My, how time flies; it seems like just last week we conducted industry researchon a number of topics germane to Federal, State, and Local Government procurements. That last week was actually December 2018.
One of the most striking nuggets we uncovered was the compressed “win rates” we came across in nearly every industrial sector we surveyed. The vast majority of responds, regardless of industry classification of business type, reported win rates of 30% or less. Oddly enough, it appears that the 30% level has been the consistent benchmark for average success in the public domain dating back decades.
It gets even worse: a 2017 study sponsored by Grant Thornton found that win rates for companies bidding on new contracts, those without an incumbent or ones that weren’t previously awarded, dropped to 26 percent, the lowest rate over the six years of the survey. Companies reported a 36 percent win rate on new contracts in 2011 and 35 percent win rate in 2016.
RWCO’s study found that large swaths of the contacting community are floating right around a 30% win rate and data seems to suggest that, for at least the last 10+ years, which may be on the higher end of the average. This is not specific to Lowest Price Technically Acceptable (LPTA) bids as the data suggests the win rate is consistent across all sorts of bid and evaluation environments.
On the surface, winning one out of every three bids actually makes mathematical sense given that the “rule of three” tends to be applied to competitive public sector bidding environments. The “rule of three” is the baseline assumption that a minimum three vendors are needed for a competitive bid and the average number of bidders for competitive competitions approaches three.
However, most of us do not strive to be average. RWCO conducted a series of focus groups and industry meetings in an effort to explore attributes and operational characteristics that organizations can immediately adopt in an effort to improve their chances of winning work. In this four-part series “How the Best Consistently Win,” here is what we found:
- Attribute #1: Bid/No Bid Processes must be rooted in objectivity and not emotion.
- Attribute #2: Bid activities and resources must be in balance with the size and scope of the contract.
- Attribute #3: Use of tools and generic templates undermines an organization’s perceived value.
- Attribute #5: Time management and “Think Time” are critical elements in business development.
Over the next two weeks, RWCO will examine these four simple attributes that leading organizations, those with win rates in the 50% or greater range, possess that impact their bottom lines and consistently lead them into the winners circle.
Deltek conducted a research study in 2007 and found that the average win rate of industry participants as approximately 30%.
ATTRIBUTE #1: Bid/No Bid Processes Rooted in Objectivity – Not Emotion.
Attribute #1: Bid/No Bid Processes Rooted in Objectivity (not emotion)
Disclaimer: The narrative below is designed to elicit a response from the reader. The point here being that it is important to have awareness of how our reaction(s) to statements shapes our ability to assess a challenge and construct solutions based on the root cause of the challenge.
It is a common topic inside sales, marketing, and business development realms: being objective and using logic, reason, and data to guidance actions rather than emotion. Not too long ago, I was on a call with a perspective client. That call was not that much different than calls most of us have with perspective partners, clients, or customers. We listen, understand the challenges and issues before us and, when possible, offer a series of actions that would result in the desired change or outcome that furthers the interest of the client (or customer, or partners). Such calls and the time spent on the phone are consistent with meet and greet conversations the world over; questions are asked, answers are provided, and a discussion of our businesses and how we might all work together toward a defined objective.
With these types of calls, it is not uncommon to field questions regarding rates, costs, and fees. Heck, if someone is going to explore the possibility of hiring a firm to help the cause in the business development realm, it is only fair to ask the questions “How Much”.
Quick sidebar for some background: RWCO typically charges its fees by the project rather than by the hour. In doing so, the Client knows well in advance of commissioning a project on the costs associated with the said project and the deliverables provided as a result. The reason is two-fold: (1) to provide the Client with the ability to conduct a cost/benefit analysis and calculate a return-on-investment (ROI) and (2) to align the collective interests of the Client and that of RWCO through the mission of winning work vs. the notion of charging more by the hour. In this way, impediments like extensions, amendments, and procurement delays do not impact the cost of the project, as the meter is not running regardless of the procurement getting bogged down in Q&A or extended for the next 3 months…but I digress.
Ok, back on topic. During the conversation, this potential Client – now fully aware of RWCO’s rate methodology of project vs. hourly rate – asked “what if I lose.” The basis of her question – the motivation for asking it – was not so much that she wanted reassurances on motivation and consideration of a reduced rate in exchange for a win fee, but rather was the result of a bad experience in which a prior consultant charged her firm a considerable sum to write a technical proposal. And they lost.
In fact, they did not just lose; their technical was never even opened. This was because the evaluation process, as specified in the Request for Proposal (RFP) package, outlined a three-step evaluation approach, starting first with (you guessed it!) PRICE. To make matters worse, her price as lower than the awarded price BUT, it was so slightly lower that I dare say it was irrelevant to the evaluation. In fact, the Federal Government could very well make the argument that the few dollars difference might as well have been a rounding error.
ATTRIBUTE #2: Bid Activities & Resources are in Balance w/ Size/Scope of the Contract
This moves us into a discussion of Attribute #2.
Attribute #2: Bid Activities and Resources are in Balance with Size/Scope of the Contract
In the prior discussion of a contract award that was not to be, it is important to note that the totalawarded price of her competitor for the entire contractwas $140,000.
