1. K Andy
Pricing Case
Pricing Case

2. KAndy Pricing Case Case Objectives:
Identify the environmental and business factors impacting pricing decisions of DoD contractors
Assess the risks associated with pricing, relative to environmental and business factors
• Requirements:
As an individual (homework):
Read assigned readings shown in Lesson Assignment Sheet
Complete the “individual issues” sheet during homework reading (turn-in when requested)
As a team (in class):
Analyze case information
Complete the team’s “business issues” sheet
Complete “Contract Bid Proposal” (turn-in at designated time)
Prepare a business case that supports the team’s bid prices
Make a presentation supporting the team’s bid for the contract

3. Example of One Company’s Analysis
Bid / No – Bid Process
Example of One Company’s Analysis
New Business Process
Investigative Phase
Probability >10%
Pursue Decision?
Probability >30%
Capture Decision
Probability >60%
Win Contract?
Probability >90%
Execute the
Capture Plan
Bid & Proposal
Account #
Assigned
Identify Programs:
1. Strategic Fit?
2. Know Key Players?
3. Have Product
Knowledge?
4. Management
Interest?
5. Budget Available?
6. Schedule Allows?
High
Expectation of
Winning or
Notified of
Contract
Award
Go or
No-Go
Bid-No-Bid

4. That Affect Pricing Decision
Business Issues
That Affect Pricing Decision
Internal
Issue - risk to pricing
External
Bid
If bid won at bid price, can we meet/beat estimated costs?
How accurate are our cost estimating – and cost control – processes?
Impact to stock price on Wall Street?
Actual profit at that bid price?
Will bid price win the contract?
Is bid low enough?
Will bid price “leave a dollar on the table?”
Is bid just high enough to win?
Group Work

5. Business Case Considerations Supporting Team Recommendations
Use “Butcher Paper” Flip Charts to Record Information
Address competition relative to winning contracts --
For HAVOC Missile contract
For SCORPION contract
Will proposed bid prices on HAVIC provide company a profit?
For HAVOC RFP compliant contract?
For commercial variant contract?
Was fully absorbed or variable overhead cost method used to determine bid?
Address which HAVOC proposal is preferred (RFP or commercial)
Address confidence level of winning the contract
Address in general terms the impact on company’s financial position for the next five years if (1) HAVOC contract is won and (2) HAVOC contract is not won
Group Work

6. Red Team # _____ Contract Bid Proposal
Key Assumptions in Determining Recommended Bid Price Proposals:
Win HAVOC only? Yes / No
Win HAVOC and Scorpion? Yes / No
Win USAF Follow-on business? Yes / No
Bid Price Proposals Details:
HAVOC RFP Fully Compliant Bid $ _______
Profit or CM Expected on RFP Compliant Bid? No / Yes $ _______
Indicate if “fully absorbed” or “variable cost” method was used
Confidence in Winning Bid ________ %
Commercial Variant Bid $ _______
Profit or CM Expected on Commercial Variant? No / Yes $ _______
Group Work – Turn in to Instructor at designated time

7. Individual List of Issues
Name / Team Number
Individual List of Issues
________________________________________________
Individual Work While Reading Case
Turn in When Requested by Instructor

8. Team List of Business Issues
Team Number
Team List of Business Issues
________________________________________________
Turn in With “Recommended Price Proposal” Submission