“To bid, or not to bid?” That is the question that can perplex government contractors.
Unlike the question posed in Hamlet’s famous soliloquy, the decision to bid or not to bid on a contract opportunity is not a matter of life or death, but it is a critical moment of action.
Deciding on whether you pursue a government contract is not a trivial decision.
The proposal development process is time-consuming and requires a significant investment in your company’s time and resources. What’s more, offering to provide products or services for the government must be a decision that has the full commitment of your entire company, and be work you know you are capable of delivering.
Lastly, a carefully executed “bid, no bid” decision-making process will have a direct impact on your success in winning (your “win rate”) government contracts and impact your annual costs in personnel and proposal development as well as your annual revenue.
To help your company make a good decision on whether or not to submit a proposal for a government RFP, we have outlined several steps for government contractors to consider.
Knowledge of opportunity
In some, but not all cases, if you are responding to an opportunity shortly after a RFP has been released – you are likely too late. Companies with higher win-rates have a 90-day to 180-day activity window prior to a procurement release. In other words, they are already aware that an agency is going to issue a RFP and have been in communication with the contract officer and others within the agency for months before the public release.
The sooner you have knowledge that an opportunity is coming, the sooner you can engage the contract officer and the team and make them aware of your business. It may even be possible to help shape aspects of the procurement’s requirements simply by being engaged and providing the agency with thought leadership and industry best practices. This kind of pre-solicitation activity leads to the acronym CBD – or – contract has been done. While there are never guarantees that pre-solicitation marketing will result in a contract award, a company’s win-rate will likely be higher if they are bidding on opportunities they helped shape.
As we noted above, this is not the case for all opportunities. However, it should be a factor in determining whether or not you submit a proposal.
If you are extremely late into the process, you will be competing against companies that could have months of relationship building invested. This could put your company at too much of a disadvantage.
However, every opportunity is different. In other cases, a set of contract opportunities may not have enough competition. Your win-rate may be high regardless of when you learn of the opportunity, provided you meet the government’s requirements and apply in a timely-manner.
Therefore, note when you become aware of the opportunity and consult a government contracts expert to get an idea of just how important when you learned of the opportunity is to your ability to win.
The next question to ask your team is, “Do we understand the customer’s mission and the work to be performed?”
Government agencies typically work to solve problems. They are not necessarily thinking about long-term implementations or phases to a project like many commercial businesses. Senior agency officials may only have a 2 to 3-year window of time within their role. As a result, agencies are looking for ways to speed-up the contract award process and delivery.
Therefore, It is essential to understand what makes an agency tick: what are their pain points?
You also need to carefully and completely read and understand the requirements in the request for proposal.
If you have questions, and you are engaged at the earliest possible stage, it is always a good idea to ask the contract officer to clarify elements of their procurement release. This will open a channel of communication and help to ensure you can meet the mission.
Another essential set of questions to ask include:
- Do we have a relationship with this customer?
- Have we met them at conferences or industry days?
- Have we done work directly for them in the past?
- Have we done similar work at other agencies and shared our results?
The extent of any past relationship (or lack thereof) could be a helpful predictor of your ability to win the contract. While not having a past relationship may not necessarily be damaging, the more positive interactions with an agency will definitely improve your chances for success. You should give more weight towards bidding if you have a lot of positive engagement.
When it comes to making a “bid, no bid” decision – capability is probably the most critical factor.
The bottom line is that if you do not have a solution or service that will help the government customer achieve its mission and contract objectives – why submit a proposal?
Of course, capability does not just apply to a solution or service.
You may have software that solves a government need, or a service that meets the government’s RFP exactly. But do you have the ability to supply and support the government if they award you the contract? Do you have enough people or equipment? And another factor that will be considered is – do you have financial stability or the financial capability?
Capability is often connected to past performance. Whether your experience is solely in the commercial space or have done similar projects for the government before, the government wants to know if you have done the work before at the same scale as they require.
If you are a small or mid-sized business (SMB), the government is going to weigh your capability with much more scrutiny. The government will more often than not assume a large organization has the capacity and capability to do the work. However, the government will see SMBs are having more risk – and therefore – the issue of capability needs to be a critical part of your decision to submit a proposal.
If you are going through this check-list and have not stopped, you could be in a good position.
However, every government contract will face competition. Here are some things to consider:
- Do you know who you are competing against?
