Congress recently passed the 2018 National Defense Authorization Act which authorizes programs and funding for the Department of Defense, and addresses certain other policy and fiscal matters important to Government Contractors. Continue reading “Congress Passes 2018 NDAA” »
by Gary Dunbar
- What is next year’s Gross Revenue?
- How much of next year’s revenue must come from new contracts won this year?
- How much will Business Development cost this year?
These key questions in Business Development Management aren’t easy to answer with reliable accuracy. Obviously, next year’s revenue from continuing existing contracts is relatively easy to forecast. It’s next year’s revenue from new contracts, this year’s wins, that’s difficult. Here are some tips to help you do that.
Develop a Consistent Method to Calculate Your “Win Rate,” i.e., the number of successful proposals compared to the total number of proposals submitted. If this number or percentage varies wildly every year, next year’s revenue forecast is very likely to be a wild guess. On the other hand, if your firm wins at a consistent percentage of total proposals submitted, revenue projection gets far easier and much more reliable. A win rate of 60% is a good target.
Imagine what it would be like if your annual revenue forecast was always, year after year, within 5% of your actual annual revenue. How would this impact hiring, or acquiring more office space, or upgrading computers, or advertising, or an updated website? Or your Go / No Go proposal decisions for new opportunities? You get the picture. So, the bedrock issue in Business Development Management is your win rate. Calculating your win rate is easy to say and difficult to do. Consider these seven factors:
- The span of time over which your rate is calculated. We like 24 months. Every month the rate is updated to drop data that’s 25 months old and data from last month added. Keep a record and formally update it every month.
- Track every proposal submitted. Minimum data should include positioning-to-win efforts completed before the RFP was released; the total cost of proposal preparation; the maximum gross revenue contract value; your estimated maximum net revenue value; contract Period of Performance; and estimated date of award and start of work.
- Calculate your win rate by comparing the number of contracts won to the total submitted and by the gross revenue value of contracts won to the total gross revenue value of proposals submitted.
- Always get a debriefing for every proposal you submit. Ask for and record the reasons your client provides for why you won or why you lost.
- Submit a written Business Development Status Report to senior management monthly.
- Conduct periodic management review meetings with your firm’s senior management and all Business Development personnel at least quarterly or monthly if the volume of activity merit more frequent reviews.
- Use Business Development data and reports to prepare your Annual Business Plan for the next year during the last quarter of each fiscal year. This plan should include all previous years’ comparisons of Annual Revenue Forecast and Actual Annual Revenue. In addition, include a full description of actions planned to ensure the revenue forecast is fully achieved.
Establish Procedures to Conduct All Steps in the Business Development Process. The basic Business Development Process has six phases, and each phase has information items to be obtained, recorded, and saved and tasks to be performed:
Phase 1 Lead
- BD Number – Assign your firm’s BD Number to every lead tracked
- Quantity of Current Leads – Maintain a tally of the total number of leads currently active and update monthly
- Procurement Name – Determine/save the contract name your prospective client uses
- Purpose – Describe the contract’s objective
- Contract Price Structure – Record information available about the type of contract structure likely to be used in the procurement (e.g., Firm Fixed Price)
- Contract Type – Record information available about contract type likely to be used by the Government (e.g., IDIQ))
- Contract Method – Record information about the procurement method likely to be used by the Government (e.g., Small Business Set Aside)
- Contract Maximum Value – Record information about the maximum estimated amount the Government believes the contract will cost
- Timeline RFP Release – Record information available regarding when the RFP is expected to be released
- Timeline Proposal Due – Record the date you expect the proposal to be submitted
- Additional Comments – Record other information you might obtain
Phase 2 Opportunity
- Lead Information – Update/correct as required
- Contacts – Date, names, and reports for all meetings with individuals in the Government agency responsible for this procurement
- Contacts Directory – Name, position, address, email, and phone number of all Government contacts
- Contract Net Value – Update information on Maximum Value and estimate the Net Revenue Value (Maximum Value minus the estimated pass-thru costs for vendors, subcontractors, consultants, and other ODCs)
- Capture Plan Status – Such as waived my upper management, in process, under review or approved
Phase 3 Target
- Sales Calls – Status of all meetings with prospective client/customer required in Capture Plan
- Competitors – Status of competitor identification and analysis
- Team – Status of SOW analysis; identification of teaming requirements, Team Win Strategy and Objectives, teaming negotiations, and Teaming agreements
- Positioning Deliverables – Status of positioning deliverables (information, reports, and other data for use in the proposal preparation) required by the Capture Plan
- Proposal Plan – Status of management review/approval of proposal budget/preparation cost
Phase 4 Proposal-In Process
- Proposal Steps – RFP-Based Proposal Outline, Annotated Outline, Pink Team Draft Review and Report-Out, Recovery, Red Team Review and Report-Out, Recovery, Green or Gold Team Review (Price) and Report-Out, Recovery, Final/Gold Draft, Final Management Sign-off, Proposal Submittal
Phase 5 Proposal Pending
- Contacts – No more than three phone calls to the Contract Officer only inquiring regarding when the Source Selection will be announced; don’t ask any other questions
- Update – All contract value data
- Expected Award Date – See Contacts above
- Estimated – Length of time between contract award and receipt of payment of first invoice
Phase 6 Won, Lost, or Terminated
- Win Rate calculated by number of wins and by value of wins during current time period (we recommend two years as the current time period)
The biggest mistake that happens far too frequently is learning about a procurement after the RFP has been issued and then deciding to prepare and submit a proposal. Only do this when you have very recently inherited a vast amount of money from a relative you never knew about who won the lottery.
