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Identifying Your Competitors: How Wide Should You Cast Your Net?

Winning government contracts requires a lot of preparation. Would-be contractors spend hundreds of hours developing capture strategies and crafting compelling proposals, as well as (hopefully) assessing the competition. A successful competitive intelligence effort will identify the overall approach, as well as the strengths and weaknesses of each credible competitor, but this requires early identification of who those competitors are likely to be. An overly narrow focus risks missing one or more key competitors (surprises are bad), but an overly wide focus drains resources (like trying to boil the ocean).

So how wide is too wide to cast your net?

A textbook capture effort begins very early, well in advance of the customer releasing a Request for Proposal (RFP) and preferably even before word of the opportunity has hit the streets. This requires strong customer intimacy and keen market insights, but that’s a topic for another day.

Regardless of how your organization learns of an opportunity, your competitive intelligence effort should begin immediately and continue in sync with the capture effort. At this early phase, competitive intelligence begins with the critical step of identifying who the companies are that will likely bid against you.

There’s an obvious trade-off in starting this process so early; the less you know, the more you must assume. Alternatively, if you wait to assess the competition until you know who they are, it may be too late to make any needed course corrections. Therefore, the competitive intelligence effort is charged with making early predictions about who the competitors will be. But how?

An early prediction of which companies are likely to bid against you is based almost entirely on capabilities. Who in the industry has the capabilities required to submit a credible bid on the opportunity in question? Answering this question will require some research, but not as deep a dive as you will need to do later as the field narrows. For now, look at the websites and other marketing literature of would-be competitors. Read their capabilities statements. Review their list of past contract awards and compare that against their claims to assess their credibility.

It’s important to note that the government’s procurement strategy nearly always changes and evolves, making its requirements clear. As they become more specific, some competitors will drop out. This is the time to dig deeper into the contenders. Look at their strategies, unique strengths and weaknesses, and present and past clients. After you’ve done that, you can narrow your assessment down even further by reaching out directly to those companies to discuss any interest they might have in the bid. Look into their key personnel and find out what kinds of things they have historically shown interest in pursuing.

Be prepared for the evolution of the bid to involve huge jumps. What starts as a full and open competition may morph into a small business set aside, completely changing everything about the process.

Keep in mind that securing a government contract is an iterative process. As the government’s requirements become clearer, you can re-focus your lens based on those things to get a better idea of who your competitors are and the strategy you need to employ to win the contract.

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Evaluating Your Competitors’ Capabilities: Where to Start?

It goes without saying that winning government contracts requires a thorough and intimate understanding of the customer’s wants and needs. In positioning to win, however, it is equally important to understand how other companies (competitors) will attempt to meet those needs. In attempting to study and evaluate your competitors, one of the most fundamental questions to answer is “What do they do?” What are your competitors’ capabilities, and how do they apply?

In evaluating competitor capabilities, start with each of your potential competitor’s websites. Read their capabilities statement. What do they say they can do? What do they list as their products and services? What type of prospects do they target, or have they targeted in the past?

Now take it to the next level. Try to match their claims against reality. They may say they have capabilities in “cybersecurity,” but what type? Do they develop products or just implement other company’s software? Are they all about comprehensive strategies, or do they have a niche? Do they specialize in general prevention, rapid detection, and response, or is their focus endpoint, cloud, application, or network security? Most reputable competitors will not deliberately misrepresent their capabilities intentionally, but you can bet they will exaggerate to make them sound as good as possible. It’s up to the savvy and tenacious analyst to drill down and verify that any claims that competitors make are accurate.

Even an accurate list of capabilities doesn’t tell the whole story. What really matters is whether the competitor has actually put a capability they claim into action …and if so, when, where, and for whom? These are the details that put teeth into your competitors’ claims. Are there testimonials from clients on their site? Finding convincing and compelling evidence that your competitor’s capabilities have been put into action effectively on behalf of a client is what gives them credibility.

Make it a point to find out not only which contracts your competitors have been awarded, but how those projects turned out. Were the contracts shortened or even cancelled because of cost overruns, problems with making deadlines, or other deficiencies? Following a competitor’s social media accounts can also be revealing.

One helpful tool for evaluating competitors’ capabilities is called a Most Important Requirements (MIR) assessment, where you create a list of the customer’s most important requirements and rate each competitor against each of those requirements. This will show you how your competitor’s strengths will align with what the eventual RFP will be looking for. 

