Chapter 1
Winning New Business from the Federal Government
Each year the federal government procures products and services worth billions of dollars. In fact, the number is in the hundreds of billions. The sheer size of this market attracts the attention of hundreds of companies that compete for this vast source of potential revenue. If you are reading this book, you either work for one of those companies or hope to join the hunt.
The only avenue available to those who seek to share in the spoils of federal spending is through the competitive process. Typically, bidders prepare a proposal in response to a request for proposal (RFP). Occasionally the government buys a product or service without competition, but those circumstances are rare. Mastering the complex set of skills required to prepare proposals, therefore, is a critical prerequisite to winning government business. For those companies that rely upon government contracts for their livelihood, proposal development is an essential survival skill. Everything else being equal, your ability to prepare proposals is the single most important factor in attaining new business from the government.
WHY PROPOSALS?
Proposal team members often ask why they have to write a proposal. After all, why can’t government customers buy things the same way the rest of us consumers do? They could decide what they need, survey the available products or services that fulfill that need, and pick the one they want. Actually, in a sense this is what government customers do. They first define a need or requirement. Then they communicate the need to industry by posting a notice on the Federal Business Opportunities website. The government customer then releases an RFP or a request for quote (RFQ) that defines its need and provides instructions about how to bid. Once proposals or bids are received, the government customer evaluates them against a set of defined standards to pick a winner. For RFQs, it selects the lowest-priced qualified bidder.
Proposals enable the government to evaluate offers and select the company it deems the best choice. Unlike consumers, the government is not supposed to just pick anyone it wants. Instead, the evaluation process is highly regulated. It is intended to be fair and objective, with the goal of selecting the bidder that represents best value to the government.
The proposal process permits any company that believes it is qualified to compete for government business. It is intended to give everyone a fair chance. It also is designed to maximize competition. Competition is good. It stimulates innovation, promotes quality, and reduces cost. As taxpayers, and the beneficiaries of many government services, we should applaud the competitive process. Ultimately, it is in our best interest and the best interest of the country. Unfortunately, the federal government procurement process is controlled by a mind-boggling array of regulations and is implemented by an inefficient bureaucracy. That is the downside of the competitive process. Yet, it is a process we must navigate effectively if we want to acquire business from the government.
WHY IS PROPOSAL PREPARATION SO DIFFICULT?
There is an old saying that the only thing worse than having a government contract is not having a government contract. Part of this sentiment reflects the difficulty of acquiring business from the government, which typically entails the arduous task of preparing a proposal. Under the best of circumstances, proposal preparation is a serious challenge. Normally, the process is extremely difficult. Often it is nightmarish. During a difficult proposal, it is not unusual to hear someone threaten to quit and open a hardware store or bait shop just to avoid future proposals.
What makes proposals so difficult? Multiple factors contribute to the challenge. My candidates for the gremlins that contribute to proposal Hades include the following.
Puzzling RFP Structure and Content
To the uninitiated, a government RFP can appear to be a jumbled hodgepodge of regulations, requirements, contract deliverables, and instructions that defy human logic. Many RFP sections read more like a document you would expect to receive from your lawyer than an invitation to bid. Sorting through RFP sections and finding what is important can be a daunting challenge. It can be nearly impossible if you are not familiar with the various sections.
Inconsistent or Confusing RFP Requirements
Government RFPs are often assembled by committee. Separate groups prepare different RFP sections. Sometimes they do not coordinate their respective work efforts. Other times they cut and paste sections from old RFPs with different requirements. The result in either case is inconsistent or contradictory requirements. In yet other instances, an error in the RFP makes it impossible to perform the contract.
For example, a few years ago I was working on an RFP that required us to modify a series of flight simulators. Aircraft equipment kits required to perform the modification were to be provided by the government. Unfortunately, the RFP-scheduled date for kit delivery was after the scheduled delivery dates for the simulators. It took us until the week before the proposal was due to get this issue resolved.
Reconciling inconsistent and poorly defined requirements is simply part of the job. Often this involves writing a question and submitting it to the government contracting officer—and then waiting for what you hope will be a clear answer.
Insufficient Time
A “blivit” is ten pounds of manure in a five-pound bag. Proposals have a similar quality, only the commodity is time instead of manure. (Some would argue that there is a correlation between the two.) There never seems to be enough time to perform all the tasks required to prepare an effective proposal. Most federal procurements give bidders between 30 and 60 days to prepare and submit their proposals. It is not unusual for proposal teams to design a system, determine how to support it logistically, write a 300-page technical proposal, and prepare detailed pricing, including a life cycle cost analysis for a 10-year contract, all in 45 days.
