Russell Smith

COMMENTARY

Break barriers between marketing, BD, capture and proposal groups to maximize your profits

For large and mid-sized government contractors, it can often feel like organizational silos hinder even the best of intentions. When pursuing a large proposal opportunity, the much-needed coordination between marketing and business development, as well as with the capture and proposal groups, can become a Kafkaesque nightmare.

Typically, this process starts with the marketing teams. Then it moves through business development, capture, and proposal teams – and finally on to sales and delivery.

Based on interviews OCI conducted with 30 vice presidents and directors of BD, capture and proposals, we found some enlightening views on what really happens during this process.

For example, only two companies we interviewed were happy with their overall process from marketing to proposals. The vast majority found big gaps between the groups in the overall proposal development chain. And, two companies stated that the pricing teams did not collaborate with the proposal teams – out of fear that their pricing secrets would be leaked out through consultants.

This is only the tip of the iceberg. Other issues that were uncovered included one company that invested $1 million in consulting services only to find out that there was no commitment from government to fund the program. Another contractor spent a similar investment on a proposal, but failed to get a signed non-compete from its principal sub at the last minute, and the bid was abandoned.

The third proposal horror story we uncovered was about a contractor that made a $3 million dollar investment in a new special delivery vehicle for government, on top of a nearly $1 million proposal services investment. The problem was the price-to-win (PTW) study done late in the cycle, which found the necessary price was too low for the company to reach. And they abandoned the bid.

From ineffective BD processes to capture not engaging with the contracts team early, there were many gaps that occurred that could have easily been avoided. In fact, all three of these contractors could have actually won at least part of these contracts. Instead, these scenarios were all very expensive derailments. Following are ideas on how to avoid these issues and maximize profitability.

Get the Pricing Right the First Time

First, pricing work needs to start at the time of the contract pursuit decision. Often this begins with the CFO appointing a pricing lead who can formulate the overall pricing strategy in accordance with the draft RFP. Or, if there is no draft RFP, then use the past RFP.

One company interviewed had a big advantage in folding the pricing work into the mix. Unlike nearly all other companies, they place the pricing personnel in the same group with BD, proposals, etc. So they don’t have to fight other priorities to get pricers. In addition, possibly the best-respected pricer in the Washington, DC area provided this insight into the picture: “When I am reporting to the person responsible for BOTH profitability and delivery, things generally turn out better.” 

Of course, we all want to have our pricing reflect the findings of the price-to-win (PTW) study. Being able to do that is greatly facilitated by true collaboration between all related internal parties.

How the Proposal Group Can Enhance Collaboration

The most popular response from our phone surveys with contractors was that the proposal group can enforce attendance at all of the meetings. This especially includes having a qualified substitute if the designated person cannot attend.

Furthermore, 10 percent of the companies we interviewed have dedicated training crews provided by the proposal group. The value of training can’t be overestimated, especially for players who are new to the proposal process.

We also found that 20 percent of the respondents give early-stage process briefings to make everyone aware of the upcoming opportunities and communicate everyone’s roles – including the importance of each person’s role, and provide the training and tools that everyone needs. One large company even had proposals develop an operational capture manual to document all processes and rolls.

Of course, many respondents recommended using tools such as Slack and Microsoft Teams for rapid collaboration, as well as new tools such as Bluescape for digital white boarding. One company opens dedicated meeting channels to help obtain continuous communication among team members.

What Will Increase Profit with the Least Amount of Investment?

In what may be the most critical question in our survey, we asked what was the single-most important initiative to increase profit for the least investment.

Twenty percent of the respondents from directors and vice presidents mostly at top 100 companies stated that money is the best incentive.

A BD or capture manager plan can include a pool of funds to reward all participants. All of these respondents believe that money incentives draw out the most productivity and creativity from all team members. Some firms even pay out ½ to 1 percent of the contract win. With that in mind, a $200 million contract could yield a $1-to-$2-million bonus pool.

Other winning tactics included getting the right people for the job, seeking out better-qualified opportunities from the start, gaining more government customer engagement, enforcing use of a shared document repository, and having technical teams develop irresistible solutions. Many also suggested having a well-committed executive sponsor to help supervise and facilitate all teams.

Parting Thoughts

One interview subject stated that starting any new initiative is never easy. And it requires deep consideration for all positions and risks involved. In addition, no matter how good the initiative, upper management must demand compliance from everyone if it is to succeed.

Responding to a large opportunity can often feel like you are climbing Mount Everest. By improving overall processes, enhancing communications, setting accountability, and even incentivizing, it is possible to get everyone moving in the right direction for that next big contract win.

About the Author

Russell Smith is president of Organizational Communications Inc., a Washington D.C. area proposal consulting firm. He can be reached at rsmith@ociwins.com.

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