Evaluating your competitors will teach you a lot about your business and broaden your knowledge of the industry so that you can refine your business strategy, craft winning bids, and grow your company.

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Understanding the Requirements: How to Earn a Winning Edge

It may seem rather obvious that the first step in competing for a federal contract would be to try to understand what the customer is actually asking for. Isn’t that just common sense? And yet a surprising number of companies make the mistake—consciously or subconsciously—of underemphasizing this fundamental principle. Consequently, the resultant proposals are either too self-centered, or worse, non-compliant.

Failing to (a) understand what the customer actually needs and (b) address those needs thoroughly in a proposal is often the reason companies fail in their attempts to secure contracts in the federal marketplace.

How does this happen? It happens when a company focuses too much on convincing the customer to buy what they’re selling rather than first taking the time to understand what exactly the customer needs and then striving to satisfy those needs. This may seem subtle, but there is a vast philosophical difference here that can truly make all the difference between winning and losing.

It’s important to note that every RFP contains explicit and implicit requirements. The explicit requirements are those requirements that are articulated by the customer to all bidders, so that all are equally aware of them. These explicit requirements are the foundation—they are the key components that a contractor MUST address in order to qualify for a given opportunity.

Just because they are explicitly stated does not mean they are clear. Sometimes (okay let’s be honest, much of the time), the customer doesn’t actually know what they want. Sometimes (if you’re lucky), the customer will be conscious of their limitations, and will seek input from industry (via RFI, sources sought, Draft RFP, etc.) to help them understand what is possible, but not always. Unfortunately, there are many times where the customer has no clue what they want, but thinks they do, and moves forward at ramming speed.

Behind the explicit requirements, there is typically a hidden list of unspoken—or implicit—requirements that represent the customer’s true definition of value. These are what we call “customer hot buttons,” and every customer has them. A customer’s hot buttons will motivate them, inspire them, or perhaps even keep them up at night. Identifying and addressing these implicit requirements is where a winning strategy beings—it is how a company differentiates themselves from their peers and gains a competitive edge.

You may ask, how does one go about identifying a customer’s implicit requirements? The answer is … (you guessed it!) … good old fashioned customer intimacy. Know your customer. Study your customer. LISTEN to your customer! Talk to others in the industry about your customer. The ultimate source of your customer’s hot buttons is always your customer.

Once you have come to understand explicit and implicit requirements of an opportunity, THEN you can begin matching them against your internal capabilities. Your strengths and weaknesses will emerge quickly, enabling you to develop strategies for leveraging and enhancing your strengths and mitigating your weaknesses (e.g., teaming).

The better you understand your customer’s explicit and implicit requirements, the better positioned you will be to enhance your proposal in ways that your customer appreciates and values. Don’t assume you know the answer, don’t be afraid to ask “dumb questions,” and don’t try to sell what you have before you understand what your customer wants.

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Price To Win: Know When to Hold ‘em and When to Fold ‘em

In today’s federal marketplace, anyone can compete for business.

And anyone can win—at least some of the time. It’s the possible losses, however, that can provide more than experience to learn from—they can, at times, be ruinous.

Therein lies the rub.

Because opportunity incurs costs—in resources, bid and proposal feeds, and your staff’s time, smart would-be government contractors know that Price To Win (PTW) strategies are a key part of capture. Smart government contractors can tell you that identifying your Price To Win position is more than a number; a true PTW strategy reflects the complex relationship between your customer needs, their allocated budget, and their spending patterns.

Industry expert Randy Richter, Chairman and Price To Win Director at Richter & Company will tell you that even smarter contractors take the definition of PTW a bit further. These competitors know that determining their PTW position for a given opportunity not only involves factoring in the impact of their customers’ needs, budgets, and spending patterns, but also analyzes their competitors’ solutions, strategies, tactics and degree of aggressiveness throughout the bid cycle.

But only the smartest contractors, says Richter, understand when the PTW process should actually begin. “Some will say that the process should begin early in the life cycle of the bidding process, but in reality, the smartest competitors begin crafting their PTW strategies well before a draft RFP is in place,” he says. “The wisest decision a contractor can make is not to try to decide how to win a bid, but whether to compete at all. Sometimes, the better part of valor in government contracting is to step back from a given opportunity so you can live to fight another day.”

