Fee Proposal/Fee Letters
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A fee proposal (or fee letter) is a formal document submitted to a client that states a firm's proposed cost for delivering a defined scope of work, broken down by phase, discipline, or task, and structured to align with contract requirements or procurement rules.
Why fee proposals operate under different rules than technical submittals
Under the Brooks Act (1972), public sector QBS procurement prohibits discussing price until a firm is selected on qualifications alone. That means fee proposals for federal and most state work arrive late in the pursuit, after shortlisting, often in a separate envelope or submission sequence entirely. On design-build or CMAR pursuits, the structure changes again: cost may be part of a best-value evaluation from the start, requiring the fee document to be price-competitive rather than simply defensible. FAR Part 36 governs federal construction fee negotiations and sets specific expectations around cost breakdowns, overhead rates, and profit justification. Knowing which procurement path you are on determines when the fee document enters the process and how much detail the client actually wants to see.
What a fee proposal contains and where it creates compliance risk
A well-structured fee letter typically covers: labor by phase and discipline, direct expenses, subconsultant costs, exclusions, and any assumptions that cap the firm's exposure if scope changes. The exclusions and assumptions section is where most disputes originate; clients read past it during submission review, then cite it during construction when additional services come up. On public procurements, fee proposals are often subject to audit, which means your overhead multipliers and profit rates need to match what your accounting system can actually support. Submitting a fee structure that contradicts your firm's audited indirect cost rate, even unintentionally, can trigger a negotiation reset or disqualification.
The institutional knowledge problem with fee proposals
Fee proposals are among the least-shared documents inside AEC firms. They live in project managers' folders, get attached to contracts, and rarely make it back to the marketing or BD team in any structured way. That creates a genuine problem: when a pursuit team is scoping a similar project type for a new client, they are often building fee structures from scratch instead of calibrating against what the firm has actually negotiated and delivered. The non-obvious risk is not just efficiency; it is accuracy. A fee estimate built without reference to comparable past projects tends to underprice complex phases and overprice straightforward ones. Kantiv captures fee-related context from past pursuits and project records and surfaces it during active pursuit scoping, so the team is working from verified history rather than instinct.
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