and prior statistics for filling open positions. Statistics can also include staff turnover, staff retention, and average tenure of existing staff.


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Guidance Based on Industry RealitiesSolicitation Development – Past Performance

Primes will take credit for the work the entire team performed as opposed to their own individual contribution. Tip: Ask for clear delineation of work

performed by the prime vs. subcontractor on contracts cited as past performance or experience.

Tip: Ask for information regarding staff that worked on a previous contract, and their role on the proposed contract.


Make sure specific areas of concern are

addressed to demonstrate quality

such as cost overruns, schedule delays,

performance issues, retention rate, etc.

Require offerors to provide the specific annual revenue number (not total contract value) for each reference to determine relevancy.

Be specific with the questions on the past performance questionnaire. Make sure the they highlight the relevancy towards the Statement of Work.

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Guidance Based on Industry RealitiesSolicitation Development – Cost/Price

Many small businesses do not often understand pricing approaches and strategy. They struggle with cost type contracts. Tip: Many small companies have never been audited and don’t understand

DCAA. In place of requiring a DCAA latter require companies to provide data to justify rates.

Be cognizant of highly inflated indirect rates or undocumented direct rates. Certain costs are often hidden that the government ends up paying for. Tip: For smaller efforts, require offer letters to see the salary of those staffed

people


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Base the pricing evaluation on a sample task order that may or may not be awardable. This forces companies to think about the real level of effort and

rates assigned to proposed labor categories.

Don’t provide the evaluation quantities for labor categories. This prevents the offeror from bidding unrealistic rates (high and low) on various categories.

Look at rates based on reasonableness of individual rates versus looking at total price of hours and rates calculated together.


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Request companies to provide innovative ways/methods as to how they intend to reduce their overall pricing or cost throughout the contract lifecycle. Examples include: Open up a Materials and Handling pool for

material heavy contract. Volume discounting based on labor. Open PMO’s within corporate structure

internally billed.

When utilizing Lowest Price Technical Acceptability, define your technical acceptability evaluation based on the complexity of the requirements. Tip: Consider utilizing minimum acceptability metrics for certain

requirements

Always Ask for

Best and Final Offer!


Part 3: Modeling and Gaming

Part 3: Modeling and Gaming Example

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Modeling and Gaming

Reality Modeling The intent of Reality Modeling is to best predict what changes will likely

occur over the life of a contract and bid with those changes in mind. In other words, compare what is being evaluated with what will actually be purchased, and then determine the timing and margin on the purchase.

Gaming The intent of Gaming is to exploit the inefficiencies and imbalances in a given

solicitation. The Modeling/Gaming process:

Typically a bid model begins with a uniform application of margin to all items.

Items determined to be over-evaluated (i.e bidder believes it is less likely to be sold) – bid with prices below cost

Items that are under-evaluated (i.e. bidder believes it is more likely to be sold) – bid with healthy or even high margins.

Inaccurate evaluation quantities (hours or items) lead to a lower overall evaluated price, but higher prices on orders post-award.


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Modeling and GamingExample


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Questions?

Red Team Consulting proprietary material. Duplication or distribution prohibited without prior written consent.

Jeffrey Shen

11190 Sunrise Valley Dr., Suite 100

Reston, VA 20191

Office: 703-787-9009

Fax: 703-787-9022

[email protected]

www.redteamfederal.com

A Contracting Officer’s Guide to Getting Stronger Proposals; Lower, More Realistic Pricing; and...

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