Name: From OTA to FAR: Pricing Discipline That Scales with Mission Growth
Uploaded: 2026-08-20T19:30:47.062Z
Duration: 37 min 32 s
Description: From OTA to FAR: Pricing Discipline That Scales with Mission Growth

Transcript for "From OTA to FAR: Pricing Discipline That Scales with Mission Growth": Hello, everyone. I'm Padma Raghunathan, senior product marketing manager for Deltek. Thank you for joining us for today's presentation. Before I get started, I have a few administrative items to note. For the best webinar experience, please use Google Chrome. If you have a question, then please type it into the q and a box anytime during the presentation. We will address as many questions as we can at the conclusion of the webinar, and any questions, left unanswered will be addressed individually offline following today's presentation. Resources, including the presentation slides, are available for you to download in the resources tab on your screen. You will also receive the on demand, recording of today's webinar via email within twenty four hours after the webinar ends. So with that, let's go ahead and get started. Alright. So the the topic of today's session is from OTA to FAR, pricing discipline that scales with mission growth. So I spend a lot of time looking at the trends shaping government contracting and in particular, what those changes mean, for the businesses competing in the aerospace and defense market. And one of the things that truly stands out right now is the pace of opportunity. So winning innovative work has never been more accessible or more challenging to scale. Now that's really the premise behind today's discussion. And the title from OTA to FAR, you know, doesn't mean that this is going to be a session comparing acquisition regulation or suggesting that every OTA ultimately becomes a FAR contract. We're going to use those acquisition pathways as the backdrop for a broader business question, which is, as the opportunities you are pacing change, is your pricing organization ready to change with them? So over the next thirty to thirty five minutes, we're going to look at that question from the perspective of the aerospace and defense pricing organization and then give you a practical way to think about your own readiness for growth. So let's start with why this conversation matters right now. So I point to three things happening at the same time in the defense industrial landscape. First, more contracting opportunities are entering the pipeline. Like, there are more ways for aerospace and defense companies to participate in important government programs and pursue new growth. Second, the program themselves are becoming more complex. We are not just talking about larger opportunities. We are talking about more technical dependencies, more stakeholders, basically more moving pieces that ultimately have to come together in a credible price. And third, the bar for pricing is rising. So the expectation isn't simply that you put a number on an opportunity. You increasingly need to be able to explain the basis for that number, understand the assumptions behind it, and have confidence, that, the organization can actually execute against it. So those three things are coming together. More opportunity, more complexity, and higher expectations for pricing. And that brings us to the question at the bottom of the slide here. The question isn't whether a and d contractors can win new work. It's whether their pricing capabilities can scale with it, and that's the tension we are going to unpack today. So to understand why the question is becoming so important, let's start with the opportunity side of the equation. Like, what's changing in the acquisition landscape and what those changes are making possible for contractors? One of the biggest changes we are seeing in the aerospace and defense landscape is the number of ways contractors can participate in important government programs. We're seeing opportunities come through other transaction agreement or commonly known as OTAs, small business innovation research, commercial solutions openings or CSOs, or rapid, acquisition approaches and traditional power based contracts. And those pathways are opening doors across a broad range of A and B innovation from AI and autonomy, sensors, software, space, advanced manufacturing, and major platforms and weapons. I'm not going to spend time walking through the rules of each vehicle. That's not the purpose of this session. The important point for us is that the acquisition landscape is creating more routes to growth and contractors may find themselves pursuing and pricing opportunities across more than one of them. And that creates an important pricing question. Can your pricing capability adapt as the opportunity, the acquisition environment, and the expectations around the world change? So having more ways to win is one thing. What happens inside the business after you win is another. An opportunity doesn't stay an opportunity for very long if it is successful. Right? It starts creating new demands on the organization. At the opportunity stage, the question is relatively straightforward. Can we compete and win this work? But once you're growing, the question changes, which is can we support more work without compromising how we operate? Then complexity increases. You have more technical inputs, more dependencies, more suppliers, more assumptions, and many more