I must confess that the below is my methodology derived from my 9.5 years of awarding federal contracts from cradle-to-grave. It passed review and garnered signature whether me or at a Level III warrant designation.
When your CO receives a proposal the first thing many experienced COs do is open your 03-Price Proposal document. This is the meat and potatoes of your offer. Everything else revolves around that.
Time Frame Of The CSP
Your CO will ensure the timeframe of the CSP is prevalent to the anticipated date of award which is 180 days or six months after the date of signature of the SF-1449. That makes the displayed sales practices and vendor government forecast legitimate. These two baselines play an important role in your project’s estimated contract value.
Proposed Pricing
Your CO will peruse your prices proposed with IFF and for commodities will obtain a cumulative total for number of line items and price points. The latter will be compared to the twelve month totals for your commercial sales and government projections.
The Multi Baseline Approach
Your commercial sales tell their own story. They tell your CO what line-items are prominent. They show cumulative sales totals for each item. They generate a grand total for commercial business.
Your vendor projections tell another story. They show what percentage of each line-item’s commercial sales is projected on a potential award. They display what line-items the vendor is confident about. They display a potential one-year total for a potential ten-year awarded contract.
The cumulative total for price points including IFF tell one story. If each line-item was purchased one time over a ten-year period that would be a viable contract estimated value.
Numerical Example For Commodities
Commercial Sales-$1,000,000
Government Projection-$250,000
Line-Item Total-$600,000
Mock Estimated Value-$425,000/yr.
Mock Estimated Value Explanation
The $1M in commercial sales tells the CO that your widgets were moveable and that you have a credible customer base. However, the commercial market and the federal arena operate on a different scale. That gives good information but not enough.
The vendor projection could simply be an attempt to create easy math for appeasement’s sake. The general observation is either 10% or 25% of the commercial sales total. Nobody really knows but this number displays confidence in the vendor being able to meet or exceed the FSS sales criteria at I-FSS-639 which is a ten-year total of $225,000.
The cumulative total of price points gives a ten-year grace period. That being said, the CO has discretion of whether to use that for a ten-year total or a one-year total. Frankly, it depends on the number of line-items. In this example, I chose to use $600,000 as a one year total because it fell in line with both the commercial sales total and the vendor’s government projections.
I then found the average for the vendor’s government projections ($250,000) and the cumulative price point with IFF total ($600,000) which equals $425,000 for one year. However a full-length FSS contract is ten years. Therefore 425,000 x 10 = 4,250,000 for an estimated contract value of $4.25M concerning this mock commodities contract estimated value scenario.
Estimated Contract Value For Services
Try For services, the estimated contract value process primarily relies on the vendor’s government projections since line-items aren’t as plentiful. Your CO will most ordinarily multiply those projections times ten. Easy peasy.
Pre-Award Reviews & Contract Value
The estimated contract value has a direct effect on a pre-award review by the Office of Inspector General. For commodities, the contract must have an annual value of $10M for an estimated contract value of $100M and for pharmaceuticals, an annual value of $5M for an estimated contract value of $50M. The latter goes for review quite frequently. Reviews can take three to six months. I would warn every CO not to skew their estimate to go for one and for each vendor not to skew their government projections away from one.
If you think I can help email nicholas.s.robertson@outlook.com for your introductory email and free consultation.
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