Bid smart or walk away

With commercial markets reeling in today’s economy, future revenue growth also is becoming more uncertain for firms in government contracting. The number of federal services contracts has increased about 8 percent on average in the past four years, but the number for 2008 is slightly down from previous years, with only a 5 percent to 6 percent increase in contracts. Furthermore, the average value decreased about 60 percent in 2007.

That means there is increased competition for fewer opportunities with less value. If your organization’s position is one of strategic revenue growth, you need to focus on identifying and qualifying opportunities. That process is not just a line item early in an organization’s business development process. As revenue growth gets tougher, it could be the most critical pre-capture decision point there is.

Such a process eliminates emotional judgments to bid as a prime contractor, join as a subcontractor or walk away. It presents a deliberate set of qualitative and quantitative questions to use when assessing an opportunity.

First, your team must understand the contract vehicle and gather intelligence on the project, including finding out who the critical decision-makers are. Team members must meet with the customer and build a trust relationship by asking hard questions. They must understand the customer’s mission and the challenges the customer faces.

Second, you must determine if an opportunity matches your company’s core capabilities and expertise. If a shortfall exists, consider teaming with a small business that fills the capability gap.

Third, your business development team must possess sufficient resources and bandwidth to pursue the work. A client recently noted that the use of quantitative criteria in the decision-making process was of utmost importance because it allowed the business development team to decide on the probability of a win in a manner that was objective and free of emotional bias.

It comes down to a strategy of bidding smart. That means asking the hard questions and disqualifying opportunities early. Do not gloss over the act of disqualifying.

That approach raises the question of how much emphasis managers place on not disqualifying low-probability opportunities early, which significantly affects the size of the pipeline and the probability of winning. A client learned from experience: Bidding smartly is not necessarily building a fat pipeline. For her, if it’s in the pipeline, it’s real. Consequently, her group has a high win rate, although its pipeline is not of the same magnitude as others with a win rate of only 15 percent.

There are many benefits to using a process for identifying and qualifying opportunities. By preventing low-probability opportunities from ever entering the pipeline, the business development team is a prudent steward of resources. But even more critical than the financial aspects are the personnel and psychological ramifications of strictly following such a process. Bidding on everything that moves and building a fat pipeline will eventually burn out and demotivate the business development team and lower your win rate. After losing too many bids, it becomes increasingly harder to get the team interested and excited about the next pursuit.

A full-blown process for identifying and qualifying opportunities is the missing link in most organizations’ business development strategies. Followed correctly, such a process can set the stage for a valid pipeline, a prudently invested bid and proposal budget, and a high win rate achieved by excited and motivated individuals who believe they can win.