In This Chapter

“Make new friends, and keep the old. One is silver, and the other gold.” Government contracting is much like these old song lyrics. You’re always looking for new business opportunities, but you don’t want to lose the old ones. No matter how long a contract, it will eventually come to an end when the agreed-upon term ends. The contract then will likely be up for recompetition, meaning the customer will put the opportunity out for bid again. (The exception to this is when the need that led to your contract in the first place goes away and so the customer doesn’t have any reason to open it up to recompetition.) All good things must end, including even your best, most profitable contracts. So you need both strategic and tactical plans to have the best chance to keep your customer when competition time comes again.

The current contract isn’t over until it’s over. Just because you won quality awards in this program in years two, three, and four doesn’t mean you’re invincible after year six. Unfortunately, some government program managers have short memories. Or maybe there’s a new program manager or a new customer’s Contracting Officer (KO) since year four, and these new people have no memories of those glory days. From a recompete strategic perspective, it’s more important that your company do well at meeting customer expectations toward the end of the program than at the beginning.

Your objective is to please the customer right on through the end of your contract and beyond. What’s past is prologue. The customer has a right to expect, and does expect, to get the same level of performance in any new contract as you’ve delivered in the current contract. Your best bet is to start at a high level of performance and continue to the very end.

Conventional wisdom says that retaining your current customers is only a fraction of the cost of getting new ones. Whether that fraction is 15 percent, 20 percent, 25 percent, or something higher, I advise you to invest heavily, and first, in keeping the customers you already have. You’re already in place; you know this customer. You’re making revenues and profits from this customer. In any recompetition, you have the high ground.

This is a tough point but a necessary one. Even in an eight-year contract, begin planning for the recompetition from Day One of the contract. This seems like a terrible idea, given that the first few days and weeks of a new contract are often fraught with unknown and perhaps unknowable problems. Yet the best circumstances are that you begin and end with a customer-focused mind-set.

At the highest conceptual level, your long-term success with a specific customer is wrapped up in a simple admonition: be customer-centric. What does this mean in operational terms? A simple test is this: you get what you want by helping the customer get what the customer wants. As long as you’re helping the customer get what the customer wants and not getting what you want at the expense of the customer, you’re on the right track. Achieving a win-win solution is always best. Avoid getting yourself backed into a corner where you have to help yourself, at the expense of and to the detriment of your customer.

It helps to be pro-active with your customer, rather than reactive. As you and your program staff sees problems, or potential problems, it helps both you and your customer if you expose those problems, and identify potential problems, early, rather than late. Unlike fine wine that gets better with age, problems don’t. Hiding or ignoring problems can be a blueprint for disaster.

It’s easiest to keep your customer happy by being forthright and truthful at all times. Regular (and short?) meetings with the customer create a forum for resolution of differences before these differences grow into major issues.

You really do want to keep this customer, so what are specific steps you can take to increase the probably that you will win the recompetition? Making personnel changes is often a step you have to take to inject new life into the solution you offer the customer and into the relationship with the customer.

Changes in personnel come it two flavors: management and staff. Each has its own, different considerations.

For purposes of this discussion, management means the program manager and anyone reporting to the program manager. This set of people is your program management team.

About a year or so before your current contract ends, your top management should make a focused effort to assess the state of your program management team, and especially its two or three or perhaps four most important individuals. The number will depend partly on the total program size and partly on how responsibilities break out between individuals. This smaller set will surely include the program manager. If you have a deputy program manager, that person will also be in this set. Next will be the chief technical person (chief engineer, senior engineer, technical team lead, or something like that). A fourth member could be the top person in administration.

It’s a good idea to involve your own contract manager in any discussions with TM as well. While the program manager may have great insight on what is happening on-site, your contract manager may have other information that would benefit TM.

An important part of this year-ahead assessment is to have your top management meet with the customer’s top management. This is best to target at least one if not two levels of authority above the government program manager. This should be a one-on-one meeting, preferably with the individual who in your judgment will be the source selection authority or someone close to that person.