By Gary Dunbar
Your business cannot continue or grow without effective executive decisions that produce revenue. Your future as a Government Contractor depends on your yes (GO) or no (NO GO) decisions to prepare and submit proposals, often expensive investments. In addition to decision-making factors unique to your company, here are 10 critical factors every firm should consider when determining whether to respond to a competitive RFP.
- Do we understand the Government agency’s challenge and do we have a concise plan for helping their project succeed? Your proposal must convince evaluators that your firm deeply understands what’s required for success and how you’ll deliver the performance that creates that favorable outcome.
- How does our plan reduce risk to the Government and provide value (as defined by the particular agency)? Sure, you can do the work – and so can most, if not all, of your competitors. But can you accomplish the SOW/PWS in a manner that mitigates mission or contract risk? To do that, you must frame your solution-based features as strengths, and clearly link those strengths to customer-based benefits.
- Does the Government agency know our firm as a leader in the SOW? We’re not talking about meeting with the prospective client with a 450-slide presentation and a three-inch thick notebook of bragging materials. We’re talking about effective capture and relationship-building – months prior to RFP release. We’re talking about writing white papers that influence the RFP. We’re talking about really knowing the agency’s pain points – beyond what is said in the RFP – so you can address them in your solution and target the most meaningful benefits to this particular customer. Submitting a proposal to an agency who doesn’t know you is NOT effective capture … it’s lots of wasted overhead money spent on preparing a losing proposal.
- Does the Government agency know our proposed Project Manager (PM)/Key Personnel (KP) as outstanding professionals with the skills to address this SOW’s challenges? Has this prospective customer worked with your proposed PM//KP? Did your PM/KP participate in recent sales calls to this prospective client? Or has your client attended a presentation your PM made at an industry conference or on a relevant broadcast? If the answer to these questions is no, what is your plan to persuade the prospective client that your PM/KP are best value candidates? Proposals that present multiple highly successful relevant contracts and then propose a PM/KP not involved in any of those contracts is likely to lose.
- Does this opportunity fit your firm’s Strategic Plan and provide long-term strategic advantages? If you want your boat to go to Hawaii, don’t steer to Antarctica. Make GO decisions on opportunities that fit your strategy. If your strategy needs to be changed, think it through and make wise decisions, not long-shots at unforeseen opportunities.
- Can we prepare an exceptional winning proposal within the time constraints? This isn’t gambling; you’re not shooting craps; you will not win by a “throw-something- together and throw-it-over-the-wall” approach. Commit the requisite time, money, and resources to prepare an exceptional proposal or make a NO GO decision. There is no middle ground.
- Can we submit a competitive price? Obviously, price matters, even in “Best Value” procurements. Do your homework and develop realistic estimates. What does the Government expect to pay for the product or service? If this is a re-compete, what price was paid before? Slightly different, but highly relevant, is the impact winning will have on your annual gross revenue. If winning the contract will result in your annual gross revenue increasing by more than double the current amount, make a NO GO decision and look for a role as a subcontractor or provide a detailed, thorough explanation of how you’ll increase capacity to perform the contract. It’s a big mistake to submit a proposal hoping no one on Source Selection Evaluation Board will notice your lack of planning.
- Can we manage or mitigate all the risks to our firm as we execute and perform the contract? All contracts have risks. Do you really understand the risks to your firm in this contract and do you have the plan, resources, and know-how to mitigate those risks?
