Price-to-win

Competition for Federal contracts can be tough, with many bidders seeking to win their fair share.  How do your offerings stack up to the competition?  Can you provide your products and solutions at a compelling price? This is the point of conducting a price-to-win (PTW) analysis.

The PTW analysis starts by building a deep understanding of the customer requirements.  Are these ongoing requirements and is there an incumbent provider?  What is the customer accustomed to paying for these goods and services?  Have the requirements changed significantly?  How so?  Have methods for providing the goods and services changed significantly?  How so?

What do you know about the competitors who are likely to compete to win this contract?  What's their track record for similar requirements?  What can be discerned about their likely solution and how they have recently priced their offerings?

Effective PTW analysis is not a guessing game, it's facilitated by conducting a independent, comprehensive competitive analysis research and can involve a variety of inputs, including:

• Existing contracts and related materials obtained through Freedom of Information Act (FOIA) requests or business intelligence (BI) services like GovWin, ezGovOps, Federal Compass, or similar
• Existing contract spending data from Federal Procurement Data System (FPDS) and/or BI services
• Correlation of data from the above two categories obtained for recent programs similar to the competition at hand
• Consultants who can help articulate specific competitor approaches and pricing

Are you the incumbent provider looking at a re-compete and striving to retain the privilege of continuing your services?  You should be no less diligent than the companies looking to take your work away from you.  It could be a fatal mistake to assume that you can continue "business as usual" in your proposal and pricing!

Each RFP is different and each set of client requirements are different.   Some programs lend themselves to technical innovations while others do not.  Ultimately, whatever price point you try and hit you must be conscientious of the fact that the Government will match your pricing with their Independent Government Cost Estimates (IGCE). This is the government’s best estimate of a contract’s potential costs and are an important tool throughout the process of planning and awarding service contracts. The IGCE supports efforts to ensure that the cost of meeting the government’s requirements for the good or service being acquired are known. IGCEs are also used by contracting officials to compare offerors’ proposed prices, determine whether proposed contract prices are reasonable, and to support contract price negotiations.

If your strategy results in a price point that is significantly lower than they are accustomed to paying, you're probably well below their IGCE.  When that looks possible, your capture team needs to spend some significant time (usually well in advance of the RFP) to socialize your approach and justification for why the client should be very careful when creating their IGCE and comparing bids against it. Make them aware of innovations that might drive efficiencies and lower pricing.  Talk with them about where you've done it before.  Set the expectation that you're going to crush the pricing in a good way.  You must ensure your proposal substantiates your pricing in a way that is defendable.  You don't want to be thrown out for a violation of cost realism, misunderstanding the requirements, or attempting to "buy" the contract.

Good PTW analysis can also help you realize whether you can be competitive (or not) and pull the plug if financial conditions are not in your favor.  Regardless of whether you decide to bid, or not, you can increase your competitive awareness by doing a PTW analysis.

Need help conducting a PTW analysis?  We can help.  Click on the "Contact" link and let us know.