Pricing Strategy Tune-Ups

In the prevailing competitive environment that is defined by sequestration and LPTA bids, price has become, hands down, the most important determinant of competitive contract awards. As a consequence, firms that play to win must focus their capture teams on spotting and exploiting opportunities to minimize evaluated prices without sacrificing profitability.

The overarching purpose of the tune-up process is to improve the probability of a win by ensuring that the customer's pricing strategy considers and implements concepts, ideas and approaches that can make a positive and quantifiable difference. CAI/SISCo has long been informally helping clients hone and sharpen their strategic pricing plans and strategies to meet winning PTW price targets. This offering augments and completes our PTW offerings with quick-turn Pricing Strategy Tune-up studies. These tune-ups, which are conducted by our seasoned PTW professionals follow a detailed structured interview process that allows our analysts to rapidly parse opportunity complexities to uncover strategic pricing drivers.

The process is more than a peer review -- its intent is to test the applicability of scores of potentially relevant ideas and strategies to determine if the pricing aspects of existing pursuit plans can be augmented and improved to prevail in today's hyper-competitive government contracting world. The tune-up process is also an educational tool that exposes capture professionals to scores of concepts and strategies that CAI/SISCo has encountered or developed during the course of supporting over 1,500 major complex pursuits with PTW studies, pricing strategy development, and other BD support services.

The Tune-Up team starts by reading into the opportunity's acquisition documentation. The next step is an in-depth interview session with the customer's capture team (i.e., the opportunity Capture Manager, senior capture team members, and the pricing team). The capture team should kick things off by providing a high-level overview of the Opportunity Environment and a sketch of the Strategic Pricing Plan much as they would for an internal management review. The overview should:

• Describe the acquiring customer and the project's background [10 follow-up questions]; and
• Describe the project's purpose and work environment. [5 follow-up questions]

This walk-through is followed by the Tune-Up team asking relevant questions within the representative major issue areas presented below. Questions related to each issue area are designed to pin point precisely what pricing strategies could and should be included, and how each strategy should be implemented in the pricing strategy and, by inference, what isn't included that has potential to improve price positioning.

• 1. General Issues includes the following types of questioning:
  • How did the contract/task order type inform capture strategy? [15 follow-up questions];
  • What is the capture strategy and vision that describes how the opportunity will be captured? [5 follow-up questions];
  • How will the capture strategy be conveyed to Operations post-award? [10 follow-up questions]...

• 2. Labor-Related Issues includes 17 questions and over 100 follow-up questions, such as:
  • How were the levels of effort that are not prescribed developed or determined? [20 follow-up questions]...

• 3. Subcontracting Issues includes 8 questions and over 65 follow-up questions, such as:
  • What is the subcontracting strategy, why was it chosen, and how does its intensity change over time? [10 follow-up questions]...

• 4. Other Direct Cost (ODC) Issues includes 12 questions and over 90 follow-up questions, such as:
  • How were CY1 ODC prices that are not plug numbers developed? [15 follow-up questions]...

• 5. Gaming & Other Price Reduction Opportunities includes 9 questions and over 75 follow-up questions, such as:
  • What cost avoidance potential has been identified that can be offset against project costs? [20 follow-up questions]...

Following the interview the Tune-Up team develops a detailed read-out of the process and its results including recommendations for improvements and an estimate of the positive affect that the recommendations should make to the probability of a win once implemented. A draft of this read-out is briefed to the capture team before being finalized and presented to BD leadership.

The purpose of the Pricing Strategy Tune-Up is to improve the probability of a win by leaving no stone unturned in the quest to maximize the return on a BD investment.

All CAI/SISCO opportunity-related studies are performaed on a first-come, first-served opportunity-exclusive basis. To request a proposal or more information about any of our services or
products, please e-mail Tony Constable or call him at (301) 807 8171.