Bid/No Bid Decisions

Are RFPs Worth Responding To? The answer is a simple mathematical equation: Bids x Cost < Profit x Wins
Is the number of bids times the average cost of bidding greater or less than the average profit times the number of wins? In other words, you don’t want the cost of bidding to exceed any profit you might make.
The key variables are:
What is the cost of bidding? What is your probability of winning? Will it be profitable if you win? Small projects or slim profit margins decrease what you can afford to spend to pursue an opportunity. If you cannot afford to prepare a customized proposal and are planning to send the customer a “quick” proposal, then you are really trying to get away with sending them a brochure and a quote. You are basically trying to win by being the lowest cost.
Small projects or slim profit margins are not the kind of opportunities where you should casually follow a low cost bid strategy. Big projects or nice profit margins are worth investing in winning, so your win strategy should not be to minimize the proposal effort.
The real conflict is that to win, you want to invest in the pursuit, both before the RFP is released and in preparing the proposal after the RFP is released. If you are not consciously investing in the win then you are just fishing and hoping to get lucky. Unfortunately if you invest in the pursuit of a low probability opportunity you can easily spend more on the pursuit then it is ultimately worth. This is why some people don’t like to respond to RFPs. The problem is that they haven’t found a sweet spot where the profit from the wins covers the cost of bidding. This is usually because they bid on the wrong RFPs.
This brings us to the probability of winning. The problem is you can’t predict it. Over time, you can track various factors and see how they correlate with your win rate. Because the same factors can have a greater or lesser impact from one company to the next (even one business line to the next), this is the only way to predict them reliably. The CapturePlanning.com MustWin Process is designed to provide the foundation for identifying these factors and tracking the metrics data needed so that you know what things correlate with a positive win rate at your company and how strongly.
Short of collecting metrics over a period of a year or two, all you can do is identify “indicators” based on best practices and assume they correlate to a positive win rate. These “indicators” can include positive things like:
You had an existing, positive relationship with the customer before the RFP was released You understand the customer’s needs and preferences You understand the customer’s procurement, evaluation, and selection methods The customer is willing to talk to you when you need clarification You have detailed knowledge of the competitive environment The potential for additional/follow-on work with the customer is high They can also include negative indicators like:
You had no relationship with the customer before the RFP was released The customer doesn’t want to talk to you or help you understand their needs and preferences You did not help the customer develop the RFP You do not know who your competitors might be This project is likely the only work you will do for the company The dozens of pre-RFP readiness factors identified in the CapturePlanning.com MustWin Process can be used to create a list of bid/no-bid design criteria. These criteria can form the basis of a point-scoring system. In a point scoring system you add points for positive indicators and subtract points for negative indicators. The final score can be used to substantiate a bid/no-bid decision.
Finally, the potential profit must be taken into consideration. However, you probably won’t know how much profit is in it until you prepare the bid (or more realistically start the project). Most companies either use an estimate such as their average profit rate or just use the potential revenue as a guide. If you can’t even estimate the potential revenue, there might be other factors that can be used to estimate the project’s size. What you use depends on the nature of your business. For example, a staffing company might use the number of staff, hours, or person-months. Other types of companies might use the number of units, deliverables, users, servers, square footage, etc.
While a large project is always attractive at first, consider that the investment to respond to the RFP is much higher, but the win probability could be much lower. You might only have to win one to be very happy, but you could go broke losing bid after bid waiting for the win. Meanwhile smaller projects produce less profit to cover the cost of responding to the RFP. Ultimately, what has the biggest impact on the equation ends up being your win probability. To bid on RFPs successfully, you need to win enough of them (in dollars and in units) to cover the cost of responding to them.
So the answer to whether they are worth bidding usually is driven by your probability of winning. If you go with your gut, you’re probably wasting your time. If you prepare a list of positive indicators and negative indicators and then assess each opportunity against that list, you’ll do much better. If you start bidding and find that it has potential, even if it is a rocky road, you can improve over time if you collect metrics regarding which indicators correlate with your win rate so that you can continuously improve your list (including how much weight to give each item) over time. Ultimately you win more and achieve the best profit not by responding to the most RFPs, but by having the best bid/no-bid indicators so that you only respond to the RFPs where you have decent odds of winning.

