Do you have a Strategic Plan

Regardless of the size of your company a Strategic Plan can be a valuable tool. I provides a plan to achieve the goals of your company. It’s hard for a company to be successful when they don’t even know what success looks like. A Strategic Plan provides guidelines on where the company is headed and how it will get there. Tactical Plans support your Strategic Plan and provide the plan for very specific portions of your long-term goals.

It doesn’t matter how small your company is. A Strategic Plan will help you achieve your long-term goals and set a course for you company.

Where to Start?

I see this question a lot. People ask “where should they start” or “how do they get started”. That’s a hard question to put a direct answer to, but if I had too I’d say start with research.

There are two areas of research to that you need embark on. 1st,how does the government processes work. Apex is a good place to get the basics. Unfortunately, I have learned the Apex Accelerator program is not the same “quality” in every state. I have also learned that you can sign up for online classes even if you’re out of state. So if you don’t think your getting good information of your local Apex office try the Georgia office.

The 2nd area of research is what are you going to provide to the government. What are you going to provide to the government at a competitive price. People tell me all the time they want to be a supplier to the government buying and re-sailing Commercial Off The Shelf (COTS) products. That’s fine, there is nothing wrong with that plan. So my question is “what suppliers do you have a relationship with”. That’s when their plan falls apart. You have to be able to provide your product at a lower cost than your competitor. How are you going to do that? Let use an example:

If the Government wants to purchase 100 torque wrenches. 1st question is where are you going to get 100 torque wrenches? Lowes and Home Depot probably don’t have that many in stock. 2nd question is how will you price them? If you pay full price, say $100 each. You need to add your margin (profit), Overhead (OH), General & Admin (G&A), shipping & handling. So you unit cost ends up being $150.

Your competitor talked directly to a torque wrench manufacturer and got the same wrenches 20% cheaper than you can. So his price is automatically lower than yours. You lost before you started. So we’re back to the original question. “What are you going to provide to the government at a competitive price?” Remember, there are 1000’s of others out there trying to do the same thing you’re trying to do. How do you beat them?

What Can a Consultant Do?

There is a common misunderstanding that you can hire a proposal writing consultant that will write you a winning proposal and you don’t have to do anything except provide some information. A GOOD consultant won’t promise to write a winning proposal for you. What they will do is guide you through the proposal process and help your team develop a winning proposal. Along the way they should teach your team some of the processes related to developing a proposal.

A consultant will guide your team through the capture process (if hired early enough), Win Strategy Session, PWin Calculations, Color Reviews, Outline the Proposal, and yes they can help write the proposal. Especially the “boilerplate” parts of the proposal. There is a lot more to writing a proposal than just writing a good story. Remember, what you promise in the proposal you will be expected to deliver when the contract is awarded. Do you really want someone who is not part of your company committing your company to the Government? The responsibility for executing the contract they way your proposed it is the responsibility of the company’s leadership.

Be careful letting a consultant write your proposal for you. He is probably taking someone else’s winning proposal and editing it for you. He may also be committing you perform tasks you didn’t consider in your pricing and many not be prepared to deliver.

Understand What You are Selling

The challenge of selling services is selling a product that can’t be seen or touched or held. Selling a product can be just as challenging because you can’t always pull one out of your bag for the customer to see. The only thing a customer can see is you. So, you must sell yourself before you can sell the company’s services or capabilities. This is where the Art of Business Development begins. Viewing yourself as the “product” being sold is a new concept to many people, but a vital concept to understand. You are what’s being sold.

As you build your network of customers and contacts you want them to view you as a source of solutions to their biggest problems, not a business development rep working for a company, just another salesman. It is difficult to tell you how to accomplish this because the techniques that work for you may not work for somebody else. In addition, every person you talk to has different concerns and problems they need a solution for. They also have different personalities which must be approached in different ways to earn their trust and respect. You need people to feel comfortable talking to you and not feeling like you’re just there to “pump them for information”. People know why you are there. You’re there to find new opportunities or get more information about upcoming projects they may be involved with. If they are comfortable with you in many cases they will tell you what they know without you having to ask. They know you want to help them so they want to help you. Its that simple.

Treat people with respect and courtesy and you’ll get the same in return. Patience is a big part of the Art of Business Development.

