Sylvia D from Harrisburg, PA. Got a county government RFP for utility bill auditing services across 45 county-owned facilities. The RFP specifies a maximum contingency fee of 25% on identified savings. That is significantly lower than my normal 40-45%. At 25%, is this worth pursuing? The county utility spend is about $2.8M/year.
Government RFP has a fee cap — contingency limited to 25%
Sylvia, government work at 25% can absolutely be worth it if the volume is there. $2.8M across 45 facilities with a typical error rate of 3-6% means $84K-168K in potential findings. At 25% your fee would be $21K-42K. The question is how much time the 45 facilities require. Government accounts often have straightforward billing but the bureaucratic process for filing claims and collecting refunds is slower.
Sylvia, I do a lot of government work in Virginia and the 25% cap is standard for public-sector RFPs. The trade-off is volume and predictability. Government clients do not negotiate, do not try to cut you out, and do not change their mind. Once you win the contract, you have guaranteed access to 45 accounts for the term of the agreement. My government contracts are the most reliable revenue in my practice.
Phil, that is reassuring. The reliability factor is appealing. My commercial clients sometimes drag their feet on LOAs or delay payments. Government contracts pay on schedule because they have procurement rules requiring timely payment.
One advantage of government audits: the findings are often larger per account because nobody has ever audited them before. Commercial clients in competitive markets may have been audited by someone else already. Government facilities often have billing errors running for 10-15 years because no one was looking. The 25% fee on a 10-year-old error can be substantial.
Laura, that is a great point. These 45 county facilities have never been audited. The low-hanging fruit should be plentiful. I am going to bid on this.
Update: won the county contract. Completed the audit of all 45 facilities over 4 months. Total findings: $218,000 in recoverable errors — rate classification on 6 buildings, tax exemptions not applied on 11 buildings, and demand charge errors on 3 buildings. My fee at 25%: $54,500. Effective hourly rate was about $170/hour which is lower than my commercial work but the volume and payment reliability made it worthwhile. The county administrator has already asked me to audit the school district and the water authority next.