Ugh, So I Need to Create a BOE!
If you’re a veteran-owned business competing for federal contracts, you’ve likely heard the term Basis of Estimate (BOE). Whether it’s your first bid or your hundredth, building a compliant and convincing BOE can be the difference between a winning proposal and a missed opportunity. This guide will walk you through how to create a BOE that’s FAR-compliant, persuasive, and grounded in reality—just like the missions we completed while in uniform.
What Is a BOE and Why Does It Matter?
A Basis of Estimate is more than just a cost spreadsheet—it’s the narrative backbone of your pricing strategy. It explains the why and how behind your cost estimates. A well-written BOE builds trust with contracting officers and evaluators by showing that your price is realistic, reasonable, and based on sound assumptions.
Under FAR Part 15, especially in competitive negotiated procurements, agencies are required to evaluate cost realism. That means your BOE isn’t just paperwork—it’s a strategic tool to prove you know the mission and can execute it responsibly.
Step 1: Understand the Purpose
Before diving into numbers, get clear on why you’re writing the BOE. Its main objective is to justify your proposed costs by linking them to specific tasks, timelines, and personnel. Think of it as your operational plan in financial form.
Ask yourself:
- What are the key tasks in the Performance Work Statement (PWS)?
- What resources will it take to execute each one?
- How long will each task take?
- Who will do the work?
Every dollar should be traceable to a requirement.
Step 2: Develop a Draft Executive Summary
Start with a high-level snapshot. Use this section to reinforce your value proposition—what makes your firm the right choice. Highlight relevant past performance, your team’s qualifications, and any differentiators such as SDVOSB or 8(a) certifications, technical expertise, or innovative solutions.
Sample:
A2 Federal, Inc. presents a low-risk, technically sound, and cost-effective solution for [Contract Name]. Our approach is rooted in proven methodologies, veteran-led leadership, and a commitment to mission success. Our pricing is grounded in real-world labor rates, historical data, and rigorous task analysis in accordance with FAR guidelines.
Step 3: Identify Key Elements
Break down each task and clearly document:
- What the task is
- Why it’s required
- Who will perform the work (by labor category)
- Start and stop dates
- Location and dependencies
Use this to create a Work Breakdown Structure (WBS) and assign estimated hours to each element. This becomes the foundation for pricing labor, materials, and other direct costs.
Example:
| Task | Labor Category | Start Date | End Date | Hours |
|---|---|---|---|---|
| Deploy Cybersecurity Toolkit | Info Sec Analyst | 10/01/2025 | 12/15/2025 | 320 |
Step 4: Justify Your Estimates
Evaluators want to see how you arrived at your numbers. Don’t just plug in labor rates—show your math. Justify each estimate using:
- Historical data from similar contracts
- Industry benchmarks (e.g., GSA rates)
- Quotes for material costs
- Internal labor rate build-ups (base wage + fringe + OH + G&A)
If you include travel, explain why it’s necessary. If you include subcontractors, identify them and describe their scope of work.
We based our labor rates on current average salaries for cleared personnel in the Colorado Springs market. Our indirect rates align with our latest DCAA-approved accounting practices.
Step 5: Follow FAR Part 15 Guidelines
FAR 15.404-1 requires a detailed rationale for all cost elements. That means your BOE must be:
- Complete – covers all requirements
- Consistent – aligns with your technical volume and pricing sheets
- Credible – rooted in data and logic
- Compliant – meets all solicitation instructions
Use the solicitation’s Section L and M to guide what must be included. Missing details—even if your price is competitive—can lead to a deficiency.
Final Thoughts: The BOE as a Strategic Asset
The best proposals aren’t just compliant—they’re convincing. A strong BOE shows that you understand the mission, respect taxpayer dollars, and are prepared to execute with discipline and precision.
Remember: the BOE is your chance to narrate your cost story. Make it as compelling and credible as the rest of your proposal.
With Love and Respect,
Gary
Download a BOE Template Here: https://veteran-business.com/wp-content/uploads/2025/06/boe_template.docx
Veteran Entrepreneur 