Many people ask JetCo, “What is price-to-win?” For us, it’s the process of building the price point that fulfills the customer’s requirements and needs and beats the competition. We use our Price-to-Win methodology for all levels of government while we also determine how our clients’ capabilities meet the government’s needs. Unlike its commercial counterparts, the government often only gives bidders a single opportunity to offer a price narrative and volume. Therefore, it is imperative to put your best foot forward from the start when dealing with the government.
Incumbency is often the biggest challenge for a new bidder. FOIA, forecasts, budgets, public records requests, and direct discussions with government contact provide our capture professionals with better understanding of the competitive landscape, incumbent weaknesses and strengths, contract magnitude, and potentially line-item pricing.
Coupled with an understanding of the government “hot buttons,” copies of previous contracts, offeror responses and evaluation notes, the capture professional should have a target price. That leaves two questions for the offeror to answer: 1) Will the incumbent propose a lower one and 2) how much will the competition discount its price submission, assuming that price is a significant evaluation factor? A reminder, you typically get only one opportunity to win, and you must be able to live with your offer.
As capture professionals, our mission is to accurately define the budget, government estimate, and (if available) the number of people or level of service and effort desired by the government. While we are conducting research, analysis, validating assumptions, and communicating with government contacts to determine a final price, it isn’t uncommon for our clients to engineer solutions that the government didn’t ask for. We guide our clients to carefully consider if the government customer is willing to trade off or pay more for these features and benefits. A common mistake that offerors often make is to assume that the government wants to upgrade and is willing to pay more to do so. This is the same mentality for service levels and support. This assumption commonly results in the offeror failing to hit the competitive price range, leading to disqualification.
Assessing What's New
New requirements or opportunities that have an updated statement of work (SOW) pose another challenge. In this scenario, the government has likely budgeted and appropriated money to support the contract, though often this information is not shared. It has also likely developed an estimate or competitive price range that it will consider. Trade secret here – pay attention to how the government is purchasing, because it may have a certain process it must use because of the contract magnitude. For instance, is it an invitation to bid (ITB) or request for quotation (RFQ).
If the capture process is done correctly, the technical proposal could be accepted. If not, debrief with the government to better understand what they expected and what your competition offered instead.
About the Author
Lieutenant Colonel (retired) Jon Tellier is the President at JetCo Solutions. With over 25 years of experience in government, he provides direction to a growing team of employees who help businesses sell to all levels of government.