How DO YOU Decide What to Bid?

One of the most frequent questions I get revolves around the decision of what to bid.  I have observed many processes.  Some are very formal, associating point scores to factors at different stages of the process.  Others are casual and fly by the seat of their pants.  But… what really works for a small business?

 Before I embark on the discussion further, I want to make it plain that I am assuming that you have taken the time to define your business offering and its value to Federal clients.  If you are only offering “butts in seats” or commodity products/services, the decision is easy:  Can you price lower than your competitors, deliver the goods,  and stay in business?

 For the rest of us, the decision involves more variables.  As you can probably guess, there is no magic formula – if there were, we would all be rich.  What I can tell you is that you cannot emulate the large companies with formal processes.  You don’t have the resources to make this work.

 So, what is the best approach?  I submit that there are six factors that should influence your decision:

 1.  Is the work primarily within your sweet spot?  If your company can do a sufficient percentage of the work, you will appear credible as a prime to the client.  This is important, as the client deals with the prime, not the subcontractors, and wants to know that the prime can lead the deal.

 2.  Do you have the resources to put together a well-written proposal?  Notice that I did not say a “compelling story”, as I really do not know what that means.  However, I can tell you that clients want to see a proposal that they can read, understand, and map to their requirements.  If all you can do is repackage existing material, stay away from the bid – you will just embarrass yourself.  I have won many bids simply based on the quality of the proposal where we had no interaction with the client.  Even when we lost, the quality of the proposal was acknowledged, we received a meaningful debrief, and, in many cases, were invited to come back to bid future deals.

 3.  Can you price reasonably?  Don’t kid yourself into thinking the Federal client will pay more for a superior technical solution.  “Best Value” is difficult to assess as a bidder.  Without a doubt, the best position is High Technical and Low Cost.  You have heard the expression “Price to Win, Manage for Profit”.  To accomplish this, you need to understand the pricing evaluation model and not just rely on the concept that your competitors have the same cost model as you (I have sat in too many meetings where cost is built up under the assumption that competitors will be pricing the same way).  Cost is what you pay – Price is what your client pays.  You don’t have to build up your price directly from your costs, but you do need to have a plan as to how you will manage the contract after award without sacrificing the quality of your work.  Cost and Pricing is a major topic that I will discuss later, but keep this concept in mind.

 4.  Is your team behind you?  By this, I mean both your internal team and your external team.  Not only must your technical, managerial, and support staff believe you can win, but your subcontractors and consultants must also believe it.  If you are brining in consultants to help you write the proposal, make sure they are believers in  your solutions and not just pushing a process for a high price.  A team that believes is one that will be creative and fun.

 5.  Can you deliver?  Nothing kills a business faster than a total failure to deliver.  The narrower your focus, the larger the impact.  The Federal Government does share bad information across agencies.  Take a look at the size, scope, and expectations of the effort.  I hear companies say “we can do that” when they have no credible capability.  They just throw away good dollars chancing bids on which they have no reasonable chance to win.  I do believe in long shots (and have won many), but only when justified by the capabilities of the company and its ability to present those capabilities to the client.

 6. Do you have the past performance?  Unfortunately, the Federal Government does believe that past performance is indicative of future performance.  Most proposal evaluations place a heavy weight on experience and past performance.  If you do not have reasonable past performance, do not rely on your partners to provide it.  Subcontractor performance, while relevant, does not carry the same weight as prime performance.

 As  you have probably noticed, I have not included your contact with the client or the strength of the incumbent in my decision list.  While these may be important decision factors for some bids, I have found them to be overrated.  I think they are factors developed by Business Development organizations that want to justify their value.  Lack of customer contact and/or a strong incumbent may be factors in your evaluation, but I contend that they should not be your primary factor.  Look at your strengths and win on the basis of your strengths.

 On a final note, do not be afraid to walk from bids that do not feel right.  Trust your gut and don’t be talked into bidding something you do not feel is right for you.  And, don’t hesitate to bid on a deal you feel is ideal, even when you are being told by others that you have not positioned yourself well.

I would love to hear from you, so please comment below with your thoughts.


Posted on April 20, 2012, in Capture and Proposal, Cost and Pricing, Debunked Myth and tagged , , . Bookmark the permalink. Leave a comment.

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