Federal procurement streamlining initiatives also place more of the burden on the bidder. Many RFPs require bidders to prepare their own program management documents, like the statement of work, contract data requirements list (CDRL), product or performance specifications, and complicated management tools.
Time pressures are made worse by RFP amendments that require a major change in your proposal or provide answers to questions that force a change in your technical approach. Although RFP amendments may include additional proposal preparation time, the time allotted might be insufficient to make the changes properly.
Time is the single biggest enemy of proposal teams. Its effective management is critical to a winning proposal effort. The only saving grace is the realization that your competition faces the same time pressures and challenges.
Many of the people assigned to work on proposals have regular day jobs. Consequently, they must juggle their normal daily workload with proposal demands. This can be very frustrating to employees torn between competing priorities. The short time fuse of most proposals only exacerbates this problem.
Lack of Proposal Skills and Experience
There is nothing in a normal work environment that prepares people to work on proposals. Proposals require a unique set of skills that are not easily acquired. Like most complex skills, they are best developed through experience. However, some people will work on only a few proposals during their entire career. At best, they will enter the proposal fray once or twice a year. Few ever receive constructive feedback on their proposal performance. Hence, errors are propagated from proposal to proposal. Over time, poor proposal practices become institutionalized.
Most proposal team members receive little or no proposal training. Yet they are tasked with analyzing RFP requirements, preparing storyboards, identifying themes and discriminators, and writing complicated proposal sections that will convince the customer that their company should be awarded the contract. Technical personnel generally have sufficient writing skills to accommodate the business communication requirements of their jobs and communicate with their technical peers. Yet they often lack the peculiar blend and style of writing demanded by proposals.
RFPs routinely request that bidders present information in an illogical order and ask questions that seem peculiar to those not accustomed to government proposals. Consequently, proposal authors struggle to make sense of their assignment and become frustrated because they are asked to perform a task for which they are unprepared. Frequently, proposal authors work tirelessly for two or three weeks before their efforts are reviewed. Following an evaluation of their work, they are told they have failed to respond adequately to RFP requirements and their proposal sections must be completely redone.
Lack of Tools and Processes
The general lack of good proposal tools and formalized processes is an additional factor that contributes to proposal difficulty. Tools include templates, examples, or aids that help proposal team members perform their assigned tasks. They include things like an author guide that clearly shows the author what to address in his or her proposal section. Other helpful tools may include a style guide and proposal directive that identifies the required proposal format, specifies the writing style to be used, and sets standards for things like how to handle abbreviations, the preferred format for graphics, and how to refer to the team being proposed to perform the contract.
A formalized process consists of a series of well-defined, integrated stages of proposal development. Each stage has a defined product, and proposal team members are given detailed instructions about what will be accomplished during each stage and their role in the process. Hence, they know what is expected of them and when things are due. Having a proposal road map available helps ease proposal anxiety. It also enables proposal team members to understand the overall process and how the different stages fit together.
Many organizations lack a formalized proposal process. Each proposal follows a different course of events driven by the personality, style, and whim of the proposal manager. The absence of a formal proposal process only heightens the difficulty of proposal preparation. Proposal team members are often confused and frustrated because they do not know what is expected of them or because they lack a clear picture of what is going to happen during the proposal preparation process.
WINNING
Except for procurements that allow multiple awards, the government competitive process is binary: There are only winners and losers. No silver or bronze medals are awarded. Few things are more disheartening than to slave over a proposal every day for two months, eat a metric ton of stale pizza, have your family forget what you look like, and drink 100 gallons of bad coffee, only to end up in the loser’s circle. On the other hand, winning a major competition is an exhilarating experience.
Everyone wants to be a winner. Every proposal team begins by believing they will win or at least that they have a very good chance of winning. No one invests the resources required to prepare a government proposal with the intent of losing. You do not join the race just to get tired. You compete to win. The future success of your company and the careers of you and your fellow employees depend upon it.
If your organization is primarily or solely dependent upon government contracts, planning for and preparing proposals is the most important business activity you will perform. In the words of the legendary football coach Vince Lombardi, “Winning is not the most important thing, it is the only thing.” Not only is winning the key, but you must be able to win consistently. Keeping work in your company’s pipeline is a never-ending task, whether you work for a small company or a major behemoth.
