In This Chapter

You’ve gone this far. You have a good feeling about the match between your company’s capabilities and the government needs. You either have a product you think you can sell to the government, or you’ve already found a customer needing a product you can provide. Your next steps are to fully assess how this customer contracts for these needs and to concurrently learn which other companies are providing products to that customer. It would be a shame to find out that there’s already a competitor who is in firm control of the market for the customer you’re targeting. So getting both knowledge of the customer and knowledge of the competition (if any) are important. It’s also time to start considering teaming arrangements—individuals or companies you can partner with in some fashion to bring the strongest team to the customer.

In Chapter 4 you learned that the best source of knowledge about your competition is your customer. But that knowledge is not enough; you should know more, and here is how you can learn more:

This competition analysis has four uses:

The first and perhaps the most important use of competition information is in bid decisions. This book shows four different times in the proposal creation cycle when you reach bid decision points, which is only a minimum number. You may well want to conduct formal bid decisions more often. The trigger for additional discussions can be any new, startlingly significant, information you get. What is “startlingly significant?” It’s a loosely defined term, but with a little experience, “You’ll know it when you see it.”

Consider the single-award scenario. Refrain from bidding when the competition clearly has the inside track to victory and you cannot convince the contract officer (KO) that no other company, including yours, has a reasonable chance of winning. Don’t spend a lot of money to come from fourth to second place in the customer’s eyes on a single-award opportunity.

The price volume you submit must reflect not only what the customer wants to buy and approximately expects to pay, but also what prices your competitors are likely to offer. You must know where your price is likely to stand, in relation to those of other offerors.

There is no one right answer to the question, “What is the winning price?” because the answer is highly dependent on the total circumstances. Here are some considerations:

Offered price may be the most important evaluation criterion. If this is true, it is typically stated as such in Section M of the solicitation. Even more importantly, your price may be given additional weight if the technical and management solutions are more similar. This leaves price as the determining factor. So your attention to your own price, in relation to your estimates of what your competition is likely to offer, is an important consideration in your own proposal.

Chapter 12 gives examples of winning themes, including anti-competition themes. Anti-competition themes are those positive things you can say about your own solution that are not only different from but also better than those offered by your competition.

You can’t create good anti-competition themes unless you know what the competition is likely to submit as their solutions. The most important consideration about anti competition themes is this: an anti-competition theme works well for you if and only if the theme hits the mark. Unfortunately, themes that miss the mark are double trouble.

Here’s an example, oversimplified to make a point. Let’s say you are submitting a Mac solution, and you’re sure the competition is submitting a Windows-based solution. You put in anti-competition themes showing how much better a Mac solution is than a Windows-based one. But the competition does not submit a Windows-based solution; they submit instead a Mac one or a Unix-based solution. Not only did your theme miss the mark, but also missing the mark makes you look foolish for making wrong assumptions about the competition’s solution.

Now you’re in a hole. The first rule of holes is: when you see you’re in a hole, stop digging. But you don’t have a chance to stop digging because your proposal now contains a glaring error. What effect does this error have on the evaluation team? This error now casts doubt on your entire proposal. Having found a glaring error, the evaluators now ask themselves, “How many more errors are in here?” This is definitely not what you want.

The fourth use of competition analysis is teaming and teaming arrangements. Knowing the other potential players’ strengths and weaknesses, as well as your own, can sometimes suggest a teaming arrangement. If your company and Company X have strengths in all important criteria, there’s a chance to build a team with all the required strengths. So let’s take a look at teaming arrangements in detail.

On a large procurement, achieving your goal of creating the winning proposal that results in a profitable contract execution is a multi-faceted activity, stretching over at least months if not years. Building a winning team includes having the right prime contractor and the right set of subcontractors.

You have many ways of accomplishing the goal and many considerations about who, what, when, where, and how to go about teaming. This section gives structure to the decision-making process, and your analysis should focus on the right questions in search of the right answers. This analysis assumes you are playing the role of subcontractor and not the prime contractor. It’s an example of how you, as a small business, can play a role on large contracts.

Before the solicitation comes out in final form, you must strive to create the winning team. Note that it’s not “Get on the winning team,” because usually the winning team does not actually exist in the abstract. Your job is to create that winning team.

