09:58
Faizan
If you have limited experience hiring proposal consultants, and wonder how they charge for their services as they help you develop your winning proposal or are curious if there are better ways to negotiate and work with consultants, read on.
Some proposal consultants charge on an hourly basis. The majority of capture and proposal consultants charge on a strictly hourly basis. This means that if they work only one hour in a day, they will charge you for only that hour. If, on the other hand, they work a 14-hour day, they will get paid for all 14 hours, unlike exempt company employees who get paid for 8 hours each day no matter how long they work. A lot of consultants in this profession prefer to work this way because they come from a company environment where they are used to working 80-hour weeks and being paid for 40 hours.
Capture and proposal consultants that charge flat rates. Other capture and proposal consultants will establish a flat daily rate usually based on the cost of 8, or more commonly, 10 hours of their work. This is what you will pay them no matter how few or how many hours they put in. It is wise for you to set boundaries on the minimum number of hours worked. For example, you may set a minimum of hours worked at 6 hours to count a full day, so that you do not end up paying a full day's fee for half a day's work. If the consultant has that flat fee rate for the day, it is also advantageous for you to introduce increments of the day. You can negotiate that they split that day in half if they worked under 6 hours, or even charge you for a quarter day if they worked under 2 hours.
Some long-term consultants will agree to a weekly maximum of hours that they can charge, and will stick to that maximum regardless of the workload. For example, they may agree not to exceed 70 hours per week, even though they do not have a flat daily rate. This helps you control proposal budget, but some consultants, if the task requires 14-hour days with no weekends (since you have greatly understaffed your effort) may not agree to this approach.
Success fee for winning proposals. Then, there is success fee compensation. This approach can work two ways.
1. One way, which is ideal for an emerging business that has limited money, is to get a consultant to agree to work for free. In this approach, the consultant bears all the risk. If the contract is won, the consultant gets a substantial success fee. If the contract is lost, the consultant gets nothing. This type of compensation is a business owner's dream. There are entirely too many variables in this approach that a consultant cannot directly affect, especially if they are not involved in months and moths of necessary pre-proposal positioning called capture.
The consultant also bears the risk of not seeing the money until the award. Even corporations now take their sweet time to make decisions, but the situation is worse with government contracts. Some government agencies may take months or years to make an award decision, and this decision may be protested to boot, causing a recompete. Just think back to or look up Northrop Grumman's aerial tanker award and the recent downselect protest of the TSA ITIP contract, and you will know what I mean.
Another risk the consultant bears is that the management of the company, once the contract is won, may find a way not to pay them because the people who made the commitments have been replaced by others, or legal agreements put in place are hard to enforce. The consultants expected profit may be also reduced because the customer may cut down the scope of work, thus lowering the total amount of the award, or break the contract into option years, where the next option award is not guaranteed. There are also aspects of the success fee for winning government contracts that are prohibited by the Federal Acquisition Regulations (FAR).
Some proposal consultants charge on an hourly basis. The majority of capture and proposal consultants charge on a strictly hourly basis. This means that if they work only one hour in a day, they will charge you for only that hour. If, on the other hand, they work a 14-hour day, they will get paid for all 14 hours, unlike exempt company employees who get paid for 8 hours each day no matter how long they work. A lot of consultants in this profession prefer to work this way because they come from a company environment where they are used to working 80-hour weeks and being paid for 40 hours.
Capture and proposal consultants that charge flat rates. Other capture and proposal consultants will establish a flat daily rate usually based on the cost of 8, or more commonly, 10 hours of their work. This is what you will pay them no matter how few or how many hours they put in. It is wise for you to set boundaries on the minimum number of hours worked. For example, you may set a minimum of hours worked at 6 hours to count a full day, so that you do not end up paying a full day's fee for half a day's work. If the consultant has that flat fee rate for the day, it is also advantageous for you to introduce increments of the day. You can negotiate that they split that day in half if they worked under 6 hours, or even charge you for a quarter day if they worked under 2 hours.
Some long-term consultants will agree to a weekly maximum of hours that they can charge, and will stick to that maximum regardless of the workload. For example, they may agree not to exceed 70 hours per week, even though they do not have a flat daily rate. This helps you control proposal budget, but some consultants, if the task requires 14-hour days with no weekends (since you have greatly understaffed your effort) may not agree to this approach.
Success fee for winning proposals. Then, there is success fee compensation. This approach can work two ways.
1. One way, which is ideal for an emerging business that has limited money, is to get a consultant to agree to work for free. In this approach, the consultant bears all the risk. If the contract is won, the consultant gets a substantial success fee. If the contract is lost, the consultant gets nothing. This type of compensation is a business owner's dream. There are entirely too many variables in this approach that a consultant cannot directly affect, especially if they are not involved in months and moths of necessary pre-proposal positioning called capture.
The consultant also bears the risk of not seeing the money until the award. Even corporations now take their sweet time to make decisions, but the situation is worse with government contracts. Some government agencies may take months or years to make an award decision, and this decision may be protested to boot, causing a recompete. Just think back to or look up Northrop Grumman's aerial tanker award and the recent downselect protest of the TSA ITIP contract, and you will know what I mean.
Another risk the consultant bears is that the management of the company, once the contract is won, may find a way not to pay them because the people who made the commitments have been replaced by others, or legal agreements put in place are hard to enforce. The consultants expected profit may be also reduced because the customer may cut down the scope of work, thus lowering the total amount of the award, or break the contract into option years, where the next option award is not guaranteed. There are also aspects of the success fee for winning government contracts that are prohibited by the Federal Acquisition Regulations (FAR).
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