“Why Do Our Proposals Cost So Much?” A 3 Part Series Covering Business Development Lifecycle Costs

Part I – Which Proposals SHOULD Cost More?

This may seem like a self-evident question at first glance, but there is more to it than the obvious “larger proposals for larger contracts” answer. Some proposals should cost more for very differing reasons that are not related to the size of the contract being bid. First of all, do we mean overall cost, or just the cost of the proposal preparation?

We all know that Bid and Proposal (B&P) dollars are precious. For the purpose of this discussion, let’s assume we mean the total cost to win the work, all-inclusive, from the time of target identification until contract award. Let’s also assume a typical sales cycle – we visit with the potential customer, update the Capture Plan as required, fill out our required Bid/No-bid forms, and follow any other “Must Have” requirements from our marketing toolbox or ISO process.

Given that we now have a baseline to work from, the answer to the question is (now that all things are equal) proposals for competitive type contracts, governed by the Federal Acquisition Regulation (FAR) Part 15, which work generally takes the most money to prepare, with A&E type Standard Form (SF) 330 responses much less, and commercial “letter proposals” being the least.

Likewise, single-function contracts are cheaper to bid than multi-function contracts, as a single-function proposal response is more “cookie-cutter” in nature. Of course, the first one you produce will always cost much more that the ones that follow, as there is no source material to draw from and you have to create it from scratch, so to speak.

Another factor impacting cost is the estimate itself. Construction type (design-build, etc) proposals cost more to estimate than service contracts (unless the estimate is based on a coefficient, such as a Deliver Order Contract). Whereas 1 or 2 people can estimate a typical service contract proposal, it takes many more people to do design drawings, material takeoffs and prepare a construction estimate dependent on design schedule/completion and other factors.

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