Teaming arrangements involve the prime contractor on the one hand and subcontractors on the other. We can describe how to build those arrangements from either perspective: you as the prime or you as the subcontractor. So let’s consider how to accomplish teaming arrangements from the point of view of the subcontractor. If you’re the prime, you need to understand how this can work from the subcontractors’ viewpoint.

This is another way of phrasing “Who will make the procurement decision? What criteria will they use?” You must know the answer to these questions as it’s a part of your preliminary analysis, the one that led to your interest in this opportunity. Let’s say your best information says this is what the customer is looking for:

In addition, this customer may respond to another cost/price consideration: low price risk. For cost-type contracts, there’s a great difference between offering a low price and delivering a low price. The superior, winning claim, as substantiated in your team’s proposal, can be that “The ABC/XYZ Team offers not only low price but also low uncertainty about the ultimate price the customer will pay.”

Use the following three-step action plan to help you decide which team to join.

Reach a tentative judgment about the four primes with the greatest probability of winning the competition in the absence of your own company on any team. Using the criteria you believe the customer plans to use, do a “Strengths and Weaknesses Analysis” of each prime, for each of the deliverables (the number of deliverables is usually a small number, such as five). Let’s say, for the sake of example, that you have identified exactly four possible competitors, and that there are five deliverables. So you have a chart that is four (primes) by five (deliverables).

For each of the top four potential prime contractors, your company makes a presentation of your own view of the customer’s decision criteria and your own capabilities. In exchange, you solicit presentations (say, the next week) by each of the primes as to why your company should choose that particular team. By your own criteria, you tell each prime you’re looking to create the winner. You’re not making legally-binding offers to join their team; you’re soliciting offers from the primes to have your company join their team. If you do a good job, you set up a “you-gotta-do-better-than-that” situation, in which you’re in a position to choose from between/among competing offers to team, but only your company has information about the offers of the competing parties. The crunch is in the form of “You’ve-gotta-do-better-than-that.”

You explain to all primes that your commitment is to create the winning team or to no-bid and, therefore, not participate in the opportunity. As a desired fortunate consequence, it may be that if the primes are persuaded by your arguments, the nonchosen may themselves opt to no-bid and thereby narrow the total field of bidders.

On the basis of the presentations by the primes, create not only the winning team but also the team that maximizes your own participation in the total work effort. Mechanically, revisit your analysis from Step 1 to display the influence of the addition of your own capability to each prime’s capability and show how that reshuffles the win probabilities. You’re likely to find that one prime can win only if they have your company on their team. Usually, that team looks most like a winner. For example, company Big Orange may have an inherent cost/price advantage (lower conversion costs from existing systems to new hardware systems) but is weak in two of the other three deliverables. Adding your company, XYZ, to that team means the Big Orange/ XYZ Team offers the winning approach in all the customer’s criteria, including low price and, incidentally, low price uncertainty.

All the above plan requires concentrated efforts and is not for the faint-hearted. However, the payoff can be large, including having built the winning team on a large opportunity.

This process is surely gutsy. It may well differ from the recommendations made by more conventional, risk-averse members of your company. The best outcome is that through your briefing to the primes, you’ll be able to demonstrate to your own satisfaction that XYZ is creating the winning team. It is also true that, by creating circumstances in which the primes come to you with offers to join their team, you could also maximize your own share of the winning contract. And you can help control important parts of the proposal creation process, including the all-important price issues.

Because price is so important, you should launch an immediate task force to explore the relationships between alternative technical and management approaches and cost/ price. This will get complicated but is bounded by the four classes of deliverables. Presenting the methodology (but not the numbers, of course) to the four primes helps convince them that your company is serious about winning and that an important part of your contribution to the team is both low price and low price uncertainty. Your theme is “The Big Orange/XYZ team’s (experience and success with similar programs), (position in the marketplace yields economies of scale), (proprietary products), (cadre of experienced programmers) allows you to offer training, facilities management, and software conversion at lower prices and with less uncertainty about prices.”

If you’re really gutsy, you can try to influence the customer to solicit proposals or, alternatively, allow alternate proposals that switch some deliverables where you have an advantage from cost-type to fixed price!

