In Government contracting, teammates are often the best way to add important capabilities to your proposal to improve your evaluation score and improve your probability of winning. Teammates come with their good qualifications and their fair price, and their bad price too. Strategic Pricing® involves how Government contractors can effectively work with teammates to get to their target price. It takes some planning, even more communication, and a great deal of willingness from all teammates to cooperate on the price.

Teammates can be subcontractors as well as vendors. Both can add value to the price and make or break the price. Too often, they wreck the price. This sends the prime contractor to their knees haggling and cajoling to bring the price down. What is a prime contractor to do to get to the right Strategic Pricing® move? Here are just a few Strategic Pricing® items to consider devoting to each bid.

Establish The Team Strategic Pricing® Philosophy At The Earliest Point.

No matter their role, every member of the group must be willing to discuss the overall pricing strategy requirements well before the RFP release. After determining the price to win the target range, this limit must be part of your preliminary conversations with suppliers and subcontractors. By shying away from the discussions, you are purposefully delaying the inevitable disagreements and last-minute wrangling. Avoid these and talk about the big elephant in the room soonest.

Targets And Offers.

As the prime contractor, you would want to determine target prices for your subcontractors. However, initially expect teammates to provide you with their first pricing cut without sharing your targets. This provides your teammates with the opening to potentially beat your targets. Then give them your views and work to achieve the best prices and the best work distribution. You must reach agreement in advance that the ultimate decision is up to the prime contractor. Let us face it, the bid belongs to the prime and the company taking the most risk. Teammates’ input is vital to the successful price and the input you are seeking.

History Lesson.

You will perform cost/price analysis on your subcontractors and vendors’ numbers. To do your job as the prime contractor, you must do some homework. Perform market research and gather historical data on your teammates. Examine fully burdened labor rates, historical and online data on past prices for materials, and internet-driven information in general about your teammates. Comparison with what you expect regarding the target prices we discussed above is crucial to achieving the best prices.

Every time you team with companies, how you set the stage for the relationship will determine if the Strategic Pricing® works out for the entire team. When you establish the teams’ Strategic Pricing® parameters and how you will conduct the team interactions, you are making a conscious decision to establish not only the pricing results but also how you will agree to work once you win the contract.

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Marsha Lindquist
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