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Recency and Relevancy: Gaining a Window Into a Competitor’s Past Performance

Earlier this month, we discussed the federal source selection process, including how proposals are reviewed, evaluated, selected, and ultimately awarded.

To recap, we talked about how government officials use multiple sources of information when making award decisions. In this blog, we’d like to address one of the most common factors: Past Performance. Simply put, Past Performance is an assessment of a bidder’s likelihood to successfully perform the contract, based on its history with similar contracts. This is important not just for your own bid, but also for understanding how your competitors will likely score on their past performance, and how you can better counter that with your own approach.

In evaluating a bidder’s past performance, government officials use the Contractor Performance Assessment Reporting System (CPARS). Exclusively available to the government, CPARS includes detailed information on how the bidder has delivered on their previous contracts with the government. This includes their record of meeting requirements and conforming to standards of good workmanship, forecasting and controlling costs, and adhering to schedules. CPARS also evaluates what FAR part 42.1501 refers to as a contractor’s “commitment to reasonable and cooperative behavior and customer satisfaction” on previous government contracts.

Federal decision-makers evaluate contractors’ past performance based on two standards: recency and relevancy. “Recency” refers to how long ago the work was performed, and “relevancy” has to do with how similar this work is to what the current RFP is asking for.

Because FAR 42.1503(4)(d) deems all past performance data as Source Selection Sensitive; information contained in CPARS is not releasable (unless expressly directed by the agency who submitted the data). However, contractors can gather a surprising amount of information on their likely competitors just by leveraging various open-source tools and their industry contacts.

Evaluating Recency and Relevancy

Requests for Proposals typically give specifications for what they deem to be a valid past performance reference. Typically, a good past performance reference is similar in size and scope as the contract you’re pursuing and within a 3–5 year window. Section M of the RFP discloses how these references will be evaluated.

Your analysis of the relevancy of a competitor’s past performance starts with determining which category it is in. For example, is this a product-based contract that involves the development of an item or low to full-rate production? Or is the opportunity calling for a service-based solution such as mission-based support or systems integration and engineering? Especially when the solicitation is looking for a service to be performed, be sure to get a good handle on the contract requirements by breaking them down into simplest terms. For an IT contract, for example: is the agency looking for cloud-based services support? Help desk support? Cybersecurity? The same applies to any product-based procurement.

Good sources of information for competitor past performance analysis include databases like GovWin, DACIS, GovTribe, and BGOV. These databases should be augmented by searching press releases and other news articles for announcement of awards that may not have been captured (or easily found) in one of the above databases. GlassDoor and other social media platforms can be excellent sources of data for contractors that are performing poorly, but a good analyst will always guard against potential bias by taking negative press with a grain of salt.

Finally, as you examine your competitors’ past performance, there are a few questions that are good to consider:

  • Are the contract requirements well within their capabilities, or does their contract record suggest they have “gaps” in their ability that they must fill via teaming?
  • Do they have sufficient experience in designing and manufacturing the product in focus?
  • Have they recently won a large number of programs, and might struggle with bandwidth for the upcoming bid? Will they need to expand their manufacturing capabilities because they are currently performing at max capacity? Or will they need to go on a hiring spree to fill the required positions because this is a new contract type?

All this information is geared toward a single goal—providing your capture team with information that will inform strategy. It gives you the best possible chance to prepare for – and hopefully outmaneuver—your competitors and enhance your win probability.

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Understanding the Federal Source Selection Process

When the federal government issues an RFP asking companies to submit proposals to manufacture goods or supply services on a contract basis, the application process is complex and highly detailed. Likewise, there is an equally specific way through which the winning bid is selected. This selection process is defined by the Federal Acquisition Regulations (FAR) system, a group of uniform policies and procedures that guide the acquisition of goods and/or services by all executive agencies. 

Found in Title 48 of the Code of Federal Regulations, FAR consists of 37 chapters, each hundreds, if not thousands, of pages long. (Chapter 1, which applies to all government agencies and covers cost accounting standards, is more than 2,000 pages long.) Fortunately, familiarity with the entire document is rarely necessary. Part 15 of FAR that deals with the selection process, although other sections do come into play in rare circumstances.

