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How to Lose a Contract Proposal

By Robert K. Ackerman
E-mail About the Author

 
It’s easier than you think; large and small companies do it all the time.

Many would-be contractors sabotage their own bids with sloppy processes and mistaken notions that leave government acquisition officials no choice but to reject them for a contract award. These mistakes can run the gamut from firms’ attempts to pull the wool over the eyes of government officials to honest errors that bidders do not realize are hurting their cause.

Some of these measures are born of hubris, while others border on outright stupidity and a total lack of common sense. The majority, however, comprise simple mistakes that many firms just do not realize are deal-breakers for contracting agents or for large companies evaluating potential subcontractors. The commonplace errors, many of which are repeated endlessly by both large corporations and small businesses, can cause an otherwise-excellent proposal to fail the “best value” test.

Everyone loses when this happens. The bidding company commits funds and resources in what turns out to be a fruitless exercise. The government has one less option from which to choose in awarding a contract, and that missing option might have featured the best product or service for the customer. And, the taxpayer may be paying more for goods and services because a bidder that might have produced the best value for the money instead is disqualified on a technicality.

There are several actions and approaches that are likely to doom a contract proposal:

Follow your business sense instead of the request for proposals’ (RFP’s) directions. Adopting this approach is one of the main reasons that companies lose contract bids; it is one of the most prevalent and broad-based errors made in the process. When the RFP asks for specific goods or services, the company shouldn’t try to tell the government why it really should want something else. Offer what the government wants—no more, no less. Doing otherwise can be a surefire way of losing an award.

“Give us an answer to what we ask for,” a U.S. Defense Department official says. “Companies sometimes miss the mark; they don’t give us an answer or a proposal on the items that we need.

“That sounds so basic, but it is surprising how people sometimes do not really read [the RFP] and say, ‘what did the government ask for, and how am I going to meet that need?’”

Don’t sweat the details—after all, it’s the big picture that counts. No, the devil can be in the details, and this is where many companies run afoul of regulations. The first item that contracting officials verify is the terms and conditions, so a company must ensure that it has presented its certifications and representations as required.

Large businesses tend to make different mistakes than do small businesses. Kel Hodge, vice president of marketing for TKHC, Fairfax, Virginia, points out that large firms must conform to cost disclosures and detailed cost accounting rules that small businesses usually do not face. The rules for small procurements are less involved than those of larger contracts, especially with the subcontracting that is found in large contracts. These details often can trip up large businesses.

However, small businesses suffer from a lack of experience with detailed proposals. Many small firms simply play back nearly the same wording as the request from the customer. But, the customer often does not want the RFP mirrored back to it, which many small businesses do not realize, Hodge adds.

Gwen Johnson, small business liaison officer for EDS, Herndon, Virginia, offers that many small businesses do not answer the question of “how are you going to accomplish this requirement?” When firms do not answer this question specifically, it lessens the credibility of the bid.

Large firms often omit items that support the main engineering activity. These include detailing cash flow and personnel for startup facilities. Some large firms even are tripped up by presenting material that does not belong in their proposal. They may not have authorization to quote or possess that material, and its presence not only may cost the company a proposal win but also may lead to an ethics investigation. This can happen when personnel switch companies and bring proprietary materials with them to their new firm, and those materials find their way into the new company’s proposal.

Streamline RFP procedures to produce a more efficient proposal. Many firms believe that their cause is served better by deviating from the procedures outlined in the RFP. If they present it their own way, the reasoning goes, it will look better. However, at the receiving end are some government officials who are saying, “no it won’t.”

Follow the instructions,” a Defense Department official commands. For example, if an RFP asks for a technical proposal two weeks before a cost proposal, companies should do as they are asked and not try to change the order of the process—or its timing.

Another version of this disqualifier is to change the length of the requested proposal. If the government asks for a 100-page proposal, turning in 125 pages will not help the company’s cause. The government officials reviewing the proposal may stop reading at the 100-page mark, so they could miss substantive material—such as a summary or a conclusion—in the subsequent pages. Instead of improving its chances, the company has done itself a disservice.

When government officials request descriptive support material, they want easily readable descriptive support material, Hodge offers. Including PowerPoint slides that feature more than 10 lines per slide will cause the contracting official’s eyes to glaze over. Similarly, the proposal should not require a company expert to translate it to the contracting officers. “If you put in a reason to have you there when the proposal is read, then you have a problem,” Hodge says. “The proposal has to speak for itself.”