If you’re top management, don’t take your program manager with you, but tell him about this meeting. He will undoubtedly find out about it anyway, so it’s best to be candid with him.

The meeting should take place at the customer’s place of business or perhaps a neutral site, such as a restaurant or private club. Always obey the ethics rules, of course, and refrain from appearing to offer anything of more than nominal value, such as springing for a lavish meal. The essence of the conversation should be clear, which is that you’re there to assure the customer that your company fully intends to do an excellent job to the very end of the contract period. If you’re planning to compete again (and you very likely will), you should say that, also. Then in a candid conversation, ask if there’s anything you, as top management, can do to make the last few months of your contract be the best it can be. Depending on your comfort level with your host, you might even ask if there are any problems out of the ordinary, either in terms of individuals or processes or whatever, where you can be helpful. Then have the common sense to be quiet and listen.

The worst thing you can do as the incumbent is to assume that everything is fine. If you don’t confirm that things are fine, you’re opening your company to a rude surprise when you lose the recompetition because of your failure to solve a problem you didn’t know about.

In some cases, changes in staff may be accomplished more easily and with less pain than management changes.

Particularly on a cost-type contract, where the government pays whatever your costs are, plus a fee, carefully guard against grade creep.

If you’re successful, you’d like to continue the success by rewarding all your staff members with continued employment. Unfortunately, that may not be possible, given the competitive nature of the recompetition. During the last year or maybe last two of your contract, look for opportunities to move some of your more experienced people off and backfill their vacant slots with entry-level people or at least with people who have fewer years of experience and hence are probably lower cost.

This should not be done at the expense of performance on the current contract. However, and particularly on long contracts (say, five years), the average years of experience for individuals grows. This can (but not must) result in individuals who are overqualified to do the tasks required. For example, the person who started as an entry-level engineer five years ago, at the contract onset, now has almost five years of experience. That individual is now being paid much more than an entry-level engineer, but may be performing a task that could be done by someone with six months or a year of experience. So it’s to the benefit of both the contract and the individual that you find more challenging work, perhaps on other projects, and back-fill the departing person with a new, entry-level engineer, at a considerably lower cost.

You can’t do this suddenly three months before the end of your contract. Make any changes gradually, not precipitously. That’s not fair to the staff, and it will be transparent to the customer that you’re replacing staff just to achieve lower costs. If the changes are too obvious, the customer may worry that those replacements will be at the expense of performance.

There are also advantages in changing subcontractors. In the same way you solicited your customer’s evaluations of your management team members, carefully consider the roles of your subcontractors. What does your customer think of each of them? Have the workers from your subcontractors helped the total team or have some of them been other than team players? If you have a problem subcontractor, the same careful winnowing out of the bad ones will help your bidding team. Don’t hold on to the past, particularly if you can improve your team by doing so. Consider whether the subcontractor was a help to your small business goals on the current contract but is no longer a small business. If that’s true, that subcontractor is certainly worth replacing with a new small business that can contribute to your small business goals. This is business, not a popularity contest, and you may have to discard some staff in favor of others.

Even in a hurricane, all the wind doesn’t blow in the same direction. In fact, in a hurricane, changes in wind direction are inevitable. So it is with the question of whether it’s better to be an incumbent or a challenger when going into a recompetition. There are advantages and disadvantages to each side.

The following two subsections show both considerations, whether you’re the incumbent striving to keep this customer, or a challenger to an incumbent, attempting to take the business away for your own.

An industry myth holds that incumbents are always the heavy favorites to win any recompetitions. That’s not necessarily so, and certainly not so for a specific recompetition. It depends greatly on the fine details of the circumstances. If you’re the incumbent, consider these strategies to make yourself the favorite.

Take heart. You actually do have a chance to unseat the incumbent, especially if you take heed of these considerations:

The Least You Need to Know