Why is understanding the selection process important? Simply put, knowing what steps the agency will take in making a decision will help you organize and write your proposal. Most would-be contractors know that considering “What does the buyer want?”, “What are their critical needs”” and “How does this potential customer define value?” will benefit them, but understanding the steps through which their proposal will be vetted before a final decision is made is equally important. 

After the government receives the proposals and the deadline passes, pricing is stripped from each submission. The bids are then processed through three distinct steps as outlined in FAR:

  1. The agency convenes a Source Selection Evaluation Board (SSEB). Typically, the SSEB is made up of a small group or team of individuals, but it may also be a single person depending on the size and circumstances of the agency. The SSEB evaluates each proposal (again, without pricing information) separately. Each submission is evaluated for general strengths and weaknesses; any pluses or minuses that are particularly significant are identified and highlighted. 
  2. A Source Selection Advisory Council (SSAC) is chosen. Its function is to take the information the SSEB has given them, bring in the pricing information, and provide the ultimate decision maker, the Source Selection Authority (SSA), with a recommendation as to which contractor to choose.
  3. An SSA’s sole responsibility is to select the winning bid. While the SSAC’s recommendation is carefully considered, the SSA is not required to go with its recommendation.

Most often, however, the SSA will agree with the SSAC’s recommendation and make the award in that applicant’s favor. Occasionally, however, the SSA will either send the SSAC back to the table to provide more justification and back-up information on their choice or opt to go in an entirely different direction—in which case, they take full responsibility for the decision.

When an SSA deviates from the typical federal source selection process, there are inherent risks. This is why it will be important for the ultimate decision maker to be able to clearly articulate their reasoning for going against the advice of the SSAC. For example, if there is a protest over the award, the SSA will need to justify and explain its actions thoroughly. If they can show that their decision clearly provides the government with added value, as long as it doesn’t contradict the rationale given in the RFP, the GAO will side with the SSA. 

In addition to understanding the source selection process, it’s also important for would-be contractors to know who is likely to be involved in the information-gathering, evaluation and decision-making process. Very rarely, the customer will disclose who these people will be, but far more likely, it is up to those submitting to try to discern the likely players. Look for contractors who have had a close working relationship with the agency in the past. Examine the historical patterns in previous procurements. See if you can determine which agency position has typically been the SSA in the process. Along with your primary research, this sort of information can guide your assumptions and help you write your proposal more effectively.

Our best advice is to understand the process, know your customer, and write your proposal accordingly. Having as much information as possible on the decision-making process will be an important factor in winning the award.

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You Can’t Enter Every Contest

From an economic standpoint, competitive barbecue makes no sense. In a Kansas City Barbecue Society event, teams turn in six individual portions of four meats: 6 (chicken, ribs, pork, and brisket).  A typical entry fee is $300; travel and transportation costs for pulling your big rig total $200 or more; charcoal, wood, ice, rubs, sauces, and incidentals add another $200.

And meat – oh, the cost of meat: most teams cook 36 to 50 pounds of incredibly-expensive Wagyu brisket to turn in six perfect slices.  Meat costs can easily top $500.  When all is said and done, the cost of a typical contest easily tops $1,000.  And sad to say, prize money when (if!) you win may not cover those costs.  And we haven’t even talked about the costs of beer and other “adult beverages”…

As a result, pitmasters limit the competitions they enter to those which will help them achieve their goals. In my case, I focus on competitions within driving distance of my home which have (a) decent prize money, (b) a relatively small number of competitors, (c) a high proportion of certified (vs amateur) judges, and (d) good public attendance (i.e., good marketing) potential.  I’d love to compete in a contest near my daughter’s home in Nebraska, but that wouldn’t help me increase my catering business’ name recognition in the central Maryland area I can reasonably serve.

In the business world, similar constraints apply.  Winning companies pursue opportunities that will help them achieve business goals.  Notice I did not say “perform profitably.”  In today’s hyper-competitive world, businesses commonly pursue money-losing efforts because they achieve longer term objectives like improving name recognition or supporting growth into adjacent markets.  They ruthlessly discard pursuits where they have limited customer intimacy, poor knowledge of potential competitors and solutions, or have no discriminating solution.

Like winning pitmasters, they pick and choose their competitions – and believe that they will win every bid they submit.

