The True Cost of Proposals

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© DigitalGenetics – Fotolia.com

I recently listened to an episode of the Contracting Officer Podcast, a show that talks about the government market from the contracting officer’s perspective and aims to make government contracting better, one contract at a time.

Hosts Kevin Jans (Skyway Acquisition Solutions) and Paul Schauer (CACI’s National and Cyber Solutions) discussed how much it actually costs to write a proposal for a government RFP. An important and much misunderstood topic!

The first key point they make about proposal writing is that even though it seems like a no-brainer that proposal writing would be part of what they call Zone 3 – The RFP Zone, it’s not (their “zones” are explained in earlier podcasts, but you should kind of get the picture from my emphasis in this post on qualification and capture).

“Proposal writing starts long before the RFP is released, before the draft RFP is released,” Paul explains. The process goes back to the Zone 2 (Market Research for their audience of contract folks, or what we industry folks would call capture – shaping the potential RFP), so that’s where the costs start as well.

This is an extremely important point that often the government does not appreciate. From the moment of market research, and sometimes even before when the true customer begins to think of the requirement, cost is beginning for industry. There is where you as the contractor begin answering the question, “Can we solve this customer’s problem?”

By the time a Request for Information (RFI) comes out, “the writing’s already started,” Kevin says, “And that’s why it’s so important that the investment in brain power, in resources, in time, and of course, in labor” has already started as well. Here again, while we’re talking about brain power, resources, time and labor, what’s really going on is relationships – a company building a picture of what the customer is looking for, based on how the customer describes it. This is the early stages, even before the RFI or market survey comes out. Remember that often the RFI is about set-aside issues, not about solution issues.

It’s important for both sides – government and industry – to understand the true cost of proposals. This gives the buyer and seller a level playing field as they communicate through the proposal process. Kevin says this is one of his favorite sayings: “Ambiguity in here is going to lead to mediocrity.”

This is perfect, yes indeed, ambiguity leads to mediocrity, but if ambiguity remains, it’s the industry’s fault for not asking all the questions for fear something will be revealed to competitors, and the government’s fault if they don’t answer by bringing new clarity to the question. Questions are good, not a forced delay and to be resented. Over-explaining can be costly as well, Kevin points out.

Paul says to compare this to hiring a contractor to put a new roof on your house. You might use any combination of marketing messages, past performance, and talking to friends, and then get quotes from several companies. They pretty much all do the same thing, so the quotes will be pretty simple.

“Think about it,” he says, “if you went out to all these companies and you said, ‘I need a 12-page proposal with double-spaced, 12 Times New Roman font on the whole thing, graphics have to be no smaller than 8 font, and you can’t use anything, but the primary colours,’ …. You wouldn’t get a single bid ‘cause nobody’s going to put in that time and energy.”

Contracting officers should remember that “the amount of proposal documentation that you have to submit could drive decision making on whether or not a company actually bids on your acquisition.”

Paul explains that the government team writing the RFP has to realize that they’re driving more cost to the taxpayers with their complex RFPs that take longer to respond to and evaluate. And this is a critical point – bad evaluation processes and lack of clarity drive up costs. So do all the regulations, and these lead to higher costs to the government.

Now LPTA has adjusted that, but the competitive pressure means less well-constructed proposals, and lower quality of responses, or lower quality of people you can afford for the prices bid. We can never forget the trade-off between price and quality.

In government contracting some inefficiency in the process is a given, with so many regulations in the FAR. But it’s those rules that give everyone an equal opportunity to bid, says Paul. Unfortunately, most of the inefficiency is actually self-inflicted – by the government as they write RFPs, and by contractors because they don’t do a good enough job evaluating their decision whether to bid on a contract.

“If you’re really having to force that language [while you’re writing an RFP], that should tell you something.” We’ve talked a lot on this blog about focusing your federal contracting efforts, and being able to answer these three key questions about your prospective customers:

  1. Does this customer have money allocated to solve this problem?
  2. Can your company solve this problem?
  3. Do you have the capabilities to win this job?