Richter says his firm’s PTW support is provided by experienced analysts who understand the government process, know how to price, and can think outside of the box. “We train our team to ethically gather information, analyze it to create actionable intelligence, and develop solid assumptions,” said Richter. “We then customize our proven processes and tools that we’ve developed to each potential competitor’s situation to produce accurate, defensible results.”

There are two ways to build a PTW strategy:

  • The Top Down process uses historical data, including information on bids previously awarded and budget information to identify the parties’ “comfort zones.” In other words, a Top Down determines in what range customers tend to award bids, and where competitors tend to receive them. The Top Down approach is best used in early gate reviews to help firms decide whether to compete at all, and/or to develop proactive solutions using “design to cost” approaches. Effective Top Down efforts can be pursued easily and affordably as ongoing projects because very little data is required.
  • A Bottom Up PTW analysis is best performed as soon as customer requirements and evaluation processes are known, typically once the DRFP is released. Based on identifying targeted competitors’ solutions, building up their costs, and identifying how these costs will be prices using their strategies, is the foundation of Bottom Up PTW reviews. Results are updated as new solicitation documents become available, with work continuing to cover amendments, ENs, FPRs, and negotiations.

Once you have your PTW position, what needs to happen next? To compete, or not to compete. To engage in the game and work to win the hand, or—like The Gambler—know when to walk away and when to run? Hold ‘em or fold ‘em?

Richter says this is one of the most important moments in the entire process—where a business decision must be made that only the potential federal contractor can make. “Our job is to show our client the position they need to achieve to beat their competitors, but whether they should attempt to move their company into that ‘win zone’ is entirely up to the firm’s leadership.

If you need more information to decide about whether to engage, my best advice is to ask questions,” said Richter. “I always told my kids that the only dumb question is the one you don’t ask, and I extend that advice to our clients today. Unless the project is classified, of course, why not take a chance? Ask the question. You just might get the answer you need to make an informed decision.”

Richter & Company’s consistent process, innovative tools and experienced staff have helped customers win over $30 billion since 2006.

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SWOT to Strategy

Many companies include the SWOT chart as part of a competitive intelligence presentation.  They spend a lot of time preparing the strengths and weaknesses, opportunities and threats, and creating a beautiful image.  And… that’s it.

SWOT charts were designed to be springboards for creating strategies.  What products or services will the company leverage?  How will they differentiate their offering?  What story will they tell?  What are their weaknesses?  Are they aware of them?  How will they mitigate those weaknesses?  How are they perceived by the outside market?  What kinds of opportunities and threats exist outside of the company’s control?

Strengths identified in other companies should give you incentive to bolster your own solutions.  If your solution is not as capable, or desirable, should you be bidding?  Opportunities allow you to assess how your own company will be viewed, and where you can maximize play in a potential marketplace.

Weaknesses and threats can be turned into ghosting opportunities.  How can you capitalize on potential (or perceived) risk?  How can you differentiate your own offering to highlight an area of weakness in another solution?

SWOTs can be extremely valuable tools, if they’re used correctly.  Contact Richter & Company today to find out more about positioning and strategies that help you win.

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The Rise of the Dark Horse

Increasingly, during Richter & Company’s pricing assignments, a “Dark Horse” or “Notional Bidder” is named as a target for analysis.  As the federal marketplace becomes more cutthroat, companies are increasingly concerned about the creative pricing strategies that have been offered on recent contracts.

Small businesses are becoming more sophisticated, investing in experienced business development people to bid creatively and expand their business.  Large businesses are creating cost pools to keep G&A down, and bidding zero fee to “buy into” programs.  A recent Grant Thornton study showed that federal contractor profit rates are plummeting, with 60% of survey respondents reporting no profit or profit in the one to five percent range.  And 38% of respondents said their revenue from government contracts declined in the past year.  It’s an uncertain world out there for federal contractors.

Let Richter & Company help your company beat the Dark Horse.  Our consultants are up to date on market trends, providing actionable intelligence that will allow you to offer the best value to the Government.   We have a large number of connections within industry, and considerable insight as to what the government is actually seeking.  Once you have insight to that worst case notional bidder, you can position yourself to win.  Contact Richter & Company today for more information.