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5 Ways to Win Federal Contract Dollars

From early market research to Price to Win positioning, Richter & Company’s goal is to help you win business.  Here are five of our top recommendations for consistently winning federal dollars:

Winning MoneyPlan your work; work your plan.  Get involved in the program early.  If you’re an incumbent contractor, even earlier than that.  Preparation for the re-bid begins on day 1 of the contract.  Build relationships with the buying and end user customers.  Influence the RFP, so that discriminators rule in your favor.  Prove the benefit of your solution.  Build a value added team, build a plan, and then follow the plan, making necessary changes as you go.

Proofread.  Don’t finish your proposal two hours before it’s due; there’s just no time to proofread if you’re making changes last minute.  Make sure pricing in your proposal matches pricing in your cost volume.  Don’t leave internal comments in your final document.   Obvious, but it happens all the time.  You don’t want your outbrief to be a rundown of your glaring mistakes.

Examine and assess your own company.  Many companies don’t examine their own structures to target cost reductions.  Look at your salary percentiles:  consider the labor needed in the contract against the labor you’re offering.  Build cost pools to bill direct costs to your customer, and leave out those unnecessary to the contract.  Reduce cost.  And be aware of where the costs you do have are coming from.

Build a compliant solution.  (Read:  Don’t sell your existing solution.) Build a notional bottoms-up solution based solely on the requirements of the RFP:  where does this solution leave your Total Evaluated Price?  Be sure all your additional capabilities are ones that matter to the government.  Prove the benefit of your solution.  Make sure the value you’re adding outweighs higher price.  Know your customer, and cater your solution to their needs.  Even “COTS based” solutions should be tailored to the needs of your customer.

Don’t go status quo.  Today’s current hypercompetitive environment is not what it was five years ago.  Ten percent fee and gold plated benefits packages won’t pass muster before evaluation committees.  Make sure your bid is both reasonable and realistic.  Know what your competition looks like before the final stages of capture, and position accordingly.  Employ consultants like Richter & Company to help you find your position to win!

 

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Competitive Analysis and Price to Win – like PB&J

Often times, clients want to hire us to perform a Price to Win analysis late in the game.  You know… when the RFP is out, the proposal is due in 28 days and their hair is on fire.

They tell us they don’t need a Competitive Analysis, but are looking for Price to Win support for the program.  And while we’re happy to help our customers in any way we can, this is not an ideal situation.

Competitive Analysis and Price to Win Analysis go together like peanut butter and jelly.  We don’t want to separate them!

Competitive Analysis defines the solutions and strategies your competitors are likely to employ in approaching an opportunity.  At Richter & Company, we define Price to Win as Cost + Strategy, so it’s pretty difficult to come up with a Price to Win number with only half of an equation.

The ideal time to hire consultants (and start your own internal efforts) is early on in the procurement process.  Your Competitive Analysis should first cast a wide net, before targeting specific competitors and identifying specific solutions.  The Price to Win should also go through multiple iterations for best possible results.

Contact Richter & Company today for more on our winning services!

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SWOT Part 2: So What?

As I said before, the other most common mistake that deprives SWOT analyses of their value is the failure to take the essential next step, after it has been completed.  “What is that next step?” you may ask.  The answer lies in the fundamental intent behind the SWOT analysis.  The purpose of a SWOT is to help analyze and assess the competition.  And what is analysis, other than simply deriving meaning from data?  There is a big difference between observation and analysis.  Simply put, observation provides the “what,” while analysis provides the “so what.”

Herein lies the reason why many deride and dismiss the SWOT chart as useless. In its standard form, it is data with no analysis. It includes nothing more than four lists of characteristics or factors about the company, none of which articulate any kind of strategy or action on the part of the company. Therefore in the eyes of the savvy decision-maker, it fails to answer the critical “so what?” question.  You can imagine your executives saying “So… the company is strong in these areas, and weak in these areas … so what?  And… the company is affected by these external opportunities and threats… so what??”

It is my assertion, therefore, that the true value of any SWOT analysis appears only after completely (and correctly) populating all four quadrants, and THEN developing key strategic implications based on those factors.

Competitive analysis of any company must include a predictive element, which attempts to answer the question “What is the company most likely to do next?”  The four elements of a SWOT chart, if accurate, can be extremely useful in developing these predictions – but they do not explicitly provide the answers in and of themselves.