Bid Strategies: The Wrong Way The right way to develop winning bid strategies is to get to know the customer months ahead of RFP release. During this time you can position yourself to win and be prepared to write to the customer's unwritten requirements and evaluation considerations. But then there is the real world. Even though bidding something at the last minute is a bad idea, companies often can't resist. Of all the tutorials we have published, the one we enjoyed writing the most was How to Do Proposals The Wrong Way. We describe it as a worst practices manual for doing real world proposals. It was written to help people cope with a proposal they probably shouldn't even be bidding.
We are writing a future tutorial on business development strategies, and in each of the last several issues, we've included an article on that topic. Recently we've addressed how to bid against (or as) an incumbent and strategies for writing about pricing. For this issue, the topic is how to preparing winning bid strategies The Wrong Way.
When you only have a few days to prepare a proposal, you can't take several days to work out a detailed plan and annotated outline. That would be the right way to do it. To write a response to an RFP in just a couple of days, the first thing to do is to achieve compliance. Get the writing that addresses their requirements started. If possible, use a point-by-point format. Once you have a compliant document, then you can add your win themes and bid strategies. You'll probably need the time it takes to write the compliance response, just to figure out what your bid strategies should be. Remember: this is The Wrong Way to do it. For a winning proposal you want the win themes and bid strategies to be fully integrated with the solution so that the entire proposal serves to support them.
Once you have achieved simple compliance then you can look at where your strengths are. If your staffing is well qualified, but expensive, then emphasize the quality you offer. If you have relevant corporate experience, emphasize your proven ability to deliver and risk mitigation. Also, look at the client's mission and goals for the project, and emphasize how you will help them achieve those goals. Then, just for good measure, throw in a statement about the value in your offering.
If your are writing to an RFP that has written evaluation criteria, write a statement that describes how you fullfil each item that they are looking for. If there is no written evaluation criteria, write a statement that reflects the customer's needs and desires. If you don't know the customer very well, write a statement describing:
How the strengths in your staffing will benefit the customer How the strengths in your experience will benefit the customer How your proven ability to manage the work will benefit the customer Any other major features of your proposal and how they will benefit the customer How it all adds up to your offering being the best way the customer can achieve their goals at the best possible value. If you put a sentence or two on each of the above in your introduction, it will greatly strengthen your proposal. You've got to give them a reason to want you in the proposal --- simple compliance is not enough. At the same time, you don't have enough time to plan before you write and then write to the plan. But if you can get something compliant on paper, then you can give it a fighting chance with a couple of paragraphs in the introduction to state what is special about what you have to offer.

How to know when not to bid an opportunity Most companies bid a lot of stuff they shouldn’t. So to help you find a reason to “no bid” here’s a list of reasons not to:
You find out about the opportunity when the RFP is released The customer has no budget or can’t afford what is actually required Your competition is cheaper There are too many competitors A key subcontractor backed out There is a requirement in the RFP that you can’t live with The price risk is too high The performance risk is too high You have negative past performance The customer doesn’t like you You don’t like the customer Customer won’t answer critical questions You have no advanced awareness The opportunity doesn’t fit corporate strategies The RFP is too vague The RFP is too specific There’s not enough profit in it You don’t have enough staff available to write the proposal You have a conflict with certification requirements The customer is unrealistic The schedule is unrealistic You don’t have the staff to do the work You can’t promise delivery of the key personnel You don’t know who the competition is You don’t know who the evaluators are The customer likes someone else You think the customer is trying to justify a selection already made The customer is just fishing/not serious Location, location, location You have a conflict with the delivery requirements There are intellectual property issues The contract type is not appropriate for the type of work Your awareness is limited to what’s in the RFP There is no potential for follow-on work Pursuing it would distract you from other opportunities You are not investing in the proposal effort You started working on the proposal after the RFP hit the street You can’t articulate why you should be the one to win The customer doesn’t know you You don’t know how the customer is organized You don’t know how the procurement fits into the customer’s strategic plans You can’t adequately perform at the price you plan to bid The technology requested is already obsolete