Consider an organization with annual revenues of $24 million. Sustaining that revenue level requires $2 million of new business per month. However, you will not win everything you bid. If your win ratio is 25 percent, you will need to bid for $8 million worth of new business each month. If you are more effective, winning 33 percent of your bids, you will need to bid on only $6 million in new business each month. Note that this is only to maintain your current revenue stream. You must bid for even more work if you want to grow.
The analogy holds for larger companies. A company with annual revenue of $240 million needs to bid on $60 million in new business each month to sustain current revenues based on a one-in-three win rate. It almost makes you feel sorry for the big guys—those with annual revenues of $40 billion or more. Well, almost.
It costs money to plan for and prepare a proposal. In fact, it can be quite expensive. Generally, it costs as much to prepare a losing proposal as it does to prepare one that wins. Money spent on losing proposals is money lost. It cannot be spent on other things the company may need. At some point, a poor win rate will undermine an organization’s ability to sustain itself. Thus, the emphasis on winning is more than just talk. You must win to survive, and you must win consistently to stay afloat in the competitive waters of the federal government.
COMMON PROPOSAL MISTAKES
If winning is everything, we will be well served to avoid making mistakes that limit our potential success. Over the last three-plus decades, I have worked on or managed nearly 200 proposals. For more than 20 years, I have earned my living solely by developing bid strategies and managing proposals for a wide variety of clients. Throughout this period I repeatedly witnessed companies making the same proposal mistakes. Those mistakes tend to be common across companies regardless of size or type of business. They are expensive mistakes. Each undermines the ability to submit a winning proposal. Most of them result in the inefficient use of company resources.
Here are some common mistakes to avoid if you want to gain competitive advantage and win federal contracts:
Underestimating the difficulty of preparing a winning proposal. Preparing a winning proposal is a complex, arduous process that requires adequate resources—people, time, tools, and facilities. Shortchanging the process to save money is akin to spending dollars to save dimes.
Overestimating the ability of the proposal team. Proposal teams require a broad mix of people and skills, even for small proposals. Two categories of people are needed: those who are experts in their assigned areas of proposal responsibility and those who are legitimate experts in proposal development. Don’t make the mistake of using an inexperienced proposal manager or selecting someone to lead the proposal just because he or she has great management skills or is a technical expert.
A related common mistake is having one person serve as both the proposal manager and the program manager. For small proposals, this may be possible from a workload standpoint, but it is still not wise. Proposal and program management require very different skill sets. Few people possess both. For large proposals, it is practically impossible for one person to handle the workload of both positions. Eventually one or the other is shortchanged.
Starting too late. The development of a bid strategy and preliminary proposal planning and development must begin well in advance of the RFP. Waiting until the RFP is released to start your proposal puts you at a significant disadvantage. It exaggerates the problem of not having enough time to prepare the proposal and yields the competitive advantage to companies that start early.
Using past winning proposals as a model for current efforts. A proposal that was successful in winning a past contract is not necessarily a “good” proposal. It was just better than what the rest of the competition submitted for that procurement. Every procurement is unique. Past proposals were probably written to a different set of requirements, to a different group of competitors, to a different group of evaluators, and with a different bid strategy. Using a past proposal as a template, or blindly using material from past proposals, can easily lead you down the wrong path. If you use information from past proposals, you must tailor it and align it with the requirements of the current RFP and bid strategy.
Failing to develop a bid strategy or integrate it into the proposal. Without a well-defined bid strategy, you have no basis for making important proposal decisions. Your proposal will lack a clear focus. Bid strategy should be the culmination of pre-proposal intelligence-gathering and decision-making that consider the competition, program requirements, and your company’s capabilities. Amazingly, some companies expend enormous effort to develop and refine a bid strategy and then fail to ensure that the strategy is used to guide the proposal effort and is reflected in the final proposal product.
Failing to review the proposal adequately before submittal. Practically every proposal undergoes some type of review before it is submitted to the government. However, these reviews produce dividends only if they are properly conducted and the results are used to correct proposal deficiencies. Experience suggests that effective proposal reviews are rare events. Too often they are conducted by people who do not possess the skills or insight they need to perform a useful review. Reviewers must be familiar with the RFP and your bid strategy—and they must conduct the review in the same manner as the government. Otherwise, review results may amount to little more than opinion. Direction given by an ill-informed review team may make the proposal worse than it was before the review.