stakeholders influencing the cost and schedule. As scrutiny increases, the business, has to be able to explain and defend those decisions, not just make them. And ultimately, at scale, the question becomes, can we do all of this repeatedly without breaking the process? Right? That progression matters because the business is changing at each stage and pricing has to change with it. So what does this mean for a pricing organization? Well, it means every stage raises the bar for pricing. So we just saw how the demands on the business change as the opportunity moves from something you're pursuing to something you have to support at scale. So now look at what happens inside the organization. Right? So on one side, you have the business itself. You have revenue, program size, proposal volume, technical complexity, customer expectations. Like, those can all change relatively quickly. And then on the other side are the capabilities supporting pricing, which is the processes, the data, the governance, people, technology, the decision support system that you have. Those two sides don't always advance at the same pace, and that's what we are calling the growth gap. Right? It's not necessarily a people problem. It's not even an indication that the pricing team isn't performing. Often, the processes and tools in place were designed for a different level of scale and complexity. So the gap appears when the demands on the pricing start to outpace the capabilities in place. And that's when you start to see friction. Right? More manual intervention, more dependence on individual knowledge, more, difficulty managing changes, and less visibility into the assumptions behind the price. So the real question is, how do you know when the pricing approach that you've got here is no longer enough for where the business is headed? So where do previously effective pricing practices start to create friction friction, sorry, and what changes when the stakes get higher? So that's what we're gonna unpack in this section. One of the easiest traps to fall into is assuming that you always priced it the way you should continue to price. Right? So but an early stage organization may be able to rely on expert judgment, spreadsheets, rough order magnitudes, and a relatively small number of people who know the business extremely well, and that can work. Now the issue isn't that those approaches are wrong. The issue is what happens when the business becomes larger and the pricing process has to support more people, more proposals, more complex inputs, and more scrutiny. Now at that point, you start needing repeatable methods, structured cost models, shared knowledge, governed workflows, any more forward looking approach to rates and assumptions. And the question changes too. Right? Early on, it may be, hey, can we win this? As the business becomes more complex, it becomes, can we win this and execute it the way we priced it? That's the real shift. Not replacing what worked, but evolving it so it can support what's next. The risk isn't using simple tools or expert judgment. The risk is actually waiting until those approaches become a constraint before evolving them. So when do you know it's time to then make that shift? And there are some very practical signals that I will talk to you about. Right? So and, again, I don't think the answer simply is, you know, when you move from one contract type to the other. Right? That's when, you know, you have to evolve. No. The better indicator is when the stakes change. So maybe your proposal volume increases significantly. Maybe you're taking month a much larger program. Say your material and supplier base becomes more complex, or you're bringing more teammates or subcontractor into the work, or say customer scrutiny basis, or you're just simply taking on more responsibility as a prime. Each of those changes puts new demands on the pricing organization. Right? And that's the point I want to emphasize. Pricing maturity should be a response to how the business is changing, not a reaction to a particular contract vehicle. You don't want to wait until a major opportunity is on the table and discover that the pricing process, your data, or the governance, isn't ready to support it. And the trigger is a change in scale, complexity, scrutiny, or responsibility. Right? And these are the moments when pricing leaders should be asking the question, is the way we are pricing today still fit for the business we are taking on? It's a very, very important question that leaders should be asking. Right? And this is where the aerospace and defense, you know, pricing and the pricing complexity gets really interesting. Right? The price isn't built from just one input. It's the result of a set of decisions that are tightly connected. You start with technical requirements. Right? What has to be delivered? That drives engineering effort. That the material requirements. That will drive the supplier and subcontractor decisions, schedule and level of effort, and ultimately, the rates and indirect costs that, that come into the estimate. And those inputs don't behave independently. Let's take for let's take for instance a very simple example. And if you see the the yellow little post it on the slide, right, just think about this. Like, a supplier cost changes. Now that can affect your material cost. It may also change your engineering effort, your schedule, your rework, your indirect