How to Find Competitive Pricing Info

In this episode of Game Changers for Government Contractors, host Michael LeJeune dives into the art of pricing for government contracts. He breaks down key strategies for finding competitive pricing information, including how to reverse-engineer past contracts using tools like USAspending.gov ?and GSA schedules. Michael also offers tips on using wage determinations and subcontractor quotes to create winning proposals. Whether you're a seasoned contractor or new to GovCon, this episode provides practical advice to help you navigate the complexities of pricing and increase your chances of success in the competitive government contracting market.

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Read Transcript Here:

Michael LeJeune (00:00): Welcome to another episode of Game Changers for Government Contractors. I am your host, Michael LeJeune. If you are brand new to the podcast, let me give you a quick intro about who I am and what I do. I work with RSM Federal. We are one of the nation's leading government contracting and consulting firms. We help folks who are brand new to the market, those who have been around for a while, and those struggling to get to the next level. We've helped our clients win over 14.5 billion dollars in government contracts and have worked with thousands of companies. So, if you need help in the government contracting space, you are listening to the right podcast.

Today, I want to talk a little bit about how to find competitive pricing information. This is a question that we get quite a bit. One of the reasons I want to focus on just talking a little about it is that I don't want you to overthink this. You can go down the rabbit hole and waste a lot of time, energy, and even money by obsessing over this topic. I want to point you in a couple of quick directions to get some information. Understand that, ultimately, when you are working on your pricing and being competitive, a lot of this boils down to two things. One of them is historical data, and the second one is just taking a shot and doing some things. Even then, no one's going to win 100% of the time.

You can hire a price-to-win consultant. You can hire experts that are out there, but they can only do so much. A lot of this boils down to things you can and can't control. You can control having the best price with the best margin and making sure you are as competitive as you can be. What you can't control is some third party coming in and underbidding you by 50% or more because they just want to win the contract and don't care if they lose money. It happens. You can only control so many factors in this. If you go in with that mindset, it helps people understand that this is a process you are going to dial in, and here are some tools that are going to help you.

One of the first things I want to recommend is reverse engineering pricing through past contract awards. You can use usaspending.gov , sam.gov , or fpds.gov . You can even use FOIA requests to request information about a contract. They won't give you the exact pricing or anything like that, but if you compare what's on USA Spending or SAM to a statement of work, that may help you reverse engineer the pricing—like, how did they come up with that? Sometimes you don't even have to dig that deep. Sometimes it's as simple as looking at a contract, especially for products, where you can see that they bought 35 widgets at $100 each. Now you know that's what the government is paying for that.

For products, it's a lot easier to reverse engineer a price than it is on the service side because, on the service side, you don't know exactly what they are providing. You can see a description, look at the RFP, and make some assumptions, but in those situations, you may have to use a FOIA (Freedom of Information Act) request to understand more of what is in the RFP response. Those are some tools that you can use to reverse engineer pricing and get it as close as you can. Even if you FOIA someone's proposal, there will be a lot of things redacted. Proprietary information and pricing will be redacted, so you're not going to get the breakdown of their G&A, overhead, and all that. You're only going to understand the statement of work they wrote to, and that may help you.

I had one client call me a while back and say, "We keep missing the price by a couple of million dollars." One of the things that jumped out was how they were deciding to price it. In this situation, the client was going with a gold standard. If someone said they needed this work done, they would look at it and ask, "How many FTEs would I give this?" Let's say it was 20 FTEs in an ideal world. Their competitor was looking at it and saying, "In an ideal world, you might use 20 FTEs, but I think you only need 15 FTEs and maybe one or two part-timers." For those who don't know, FTE means full-time employee. Their competitors were quoting fewer FTEs for the same work, resulting in a difference of millions of dollars in pricing. Sometimes, it's just about understanding how your competitors are pricing versus how you do it. That helps you.

Reverse engineering is number one. The next one here kind of goes with reverse engineering but not so much. You don't even have to wait around for a proposal to drop to go look at GSA schedules. You can jump into GSA's eLibrary and look at people's GSA schedules to see what they are pricing things at. This assumes that the opportunity is coming out on GSA, but not necessarily. GSA has their best rates, so if you look at your competitors and see their best rates on GSA, that gives you an idea of what they are going to quote.