7 Ways the Kind of RFPs You Bid Affects Your Approach to Winning The kind of RFPs you bid impacts your:
Win strategies Business development and proposal processes Staffing requirements Resource allocation Definition of quality Good advice for one type of RFP may be exactly the wrong approach for another type of RFP. Consider:
Does the RFP provide written instructions, evaluation criteria, and a statement of work? If it does, then producing a proposal is a process of following the instructions, optimizing your response against the evaluation criteria, and fulfilling the requirements. If it doesn’t you are working blind. Does your process deliver the information you need to make up for it? Does the nature of your pursuits require you to move forward without it? Your pre-RFP and post-RFP processes will both be impacted, as well as your bid strategies and the story you tell. Is compliance mandatory? If it is, then producing your proposal becomes an exercise in accounting for everything you must comply with and showing compliance in your proposal. Winning becomes an exercise in going beyond compliance. If compliance is not strict, then you should think through the trade-offs, develop a strategy regarding compliance, and make it part of the story that you tell. Are alternatives permitted? When compliance is strictly required, alternatives are not usually allowed. If compliance is not strict, then you may be able to offer options and alternatives that change the rules. This gives you more options for differentiating yourself from the competition and for influencing the evaluation. Is communication with the customer regulated? Can you talk directly to the end user(s) at the company? Can you establish a relationship? Can you gain an information advantage? Or do you have to go through a procurement specialist? Does producing a proposal become about the relationship you establish before the proposal or about gaming the procurement system? Is the evaluation process formal? While the formality of the evaluation process tends to correlate with the sector/market (federal, state/local, private, NGO/NPO, academic, etc.), some are more consistent than others. Whether it’s formal or not, the more you understand about how a selection will be made, the better your ability will be to write a proposal that influences the evaluation in your favor. The less formal the evaluation, the more likely it will be to take into consideration factors other than the proposal itself. Is there an RFP? What if the customer asks for a proposal, but doesn’t issue an RFP? How does your company go about collecting requirements and documenting customer understanding to ensure your proposals are persuasive? How do you figure out the customer’s approach to evaluation and decision making so you can influence it? How do you know what story to tell? How consistent are the RFPs you bid? When every RFP you pursue is for the same thing, specified the same way, and evaluated following the same criteria, it makes it easy to recycle proposal content. When every proposal is not only for something different (or is for essentially the same thing but with different specifications) but is also evaluated with different criteria, you have to rewrite everything in order to improve your chances of winning. Broad statements about how reusing proposal content is good or bad miss the point that it depends on the consistency of the RFPs that a given company pursues. Now look at these considerations and ask yourself questions like:
Who should write the proposal? What should the pre-RFP and post-RFP processes look like? How do you define proposal quality? What do you have to do to win? How should you organize your pre-RFP and post-RFP efforts? Should you use specialists or consultants? How many of each? As you go down the list, you will find that the answers depend on the circumstances. What makes sense for one company will be bad advice for another. The so-called best practices are not one-size-fits-all solutions that apply equally to everyone. If you want to know what the best approach is for your company, you need to understand your circumstances.

How To Fix A Broken Bid/No Bid Process If you watch how companies behave in reality, there is no single point in time where they make a single bid/no bid decision. It doesn’t really matter whether this is because of their inability to be decisive and commit or whether it’s because of the way opportunity knowledge builds over time. But it is important to recognize that you are dealing with a continuum and not a milestone when it comes to a bid/no bid determination. That is why you need a system instead of a decision to guide you to being selective about what you invest in pursuing.
For starters, you can’t make a bid/no bid decision before the RFP is released. You can “no bid” with certainty, but you can’t make a final decision in favor of bidding. A surprise in the RFP, such as a contractual clause that you can’t live with, can turn an opportunity you expected to bid into a “no bid” decision. So you can’t make your final bid decision until after you see the RFP. At the same time, you really need to make a decision much earlier. You can’t wait for the RFP to start preparing. To start the pursuit before the RFP comes out, you need to commit resources and make an investment early.