So how does one take this next step?  There are several different ways of deriving implications from a traditional SWOT chart – one of the more effective (albeit labor intensive) methodologies I have come across involves examining the intersections of the various factors two by two, in an attempt to discern the most likely action on the part of the company.  For example: if the company has [Strength #1] and [Opportunity #1], therefore they would most likely do [Implication #1]; if the company has [Weakness #1] and [Opportunity #1], therefore they would most likely do [Implication #2], etc.

There are two downsides to adopting this “extra step.”  First, it adds a layer of complexity to a process that is otherwise very simple and user-friendly (which I would argue is one of the reasons SWOT is so popular).  Second, prediction is a dangerous game.  Those who attempt to predict the future invariably expose themselves to personal risk – risk to their reputations. Success will earn them great respect and even reverence – but failure may cost them the trust of their customers.

But analysis is not for the faint of heart!  In my judgment, the benefits far outweigh the costs.  So be bold.  Be fearless.  Be ruthless in your zeal to add real value in the form of that elusive treasure – the life-blood of our profession: actionable intelligence.

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What is Price to Win?

Price to Win is both a process and a result.  Price to Win as more than a number, but could be best defined as the cost-capability tradeoff that embodies your company’s strategy.

Price to Win, the process, identifies the position your company needs to achieve to meet your company’s business goals and objectives.  It does not necessarily mean winning.  You may want to position with your customers, but not actually win a program.  You may need to bid on a program that you don’t actually want to win because it doesn’t fit your corporate objectives.  The Price to Win process is designed to respond to the government’s needs, and applies several factors (such as gaming strategy, aggressiveness, fee and corporate interest) to best identify Price to Win, the position.

The Price to Win position is the actual cost-capability tradeoff that your team will present to the government in your proposal response.  It is a carefully deliberated position that includes “cost + strategy” to represent your overall business strategy.  Remember, your company’s corporate strategy is the biggest driver in making business decisions, and the biggest factor in determining price to win, the position.  Not cost plus fee.

For more on Richter & Company’s Price to Win services, contact us today.

 

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The Two Things (Most Likely) Wrong With Your SWOT Analysis

Whether you love them or hate them, SWOT Analyses have been around for many decades, and they continue to pervade the realm of business development and strategic decision-making, most commonly in competitive assessment.  I could talk at length about why these simple quad charts have garnered so much attention (both positive and negative) over the years, but I won’t.  I continue to see value in SWOT analyses, but only if they are done properly and completely.

What I want to talk about is what almost everyone does WRONG with SWOT analyses.

In my experience, the two most common mistakes that rob a SWOT analysis of real value are: (1) failure to understand what an “opportunity” is, and (2) failure to take the essential next step after a SWOT analysis has been completed.

  1. Opportunities misunderstood.

swot-analysisThree out of the four components of a SWOT analysis are relatively intuitive, and easy to understand.  Everybody knows what strengths and weaknesses are – but if you need a definition, they are internal (i.e., indigenous) characteristics that either enhance or undercut a company’s competitive position (i.e., increase or decrease their chances of winning).  Similarly, everybody knows a “threat” is something from the outside (i.e., external) that can undermine or hurt a company’s chances of winning.  Okay, good so far, but what is an opportunity?

Before I define what an opportunity is, let’s be clear on what it is NOT, because this is where 90% of SWOT analysis efforts get completely derailed.  For the vast majority of “completed” SWOT analyses that I have examined, the “opportunities” quadrant is populated with items related to the company’s business case.  They are factors that would provide a potential long-term benefit to the company IF they should win the competition in question.  You could precede each one with the phrase “If I win, I’ll be really happy because … [fill in the blank].”  For example, a very common item to appear in the opportunity quadrant is something along the lines of “Potential for new revenue stream with this customer.”  These kinds of observations are important and useful, but they speak more to a company’s incentive or motivation to aggressively bid and win the competition, rather than the company’s strategic position.

This misuse of “opportunity” is understandable, because the word “opportunity” in the parlance of the federal contracting community (and particularly business development) is primarily used to refer to contracts or programs that the company would like to win (i.e., potential business).    But unfortunately, this definition does not fit well in the context of a SWOT analysis.