If you can’t answer yes to all three of those questions, don’t waste your time writing a proposal. Contractors should never forget that business development and proposal writing cost money, and there will be a single winner and many losers. Every loser needs clarity as to why they lost.


Low Grades for Federal Agencies Mean High Opportunities for Small Business Contractors

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© CGinspiration – Fotolia.com

The SBA recently released their 2014 Small Business Scorecard. This is where they rate how well each federal agency met the goal of setting aside a specific percentage of contracts for small businesses, and specially-certified small businesses.

Overall, the numbers showed improvement from last year (along with a few curious anomalies), but there is still lots of room for improvement. The good news for you is that the report highlights a definite need that your business can fill, provided you can find your right customer and focus your contracting efforts.

In this chart prepared by Set-Aside Alert, you can see that for woman-owned businesses, the government’s overall score was 4.68% – less than the 5% goal. When you scroll down the list you’ll see many departments with considerably low numbers (e.g., DoD, VA and NASA). Woman-owned businesses, this is your chance to go find customers – agencies that are hungry for companies that can help them meet their set-aside goals this year.

Service-disabled veteran-owned business? Look at the Department of Education’s low score in your set-aside designation. Time for you to make hay!

The bottom line is that if you have a special certification as a set-aside business, you should be looking through this list and asking three questions about these prospective customers:

  1. Does this customer have money allocated to solve this problem?
  2. Can your company solve this problem?
  3. Do you have the capabilities to win this job?

Go fish!


Grading the Government on Small Business Contracts – FY 2014 Scorecard

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© kittitee550 – Fotolia.com

On June 26th, the SBA released their Small Business Scorecard, rating how well each federal agency met their small business goals. The team at Set-Aside Alert and Business Research Services compiled the data into a one-page report you can download from their website.

The first thing to notice is that the government gave themselves an overall rating of A for the year 2014. Similar to FY 2013, they fell below the 5% goal for woman-owned businesses and the 3% goal for HUBZone businesses (located in a traditionally underutilized business area), but they exceeded the small business goal (24.9% instead of 23%), which likely led to the overall high rating.

We notice again that the Department of Energy is the only agency with a grade of F – a failing grade. They only awarded 5.25% of contracts to small business. Partly this is an institutional issue because the Department of Energy is responsible for some very large business contracts. NASA has similar issues; space stations require huge gobs of money, making it difficult to achieve the 23% prime set-aside goal.

There are some other curious anomalies in the report, such as Commerce getting an A+ rating for their 41% awarded to small business, even though they still missed their HUBZone goal by doing 1.09% instead of the goal of 3%.

Agriculture got an A, not an A+, even though the awarded 53.8% of their contracts to small business, and made every single set-aside goal including HUBZone (one of only seven agencies to make the HUBZone goal).

As you run down the numbers, it looks like just about everybody is making their small disadvantaged business goals, but many agencies missed on woman-owned businesses. There are a few missing the service-disabled veteran-owned business goals, and quite a large number are missing the HUBZone goal (overall the agencies only did 1.82% against the HUBZone goal of 3%).

It must be said that this is considerably better than last year’s numbers, and clearly represents a focus on making the small business goals across all agencies and all contracting authorities.

One caveat and then we’ll close. All of these numbers are based on the federal procurement data system – contract data from Feb of 2015. Some corrections may occur and some individual numbers may adjust here and there. But by and large this represents a very strong performance in the overall small business arena.


Following Up on Acquisition Reform

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© Minerva Studio – Fotolia.com

As we’ve discussed, there are proposals in the NDAA 2015 (which will apply to federal government activity in 2016) to deal with the question of acquisition reform.

For many of us, acquisition reform is a nice concept but not very relevant because most of the activity is really focused on giant procurements such as weapons, aircraft carriers, tanks, ships, etc.

