Procurement Question: How much OVER does the gov usually spend on items?

[steppinthrax]

So here's the deal. I've been bidding on a few state contracts for IT supply (hard drives, computers etc). We are talking maybe 60 SSDs for one contract or a whole laundry list of computer peripherals. As a new and small company I lack many of the relationships with distributors since I have not purchased in the past.

Anyway I make a few phone calls and try to put together the lowest price for the items. I get a small discount. I'm then struggling how much of a profit margin I should charge the gov. I'm concerned that if I charge too high I will simply kick myself out. If I charge too low, then I'm really short changing myself.

 

[ModerateRepZero]

why is it I have the feeling this will turn into a P & N thread?

 

[steppinthrax]

why is it I have the feeling this will turn into a P & N thread?

That is NOT my intention. LOL.

 

[ponyo]

 

[Red Squirrel]

If I had to guess 3x what you'd normally charge. Lot of politics and red tape will drive the cost up.

 

[Cozarkian]

Looks like at most 10% (for IT supply on a cost plus basis) - http://www.aptac-us.org/profit-in-contracting/

 

[steppinthrax]

Looks like at most 10% (for IT supply on a cost plus basis) - http://www.aptac-us.org/profit-in-contracting/

Thanks for that article, it's a starting point. I have a contract of safety materials that I'm about to bid on. It's all a bunch of construction safety products (safety glasses, vests, dust mask, ear protection). It's about 400 total qty of items. I've searched over the weekend for lowest price for all the items. I've added about $5.00 to $10.00 for each item. I'm calculating a 2K profit, but that would be a 42% profit margin!!! Which I think might be ridiculous.

 

[Rubycon]

 

[purbeast0]

I don't know any specifics, but as someone who's worked government contracting jobs before, they overpay for EVERYTHING by a shitload, and it is usually because they try to get the lowest bidder, which in turn gives you the shittiest work, which in turn makes everything take longer than promised, which means they have to pay for all of that extra time.

 

[brianmanahan]

you could double-charge like you do with the 2 jobs you work at the same time

 

[steppinthrax]

you could double-charge like you do with the 2 jobs you work at the same time

Man,

You keep talking about that shit. Does it bother you LOL

 

[brianmanahan]

hey man, it's your thing! alky had M3s, i got pomes, you got 2 jobs at the same time.

all of ATOT's a stage, and all of us merely players.

and the fact you would ask how much to overcharge the government is totally in line with your character development, LOL.

 

[steppinthrax]

hey man, it's your thing! alky had M3s, i got pomes, you got 2 jobs at the same time.

all of ATOT's a stage, and all of us merely players.

and the fact you would ask how much to overcharge the government is totally in line with your character development, LOL.

LOLOLOLOLOL

I'm seriously laughing my ass off when I read this man. Considering how my night has been going it's fun as hell.

 

[steppinthrax]

hey man, it's your thing! alky had M3s, i got pomes, you got 2 jobs at the same time.

all of ATOT's a stage, and all of us merely players.

and the fact you would ask how much to overcharge the government is totally in line with your character development, LOL.

So now what is a "Pomes". Also I'm not overcharging. I'm simply charging an additional fee for my services to acquire that product. Come on man..

 

[brianmanahan]

So now what is a "Pomes".

it was a past mistake which i have since embraced

 

[MrSquished]

War Dogs

 

[IronWing]

Look up the prices the competition charges. Some states are set up to buy off of GSA agreed pricing. If you can't beat GSA prices, don't waste your time. Government allows itself to be screwed on custom jobs, not commodities.

https://www.gsaadvantage.gov/advantage/main/home.do

 

[s0me0nesmind1]

My wife works in government and she has always had the same message in regards to Government spending... Whomever gives the lowest offer... thats who they go with. Doesn't matter about reputation, warranty, etc...

 

[who?]

http://s283.photobucket.com/user/Dola_chi-Trei/media/instructions/Lowest_bidder.png.html

 

[lxskllr]

Trial/error. If you lose a bid, you should have been cheaper. If you win, you'll figure out what you forgot to include :^P After several bids the market should determine what price to set, and you can use that going forward.

 

[Naeeldar]

So here's the deal. I've been bidding on a few state contracts for IT supply (hard drives, computers etc). We are talking maybe 60 SSDs for one contract or a whole laundry list of computer peripherals. As a new and small company I lack many of the relationships with distributors since I have not purchased in the past.

Anyway I make a few phone calls and try to put together the lowest price for the items. I get a small discount. I'm then struggling how much of a profit margin I should charge the gov. I'm concerned that if I charge too high I will simply kick myself out. If I charge too low, then I'm really short changing myself.

Honestly there are a lot of variables. 40% margin can be fine in some cases. Honestly if you are a small or minorirty owned business that is the easiest bet. the gov has to give a certain amount of work to those businesses each year and often times they literally have to find contracts to spend it on.

otherwise just charge a profit but for supplies or software 20-35% isn't too crazy.

 

[Naeeldar]

My wife works in government and she has always had the same message in regards to Government spending... Whomever gives the lowest offer... thats who they go with. Doesn't matter about reputation, warranty, etc...

Unless they are a small business or minority owned. It's also not 100% true abotu lowest bid - I know we are more expensive than some providers and I h ave a few deals with federal agencies. But it's a pure IT service and in some cases quality is worth it (as long as we aren't too migher higher).

 

[ponyo]

It's the lowest qualified bidder.

 

[zinfamous]

I wouldn't worry about it either way, OP. The truth is that you only get cushy government contracts if you are blowing the congressman or staffer in charge of that particular procurement.

 

[[DHT]Osiris]

As others have said, there's a lot of variables. Some things the govt gets on the cheap/on the house because it's wrapped up in some 200m contract. Think HP super double-plus-gooder platinum nugget support, or MS 'enterprise everything' licensing. Then some things are so expensive, you can't fathom how they could possibly cost that much. As an example, for a while, print cartridge packs for Lexmarks were like $800 for a pack of four (black + colors), for some dinky officejet-style printers we had all over. Could only source them from GSA for some reason, and that's what they charged. Unit I was with spent tens of thousands on printer cartridges a year until they got that sorted out via contracting or whatever.

If you can get the bid, get as much margin as you can (unless it looks like fraud... if you have to ask, it is). If your company is owned by a single widowed Japanese prior military who had her legs blown off by an IED? You'll get every bid you put in for.