BD Phase III: Lead capture & step 3 bid decision

This section provides a detailed summary of the typical government contractor capture management process (Phase III of the Business Development Process).

Once the decision to capture a qualified lead is made (see Business Development Process – Phase II), the senior company manager assigns the capture responsibility to a capture manager in the department that would most likely provide the majority of the required services or products. This individual is responsible for formulating the capture strategy including the teaming and technical approach. The capture manager should:

  • Define the winning capture strategy with the support of the BD lead
  • Be a champion for necessary capture and proposal resources
  • Build the winning industry team
  • Keep the company focused on the bid
  • Support the proposal manager during the proposal phase

The capture manager, with support from the BD lead, has six main responsibilities during the Capture Phase that are described in detail in the following paragraphs. They are:

  • Capture plan preparation
  • Positioning
  • Competitive analysis
  • Teaming
  • Bid decision facilitation
  • Reporting

Capture Plan Preparation

A Capture Plan should be required for any bid over $XX in total revenue value. The capture manager is responsible for preparing the plan; the BD lead and proposal manager are responsible for preparing certain sections (see figure for an example).

GOVPROP_CapturePlanOutline

BD = BD lead   CM = capture manager   PM = proposal manager

GOVPROP Sample Capture Plan Template (PowerPoint slides)

The Capture Plan is important because it:

  • Focuses thinking
  • Provides discipline
  • Surfaces action items
  • Raises win probability
  • Provides a framework for capture planning discussions

Positioning

The purpose of positioning activities as part of the capture process is to positively influence the customer prior to the release of the request for proposal. Actions should be taken to:

  • Establish strong relationships with all key client decision makers and influencers
  • Demonstrate technical insight
  • Get the project manager and technical experts wanted by the client
  • Form the right team of subcontractors (grab the “liked” incumbents)
  • Develop and communicate a creative, workable solution to the client’s problems

Competitive Analysis

The purpose of understanding the competition is to gain the insight necessary to formulate a strategy and assemble a team that will beat them. In some cases, the decision will be made to try to team with a strong competitor to “take them off the street.” Some of the steps to perform include:

  • Identify other potential bidders and their teaming partners
  • Delineate their strengths and weaknesses
  • Incorporate this competitive information into the capture strategy and ghost their weaknesses in the  technical, management and pricing proposal
  • For larger opportunities, assemble a group of people who know the likely competitors and have this group develop a strategy to beat them. Use the results to structure an even stronger proposal.

Some competitive analysis resources are:

  • Client visits FOIA (Freedom of Information Act) requests for information from the government
  • Annual Reports
  • Dun and Bradstreet reports
  • Telephone networking (talking to BD directors at other companies)
  • Specialized market research firms
  • Outside sales consultants
  • Former employees of a competitor
  • Competitors themselves (through exploratory teaming meetings)

Teaming

Selecting the best team is one of the most important roles of the capture manager and is quite often the difference between winning and losing, especially when your company is not able to be the prime contractor. Some factors to keep in mind:

  • Develop the winning criteria for subcontractor (teammate) or prime contractor selection BEFORE selecting the teammates or prime. These criteria should be based on stated and perceived client needs as a result of reading procurement documentation and client visits (technical capabilities, solutions, company size, socioeconomic requirements, incumbency, etc.)
  • Consider the strategic advantages beyond this competition of teaming with a company. For example, penetration into new targeted markets or a future strategic prime contractor for small disadvantaged, 8(a), veteran, woman owned or HUB zone competitions
  • Evaluate each candidate company against these criteria to determine the best fit
  • Avoid teaming just because it’s someone you already know…team to win
  • Develop effective statements of work for areas to be subcontracted out

Prime contractor selection criteria to consider when your company is a subcontractor include:

  • Technical role and work percentage being offered. Get it in writing. A teaming agreement that only promises your company a percentage of the work as a “goal” as opposed to a “commitment” is undesirable and should be avoided, if possible. Your objective should be to negotiate a specific minimum work percentage and lead responsibility for specific SOW areas.
  • Financial credibility/stability. Always run a Dun and Bradstreet (D&B) report on a small company you are considering as a prime contractor to make sure they are financially viable and able to make payments in a timely manner. Also, ask other contacts in the industry about their experience teaming with this company. In cases where your company is a strongly desired prime but is also a payment risk, discuss with your company’s senior management whether to require an escrow account as part of the teaming arrangement. This will insure you in case the prime contractor’s cash flow proves insufficient to pay your invoices. However, this is often a sticky point to negotiate with small business owners who often take offense.
  • Client relationships and incumbency. Make sure the selected prime contractor has a good reputation with the client (don’t be afraid to ask the client what they think of different companies).
  • Key personnel. Having one or more of the company’s staff as key personnel in the proposal and at the oral presentation is highly desirable.
  • Ability to do a proposal. Ask small company prime contractors for examples of prior proposals. Recognize that most small companies are not capable of preparing a top quality proposal and will require extensive support from your company. Factor this proposal cost into the teaming decision and win probability calculation.
  • Past performance. Make sure the prime contractor has the necessary positive project citations most likely to be required in the RFP.
  • Competitive pricing capability. Have direct discussions about pricing strategy with potential prime contractors to make sure they can be cost competitive and also to avoid the prime contractor “squeezing” your labor rates or product pricing.
  • History of honoring agreements and treating subcontractors fairly.