Failing to show knowledge of the customer or problem being solved. Not everything you need to know is contained in the RFP. The material requested by the RFP must be couched and interpreted with respect to the needs, wants, fears, and desires of your customer. Moreover, your proposal must demonstrate a basic understanding of the requirement you are proposing to satisfy. You can prepare an adequate technical proposal and still miss the mark if you fail to demonstrate an understanding of the problem your customer needs to solve.
Failing to clearly address all RFP requirements. Failing to clearly and completely address every RFP requirement makes your proposal nonresponsive. Failing to place your proposal response where government evaluators expect to find it likewise may cause your proposal to receive a poor score. This is the single most prevalent reason given by the government for why proposals lose. Some estimates indicate that as many as two-thirds of all government proposals are partially nonresponsive. With few exceptions, a nonresponsive proposal is a loser.
Failing to clearly articulate the features and benefits of the proposed approach. Every product or service embodies features or characteristics that help define and distinguish it from other comparable products or services. As consumers, we select those products whose features and benefits best match our needs or desires. For example, from the host of automobiles that offer reliable transportation, we select the one that has the benefits—speed, comfort, reliability, operating cost, looks, gadgets, etc.—we like the most. Faced with two proposals that offer an acceptable solution to its needs, the government will select the one that offers the greatest benefits. Highlighting the features of your proposed approach and the benefits those features offer the government is a key component of gaining competitive advantage and winning a government contract. Most proposals fail in this regard and thereby give away the competitive advantage in this critical area.
Submitting a proposal that is poorly written or hard to understand. A well-known proposal consultant used to say, “A proposal should read like a dime novel.” I agree. Well-written proposals that respond clearly to RFP requirements receive higher scores than their poorly written counterparts. Comparable technical material is evaluated differently depending on how it is presented. If your proposal is difficult to read or sounds like the operating manual for a personal computer, you have missed an excellent opportunity to gain competitive advantage.
KEY CHARACTERISTICS OF WINNING BIDS
Winners of government contracts avoid common proposal mistakes. They also perform more parts of the proposal process better than their competitors. There is no simple formula for winning. Nonetheless, winning efforts tend to share common key characteristics. Figure 1-1 lists ten of those characteristics. These ten characteristics do not encompass everything you need to accomplish; they are just some of the major characteristics of winning proposals. Achieving them does not guarantee you will win, but it dramatically improves your odds. At the same time, failing to meet these characteristics does not guarantee that you will lose, but it drastically reduces your odds of winning.
Figure 1-1. Ten Characteristics of Winning Bids
KEYS TO WINNING CONSISTENTLY
Competing for government contracts can be very confusing. Sometimes you seemingly do everything right and you still lose. Other times you violate many of the characteristics of a winning proposal and you still win. I have led winning proposal efforts that failed to follow much of the advice given here. Breaking the rules, however, is not a good strategy. It certainly is not the road to consistent winning.
The apparent randomness of government contract awards has created a lot of myths and half-truths in the marketplace, giving rise in many cases to an air of cynicism among bidders. One viewpoint suggests that proposals are just an excuse the government uses to award contracts to whomever it pleases. After a losing effort, it is not uncommon to hear comments like, “They won because the customer likes them,” “The X$@s bought in,” “The procurement was wired for them,” or “It was their turn to win.” These are rationalizations intended to soothe the agony of defeat. Unfortunately, such rationalizations are almost never true. They militate against an intelligent, systematic analysis to determine the real reason you lost. If you discover why you lost and why your competitor won, you have an opportunity to learn from your mistakes. Otherwise, you are destined to repeat them in the future.
If you are serious about winning government contracts, you need to understand a few harsh realities. First, if you lose, it is because your competitor did something better. The competitor was more clever or innovative, took more risk, accepted a lower profit margin, convinced the customer it had a better solution, wrote a better proposal, or represented a lower-risk approach. Second, the key to winning is doing more things better than the competition. You never know in advance what your competition will do well. If you want to win consistently, you need to do everything well or at least better than the competition. I use a bowling analogy to illustrate this point: If you and I went bowling and I bowled a score of 92, everyone would agree my score was not very good. To beat me you would only need to bowl a score of 93—just one point higher. If I bowled a score of 245, however, everyone would agree that was a great score. Yet, to beat me in this case, you would still only need to bowl a score one point higher.
To win new business, we should always be looking for that “one point”—that one thing we do better than the competition that will enable us to nudge ahead of the pack and emerge a victor. How do we find that one point? We find it by looking everywhere, by trying to do everything better than the competition.
