Pricing a government bid

Start with what was paid before

Federal award records are public. For any part class, you can see recent awards, who won them, and the amounts. For DLA managed items the bid board goes further and shows unit price and quantity by NSN. Before you price anything, look. The history tells you the range the buyer has accepted, how the price moved with quantity, and whether the last award looks like a competitive price or a sole source price.

Treat the history as a range, not a target. An award from several years ago at a small quantity may not reflect material costs today. A sole source award to the original manufacturer may sit well above what a competitive buy would bring. Read several awards, not one.

Our award history view collects these records by part class so you can see the pattern in one place.

Unit price versus total value

Award records in FPDS and USAspending report money at the contract level. An obligated amount is what has been funded on a contract action so far. A base and exercised options value is what the contract is worth with the options used to date. A base and all options value is what it could be worth if every option were exercised. None of these is a unit price.

To get to a unit price you need a quantity, which is sometimes in the award description, sometimes in the solicitation line items, and sometimes only on the bid board. Dividing an obligated amount by a quantity gives an implied unit price, but only if the action covered one line item at one quantity. Multiple line items, first article charges, and tooling can all be inside that one number.

When you cannot separate them, say so in your notes and use the figure only as a rough check. When the bid board shows a clean unit price by NSN, use that.

Options, quantities, and what you are really quoting

A solicitation with a base quantity and option quantities is asking for a price on each. The government may never exercise the options. Price the base quantity so it stands on its own, and price the options with the setup already covered if you expect them to be exercised. Do not spread setup across a total that may never be ordered.

Read the quantity variance clause too. Many supply contracts allow the government to accept a small overage or underage. Know how it affects your run.

Indefinite delivery contracts set unit prices for a range of quantities and then place orders over time. Price the minimum quantity honestly, because that may be all you ever get.

Freight, FOB, and packaging

FOB terms decide who pays freight and when the government takes responsibility for the parts. FOB destination means you deliver to the government dock at your cost, and you own the parts until they arrive. FOB origin means the government arranges and pays for shipping from your dock. Most small parts orders are FOB destination. Check the term on each solicitation and put freight in your price when it is yours.

Defense parts usually require military packaging and marking. The packaging standard specifies methods and materials by item, and the marking standard specifies labels and bar codes. Packaging can be a real share of the cost on a small, heavy, or fragile item. Price it as a line of its own in your estimate, even if the quote shows one number.

Small quantity math in words

The pattern is simple. Add up every fixed cost of the job: setup, programming, first article, fixtures, paperwork, material minimums, and outside process minimums. Divide by the quantity. Add the per unit cost of material, machine time, inspection, packaging, and freight. Add your margin. That is your unit price.

Then compare it to the history. If your number is far above the last award, ask why. Perhaps the incumbent has tooling paid for, or buys material in volume, or is quoting a superseding part. If your number is far below, check that you have not missed a drawing note or a clause. Being the low bid on a job you cannot deliver profitably is worse than losing.

Remember that the government pays after delivery and acceptance, through electronic invoicing, on prompt payment terms set by regulation. Cash flow on a long lead job is part of the price.

How buyers judge your price

Contracting officers must find a price fair and reasonable before award. On competitive buys, the other quotes do that. On buys with one quote, they compare to history, to catalog prices, or to an estimate, and may ask you to explain. A quote that is unusually low can draw questions about whether you understood the requirement. A clear price, with exceptions and assumptions stated on the quote, is easier to accept than a mysterious one.