cost, and ultimately the pricing that you're willing or able to offer. So pricing isn't just a calculation. It's a connected business case. So the more complex the program becomes, the more important it is to understand how those decisions interact. So when pricing inputs are disconnected, a change in one part of the estimate can create risk somewhere else without anyone seeing the full impact. And that matters because pricing isn't happening in a vacuum. It can directly influence whether an A and D contractor wins the work in the first place. And we can talk about pricing discipline as an internal process issue, but the market gives us a much stronger reason to care. According to Deltek's very own, clarity survey from 2026, fifty one percent of our respondents identified pricing strategy as one of the most challenging aspects of the proposal process, and 38% of the contractors cited pricing that lacked auditability or defensibility as a top reason proposals were not selected. What I find important here is that this isn't saying price alone determines the outcome. It's saying that the quality of the pricing position matters. Right? How credible the assumptions are, how well the cost logic holds together and whether the organization can support and defend the position it is putting forward. In other words, pricing capability can become part of your competitive strategy. So what does it really mean? It means that if pricing quality can affect proposal outcomes, then pricing maturity isn't just an efficiency initiative. It can actually influence your ability to compete. And when those pricing weaknesses aren't isolated to one proposal, then guess what? The consequences can extend well beyond the bid itself. Alright. And that this is the part that's actually very easy to underestimate. A weak pricing process rarely creates one dramatic failure. Like, more often, it creates a series of smaller problems that reinforce each other. An inconsistent assumption creates more work. Rework then slows decisions. Slower decisions increase uncertainty. That uncertainty can affect competitiveness or margin. And once the work is awarded, those same weaknesses can actually show up in execution. At compliance requirements and customer scrutiny, the consequences can reach much further than the pricing team. So what looks like a price sorry, a process issue at the beginning can become a business issue at scale. So the cost of immature pricing isn't just the time it takes to build a proposal. It's the risk that gets carried forward into the decision, the negotiation, and the program. So which raises a very important question actually. If the consequences show up later, then when should the organizations start building the capability to prevent them? And I urge everyone in this audience or whoever's tuning in to please think about this question. It's a very, very important one. And the answer is very simple before you need it. Early stage pricing is often optimized for speed. So you need to get to a credible estimate, make a decision, and respond to the opportunity. Now as the business takes on larger or more complex work, speed is still important, but it is no longer enough. Right? You also need stronger cost visibility, more structured assumptions, greater defensibility, better margin protection mechanisms, and processes that can handle more volume without creating more work. Right? And that's an important lesson from the companies that have successfully moved beyond early stage work. There isn't always a convenient point where the organization can stop and rebuild its pricing model. The next opportunity may arrive before the business has had the time to catch up. So the goal is not to wait until the contract requires a more mature pricing approach. The goal is to build towards the next level before you actually get there. So pricing maturity needs to be proactive, not something that you build in response to a crisis or a contract requirement. Alright. So we've established the pressure points. Now let's get specific about what good looks like. Like, there are five capabilities I would like to use to think about pricing readiness as organizations scale. So the first point is that pricing maturity isn't one single link. Right? It's not simply having a better estimating tool or a more experienced pricing team or stronger compliance processes. I think about it across five dimensions. First is speed. Like, can you respond quickly without losing control? Next is consistency. Can you can different people and teams apply the same fundamental approaches? Governance. Can you control decisions and changes as they happen? Defensibility. Can you explain and support how the price was actually built? And then insight. Can what you learn from one bid make the next bid better? Right? Together, those capabilities then determine whether pricing can scale with the business. Again, maturity is not about making pricing more complicated. It's about making it more capable. And so these five dimensions give a pricing leader a practical way to see where the organization is strong and where the next constraint, may emerge. So let's break each of this down real quick. So speed is important, but there's a big difference between fast and scalable speed. So you can make a process faster by adding people or using spreadsheets because that's easy. Right? Or asking experienced team members to work longer