- Is one of your competitors an incumbent contractor (in other words – are they doing the same work currently and rebidding for a new contract)? And if so, is the government agency relatively happy with their work?
- Do they have significantly more past experience than your company in doing similar work?
- Have your competitors already been working with the agency prior to the release of the solicitation?
- Do you think you can beat them?
Looking realistically at your competition will help in your evaluation of an opportunity.
This is where competitor analysis from a consulting firm can play a crucial role (Click here to learn more). The data you obtain can help you to devise a proposal win strategy or demonstrate that you are in a low-win position.
Unless you are considering an opportunity that is dedicated for small businesses, you will most likely have to team and subcontract to competitively bid on an opportunity.
Hence, you should ask yourself:
- Do we have a teaming strategy?
- If we act as the prime contractor, can we get the right subcontractors?
- If we act as a subcontractor, do we have a good relationship working with the prime contractor?
Strong networking and joining the right teams for contract opportunities will directly impact your win-rate. However, a teaming strategy and building relationships takes time. Government contracting is a relationship-driven industry. If you do not have a strategy in place, or you are not actively networking and building relationships – you may not be in a strong position to win the contract.
Pricing / Profitability
Many businesses wait until the very end of a proposal development process to determine pricing and profitability. We disagree with this approach.
While you will not know all the details from the start, you need to ask if you can make a profit on the government project and if you have the cash-flow and financial stability to take on the work.
In short, before you decide to submit a proposal, you need to have a solid idea on your costs and pricing.
To learn more about pricing to win a government contract, click here.
Win Strategy and Win Themes
A “win strategy” is not the most important part of a “bid, no bid” decision, but it should be a factor.
In short, a “win strategy” is your action plan to beat the competition at every step of the process. Because a “win strategy” can include early stage engagement of the target agency, broader branding and marketing campaigns and questions for the contract officer about the procurement opportunity, you should already be executing aspects of your strategy before you get to a “bid, no bid” decision. The question you must ask yourself and your team is whether or not your strategy has been good to this point, and if it is strong enough to carry through a proposal submission.
The other piece of the puzzle is whether or not you think you will have a good “win theme” for the proposal.
A “win theme” is all about what you bring to the table and how you differentiate yourself from the competition.
What you want to ask yourself and your team is:
- Can we connect examples of past work to meeting the government’s current needs?
- Do we have strengths that are known weaknesses of our competitors?
Reviewing both your strategy and themes will help you determine if you are in a strong position or if you have a lot of work to do (and if you can recover from the steps you have taken to date).
Match Short Term and Long Term Business Plan
Aligning a government contract opportunity to your business plan should be the easiest factor to consider.
A contract should always fit into your short term and long-term strategy. You never want to be in a position where you win an award and a quarter or halfway through determine that the work you are doing does not align with the future of your company.
Final Risk Assessment
Lastly, any “bid, no bid” decision should include one final risk assessment.
Examine the potential exposure your company may be under in terms of financial costs, training, support, staffing and ability to deliver either services or products.
What will happen if the government experiences a shut-down and you receive no payments for several weeks? Or several months? Can you sustain your business operations?
What about delays in product delivery or parts?
What about security clearances and your ability to obtain them if necessary?
Or work that must take place on-site at locations across the country?
Every potential risk should be examined before you submit a bid on an opportunity. If the risk assessment is positive, even in the worst-case scenarios, you will be able to proceed with confidence and peace of mind.
In conclusion, your business should always eliminate contract opportunities that have a low likelihood of success. Using this checklist, you should be able to come to a well-reasoned decision on whether or not an opportunity is a good match for your business.
Some business executives may respond to this strategy with quotes like, “You will never make the shots you do not take,” and “If we do not bid, we will not win.”
As a general practice in life, we agree that you will never achieve much if you do not take action. However, the decision-making process we have outlined is designed not to keep you from being successful, but to take action that helps you minimize the expense of failure – especially frequent proposal failure, which in government contracting is very expensive.
We previously noted that government proposal submissions require time and resources. To put a dollar amount to this statement, it is probable that a single proposal can cost your business tens of thousands of dollars in staff time, third-party expenses and more. Depending on the type of proposal you are submitting, you could spend $20,000 or $200,000 just to earn consideration. This is why you take the time to make sure your company has a higher prospect of success.
Overall, if you use these steps as a reference guide throughout your business development / capture management process, you will go a long way to put your business in the best possible position for success.