Mastering Salary Surveys

Government contracting presents a unique challenge when it comes to pricing proposals. Unlike the private sector, the government has strict regulations about how companies can determine labor rates. Salary surveys are a crucial tool for government contractors to ensure their pricing is accurate, competitive, and compliant.

This article dives into the world of salary surveys for government contracting, guiding you through the process and highlighting key points to avoid costly mistakes.

Why Commercial Pricing Methods Don't Work for Government Contracts

Traditional pricing methods used in a commercial setting, where companies base their proposals on internal costs or competitor pricing, are not suitable for government contracts.

Here's why:

1. Focus on Objectivity: The government requires proposals to be based on objective market or payroll data, not internal estimates or crowd sourced salary data.
2. Standardization and Fairness: Salary surveys ensure a level playing field for all contractors by providing a standardized methodology for pricing labor.
3. Compliance with Regulations: Using approved data sources demonstrates compliance with government contracting regulations.

By using reliable salary surveys, contractors can develop proposals that are not only competitive but also meet all government requirements.

Picking the Right Sources:

The first step is selecting reliable sources for salary survey data. The government prohibits contractors from using data they don't have on their payroll. Here are some options worth considering:

1. Bureau of Labor Statistics (BLS): A free government resource, BLS offers comprehensive data, but its job titles can be broad. BLS conducts comprehensive surveys every two years.  Be sure to identify the year the salary survey was completed and look to the BLS Economic Cost Index Summary (ECI) for the annual increase factor.  For example, if you are preparing salary survey data in 2023 and the data in BLS is based on a May 2022 survey, check the ECI summary and increase the May 2022 data by the amount of the published rate.

Strength:  Searching the data is free and the methodology is consistent and accurate for most labor categories.

Weakness:  BLS labor categories are broad leaving many specific job titles under a “category” instead of salary data for each specific job title.

1. Salary.com: Provides detailed information on various job titles and locations but may require a subscription. Their data is continually updated across over 29 million employees from 16,000+ companies. 

Strength:  Salary.com continuously updates salary data.  The Salary.com database includes specific job titles with well-written job descriptions.   Salary.com also provides many job titles by level – Junior, Journeyman, Senior, Consultant or by Roman numbers “I”, “II”, “III”, or “IV”.

Weakness:  While Salary.com does provide a free tool, the company would prefer a subscription.  Without a subscription, the tool will often respond with “this job title does not exist”.  This is not true and the job title salary data can be found with an independent Google inquiry.  It just takes more time to map the data and find the salaries.

1. ERI Economic Research Institute: A subscription-based service known for in-depth government contractor-specific data.

Strength:  Our clients have recommended ERI salary survey data.

Weakness:  Subscription only – the Government will not pay for salary survey data and neither should you in response to the Government acquisition.

1. Robert Half International: While not government-approved for sole use, it can be a valuable reference material for context alongside other sources.

Strength:  Robert Half International has been conducting salary survey data for a very long time and is a recognized leader in the industry.  This tool is also free.

Weakness:  Broad categories in specific industries only.  Robert Half generates commission revenue from placing qualified candidates into solid positions – the higher the salary they negotiate, the higher the commission revenue.  So keep that in mind when comparing/analyzing the salary survey data across several sources.

1. Professional Associations: Industry associations related to government contracting may offer salary survey data to benefit their members. Consider joining a relevant association for access to such resources.

Important Tip: Avoid crowdsourced data like Indeed or Glassdoor. This data is often unreliable as self-reported salaries may not be accurate.

Potential Discrepancies Across Sources

Even when closely following each source's job descriptions, you may still encounter  discrepancies in the salary data across BLS, salary.com, ERI, etc. In these cases:

• Look for core keywords that reveal essential duties and responsibilities
• Consider the typical activities, testing, skills required for that role
• Cross-reference this against your deep knowledge of labor categories

With enough practice mapping roles, your team will get better at resolving disparities. But it often takes several comprehensive surveys before this specialized knowledge is gained.

Understanding Salary Survey Data: A Breakdown of Key Metrics

Once you've chosen your sources, understanding the data itself is crucial. Salary surveys typically provide information on several key metrics:

1. Job Title: The specific role being surveyed.
2. Geographic Location: Salary data can vary significantly depending on where the work will be performed.
3. Experience Level: Entry-level, mid-level, and senior positions typically have different salary ranges.
4. Percentile Rates: Surveys often report data in percentiles (e.g., 25th percentile, median, 75th percentile). This allows you to understand the range of salaries for a particular role.

By understanding these key metrics, you can effectively interpret the data and use it to develop accurate labor rates for your proposal.

Decoding the RFP: Mapping Job Descriptions is Key

A critical step involves mapping the labor categories in the Request for Proposal (RFP) to the specific job titles used in your chosen salary surveys. This can be time-consuming, especially for complex RFPs with numerous unique categories.

• Read the Fine Print:RFP job descriptions are crucial. Don't rely solely on titles; pay close attention to the description to ensure you're mapping to the correct category.
• Embrace Expertise:Mapping can be a specialized skill. Consider outsourcing this task to a company experienced in government contracting to save time and ensure accuracy.

Common Challenges in Mapping RFPs to Salary Surveys

While mapping seems straightforward, challenges can arise:

• Broad Job Titles:RFPs may use broad job titles that encompass several different types of roles.
• Missing Details:Descriptions may lack crucial details about required skills and experience levels.
• Unique Requirements:Government contracts often involve specialized roles not readily found in standard salary surveys.

By understanding these challenges and employing careful analysis of job descriptions, you can ensure accurate mapping for a solid foundation in your proposal.

Analysis and Reconciling Discrepancies

Salary surveys may present conflicting data. Here's how to navigate these discrepancies:

• Keyword Analysis: When reviewing job descriptions, identify keywords that pinpoint the specific duties and responsibilities of the role.
• Understanding Nuances: Salary data can vary significantly based on experience level, required skills, and geographic location.

By understanding these nuances, you can reconcile discrepancies and arrive at a well-supported and defensible average rate.

Building a Strong Case: How to Present Your Salary Survey Findings

Once you've mapped the data and reconciled discrepancies, it's time to present your findings in the proposal. Here are some tips:

• Clearly Explain Your Methodology:Briefly explain the sources you used and your process for mapping job titles.
• Highlight Relevant Data:Focus on data that aligns best with the specific requirements of the project.
• Support Your Average Rate:Justify the average rate you propose by referencing specific data points from your chosen surveys.

By following these tips, you can effectively present your salary survey findings and build a strong case for your proposed labor rates.

Getting it Right from the Start: Consider Third Party Experts

To avoid wasted time, errors, and potential compliance issues, many contractors opt to purchase pre-built, RFP-specific salary surveys from experienced consulting firms like rTurner Consulting. We:

• Have streamlined, proven methodologies for rapidly mapping any labor categories
• Maintain updated databases across all trusted salary sources
• Provide a detailed narrative explaining our data gathering approach

Our salary survey services allow you to focus on higher-value proposal activities and requirements, rather than getting bogged down in the data collection and mapping process.

While conceptually simple, conducting comprehensive, compliant salary surveys is an arduous, meticulous undertaking. Even small missteps can lead to non-compliance issues or labor rates that don't pass scrutiny. Partnering with specialists ensures you follow best practices and provide the utmost credible data right from the start.