5 E’s: The US Government’s Value Metrics
By Kristine Fisher
To make sure all bidders are on the same page, decision-makers within the government define VFM for each of their projects. VFM, value for money, always includes metrics in terms of the 5 E’s: economy, efficiency, effectiveness, equity, and experience. Let's take a closer look at how your firm can use these metrics as a guide when pitching public sector projects.
For firms looking to initiate or strengthen a public sector practice, the question of how the government measures value is an incredibly important one. After all, you won’t win government contracts unless you’ve proven your value.
You may have heard of ROI (return on investment), a popular metric in the private sector. You may even be using it to make decisions within your business. Sales teams typically use ROI metrics to ensure their customers pay a reasonable amount for the services rendered.
In the public sector, VFM is the popular metric for assessing the cost of your services. VFM, value for money or sometimes called “best value,” is defined differently for each proposal based on the needs of the program. To make sure all bidders are on the same page, decision-makers within the government define VFM for their project by considering the 5 E’s.
The 5 E’s: Economy, Efficiency, Effectiveness, Equity, Experience.
Historically, when defining VFM for any given bid, there were only 3 E’s: economy, efficiency, and effectiveness. In recent years, a fourth E, equity, and a fifth E, experience, are also added.
As you can probably tell, some of these are challenging to measure because they are so subjective. If your firm wants to win government contracts, you’ll want to ensure your bid aligns with the VFM metrics that your government is looking to achieve.
Let's take a closer look at the 5 E’s and assess how your firm can use them as a guide when pitching projects to the public sector.
Economy
Economy, in this context, refers to optimizing the existing resources to achieve the goal. We want our solutions to be economica so they represent the best value for the customer. This metric includes the quality and quantity of the service that’s needed to achieve the main goal.
Efficiency
Efficiency, in this context, refers to the deliverability of the solution. We want to make sure our solutions are optimized to be as efficient as possible, including a close look at each step of the process we’re pitching. Winning bids deliver the most efficient solutions to our customers.
Effectiveness
How well does your organization’s solution achieve the desired outcome? If your solution isn’t effective, why even waste time submitting a proposal?
Equity
Does the product, service or solution you provide address social or economic disparity? Obviously, equitable solutions are most likely to win bids but more importantly, this is WHY we do this work: we’re in the unique position to create equitable relationships between businesses, the government, and citizens. If you see an opportunity for equity, don’t squander it.
Experience
Do you have the knowledge within your team to address the problem? Back it up with verifiable facts, hard numbers, and compelling stories… and you, my friend, have the beginnings of a winning government contract.
Is your ROI aligned with government VFM?
Winning government contracts show their value by aligning internal ROI with government VFM, and sometimes it takes external guidance and a 360-degree view to see the full picture. Book a call now and we’ll get to work!
Kristine Fisher, Business and Government Relationship Expert
Founder of Kaleidoscope Works, Kristine designs and implements strategic solutions for small, small, mid-market and enterprise business partners. With experience as a Procurement Officer for government, as well as the many national roles in the Private Sector, Kristine is an expert at enhancing your success when selling to State & Local Governments.
Follow Kristine on LinkedIn for more industry-insider insights.