Rely on existing business expertise instead of researching the RFP—after all, an experienced company knows the technology or service sector better than the government. Too many firms do not spend any time trying to understand the organization that is putting out the RFP and what it is trying to accomplish. That is a losing strategy; firms that do their homework before submitting a bid dramatically improve their chances of winning a contract.

Hodge adds that small businesses especially are guilty of assumptions without confirmation. These companies may develop a mental construct of how a contracting organization works, but that construct may be grossly inaccurate. “Small businesses are always scrambling, trying to open up new business areas,” he offers. “Their main goal is to stay alive, whereas large businesses primarily build on existing lines and continue relationships with customers.” Companies should do a complete set of homework on the organization’s structure and its goals, he says.

Accomplishing this may be harder for small businesses that do not have the personnel needed for extensive research, but these companies should try to understand several key points: the organizational structure within the command or organization; what specifically it is trying to accomplish; what is its history; what is the problem seeking a solution; and what has been done in the past. This will help the company make a more effective proposal, defense and industry officials offer.

Bid too low for a contract. This is the oldest trick in the procurement book. Many firms believe that the lowest bid will be the most attractive, even in a best-value proposal. However, that lowest-of-the-low bid is a red flag to government officials. They know immediately when a low bid is unrealistic and that the company is expecting to cover its costs later in the process with supplemental billings—or worse, that a company does not realize that its bid is so low that it cannot possibly deliver the contracted goods or services for that amount of money. Either way, the absurdly low bid has no value in a best-value contract.

Bid too high for a contract. Again, the government must apply the best-value criterion to a contract that is to be awarded on that basis. So, a bid that tops the dollar list may offer a lot for the money, but it may be more than what the government is seeking. Companies should not gold plate a Harley-Davidson when the government is looking for a simple bicycle.

Bid exactly on the budgeted amount. Government officials are not fooled when a company’s bid matches the amount that is budgeted for the RFP item. An unrealistic bid stands out under scrutiny, especially when a company is pricing at a budget line for a technical capability that will cost more than that existing line amount. This is another form of lowballing, only the bidder is hoping to get its foot in the door by using the government’s own figures. So, the government officials will know when a budget figure is not a realistic amount for a contract, and a company that incorporates that same figure in its bid is putting its offer in the same category—unrealistic.

Given all these pitfalls, a good bid is one that can be defined clearly and is shown to be realistic and a good value.

Market your firm instead of your firm’s solution. In their responses to RFPs, many companies seek to display their value to the Free World instead of addressing the best-value contract requirements. But again, the focal point of the contract award is the solution, not the attractiveness of the award winner. Rarely do the two coincide. If a government organization wants to know about a company’s past performance, it will request that clearly in the RFP, concentrating on company actions specific to a similar problem or solution. Firms that offer information on the company as a whole are missing the mark.

“People put a lot of fluff into their proposals,” EDS’ Johnson says. A small business may submit what amounts to a full-blown marketing brochure proclaiming that the company can do everything. But, an RFP rarely seeks everything. So, when contracting officials receive the marketing brochure, they are not impressed. “A proposal is not a company marketing exercise,” she says. “It’s about fixing or finding a solution to a problem, but many companies lose sight of that.”

Hodge notes that this attitude causes some small businesses to lose bids during the fact-finding period. Many small firms may believe that they are closer to winning the contract than someone else may be, so they may continue the selling process instead of focusing on the fact-finding process that would “give the contract officers exactly what they are asking for.” The contracting officers are turned off by the fact that the small business does not give them the breakout in facts that they want but instead gives them more of the selling process.

An adjunct to this problem is found in the presentation of the bid proposal. Many companies use marketing people to present their bid. Although marketing experts may be better at presenting a concept, many contracting officers want to hear from the actual people who will be involved in the work—the potential program managers, for example.

The same philosophy extends to the format of the presentation. Hodge warns against putting a proposal in a fancy binder with extensive color artwork. A lot of splash and dash will help very little, and it can send the wrong message to government officials who are wary of companies that put a premium on style over substance.

Focus on proposal quality instead of on deadlines. Many companies strive to provide the best-of-the-best quality in their proposal. And, to achieve that, they sometimes stretch the proposal organizational flow chart right past the government-mandated deadline. The company’s rationale is that the government is getting a better bid than it would if the firm had turned it in on time, so the government should consider that possibility as it determines best value. However, that runs afoul of one basic fact.