hours. Now that may get a proposal out the door, but it doesn't necessarily create a capability that we can repeat. Scalable speed looks very different though. It's the ability to respond to an RFP change or evaluate a new scenario or increase proposal throughput without actually rebuilding the process every single time. And that requires reusable structures, controlled changes, and fewer manual handoffs. So the objective isn't simply to reduce cycle time. It's to increase the amount of pricing work the organization can handle without increasing the risk at the same rate. So if every increase in proposal volume requires a proportional increase in people and manual coordination, you have increased capacity, not necessarily maturity. The next question is what happens when more people are involved? How do you keep expertise from becoming fragmented across teams? Right? In aerospace and defense and government contracting, especially in the pricing realm, experience judgment is incredibly valuable. Right? The problem isn't expert judgment, though. The problem is when the organization's knowledge exists primarily inside one individual or a group of individual's brain rather than inside the way the organization prices. Right? Imagine two teams pricing similar work and using different assumptions, different templates, different rate structures or different review practices. You may still get two technically competent proposals, but the organization has made it harder to compare them, learn from them or even improve the process. And metro pricing doesn't eliminate judgment. It standardizes the foundation around that judgment. And that's why things like common rate structures, reusable templates, repeatable estimating approaches, and shared review standards matter a lot. Consistency turns individual expertise into organizational capability, and you should be able to scale the organization without having to scale your dependence on a handful of people who know how everything works. Alright. Once pricing becomes more standardized, the next challenge is control, especially when assumptions change late in the process. Right? Governance can sometimes sound like bureaucracy. In pricing, I think about it differently. Governance is knowing what happened to the price as the price change. So if a rate changes, an assumption changes, or a cost input changes, you want to know a few important things, such as who changed it, what changed, why did it change, what else did it affect, and can you trace the decision back to the source? That's especially important when multiple people are contributing to the same proposal or when a proposal goes through multiple iterations. The important distinction is that governance shouldn't be something you reconstruct at the end. It needs to exist at the point where the pricing decision was made and that's what create control without slowing the business down. So what this basically means is good governance gives pricing leaders confidence that the number they're looking at is the number the organization actually intended to build. But control alone isn't enough. The price also has to be explainable and connected to what the organization will actually have to deliver. A defensible pricing starts with a simple question. Can we explain how we got here? And you should be able to connect the technical requirement to the estimate, the estimate to the cost structure, the cost structure to the price, and ultimately, the price to what the organization is committing to deliver. And that's why the basis of estimate matters. It's not just a documentation that simply attached to the proposal. It is a logic that connect the technical approach to the dollars. And I would push that one step further. A pricing sorry, a price isn't fully defensible if the organization can't explain whether it can actually execute at that price. So defensibility has two dimensions. One, can we prove the price? Two, can we stand behind the price? Defensibility is more than compliance. It's the confidence in your own business case. For a pricing leader, a defensible proposal is one where the numbers, the assumptions, and delivery reality tell the same story. And if that story is informed by what actually happened on prior work, pricing becomes more than defensible. It becomes progressively smarter. The fifth dimension is the one that turns pricing into a learning system. So most organizations have a lot of historical information. The question is whether that information, actually changes the way they price. The cycle is you know, it should be pretty straightforward. Right? You have estimate, bid, you win or lose, you execute, you capture actuals, and you learn. Right? Now then those insights should influence the next estimate. Maybe the lay labor assumption was too aggressive. Maybe, material cost behaved differently than expected. Maybe a subcontractor estimate consistently comes in high, or maybe a particular type of work has a different execution profile than the historical model suggests. Those aren't just retrospective observations. They are inputs to the next pricing decision. Over time, that creates a compounding advantage. Right? Each bid gives you information that can make the next one a lot more predictable. So the price the mature pricing organization, they don't just have historical data. It they they are mature because, you know, their pricing gets better because