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. 

 

When we grant that it is almost impossible to accurately quantify what proposals should cost, some guidelines still can be offered.  Consider the case of a services company proposing a typical services type job.  This is a job where the bidder is offering X number of people to provide a service to the Government.  The service could be a group of people to operate a computer system or maintain a military base.  For this type of a contract, the cost of preparing a proposal might range from .002 – .008 (from two to eight tenths) of one percent of the contract value.  Whether the cost would be higher or lower would depend on variables such as, do we have a previous similar proposal that can be used on this proposal, or do we have to begin from scratch.  Also, the cost will probably be lower if the bid is being competed as a task order under an omnibus contracting vehicle and is not a stand-alone contract. 

 

For traditional bids requiring a complex design or solution, a rule of thumb is that the bid will usually cost 1-2% or occasionally 3% of contract value.  An example of this is a bid requiring the bidder to prepare a complete design and piece part list of a complex network that would be installed in customer offices across the country. 

 

Other price variables are introduced by the GWAC or government wide acquisition contract that has become popular during the past 5 years.  In this type of a situation, the successful bidders obtain an omnibus contract and then compete for task orders under the contract.  The task orders are typically completed in 5 – 15 days; they are relatively simple to prepare; and they are thus cheaper than traditional proposals.   

 

A further setting is a bid requiring that a model, a prototype or a first article be produced.  An example of this is a fighter aircraft, an army tank, or a specialized computer system.  Often the Government will have preliminary bid programs in which the winning bidders obtain funds to prepare their models or prototypes, and then the best prototype wins the production contract.  Sometimes, these competitions do not have funding to develop the model, and in those cases, bid costs can exceed 2% of contract value.  Then there are horror stories such as a system integration job won by TRW about 10 years ago from the Air Force.  Due to indecision on the part of the Government, the bid competition extended from the target time of 6 months to 5 years.  TRW won the contract, but due to the very long bid period, the cost of the bid was 10% of the contract value.

 

A still further situation is that of a computer reseller or other firm selling standardized products where it is possible to prepare a proposal template that is easy to fill out to submit a bid.  An example of this is a computer commodity firm offering PC type products.  Many bids only require the bid team to fill out a product list and perhaps respond to some maintenance requirements.  Completing this type of a simple bid is usually cheap and would cost usually less than .002 percent of contract value. 

The generalization is sometimes made that, the cost of preparing the average proposal dropped significantly in the late 1990s with simplification in contracting.  It stands to reason that it is cheaper to prepare a task proposal in10 or 15 days than it is to prepare a traditional proposal in 30 days.