The mundane act of procuring services like most of the contracts we’re on, including anything from mowing the lawns to providing high-end PhD engineers, is really not the subject of reform – even though it definitely could use some reform as well. But fundamentally, the real savings are in big weapons and things like that, so that is what gets the government’s attention.

The new legislation is still being worked through – the policy bill has not yet been passed by the Congress, they’re still debating it. Some of the outlines include a much finer granularity of attention to the program management of an acquisition, how costs are managed, and how things sometimes slip.

There’s nothing wrong with any of this, but the reality is that for me and most of my readers, this is a matter of what’s affectionately known as “looking up the eagle’s hind quarters.” We’re watching how all of this unfolds for the big players, the billion-dollar companies, and hoping to get some subcontract dollars.

It’s frustrating to be in that position, but all we can do is hope that Congress continues to pay some attention to the little guy. Even though these efforts are often focused on saving billions of dollars for big procurements, a large part of that money is spent on small companies that have no say in the process, because the big primes are the ones managing the work.

More will be revealed, and we’ll look at some of the policy questions in the coming months, as they start to be approved by one or both houses.


Contract Management Professionals, the World Congress is Here!

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© W.Scott – Fotolia.com

NCMA has been holding its World Congress since 1996, and each year it gets better and better. TAPE has been an exhibitor there for the past several years, and it’s interesting to meet contracting folks in a very different environment from the usual locations, or with their small business folk, etc.

I asked NCMA Executive Director Michael Fischetti: What’s new for this year’s event, July 26-29, 2015 in Dallas, Texas?

This year you’ll see some changes in the “interactive” nature of the event. Along with education aligned with the Contract Management Body of Knowledge (CMBOK), attendees will have increased opportunities to provide solutions to problems of the day as well as meet new colleagues in the field.

What are you most excited about?

Our fantastic line-up of key leaders and practitioners in the field, most of whom are new to our podium!

I see World Congress has a mobile app (search “NCMA Events” in the Apple App Store or Google Play Store) – what features does it offer for event participants?

The mobile app contains the A to Z of World Congress. It includes the full agenda (which attendees can customize based on what they plan to go to), speaker information, sponsors and exhibitors, social media tools, and more. There’s even a part of the app that provides detailed local information about Dallas, including local restaurants, directions, and airport information.

Who will benefit the most from attending the World Congress?

Anyone involved in contracting, whether they’re from industry or any level of government. Anyone who wants to network with others across the profession and the environment they work within.

Does the employee justification packet really work to convince employers to send people to the event?

Absolutely, and our attendees tell us they love it! World Congress is well worth the investment of time, and this packet provides answers to the questions that their training officers, leadership, or customers ask.

See you all in Dallas!

If you’re a contract management professional and you haven’t registered for the World Congress, click here to learn more. If you’re a business developer, this is a chance for you to meet contracting folks over a beer or soda between sessions. You’ll hear them discuss the issues relevant to you, like LPTA or small business. This year we’re sending our CFO, who’s also in charge of our contracts shop.


Will Your Customers Get Lost in the Acquisition Gateway?

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© Photocreo Bednarek – Fotolia.com

The General Services Administration (GSA) is launching something called the Acquisition Gateway, an online workplace designed to help simplify the acquisition process for government buyers, and reduce redundancies (hence the name “Act As One”).

The portal will initially cover three purchasing categories – administrative support, IT hardware, and IT software, with more categories coming.

This video from the GSA explains how the gateway works, and the rationale behind the initiative:

As Judy Bradt points out in her article for the Washington Business Journal, the risk here is that if your current and prospective customers enter this gateway, they will face an overwhelming number of choices.

To make the quickest and simplest decision, they may automatically look for the lowest price. Yet since vendors can’t access this portal, you’ll have no way of knowing how your price compares to that of your competitors.

Judy suggests you ask your customers what they think of the Acquisition Gateway. Their answer will tell you how loyal they are or whether they’re shopping around.

Read Judy’s full article for her two tips on how to make sure you end up front and center when your customers browse this new acquisition portal.

