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Preparation of a Proposal for a Federal Healthcare Contract

Scott Honiberg, for HealthLeaders Media, December 26, 2008

Let's say the Veterans Administration just announced plans to put a contract up for competitive bid for a hospital or system to provide an estimated 1,300 inpatient admissions for area veterans per year—for five years—because the local VA Medical Center doesn't have the staff or facilities. You've got the facilities and the physicians on the medical staff are interested in bidding. Your only problem is that in order to bid, you've got to figure out how to respond to an ominous-looking 100-page Request for Proposal. Where do you start?

Most federal RFPs have at least four key categories of information:

  • Scope of Work: The SOW is where the government describes its requirements.
  • Schedule of Supplies and Prices: This is where the government typically indicates volume estimates and describes how it wants services to be priced.
  • Instructions: All RFPs will include instructions intended to help organize the proposal response. Instructions may include information about a pre-proposal conference where questions and issues related to the RFP can be discussed.
  • Evaluation Criteria: All RFPs provide some indication of the factors the government intends to evaluate in making an award decision, and of the relative degree of importance among those factors.

One of the major mistakes inexperienced healthcare organizations make is that they assume an RFP of some 100 or so pages filled with strange acronyms (e.g., FAR, CCR, ORCA, etc.) and citations to obscure federal regulations or laws is so official-looking... that it must be right, and certainly won't allow for changes. Nothing could be further from the truth. Almost every federal RFP contains ambiguities, inconsistencies, and, in many cases, outright mistakes that should be corrected. The way to do that is actually pretty easy—just ask! Agencies are supposed to make reasonable efforts to clarify questions put to them about a solicitation. That's not to say you'll always be completely satisfied with the answers, but the dialogue between an agency and potential bidders is a critical step in the process.

In general, there are several common elements to the proposal itself:

  • Technical: The technical proposal typically presents an offeror's response to the government's requirements. Basically, you tell them what you're going to do, how you're going to do it, and why you're the best thing since sliced bread.
  • Past Performance: Past performance information is typically a request for references and related work an organization has done that demonstrates their credentials to perform the type of work sought.
  • Price/Cost: Unless the proposal is for a cost-based contract, this area is where an organization proposes the prices it wants to receive if awarded the contract. For healthcare organizations used to dealing with complex Medicare and Medicaid regulations that ultimately determine what an organization is to be paid, the idea of proposing prices as opposed to simply taking what someone else determines you get is a little foreign.
  • Administrative: Most RFPs call for certain standard sets of administrative data, which now requires registration and submission via several federal electronic databases.

Healthcare organizations considering submitting a bid on an RFP for a federal contract for the first time will probably find it to be an imposing, intimidating task. Once you get beyond the intimidation factor, however, you'll learn that it's actually possible to clarify ambiguities, negotiate constructive changes, and capture attractive business opportunities. In the next article, we will discuss how the government evaluates bids.


Scott Honiberg is president and Jeff Weinstein is counsel at Potomac Health Associates, Inc. They can be reached at S.Honiberg@PHAInc.com or J.weinstein@PHAInc.com, respectively.
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