- Are your team’s Past Performance Assessments relevant to the RFP’s objectives and the SOW? Is your performance seen as “exceptional” by your former clients and customers – and can you prove that via testimonials, CPARS, other evaluations? Collect, keep, and have readily available all performance assessment information and letters of commendation. Use this information in your proposal by quoting letters of commendation, including the name of the author and the date of the letter. Provide copies of performance assessments. In your performance of all contracts, immediately and effectively address and correct any notification of less than excellent performance, even a casual comment. If your Past Performance relative to this RFP doesn’t demonstrate excellent services and products, make a NO GO decision.
- Do we know our competition and have a plan to beat them? Do you know your competition? Have they won contracts that you lost? Do you know why or how they did it? What is your plan to win? How will you ghost them?
These guiding questions force your firm to take a hard, honest look at its compatibility with any given Government agency’s RFP demands. Competitive analysis, along with capture planning, is critical to your ability to prepare a winning proposal – and thus your GO/NO GO decision.
ClientView LLC provides executive-level business development consulting to companies that sell products and services to the federal government and commercial customers. Our services include strategy development; marketing, positioning and proposal training; capture planning; and proposal creation and production.
There has been much hand wringing, pontificating and reporting on the Federal Budget woes of late … and it got us thinking about our approach to federal budget issues. Here we offer a different perspective on the budget situation. Continue reading “Our Current Federal Budget Climate” »
The CEO of this services firm with $17M Annual Revenue brings in new management with a mandate to grow the company while he slows down to prepare for retirement. Four years later new management has achieved Annual Revenue of $54M with an opportunity pipeline forecast of at least 25% growth for the next three years. The CEO steps back into hands-on management and forces resignation of the new management so that he can “get control.” Five years later, Annual Revenue is down to $19M and forecast to fall further.
I know a CEO who gave strategic planning a try – once. He brought his senior team together and tasked them to develop a company strategic plan. They went away and performed market research, defined big goals, engaged the right people, assessed resource requirements, and pulled together an integrated strategic plan, complete with milestones and metrics.
SENIOR PROPOSAL SPECIALIST WITH 20 YEARS’ EXPERIENCE JOINS CLIENTVIEW AS PARTNER
ClientView Consulting LLC (CV) is pleased to announce the addition of Luanne Smulsky as Partner. Luanne will be responsible for implementing industry best practices in helping CV clients prepare proposals that win.
Ed Harrington – ClientView Partner, Brigadier General US Army (Retired), former Director, Defense Contract Management Agency and Deputy Assistant Secretary of the Army (Procurement) – presents the first of a multi-part series addressing the challenges of growing/preparing a Small Business to enter or “graduate” into a “full and open” competitive business environment.
Objective of this ClientView (CV) Conversation series
I spent almost one-third of my 35 years as a government servant in what is now called “Federal Acquisition” (yes, based on the Federal Acquisition Regulation or FAR). I dealt, on a daily basis, with private industry, ranging from international corporations to single-person Small Businesses (SBs). I was often responsible for policy development that directed how businesses would have to comply with government requirements. One of my job functions was to oversee the efforts (policy and process improvements) at helping SBs both mature as business entities and grow their work with the government. Much of my experience with SB during my government service taught me a lot about techniques and practices that succeeded, as well as those that caused failure or stalled growth. Occasionally, I saw SBs that had purposely identified and prepared for what was required for growth beyond the realm of the SB environment of preferential, “set aside” contracts. Continue reading “Small Business Graduation Challenges” »
GARY DUNBAR DISCUSSES HIS NEW BOOK: REVENUE GROWTH
A MANAGEMENT GUIDE FOR GOVERNMENT CONTRACTORS
Managing Partner Gary Dunbar recently released a book on the subject of
improving revenue growth for government contractors. After its release Gary
was interviewed on IUniverse Radio during which he discusses his new book and
its pertinence to the current government contracting climate. That interview is
available FREE on Itunes. Continue reading “ClientView Consulting Proudly Announces Interviews with Managing Partner Gary Dunbar” »
Ph.D. with 30 years’ experience in life sciences and Government contracting
joins ClientView as Partner
May 3, 2013, Boston, MA – ClientView Consulting LLC (CV) is excited to announce
the addition of Philip (“Rusty”) Warren, Ph.D., as Partner. Rusty will be
responsible for development and implementation of diversification strategies,
especially those based on intellectual property, for CV clients. Continue reading “ClientView Extends Expertise to Life Sciences Markets” »