So what can you do, especially if, like many small businesses, the pricing strategy for Multiple Award Schedules (so-called GSA Schedules, like the IT70, or MOBIS), is to set “reasonable” prices and then discount in bids?

One thing is to add to your labor category descriptions a legend that indicates requirements matching is negotiable with the requirement. Another is to carefully screen customers and let them know in advance that bid prices may be adjusted/lower than Schedule prices. And finally, which I’m sure Judy would agree with as well because we’re preaching the same thing, build a relationship.

One more thing I’d recommend is to be sure your website matches the branding you use in your other materials. That’ll be a post for another day, but for now, just be aware that buyers go to websites, and often when you don’t even know they’re buyers yet.


Leadership Lessons: Transitioning Into a New Role

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© tostphoto – Fotolia.com

In a small business like TAPE, our VPs need to be very hands-on in the day-to-day operations of the company. They’re responsible for business development, maintaining current customer relationships, building our repository of teammates and partners, and strengthening and maintaining those relationships, each for their specific line of business.

This “leaner, meaner” approach enables us to respond more quickly to opportunities and optimize our resources.

One of our VPs, Daria Gray, transitioned into this role from another leadership position in marketing and communications. I asked her to share her reflections on the challenges and opportunities of this type of change.

She says the internal transition happened quite naturally, “Once I’ve made up my mind to do something and am committed, I want to put in the time and energy to succeed.” Yet for some of the people around her, it took time to let go of Daria being in that former role, and to allocate her previous functions to others within the organization.

She says this is an example of a lesson that holds true in everything in life, and that is that you cannot change others. “They are going to continue to do what they have naturally done, but you can change your response or your reaction to their behaviors.”

Daria said that by being firm in her own mindset about the path she was on, she could gently remind others that she was no longer performing those capabilities.” For others in this same situation, she suggests you “stay focused on your new role and kindly redirect people to others who can provide guidance on matters for which they are seeking assistance.”

For Daria, this has been a really positive move, and she’s enjoying the responsibilities of her new role – managing not just the work, but the people and all the new endeavors that have come with it.

As many small businesses transition to a more lean/low-cost/low-overhead environment in the Federal sector, these kinds of transitions will become much more common.

It is much better to take a current, committed employee, who has demonstrated leadership, and train them in a few functions gaps, rather than go through the hiring process and then guess as to whether you were right or wrong on your choices.

As your existing customers are your greatest source of increasing growth and revenue, so too, your existing staff may be the best to fill new leadership roles. Reach out and see if someone wants to grow in a (sometimes surprising) new direction.


Why Your Pipeline Needs to Be a Funnel

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© John Takai – Fotolia.com

I try to live by what I blog. This is a good thing, because I had a conversation with my staff people, and it seems as if they read my blog as well. After the posts about chasing squirrels and focusing our contracting efforts, they wanted to know what we were doing to chase fewer squirrels and narrow our focus.

Of course we do have a focus, and we talked a little about that. We also talked about how important it is to understand that your pipeline is more like a funnel than a pipeline, with a wide opening that’s full of squirrels. But not all of these are the irrelevant distractions Judy cautioned us against.

You see, if all of your capture management projects are sequential, one after another, then the inevitable delays that occur in government contracting are going to leave you with lengthy gaps when there’s nothing you’re actively working on.

Ideally the top of your funnel will be populated with enough potential opportunities that are far enough away for you to do the appropriate capture work and development, and then lower down in your funnel you’ll reduce those to the ones you’re actually developing.

The process by which you pare down those options is typically called a step review – where the business development people, the operations people, the technical solutions people, and maybe others all come together. “So we’ve got this squirrel,” they say, “Now how are we going to trap the dang thing?” Because that’s the key – we don’t want to be chasing after anything or anyone. We want to focus on getting the perfect customers to come to us.

