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An Important Tool in Government Contracting Proposal Preparation and Evaluation
The most common concern expressed during proposal preparation is, “What is the right price?” This is a difficult question to answer in the abstract because the final pricing is the culmination of every single factor that goes into proficient contract performance – every variable, every error, every stroke of luck (good or bad!), and every efficiency or lack thereof. It assumes the final outcome of every risk and assumes a positive customer relationship throughout the performance. Easy, right?
Whether you are a prospective contractor trying to ascertain the proper pricing for your bid, quote, or proposal or the government contracting staff trying to determine both cost or price reasonableness and cost realism, this tool could prove indispensable in coming up with the “right” number.
The tool used to document the elements of pricing decisions is the Basis of Estimate or BOE. It provides, through the use of checklists, standards, reliable data, rationale, and other techniques the means to calculate a high-confidence number that provides the answer to two critical questions. First, can the contractor perform the work at that number, and second, will the contractor be sufficiently competitive to win the work and successfully perform? Certainly, the pricing must be able to withstand an audit, if one is conducted, but more importantly to the small business owner, you want to know whether you will lose your shirt by winning this contract!
Why is the Basis of an Estimate Important?
Answer: It proves to evaluators that you understand the requirements, and demonstrates internally and externally that your pricing is legitimate and achievable (both reasonable and realistic).
The Basis of Estimate provides the elements and the rationale of every component of the final price. It provides credibility in the numbers through a detailed justification and analysis based on the best data available. It is often a required component of a cost proposal and provides the government with enough information to determine if the proposed price and cost elements are, in fact, reasonable for the effort, and reasonable when reflected against that contractor’s method for accomplishing the work.
We can teach you the process, assess the risk, advise you on the best course of action, review your contracts, keep your registrations current and accurate, ensure prompt billings, guide your proposals, and work directly to improve your bottom line. When you bring CCS onto your team, you'll experience the difference veteran problem-solvers make.
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