So, a few take aways here as I know there is a lot to unpack:
- Potential client had a bad experience with a consultant because they charged a bunch of money but did not win. Let’s assume, for sake of discussion, that this totaled about $10,000 of proposal costs.
- The Potential client wanted this third-party consultant to share in the pain of losing and was miffed that money was paid for a consultant to scribe a technical that was never read.
- The total contract award $140,000!
This scenario highlights some decision making that is massively out of alignment with the realities of the procurement.
First, the bidder must always have full awareness of the evaluation process. In this example, price was critical and a key determinant of the award. Failure to recognize that price is the first step of the evaluation process, and then to focus resources on that initial step. Second, while I am all for throwing other consultants under the bus when they fail to win the client ne business, the consultant in this case may have written the best proposal known to man. However, that does not matter and the evaluation rules make it so that does not matter.
And lastly, as a rule of thumb, no organization should ever allocate 5% (or more) of total award value to one small sliver of the proposal process. Throwing $10,000 out the window on a $140,000 contact (which would have been the potential client’s awarded value as that is what the bid) is never a good idea.
The second step is to allocate resources in accordance with the opportunity and do so with full knowledge of the evaluation criteria and how such resources are allocated against the evaluation criteria elements.
ATTRIBUTE #3: Use of Tools and Templates
Anecdotal evidence suggests that the internet is stocked with proposal tools, templates, and software that range from RFP compliance and outline builders to “proposal bots” that basically write the narratives for any given proposal using key words from the actual RFP and associated attachments. The plethora of proposal “cheats”, if you will, suggests that the automation of the proposal process is a highly sought-after attribute of firms small and large. Tool and template builders market these things as gadgets that free up an organization’s resources and enhance the proposal process. One assumes that these tools alleviate compliance issues, increase capacity (as an organizational force multiplier), and decrease the chaos and stress that surrounds a typical bid effort.
What we have found is it is exactly the opposite. Organizations that have historically turned to tools, templates, and other software to “mass-produce” produce bids do so in an effort to eradicate some issue or concern that they perceive has hampered their ability to win. It may be limited personnel resources, limited time and capacity, or simply limited experience of how to navigate an RFP and construct response volumes in a compelling, compliant, and complete manner. Regardless, the underlying similarities of all of the organizations RWCO has interacted with over the last twenty-years is that such tools will allow the user(s) to increase proposal writing capacity and thus increase the volume of bids submitted. Logic would dictate that an increase in bid volume will result in – you guess it – more bids awarded and thus more revenue to the organization.
To gain greater clarity on the subject, RWCO conducted a non-scientific poll of fifty (50) of its existing clients, across ten industrial sectors and found that about 40% of them had used or currently use proposal support tools, templates, software, or simply regurgitate prior proposals with specific changes and edits that are bid specific. Of that 40%, which is 20 organizations, the average win rate was about 11%. The 30 organizations that did not utilize such tools reported a win rate of around 50% [Non-scientific poll conducted from August 2019-November 2019].
All things being equal, why is there such a considerable difference between the two groups? It could be for any number of reasons, but via follow-up discussions which each of the 50 organizations polled, a few items did emerge as factors in the winning and losing with the help of automated tools:
(1) Nothing, not a tool, a piece of software, or a previously successful template, takes the place of diligence and responsiveness. The more firms use tools and templates, the more general and less differentiated their proposals are to the evaluators. Moreover, because the tools and templates are available to anyone for a price, bidders tend to all look the same to the evaluator and thus the bids become generic. With generic proposals, just like generic shampoo or toothpaste, it becomes all about price.
(2) Using tools and templates extricates the brains from the process. The thought being that, if one could use a tool or template and cut the proposal writing time by half, the organization just saves time, personnel, and other resources that could be deployed elsewhere. This is most certainly true, as least when it comes “saving time”. However, extricating the brains out of the process, at least for the mundane steps of compliance and outline building, eradicates any real institutional learning. In the opinion of RWCO, it actually makes the organization dumber. Even worse, RWCO has actually sat of debrief calls from clients who – after bidding through automation for an extended period of time without winning anything – realizes that they have taken a step back and now require help. On such debrief calls, the information provided by the evaluators is useless as the connective tissue but the organization, its personnel, and the proposal. Thus, while the evaluators are passing along feedback on the “automated” bid, the participants on the call have limited awareness on the materials actually structured into the proposal.
(3) Using tools that support human interaction, such as compliance bots, proposal management software, pricing models, or other resources that actually help a real human synthesize information more efficiently are great tools. They optimize the efforts of the organization while also affording the organization to opportunity to deploy its expertise to create solutions, differentiators, and processes that actually make the submitted proposal far more compelling and customized. When experienced individuals armed with expertise own the process, they get into the weeds of a proposal, and then end result is a much different product with the added benefit of institution learning and development, thereby making the organization “smarter”.