The step review represents a moment in time when you make a decision about whether to keep attempting to trap a squirrel, or stop. As you let go of some of these squirrels, your funnel gets down to the narrowest point where you’re actually writing and responding to a manageable number of proposals. That’s when you apply the capture management and relationship building strategies we discuss on this blog.

In a step review, we ask ourselves three simple questions:

  1. Do we know the customer, the actual customer, the person with the money?
  2. Does the customer know us?
  3. Do we have a solution for the customer’s true problem?

A corollary fourth question might be: Is the customer willing to look at new solutions?

More information will be required as you get closer to the actual RFP, but if you can answer these questions in the affirmative, that’s a successful step review and you can move this squirrel down the funnel. The ultimate goal of the step review process is to leave with fewer total opportunities that we’re chasing.


Focus Your Federal Contracting Efforts

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© creative soul – Fotolia.com

Recently Judy Bradt wrote for us about the concept of chasing squirrels (opportunities). Let’s talk some more about how we decide to focus our efforts.

In the classic Shipley method of doing business development for contract award in the federal sector, we make a determination at the agency level how and what we’re going to go after. We must understand who we are as a company.

What are we selling? Information technology services? Cyber security services? Training? Leadership development? Logistics? Warehouse people? There is a whole host of possibilities. What exactly are the capabilities we’re selling?

Who are we selling it to? For example, a company might decide that they’re an Army contractor or a Navy contractor. But the Army and Navy are great big places. Be specific.

Once that is clear, the next concept we need to understand is how to narrow our focus and properly assess the dizzying number of opportunities that come across our desk, as Judy described:

“OSDBU event! Veteran Business Owners Conference! Sources Sought! Vendor Outreach Session! HUBZone Day! Industry Day! Site Walk-through! Draft RFP! PTAC Briefing! SBA Matchmaker! Prime Vendor Meet-and-Greet! And there’s this guy you should meet, maybe they need a teaming partner like you. And, whoa, did I see an RFP deadline sail past? Where did that go?”

The fact of the matter is, often we’re too broad in estimating our capabilities. While we do want to stretch ourselves into new opportunities (that’s what marketing and business development is all about), it’s important to start where we are.

How can you turn something you’ve already done into something that you’d like to do? Who are the nearest neighbors to your existing customers and the function you’re performing?

For example, let’s say I’m supplying warehouse logistics people. Well, it wouldn’t be much of a stretch to get into supplying the folks who assemble the components that will be stored in the warehouse.

If I’m working for the Navy’s SPAWAR warehouse in Charleston, maybe I should go talk to a nearby GSA warehouse. From there, maybe I’ll bid on a GSA warehouse in Virginia. It’s a different location, but I’ll have good GSA references.

The best new customers come as referrals from our best current customers. That’s why when we break down the work we do in our business, at the top of the list is taking care of current customers. We never want to lose that focus.

We may have a strategic plan that lays out our capabilities and target agencies, but what’s key is to build relationships that support that plan. Because it’s from those relationships that will come information about new opportunities, and new functions we can perform within our scope, whether that’s for existing customers, or their nearest neighbors.


Beware of Being Honored

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© Brian Jackson – Fotolia.com

Recently we were approached by a magazine in an industry somewhat related to what we do, with the idea that we would be one of their honorees for the Top 20-this, Top 50-that list, whatever it was.

At first, it sounded really cool. It’s always good to be honored in some way. But the reality was, and we had to investigate in order to really nail it down, first you had to sign up for a full-page advertisement, and then they make their shortlist from those advertisers, and then their final selection of honorees. The more you advertise, the more likely you are to be honored.

This was not necessarily a terrible thing. It was still a reputable magazine, and it would still be an honor to be on their list, but in these situations it’s always important to have a fundamental understanding of what it is that’s being sold. Are you really being honored, or are you being asked to buy a full-page ad?

When push came to shove, we declined the offer because buying a full-page ad in this particular publication would not have paid off for us.

Has this ever happened to you? How did you handle it? Would you do it differently the next time?


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