of what the data actually teaches them. So now that gave us the framework, like, those five dimensions. The next question is a lot more practical, which is where is your organization today and where is the biggest gap? You don't have to do this right now, but I encourage you to treat this as a quick self assessment, not a benchmark. So for each dimension, give yourself a simple score from one to five, one being the lowest. Right? When you think about speed, you know, for your organization, like, you know, you have to ask the question, can we increase responsiveness without adding proportional headcount? For consistency, right, are people using repeatable methods and assumptions? For governance. Right? Can we control and trace changes, you know, and then can we clearly explain how our pricing decisions were made? And finally, you know, our actual results making future estimates better. And then if you look at the last one, which is scale, like, could we significantly, could we handle significantly more proposal volume or complexity without a proportional increase in rework? Right? So the idea with this slide is that the idea is not to get a perfect score. It is to identify the capability that is most likely to constrain the next stage of business. So if four areas are strong and say one is weak, that weak area may matter more than trying to improve everything at once. So question is, once you have identified the constraint, what do you actually do about it? I would start with three key actions. First, identify. So find the places where the process depends on manual workarounds, disconnected information, or individual expertise. Second, standardize. Decide what should be consistent across the organization. Right? Data assumptions, rates, estimating practices, review processes, and governance. Third, connect. Bring the relevant pricing, estimating, finance, technical, and even execution information together so that a change in one part of the business can be understood in the context of the whole decision. These don't have to happen as a massive transformation at once. The point is to start with a capability that most threatens the next stage of scale, and then you build from there. That's how you close the gap deliberately instead of discovering it under deadline pressure. So what does this mean? Right? Again, the objective isn't to make pricing more complicated. It's to make the organization more capable of handling complexity. And that brings us to the broader point. Pricing isn't just supporting growth after the fact. It can actually shape which opportunity the business chooses to pursue in the first place. At this point, I think it's useful to broaden the definition of what at what pricing actually does for the business. Pricing certainly supports the proposal, but the decision doesn't stop at can we win. Pricing helps answer some very critical question, which is one, can we compete effectively? Are we protecting the economics of the world? Can we actually execute what we're proposing? Can we defend our position when we are negotiating? And at the portfolio level, the question is which opportunities makes sense for us to pursue? That's why I see pricing as a growth capability. It helps determine not just how much work you win, but what you should want to win. Right? And that and that is a very different role from simply producing a cost volume. So for leadership, mature pricing creates better choices, not just better proposals. Right? So which then leaves us with one final question, which is, is your pricing capability ready for your next win? Not just ready to submit the proposal, but ready for what winning and work it will create. Right? More volume, more complexity, more suppliers, more technical inputs, more scrutiny, more responsibility. Because, again, the goal isn't simply to win the next contract. It is to build pricing capabilities that can grow with the mission. And at this point, we are going to pause. This point, we are going to do a quick poll before we open things up to q and a. Today, our polling question is, would you like to be contacted by a sales representative to learn more about Propricer, the industry standard proposal pricing solution for government contractors? So we'll go ahead and leave this up on the screen for a moment or two, allow people to answer their question, and then we will bring Pamela to the stage and, she will go ahead and get us started with our q and a. So, let's see. We'll just give it another second here. Okay. Alright. Okay. Padma, I think you can, go ahead and get us started with q and a. Padma, can you come on stage and get us started with q and a? I think we've lost her for a second here. Yep. I am right here. There we go. There we go. Yep. We got her back. I just muted myself for a second over there. So, again, thank you so much everyone for tuning in, and, you know, joining the session today. So we have a few questions. So I just I'll just quickly go through them. I think what the first question was, how should pricing teams balance speed and innovation with compliance when pursuing OTAs or other rapid acquisition opportunities? So, one of the things that we have to be very clear is not to confuse flexibility with a lack of discipline. So, an OTA may give you more flexibility in how you structure and negotiate the opportunity, but you still need to understand what you're pricing, what assumptions you're