Popular books and seminars on proposals suggest you can win if you just follow a few simple rules. Indeed, rules about starting your proposal early, collecting good marketing intelligence, building good proposal storyboards, and integrating themes into your proposal are all important. Yet, you can follow all the rules and still lose. Remember, your competitors know the same rules.
Everything in a proposal is important. You must manage every detail with a focus on winning—starting with the first piece of marketing information and continuing until the contract is signed. Every contact you have with the customer, every phone conversation, every meeting, every question you ask and how you ask it, and every single aspect of your proposal all contribute to a winning or losing effort. Nothing is unimportant. The one thing you neglect or overlook may well be the one thing that determines whether you win or lose.
Winning and losing in the competitive arena of government contracts is determined by how well you play the proposal game. You will win if you do a better job of preparing your proposal and responding to the government’s need than the rest of the competition. Your proposal does not have to be great. It just has to be better than the other proposals submitted. “Better” is a judgment the government makes based on your proposal, the quality of your relevant past performance, and how well you have positioned yourself with your customer. You might have a superior technical approach compared to your competition, but it will not matter if you fail to convince the government evaluators.
Never forget: It is not the most qualified team, the most technically qualified company, or the lowest cost that wins. It is the proposal that persuades the government that you are the “best” choice for the contract. I have managed proposals and won major contracts against companies that were far more qualified. I also have watched companies that possessed tremendous technical capabilities and a superior technical approach lose to far less capable competitors.
VALUE OF WINNING
Bidding to win new business is expensive. It means spending money and using valuable resources, especially the human capital represented by the members of the proposal team. We achieve a good return on this investment if we are successful in winning our bids. Alternatively, losing means we have expended valuable resources with no return. Losing too often can undermine the future livelihood of an organization and severely deplete resources available for future bids. Nowhere is this more apparent than in the devastating effect losing has on personnel morale. Losing repeatedly can drain the life out of an organization and reduce its future competitiveness.
The purpose of this book is to help you win consistently and reap the benefits that come from winning. Winning just one more bid per year could significantly improve your financial performance and create a more competitive posture for future bids. The following simplified example illustrates this point:
Your company bids on ten contracts per year. Each contract is worth $10 million and costs $200,000 to bid. You normally win four contracts per year and hence book $40 million in new business at a cost of $2 million in bid and proposal (B&P) expense. You make a 10 percent profit on each contract and earn $4 million in profit each year.
Winning just one more contract each year yields the following advantages: You increase sales by 25 percent from $40 million to $50 million and profit by 25 percent from $4 million to $5 million. Because you achieve this feat without spending any additional B&P, you also decrease your company’s indirect cost (larger base with the same indirect expense). This will make you more cost competitive on future bids. Furthermore, if you are able to perform the extra contract without expanding the organizational infrastructure of your company, you can further reduce indirect cost and gain an even greater competitive advantage for future bids.
SOLVING THE PROBLEM
Given the difficulty and importance of preparing proposals, we must ask ourselves, “Is there any way to make this easier? Are there some steps you can take to reduce the pain?” The short answer to these questions is a resounding yes. Much of the information contained in this book focuses on developing an effective, efficient proposal process. There is no magic cure to proposal drudgery. You will not find the “six steps to proposal bliss” contained in the chapters that follow. Nor will I promise to make proposals fun or easy. They can be fun, especially when you win, but they are never easy. Instead, this book includes some tips and guidelines, as well as detailed instructions, on how to master the proposal process. It will equip you with the information you need to:
Avoid common proposal mistakes
Overcome problems that plague proposal teams and create trauma
Create proposals that have the ten characteristics of winning proposals.
GAINING THE COMPETITIVE ADVANTAGE
At its core, this is a book about preparing for and capturing new business. Yet it is far more than that. The book’s entire focus is on gaining competitive advantage. It covers every aspect of the competitive process and provides instructions on how to gain the competitive advantage at every twist and turn along the way.
Most competitions for new business are won by a narrow margin. Figuratively speaking, winning or losing is often decided by a single point. Therefore, within the competitive arena, we are always looking for that elusive “one point”—that one thing we propose that enables us to edge out the competition and win.
Winning new business from the government is an infinitely complex game. Those who learn to play the game well win consistently. Those who fail to play well lose consistently and spend their careers making excuses for why they lose.
The information that follows will equip you with the knowledge you need to find that one point, gain the competitive advantage, consistently win government contracts, and make good use of company B&P resources.
Let the games begin!