Subcontractor teammate selection criteria to consider when your company will be the prime contractor include:

  • Client relationships and incumbency
  • Financial stability. Run a D&B report on any small company to make sure they are financially viable
  • Technical insight and capabilities in relation to ours
  • Key personnel
  • Past performance
  • Competitive pricing capability
  • History of helping with the proposal. If there are any doubts about a company’s ability to support the proposal effort, put a requirement that describes the specific support in the teaming agreement.
  • Do not make verbal teaming commitments without a company executive’s approval. Your company and a potential teaming partner may sign a non-disclosure agreement when it is necessary to discuss competition sensitive matters prior to actual teaming. However, the competitive information about your company’s capture strategy that you share with other company representatives should still be carefully guarded. All teaming agreements should be reviewed and approved by contracts prior to execution.

Bid Decision Facilitation

The last major activity of the capture phase is the bid decision meeting. Ideally, this takes place on two occasions – a few months before the release of the final RFP and a day after the release of the RFP. However, today’s fast turnaround government procurements often do not allow sufficient time for two meetings. The capture manager is responsible for scheduling this meeting. Participants should include:

  • Business unit manager
  • Finance and contracts
  • Recruiting staff, if relevant
  • Program director
  • Capture and/or product manager
  • BD lead
  • Proposal manager

For company priority leads, capture meetings might also include a company executive, CTO and CFO.

The capture manager presents the capture plan at this meeting. The BD lead presents the slides for his/her section including the competition and major themes and discriminators. Then, the capture manager passes out a copy of the bid decision matrix (see following Table) and leads a discussion of each of the bid decision elements.

Bid Decision Matrix Section 1

Bid Decision Matrix Section 2

Bid Decision Matrix (PDF document)

Bid Decision Matrix (Word document)

After making any adjustments to the criteria scoring, a final bid decision is made by the business unit manager with input from all the attendees. A company executive often has final bid decision approval authority when bid and proposal expenditures will exceed a certain percentage of total company allocated business development budget and on all firm fixed price bids that exceed $XX in expected order value.

Some of the reasons a decision might be made to stop pursuing a lead are:

  • BD funds are not available to pursue the bid
  • Can’t get the right companies for the team
  • No available/acceptable Project Manager candidate
  • Insufficient proposal resources
  • Strongly positioned low cost bidder emerges
  • Unacceptable contract terms and conditions
  • Key client relationships have not been established

It is important to consider the probability of the bid both for the purpose of maintaining a balanced bid portfolio and understanding the risk associated with bidding a specific opportunity. The following VERY ROUGH general guidelines can be used to assign a win probability (consider the entire team’s win probability whether your company is a prime or subcontractor. These guidelines for a re-compete apply when the number of probable competitor is only one or two. As the number of credible bidders rises, the incumbent contractor’s win probability will usually decline):

  • Blind bid – new market: 1-5%
  • Blind bid – established market (current client): 10-25%
  • Well positioned bid – new market (new client): 20-30%
  • Well positioned bid – established market (current client): 25-50%
  • Re-compete with satisfied client: 25% to 75%
  • Sole source to company or recent win contract growth: 50 – 90%
  • Contracts and pricing

The contracts and finance departments are responsible for supporting the following activities:

  • RFP analysis
  • Proposal support and procurement strategies
  • Proposal support when subcontractors are involved
  • Subcontractor proposal evaluation
  • Preparation of “cost volume” terms and conditions
  • Negotiation – prices, terms and conditions
  • Post award contract administration
  • Program management support
  • Teaming agreements (as prime and subcontractor), non-disclosure agreements, etc.
  • Business advice and guidance related to contract terms
  • Subcontract administration
  • Any required government Contractor Purchasing System Reviews

One of the most important aspects of contracting for all company managers to be aware of is the relative risk of different contract types. The major variable is the amount of financial responsibility the contractor assumes and the potential financial reward. Your company should have at least a contracts expert and a finance expert available who understands each of these contract types as well as the Federal Acquisition Regulations. Here are several major contract types in ascending order of financial reward and descending order of risk:

  • Cost-Plus Fixed Fee (lowest risk and lowest potential financial reward)
  • Cost-Plus Award Fee
  • Cost-Plus Incentive Fee
  • Time and Materials
  • Cost-Plus with rate limits
  • Firm-Fixed Price level of effort
  • Fixed-Price deliverable (highest risk and highest potential financial reward)

Before and during a project, it is crucial that everyone on the capture and project team:

  • READ the solicitation
  • WRITE proposals carefully
  • READ the contract
  • INTEGRATE the proposal and the contract
  • CONSULT company subject matter experts

Reporting

The capture manager is responsible for providing capture status in a weekly capture e-mail status report, as well as updating the company lead tracking system.

The Capture phase concludes with the release of the government Request for Proposal (RFP). A final bid decision is made after reviewing the RFP requirements including evaluation criteria and special contract clauses.

— Mike Lisagor

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