PWin

Pwin (Probability of Win) is a common tool used in Government Contract Capture Management. Unfortunately it’s a very misunderstood tool. Pwin is your probability of winning a specific opportunity you’re evaluating. Methods of calculating Pwin vary from company to company and system to system. Paid pipeline tracking systems and proposal management systems frequently calculate a Pwin for you, but their methodology is usually proprietary. Manual methods for calculating Pwin are available, but must be applied consistently. If Pwin is not applied consistently it loses its value. Finally, there is the “Gut Check” method. The Capture Manager makes a guess at the probability. Of course, this
isn’t a very scientific method of estimating Pwin, but it shouldn’t be discounted either. A good Capture Manager should have a pretty good idea of what Pwin should be. One use of PWin people frequently fail to utilize is it’s ability to track the progress of you Capture Efforts. As you progress through the Capture Process your PWin value should increase. So recalculate your PWin often to see if it is trending upward. If your PWin is not improving you may need to revisit your Capture Processes or your Capture Plan.

Creating a Requirements Matrix

A Requirements Matrix is a valuable tool when evaluating a government opportunity. The 1st step is to review the SOW/PWS/SOO or what every requirements document you have. READ EVERY WORD! Failure to understand something is on you not the Government. After you have read and understood the SOW so a word search for the word SHALL. Look at the sentence that contains the word “shall”. It probably says “contractor shall…” or something similar. Copy that sentence to a spreadsheet. Repeat the process for the word WILL. This will be the basis for your requirements matrix. Now you have a list of the contract requirements you can use to create a WBS, start your pricing and other projects.

As you’re creating your requirements matrix copy the requirement to the spreadsheet, but also document the document and paragraph number the requirement came from. This will be useful data as you continue your analysis.

One word of WARNING: Searching for Will and Shall bill get you 90% of your requirements, but more complex requirements may not be so easily identified. That is why it is vitally important to READ all the solicitation documents completely. If you fail to recognize and price and requirement it’s your fault not the Government’s. Don’t expect special consideration for your mistake.

Pricing a Government Contract

Every pricing effort is different so there is no way I can provide a “How To Guide” and it apply to every situation. So this is a very generic description. Whether you’re pricing a product or a service there are cost involved that must be covered within your total price. Some of the common cost include:

  • Material Cost
  • Labor Rates
  • Mil-Std Testing/Inspection Requirements and Certifications
  • Mil-Std Packing, Shipping and Insurance Requirements
  • Travel Cost (this is usually a separate estimate as travel is cost reimbursable)
  • Other Direct Costs (ODC)
  • General & Administrative (G&A)
  • Overhead (OH)
  • Warranty Costs
  • Escalation Rates for Multi-Year Contracts
  • Security Requirements (Cyber and Physical)
  • Risk
  • Margin (Profit)

If you leave something out of your pricing or underestimate the cost of something is can be very difficult to get the Government to provide additional funding. The days of “low bidding” and asking for additional funding later are gone. That’s not to say it never happens, but not often. You should identify all your requirements and price them separately. The “roll-up” will be your total price.

AUSA Global Forces Conference

I attended the AUSA Global Forces Conference in Huntsville AL last week. This is a medium sized conference targeting the Army and companies that support the Army. There was a lot of new technology there. I saw more drone companies there this year than I have in the past. That market is growing incredibly fast. Of course Cyber security was a big topic there. Several new companies were displaying capabilities in adapting Artificial Intelligence to Army logistics and data management needs. I haven’t seen that so prevalent before. These conferences can be expensive to display at for a new start up company, but they are a good way to connect with similar companies and find out what your competitors are up to. Even if you just walk the show they can be worthwhile.

Growing the Site

I’m hoping everyone can help me grow this site into something useful for those interested in discussing the Government/Defense Contracting Industry. I have spent a lot of time as a consultant for defense companies and wanted to share some of my experiences. Also it provides a place where people can ask questions. Currently it requires you set up an account to access the discussion area. This is only an attempt to limit access to those who have an actual interest in discuss contracting concerns. In the future I hope to start “Matchmaking” companies who can team together to pursue larger contract opportunities. Right now I’m not aware of any other sites attempting to do that. I don’t get paid to run this site and its all funded out of my own pocket. Maybe in the future I’ll have to charge a small fee to cover costs, but right now there is no charge.

The next update to the site will be adding a page where I can upload documents I have written over the years I used to train small companies looking to get started in Defense Contracting. They cover various topics to include, Getting Started, Pricing, PWin, The Art of Business Development and others. I hope some of you may find them useful. Keep an eye out for the update.