How Do I Structure the Arrangement? (Part 5 of 9 in Outsourcing Proposal Development)

You will probably work out the structure of the arrangement as you are considering different proposal consultants. However, there are a variety of ways to structure the engagement. Let’s talk about the two primary models for the scope first:

  • Defined scope: we need someone to write the narrative only for sections 3.12 through 3.25 of the ABC RFP. Our proposal standards are in the company style guide. (Etc.)
  • Loose scope: we need someone to help us on (whatever) proposal tasks for the ABC RFP.

In the defined scope, the required capabilities are very clear, and the amount of time necessary to complete the task should be easy to determine. Both the client and the consultant should be able to come to a reasonable agreement on the content of the finished product. And, both assume only a moderate level of risk.

In the loose scope, the required capabilities are not clear at all – they may range from strategy consultant to proposal manager to writer to editor to artist to production coordinator. The skills and capabilities will be defined only by “what needs to be done right now?” That may change from moment to moment. But, this may be reasonable, if the client is relatively new to the world of developing proposals to secure business. Both client and consultant assume a higher level of risk – the consultant because he or she may be blamed for something that was not clearly defined, and the client because they lose the contract.

Either model is fine – as long as both parties know and understand their commitment.

Second, there are various models for structuring the fees for the project. While there are a whole variety of different models, here are the most common:

  • Time & expense. Here, you typically pay an hourly rate that may vary with different staff skill levels, and itemized expenses. Expenses usually include travel but may include production costs, and sometimes even phone calls and other miscellaneous charges.
  • Firm fixed price. Here, you pay a flat fee for the completed project. Most consulting firms will agree to a firm fixed price only if the scope is quite well-defined. Many will require change orders to address changes in direction (for example, your business solution changes dramatically) or for factors outside their control (the agency conducting the procurement extends the due date three times and issues five amendments to the scope of work in the RFP). The flat fee might be based on a number of different elements: the expected labor and expenses plus profit, or a contract value, or a perceived market value of the completed product.
  • Contingent fee (usually used in combination with one of the others). This is often called a “win fee” or something similar. Essentially, the consulting firm gets a bonus if the client wins. While such fees used to be common, they are becoming less so because of state and federal prohibitions on such arrangements. The logic is straightforward – if you have such arrangements, the thinking is that these costs will subsequently be built into your price. And, because these contracts are paid for with public funds, such arrangements cannot be tolerated.

Leave a Reply