“Late is late,” a Defense Department official says. There is no such thing as better late than never; late is never. The bid must be in by a specified date, and the officials in charge of evaluating bids usually are required by law to disqualify any proposal that is received after the deadline. No matter how good the bid is, a late bid cannot be considered. That is why it is called a deadline.

Take an RFP at face value, and never question its details. Some firms believe that any perceived ambiguities in an RFP are up for interpretation—theirs. If there are two possible choices, the company has a 50-percent chance of taking the wrong fork in the road and losing the bid as a result.

If they want to win, companies should not hesitate to contact the issuing authority if they have any questions at all about the RFP, government officials say. “We’re trying to have a more open process,” a Defense Department official states. “By all means, come back with questions, ask, get clarification.”

Many companies do not want to ask questions because they fear that they will tip their hand to the competition. If the contracting authority believes that the answer to one company’s question is important to all bidders, it will share that answer with everyone. However, no one wins if a point that requires clarification goes unclarified, government officials note.

Blur the lines of separation in a team proposal—it reads better, and you don’t have to worry about consistency. If a proposal is being evaluated on a team basis, then government officials want to be able to view that proposal team by team. When different specialty teams prepare a proposal, the company should make sure that each team item is portable. Hodge explains that companies should not blur the lines of distinction with data. “Putting financial information in a technical proposal is definitely something that you don’t want to do,” he says. “Make sure financial data stays in the financial data section. Find a way to tell them other than [mixing up] the data.”

But, putting together that team proposal sets up the company for another potential pitfall—inconsistency. When separate teams work independently on a proposal, the results may not mesh perfectly. To the contracting agents who look over the proposal, these inconsistencies stand out, notes EDS’ Johnson. “A company’s cost proposal should reflect whatever its technical proposal or its management proposal has in it,” she relates. While elements of a team proposal should be able to stand alone, they are not stand-alone documents.

Offer your best personnel, even if they cannot be expected to stay with the program. Some companies can boast specific individuals who are well-known and well-regarded in the relevant acquisition community. However, these experts may be committed to other efforts and are unable to take part in the particular contract that is up for bid. A program manager can manage only one program, and if that same name is being offered up in three major proposals, then at least two of them are not valid. Many theaters or even services know when an individual already is committed to another ongoing project within their realm. “We obviously want a great program manager,” a defense official says, “but we also are smart enough to know that this individual cannot be dealing with 20 programs at once.”

Some companies may offer their valuable program manager concurrently on many proposals with the expectation that they will not win even a majority of those bids. Still, contracting officials know that a high degree of uncertainty remains as to that individual’s participation in their program.

“We need to understand how the company is really going to staff and support a key effort,” the official adds.

Clearances complicate the problem. Many firms follow rote procedures for contract security only to be surprised by the difficulty they have at the last minute. If a firm needs to hire 200 Top-Secret cleared people who will stay through the life of the program, they will find that goal is easier imagined than achieved.

TKHC’s Hodge says bluntly, “We are running out of people that you can move from company to company.” Many cleared military and government experts are retiring and are marketing themselves to multiple companies, but their numbers are limited, and they may be committed to another company or project. “It’s a dwindling resource … an industrial base problem that we have right now, and not being able to put together a coherent, believable story during that bidding process that you can provide that rare skill level is a problem,” he says.

Don’t second-guess your proposal process—when you’re done, you’re good to go. A company that has pulled out all the stops in drafting a proposal doesn’t need to do a reality check on its proposal—unless it wants to win. Johnson offers that all firms should red-team their proposals to make sure that objective reviewers can apply the same type of critical eye that will be applied by government officials. This red-team effort can uncover most of the drawbacks that can cause a proposal to fail.

She explains that this type of assessment can reveal whether a proposal meets the overall requirement but lacks necessary details—or, if a proposal is strong on details but fails to meet the big picture. And, a good red-team review can uncover team proposal inconsistencies in time for the company to correct them.

Whether you win or lose, when the proposal process is over, put it in the past and move on. Companies that do not learn from a contract proposal either will keep on losing them or they will see their winning streak come to an end. Even a contract win provides some lessons learned, and companies should take advantage of that. Both winning and losing companies that want to avoid losing the next proposal should ask for a debriefing. “I’m always surprised at the number of winners that do not ask for a debriefing,” a Defense Department official offers. “They are happy that they won, but they should find out why they won. It makes them more competitive next time.”