The Truth About Federal Proposal Costs
During the past 30 years, I have frequently been asked the question, how much does it cost to prepare a proposal?
Or "What should it cost to prepare a proposal?" The desire is to have a valid standard a bidder can use to estimate the cost to prepare a proposal based on a key variable such as the dollar value of the contract being bid.
This question is a little like the question, what does it cost to build a house? The answer is that it depends on the size, style, materials, etc.
Back in the day, the generalization was often made that preparing a proposal cost 2% of the value of the contract being bid. However, solicitation requirements vary so much that this answer is dated and does not fit all situations. When we grant that it is almost impossible to quantify what proposals should cost, useful guidelines still can be offered.
Four Primary Types of Proposals
In order to address the question, let’s break proposals down into four different types that collectively account for a large portion of solicitations:
1. Low end base O&M services such as grounds, buildings, streets, uniformed guard service, utilities, trash, etc.
2. High end technical engineering services staff augmentation where the customer is buying a team of contractor personnel to provide technical support.
3. High end hardware / software driven solutions where the contractor is developing a system to perform a complex management function or to operate specialized equipment.
4. Product sales where the customer is buying a commercial off the shelf product.
