businessman signing proposal

Total Evaluated Price: Don’t Price Yourself Out of a Contract

Whether you’re bidding on a new contract or resubmitting a bid for a government contract you already hold, it’s important to submit a carefully considered TEP for an RFP.

Bidding a new contract means fighting the temptation to paint your business in the best possible light, even if it means adding value that the government customer can’t afford. Rebidding a contract can mean a combination of complacency and a lack of humility known as incumbentitis; after all, you have a solid history with this customer, and no one knows the company better than you do…right? 

Both of these approaches frequently end up in frustration and disappointment as another company walks away with the contract. It shouldn’t be a surprise, though; the company laid out its requirements plainly in its RFP and the winning bid was the one whose TEP addressed only those requirements.

How do you avoid an overly inflated TEP?

Read the Request for Proposal

The RFP outlines the most important information your company needs to know before submitting the proposal, and it will frequently include a description of the criteria they will use to evaluate and review proposals. Pay special attention to key dates, overall project description, submission details, and evaluation criteria. In addition, watch for acceptable proposal formats and the customer’s legal terms and conditions.

Even if you’ve been working with the customer for 20 years, treat each RFP as if it is your first bid for the contract. No matter how long you’ve been working with the business, your company is not irreplaceable and you need to be aware of any changes to the RFP from the last time you submitted a proposal. Never assume that the requirements haven’t changed, and never assume you know better than the company or agency providing the RFP.

Understand the RFP

Listen to what the government says it needs, and provide only what they specify. Don’t change the RFP, and again, never assume you know better than the company providing the RFP. 

If the business is looking for an engineer with five years of experience, for instance, don’t offer an engineer with 15. It’s impossible to fit more expensive solutions into a smaller budget, even if you think the engineer with 15 years of experience will bring more value to the company providing the RFP. If the customer could afford the extra experience, they would have requested it.

The best-value continuum is at play here, with some government customers following the LPTA requirements and others following the BVA. A safe approach is to assume LPTA in your pricing, but reference your company’s extra values, such as a wealth of knowledge and a deep talent pool, outside of the TEP. You can put your added value on the table, but it should not be factored into your bid.

Don’t look at other factors such as past performance. Take the RFP at face value and base your proposal on exactly what is requested. Remember that the TEP is just a proposal, not performance.

Write the Proposal for the RFP

Write the proposal with a complete understanding of what the RFP is requesting. It’s important that your pricing is within an acceptable range for the contract, and that all price lines are balanced to avoid potential complications with the proposal.

Remember, you are writing the proposal to the exact specifications of the RFP. If you’re adding cost by adding line items that your competitors aren’t, you will be pricing yourself out of the contract.

If you can’t meet the price because your solutions are too valuable, maybe the bid is not a good fit for your organization.