In the context of a SWOT analysis, an opportunity is an external factor that enhances a company’s chances of winning. A few examples of opportunities might include (a) increased customer demand for a product or feature the company possesses, (b) competitors’ losing ground or exiting the competition altogether, or (c) change in government regulations in favor of a technology unique to the company.

When properly understood, this kind of “opportunity” fits nicely into the framework of the four-quadrant SWOT chart, because the top row (strengths and weaknesses) are both internal characteristics of the company, and the bottom row (opportunities and threats) are both external factors.  The left column is positive, and the right column is negative.  Behold the beatific symmetry!

These kinds of “opportunities” – external factors that give a company a competitive advantage – are infinitely more insightful, because they empower analysts (and decision makers) to thoughtfully and rigorously assess another company’s most probable strategic actions.  They complete the picture, instead of leaving a gaping hole in the analysis, which could potentially lead to competitive blind spots.  Not to mention, external factors are often the very issues that make the most significant difference between a company winning or losing a competition.

This leads us into the second most common mistake of SWOT analyses – failure to respond appropriately – which I will address in the next section.

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Trust the Process: More than Checking a List

Price to Win is always an ongoing process, which undergoes many iterations before an actual proposal is ever delivered.  Richter & Company’s training courses are designed to give you the tools and templates you need to maximize the benefit of your competitive intelligence and price to win efforts.  Actionable intelligence is derived from following the process, while trusting the skills of your analysts to deliver quality results to your capture team.

ChecklistBut it’s more than simply checking a list:  the process is designed to lay the foundation of your winning proposal.

Plan work based on requirements.  Designate resources.  Can you deliver on the work proposed?  Although it sounds obvious, make sure you’re bidding on work you can and should win.

Baseline the opportunity and customer.  Spend some time getting to know your customer, and what they’re actually looking to buy.  Get to know the contracting shop as well as the end user, and understand that you’re going to need to address all customers in proposing your solution.

Identify and analyze the overall competitive field.  Identify who else is going to bid, and their relationship with the customer.  What does their solution look like?  The competitive field will change as time goes on:  who has left the competition, and why?  Who has joined the competition, and why?  Identify any teammates and suppliers, and determine how their addition to the team will affect solutions, and pricing.

Develop and test RFP-based models.  Forget the gold plating, and the standard set by the competition.  Build a bottoms-up model, based strictly around RFP requirements.  How will your solution add value?  Rank your solution based on the requirements set forth in Sections L & M.

Prepare analysis of key competitors.  Once the RFP is imminent, look again at your key competitors.  Identify strengths and weaknesses of their solution.  Mitigate their strengths by offering value to the customer.  Speak to the things they care about, and emphasize your own strong, low-risk solution.  Ghost weaknesses by highlighting your own strengths.  Be aware of how competitors will leverage their solutions and ghost your company.

Evaluate and rank key competitors.  Build out solutions for your competitors.  What is their offering likely to include?  How will it be received by the customer?  Be sure to do due diligence in looking at past successes; what stories will they tell?  How will they game their solutions?

Identify and analyze pWin enhancers.  Once your analysis is complete, it’s time to finalize your story.  Identify any final solution gaps, and address them:  team as necessary.  Close in on any gaming opportunities.  And decide on your key messages and discriminators that really differentiate your solution from your competitors.

For more information regarding Competitive Analysis and Price to Win, contact Richter & Company.  Since 2006, our proven processes have helped clients win over $30B in new business.

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Making the Call: Competitive Analysis

At Richter & Company, we make the call.  Primary research– actually talking to people within industry– provides quantitative data we need to make sound analysis.

On most projects, there are 150 to 300 contacts that we reach out to.  In our consulting role, we have flexibility in reaching out to companies as a third party.  Because we’re not vested in an opportunity, we have the ability to ask about the opportunity, problems with the procurement, the competition, and likely solutions.

Primary research faces the largest risk of disinformation- any business development manager can offer unreliable information, but it also offers some of the most valuable data points.   Statistical “outliers” can be set aside for further review or examination, but the aggregate of information presented in calls paints a pretty accurate picture of the competitive landscape of a program.

Sound and accurate analysis is built on both qualitative and quantitative data.  The more thorough the research efforts, the more we can provide you with actionable intelligence for your capture efforts.  For more information regarding Richter & Company’s services, contact us.