Because today’s partner is tomorrow’s competitor, you must be careful to guard your own proprietary data and insist on nondisclosure agreements (NDAs) with anyone on your team. Of course, these agreements must be reciprocal. Such nondisclosure agreements are common among government contractors.

Nondisclosure agreements protect each company against the inappropriate leakage of proprietary information about the other company. The importance of these agreements means that both your legal staff and your contracts staff must assist in obtaining an appropriate agreement.

Your competition may know a great deal about your customer, and under selected circumstances, that competitor may be willing to share its knowledge with you in exchange for your knowledge about that customer or another customer. Although you must guard any proprietary data you’ve obtained under an NDA, nothing prevents you from sharing nonproprietary data with other companies.

There’s no better way of finding out about the customer than meeting with that customer at his place of business (see Chapter 4 for a baseline scenario for such a meeting). And you’ve done that while building your team. While that scenario was a good example, it’s not the only or final step in getting to know your customer. Here are two more ways of gaining that knowledge.

First, invite the customer to meet with you and your company’s people at your place of business. This is your chance to show the customer your facilities, and particularly those facilities that match that customer’s interests. While you’re on your own turf, you should be more comfortable in discussing sensitive issues there than at the customer site, or at neutral sites. At the other locations, “the walls have ears,” and proprietary or sensitive discussions could be inappropriately leaked to your competition.

If the customer comes to your place of business, remember to observe the restrictions about providing anything of value over a certain dollar amount. For example, you can’t pick up the tab for a lavish dinner at a fancy restaurant. For meals served to employees at your facility, you must recover the fair value of that meal. 5 CFR paragraph 2635.204(a) states that “a (government) employee may accept unsolicited gifts having an aggregate market value of $20 or less per source per occasion, provided that the aggregate market value of individual gifts received from any one person under the authority of this paragraph shall not exceed $50 in a calendar year.”

Second, join and participate in professional societies and/or trade associations where you might have an opportunity to converse with your customer personnel. There again, you must take care to avoid undue familiarity and not cross the line into influencing or attempting to influence the customer’s decisions regarding an opportunity under competition.

Seriously consider acquiring information about your customer through the fee-for-service providers shown in Appendix B. After you’ve exhausted your other, lower-cost sources, at least try these other sources to see if you get important new information from them.

In addition to the preferred ways listed above, some very good sources are available to you, largely from public postings on the Internet. Government customers have websites and typically post much very good information. They list their vision, mission, strategies, core values, organization, and phone lists showing personnel (except for classified agencies; they don’t do so, for obvious reasons). If you’re new to this business, you have no realization of how helpful and accessible this type of information has become. Those who have been doing this for a while used to have to work very hard for this type of information, and now, here it is in plain view. Take advantage of it before you take the next step, which is to fill in your knowledge gaps.

Your next step is to see what holes you have in your knowledge and figure out how to plug those holes. First, go the relatively inexpensive way, which is to do the digging yourself. This is particularly true if you’re working with a customer in your own geographic area or if you have an agent (typically a part-timer not looking for steady work) in the customer’s area. The next best way is probably to engage a fee-for-service provider of information about that specific customer. Appendix B has a list of selected sources. Every source has a slightly different method of providing information. Fee structures are different. As a prudent buyer, you should solicit more than one before parting with your money. Typically, these sources have been around a long time and have demonstrated their value to their users. Nonetheless, choosing which one or ones and when is still a business decision requiring your closest attention.

Whenever you‘re getting information about the customer, you must remember you’re always holding a ticking bomb. Your time is limited, at least with regard to a specific opportunity. The FAR and the Competition in Contracting Act (1966) severely limit contact between prospective offerors such as yourself and the government employees. You must gather anything you want to know or need to know before the solicitation is released. Depending on the interpretation of each agency, this restriction may be imposed even before the final solicitation is released. For example, some KOs insist that they be the single point of contact after the release of a Request for Information (RFI). Whether this is or is not the intent of the FAR and the Competition in Contracting Act is a moot point. The government may make up its own more restrictive rules as it goes along, and it’s up to you to be aware of local practice, another reason to become very familiar with your customer.

The Least You Need to Know