Notes: Pricing in Government Contracting

Introduction

• KY Parks discussing pricing in government contracts, particularly staffing.
• Emphasis on the importance of transparency and not hiding behind paywalls.
• Personal background: Started in 2007 with Air Force contracts.

Key Concepts in Pricing

• Staffing as Profitable: Staffing is a key area for making money in government contracts.
• Contractor vs. Employee: Differences between 1099 subcontractor (W9, no workers comp) and W2 employee (includes benefits).
• ISO Certification: Mention of ISO 9001 certification.

Example of Pricing Strategy

• Case study: Medical case managers in Kentucky.
• Components of Cost:
  • Salary, holidays, benefits, workers comp, 401k, dental, life insurance.
  • Additional costs: Payroll, G&A (General & Administrative), profit margin.
• Profit Margin: Example showed 1% profit margin.
  • Emphasis on knowing evaluation criteria: Lowest cost technically acceptable.
• Wrap Rate Calculation: Example given (1.39 times the cost).
• Comparison with Restaurant Industry: Profit margins compared to restaurant industry norms (3%-5%).

Pricing Strategy for Different Roles

• Wrap Rate: Calculating based on hourly rate and wrap rate for billing.
• Example of Wrap Rate Calculation: $28/hr cost, $39/hr charge, wrap rate = 1.39.
• Importance of Flexibility: Different contracts demand different profit margins.

Managing Payroll and Expenses

• Essential to Identify Expenses: Including unique taxation in different states/counties.
• Usage of Payroll Companies: Importance of using payroll services like ADP to manage taxes and deductions.
• Local Business Requirements: Importance of having all necessary legal and business documentation.

Finding and Managing Staff

• Sources for Hiring: Indeed, Craigslist, LinkedIn, Facebook, professional recruiters.
• Badging Over Process: Transitioning employees from one contractor to another.
• Using Job Boards and Networking: Strategies for finding qualified candidates.

Financial Management in Contracting

• General and Administrative (G&A) Costs: Explanation and examples.
• Evaluating Contracts: Identifying potential staff and expenses before bidding.
• Adjusting Profit Margins: Different margins for different services, e.g., customized services may allow higher margins.

Challenges and Solutions

• Understanding Market Rates: Using resources like GSA schedules and job boards to understand market pricing.
• Learning from Experience: Importance of learning, applying, and adjusting strategies as you gain more contracts.
• Navigating Industry Challenges: Overcoming obstacles and staying informed about industry changes.

Closing Thoughts

• Believe in Yourself: Encouragement to maintain confidence and continue learning.
• Manifesting Success: Utilizing positive thinking and strategic planning for business success.
• Community and Support: Importance of community engagement and support in achieving goals.
• Action Steps: Take decisive actions based on learned strategies to succeed in government contracting.