To be fair, understand that most people are not going to quote their GSA schedule rate. They're actually going to quote a discount on that rate. Is it a 2% discount? A 5%? A 10% discount? I don't know the answer to that, but they're often going to quote a discount. For example, we'll use the labor category here and say they are quoting $100 an hour for a person, and you decide to do $99 an hour. You may not be competitive with them because they may be quoting $95 an hour when they submit the quote. Just understand that seeing it on the GSA schedule doesn't mean that's the price they will quote. In fact, it almost always means it will be less than that. Not always, but almost always.

That's one way to see if you are competitive with pricing based on what people have in their GSA schedule. The next thing you can look at is wage determinations on sam.gov . There's a section where you can look at wage determinations and see what certain things cost. For example, you can find that for an accountant, it costs $55 an hour, plus there are certain benefits and different things, so it's another $4.50 an hour or whatever. This shows you what those things cost per city because the cost of hiring someone in El Paso, Texas, is very different from Fredericksburg, Virginia. You can't just look at your pricing and say, "Anytime I hire an accountant, janitor, or IT person, I'm always going to pay them $85 an hour." Depending on where they live, it's going to be different. The government understands that and knows that it's going to be factored into your proposal.

A lot of people look at this and don't understand it, so they struggle when it comes to pricing. You need to understand what that is. That one is probably more for people just starting in the market. If you've been in the market for a while, you probably understand this well. But if you're brand new to the market, understanding how you're going to charge for an employee based on where they live and what's going on is a big deal, and it needs to be factored into your pricing.

The last one here—and I know you're like, "Man, this has only been a few minutes in the podcast. This is a really quick one, Mike." Yeah, again, I don't want you to overthink this. The last thing I want to talk about is getting supplier and subcontractor quotes. As you are starting to put together your pricing and your RFP strategy, it's okay to go out there and get supplier and subcontractor quotes. Find out how much the labor, parts, or products cost. Is there an opportunity on the supplier side or the manufacturing side to get discounts by guaranteeing quantity or signing some sort of agreement for exclusivity? Is there a way to lower those costs?

If you focus on gathering all of this information and understanding how to quickly access it for pricing, it will allow you to put together quotes faster and price to win. You don't always want to be the lowest price; you want to be the best value—unless it's LPTA (Lowest Price Technically Acceptable). Even in those situations where things are LPTA, there might be a client that is a little more expensive but offers different values. For example, maybe they include shipping. Think about that for a moment. How many times have you been on Amazon, Walmart, or another website, like Wayfair, and seen the price of a product and thought, "It's cheaper to pay a little more because this one includes shipping, and the really cheap one doesn't, and the shipping is outrageous"? Sometimes, the quote will be a little more but offer more value. The government may pick that because of the added value.

Pricing is really an art. At the end of the day, like I said at the very beginning of the podcast, there is only so much that you can control. If you remember that, stay focused on it, go through these tools, and use them to gather your information, you will be able to build your pricing much faster. The only other bonus category I would look at, especially when you start getting into the labor side, is understanding your costs.

If you don't understand your costs and the cost breakdown—what your wrap rate is, your fully burdened rate, all of those things—that is something you need to sit down with, whether it's you, an accountant, or whoever does your books. You need to understand that. There are several books on that topic, and I can refer you to different people in the market who can help you understand your costs and how those breakdowns work. As a bonus, a lot of times when you download an RFP, not all the time, there is a pricing section that has a breakdown and wants to know your financial model. You need to understand your financial model so that you can understand the profitability.

At the end of the day, as my partner Josh would say, it's not about the money—it's about the money. It's about you making money. You don't want to be losing money on a contract. You don't want to be in a situation where you have 3-5% profit, and any mistake sinks your company. You don't want that. Be very careful about how you do this, and I think you will be just fine.

If you have any more questions about pricing, I know plenty of people who do this for a living. I don't, because I despise doing pricing, but I know a lot of people who do this for a living. So, there are people I can refer you to if you have questions about it. We'll see you in the next episode.

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