A key takeaway is that nothing can replace the experience and expertise of the personnel inside an organization. It is the fuel that turns to combine; it is what fuels growth. Tools that optimize the performance and capabilities of an organization’s greatest resource – its people – are tremendously useful. Pricing models, compliance bots, and the like, all allow the brains behind the process to be smarter, faster, and more precise. However, the dark side of such tools is that, when used to circumvent the thinking and doing part of the process, when utilized over time it actually erodes an organizations ability to differentiate, dumbs down the proposal process, and contributes to a considerable reduction in the organization’s long-term ability to win work through the proposal process.
ATTRIBUTE #4: Think Time
Attribute #4: Think Time and its Correlation to Winning and Losing
This is not going to come as a surprise: for most things in life and in business, speed and quality tend to have an inverse relationship. It may (or may not) come as a shock, then, that given this obvious relationship between speed and quality, most organizations involved in the business development and proposal writing process seem to structure their resources and actions in such a way that places a premium on speed.
RWCO conducted an informal poll of past and present clients, in which RWCO leadership asked a hypothetical question that closely resembles a real scenario: if you had thirty (30) days to response, how many days would your organization allocate to stripping apart the RFP and writing a complete responseto the response requirements?
The common answer was about three weeks, 21 days, give or take. A full 75% of the timeline afforded to organizations seem to be gobbled up by merely development the volumes, building the outlines, and then writing narrative. In many instances, clients suggested that the response volumes would lack a complete first draft well into the last week prior to submission.
It is not uncommon, when interacting with potential new clients, for RWCO to be asked to quantify and articulate its win rate. As a company, RWCO sits right around a 70% win rate, and this win rate is audited – annually – by an independent Certified Public Accountant (CPA). The reason why is the very subject of this fourth key attribute: maximizing “Think Time” produces higher quality results that generate a greater win probability in the long term.
We’ve all been there, cramming for a test or pulling an all nighter writing a term paper. Those that make a career out of proposal writing and business development have a long-list of nightmare scenarios involving lack of sleep, gallons of coffee, and stress. The problem is, when racing against the clock, we seemingly turn off the part of our brain that absorbs and distills information and we construct creative problem solving and rationale thought as if we are pushing a round peg through a very small square hole. The root cause of this all too common scenario is a long lag in RFP review and proposal writing to the point of a complete (i.e. all sections and response requirements are covered) draft being generated only days away from submission. This lag pushes the review cycle up against the clock.
Those that are then tagged with the honor of sitting on the color review teams have to juggle, in most cases, their day job as a corporate executive, program/project manager, or other contract-dedicated staff member with the time pressures (and peer pressures) of reviewing and commenting on a given proposal draft. In an effort to both “check the box” and to placate those in leadership and in business development, this poor soul that flies through the proposal at Mach 5, dropping in comments and sprinkling in topical edits throughout the document (we need to provide evidence we did the review!).
The outcome is, in most cases, a string of comments, open ended statements that provide no real feedback or answer, or even refer the writer to someone else who may be equally annoyed and time constrained. The proposal hall of fame is littered with these proposal graffiti marks: “…see salary about our work with the Air Force….” and “… need more clarity here….” or my personal favorites…”restructure this sentence, it does not make sense” or “not sure we want to say this…”.
Once the proposal writer is finished banging their head on the desk, crying, or plotting their escape, they are then left holding the bag. As such, and with a deadline for submission days (or minutes away), the secret sauce of the organization is squandered. The brainpower that makes the organization successful has been washed away by the avalanche of time, workload, and checking the box.
Getting back to our informal poll, we ask the 25% of the crowd, those that allocated more time than not to the review process, on what their annual win rates looked like. To an organization, each and every one of them reported rates at 50%. The key here, with all else being equal, is that the think, problem solving, and strategic thinking that goes into the review process generates meaningful approaches and refined processes that differentiate the organization from its peers. It allows writers to write with the objective of putting narratives on paper in a manner that cuts across the entire RFP requirement while setting the reviewers up for success with affording days (not hours, or a day) to review a few pages, set it down, think, look at again, think, and process. Ultimately, this shifts the proposal process from a writing exercise, to a thinking and problem solving exercise. As such, the organization gets smarter and more innovative…which translates into more wins than losses in the long run.
PUBLIC SECTOR PROCUREMENT BAROMETER SURVEY RESULTS
RWCO conducts an annual research survey of comprehensive market trends across the Federal contractor community. The research survey, entitled “Public Sector Procurement Barometer”, is fielded via an online research portal. Respondents are invited to participate in the survey through an email outreach campaign that is conducted throughout the month December. The survey is released from January 2-January 31 every calendar year.
SITE III WHITE PAPER
The DIA will combine two information technology contracting vehicles worth potentially $5.1B as a follow-on to the Enhanced Solutions for the IT Enterprise contract (E-SITE). The DIA plans to merge the $3B Infrastructure Sustainment and Development 2 program with the $2.1B Application DS2 solicitation to form a SITE III multiple-award contract. IDS2 covers cloud services and data center support work, while ADS2 seeks data integration, software engineering and other technical support services.
LTASC SCOPE OF SUPPORT
RWCO has assembled a complete review of the LTASC III program in the form of a project plan and we are providing you access to that project plan with no strings attached. Consider it our way of providing value in the form of market intelligence and LTASC guidance while demonstrating our capability of support on LTASC responses in the future.