making, and whether you can actually deliver at that price. And I also think beyond the immediate opportunity. Right? So the question, as I said, in my session as well, like, if this world gets bigger, like, you know, what is it that you have to do to put in place earlier? Right? Whether I don't know. Better cost history, better documentation, more consistent estimating. So I wouldn't necessarily bring every FAR oriented process into an OTA. That obviously defeats some of the purpose, but I also wouldn't wait until you're pursuing more structured work to start building pricing discipline. So use the flexibility, but don't sacrifice visibility, into the into the economics of the work. We had a couple of questions around AI. So let's again, AI is such a hot topic. Right? So the one question was around how do you see AI changing the role of a pricing professional? Right? And where do you still need human judgment? And that's a great question because I think AI can definitely take a lot of friction out of pricing. You know, just think about this. Right? Like, pricing teams spend so much time looking through historical data, comparing estimates, checking assumptions. They're looking for if there are any anomalies, or they're also building diff building out different scenarios. Now those are areas where AI can potentially help you either get to an answer or at the very least provide some insight much faster. But I don't think that means AI is actually making the pricing decision for you. Someone has to still decide, you know, whether this assumption is reasonable or what's the risk we are willing to take or whether this is the right pricing strategy for this particular customer. And sometimes the data may tell you one thing, but it is that human experience and context which tells you something else. So the way I look at it is that AI is augmenting, the role of a pricer or a pricing analyst or a proposal manager rather than actually replacing them. So it can do more of the searching, the comparing, surfacing the information, but it is that pricing professional who brings in that judgment and strategy. So AI can make things move faster, but one of the other things that I would also urge this audience to think about is, you know, where does governance come in because that is equally, important. Alright. So I think there was another question on AI, which was, is it a mistake to rely on AI to initiate the proposal? Should it be all hands on deck when it comes to proposal writing in a small company that is new to US government business, you know, whether it's engineering technical, you know, whether those teams need to be involved. And, it's a great question, and I don't think it's necessarily a mistake to use AI to help initiate the proposal. And I would say, in fact, for a small company, AI can actually be quite useful for getting past that blank page. Right? Whether you're organizing your requirements, whether helping develop an initial outline or summarizing your, you know, the solicitation content because some of the solicitation can be pretty can be pretty intense. Right? Or it can also help identify questions that the team needs to answer. Where I would be careful is treating the initial output or the initial AI output as a proposal strategy. Especially if you're new to government contracting, I would absolutely involve your technical engineering teams because they understand what you're actually proposing to build or deliver. They are the ones who will give you a realistic, idea of the level of effort that's involved, the technical risks, assumptions that you have to make. So so but I would not also but I would not call it all hands on deck type of a situation because that can create its own set of problems. What you want is right hands on deck. Right? You want to cap whether it's capture a proposal, pricing, engineering, your SME your your subject matter experts. Right? Basically, folks who ultimately own the execution. Because what happens is AI can help all these stakeholders move faster, but, again, it cannot replace the subject matter experts' judgment about the solution. Again, it's it's the humans who know the customer better, the risks better, and what the company can credibly commit to. So my view is, you know, especially, again, you know, if if there's a company that's out there that's new to the US government business, I would be very careful about putting sensitive solicitation customer, even proprietary or controlled information into an AI tool unless and until you know the tool and your organization's policies that allow you to do that or they don't allow you to do that. So use AI to accelerate the process, but keep people accountable for the strategy, the solution, and ultimately the commitments that you're making to the customer. So I think those were I hope that answers the question, actually. I think those are the questions, Lisa. I don't see any more. So I think we're I think we're good. So back to you. Sounds good. Thanks so much. Alright. So before we officially conclude, we want to remind you, you will receive an on demand recording of today's webinar via email within twenty four hours. And if we are not able to get to your question, we will be sure to follow-up with you directly offline. And with that, I'd like to thank you for joining us today. Please visit deltek.com for more upcoming Deltek events. Have a great rest of your day.