This is what led people to develop “gate” systems. Gate systems are a series of decisions or “gates” that must be passed, each with its own criteria and typically with limits on the amount of investment in the pursuit, before the opportunity gets to the next gate. Unfortunately, most gate systems are focused primarily on financial issues --- is the pursuit worth investing in, how much should be budgeted for the pursuit, what is the anticipated value, etc. They may or may not include things related to whether you have gathered the right intelligence or taken the right actions to position your company to win. As a result, while they are a step in the right direction, they may not help you win as much as they could.
To fix the gate system approach, you need to define criteria that ensure the pursuit is preparing you to win at RFP release. However, it is difficult to define better criteria because:
You cannot collect all of the intelligence you would like to have. The availability of the type of information as well as the depth can change from opportunity to opportunity. Some of the information being collected is difficult to quantify. It can be anecdotal, subjective, or narrative. Some of the goals are difficult to validate. How many people inside a company are willing to admit that the customer doesn’t like them? Having a positive customer relationship is important for the pursuit, but it's difficult to validate whether this has been achieved. Point scoring systems are another approach that tries to grapple with the nature of this kind of information. You can give point values to different criteria when they are met. You don’t know which criteria will be met or how highly they will score, but you can identify a value that the total score must reach in order for it to be worth pursuing. Point scoring can be combined with gate systems.
Another difficult issue is the scheduling of bid/no bid reviews. When do you formally declare a lead and start tracking it? How many gates do you have and when should they be scheduled? Sometimes you don’t find out about a lead until RFP release, and sometimes you know about them years in advance. How do you adapt the scheduling to the wide disparities in time available before RFP release?
The Readiness Reviews described in the CapturePlanning.com MustWin Process provide a foundation for a bid/no bid system that addresses these issues. Readiness Reviews consist of four reviews, each with a specific list of questions to be answered and goals to be accomplished. Since each review is considered a bid/no bid meeting, they provide a framework similar to gate-style reviews. One key difference between readiness reviews and gate systems is that Readiness Reviews focus on making sure you are prepared to win instead of financial considerations. Readiness Reviews can easily be customized to accommodate your financial considerations.
How well the questions are answered and goals are achieved serve as decision criteria for a Readiness Review. The answers can easily be scored, much like in a point system. In fact, the scores can be used as the basis for a full blown bid metrics and measurements system that can uncover hidden correlations between factors that impact your win rate.
We even provide a list with a couple dozen bid/no bid considerations to help ensure that you consider all of the issues. When you combine Readiness Reviews with a final bid/no bid review after RFP release, you get a bid/no bid system that works much better than attempting to have a single bid/no bid decision or meeting.

4 Steps to Winning a Procurement That is Wired For Someone Else. Sweet! When the customer has already decided who should win before an RFP is released, the procurement is often called "wired." As in, "It’s wired for the company that they prefer." Often this company has helped write the RFP. In government procurement, one of the main reasons for all the rules is to prevent wired procurements. But they still happen.
Here are four recommendations that can help you win anyway:  
Take risks. This is something that most government contractors (and probably most other companies) are not good at. But you can't steal a customer away by being similar to their current vendor. You can't just be the same, but a little better. You should aim at being categorically different. You need to present a real alternative. Your proposal should read that way too. Throw out all the blah, blah, blah that has built up in your proposals over the years and speak directly to the customer. Throw out all of your past proposal text instead of trying to re-use it. Change the tone. Have an attitude (that alone is enough to discriminate you from your competition in most proposals). Be upfront about offering them a choice. But most importantly, you need to tell them a story that they want to be a part of. If there is an incumbent, keep in mind that the customer already knows them — warts and all. The customer knows the incumbents limits. The incumbent has been locked into a contract and a way of doing things for years. You need to remind the customer that the incumbent had their chance to be innovative and weren’t. You can be anything you want, but the incumbent can't escape what they've been. You need to be something different from the incumbent. There are only so many ways this can happen: staffing, procedures, responsiveness, personality, resources, capability, technology, results, etc. If you submit the same-old, same-old management plan as you always have just like everyone else, you won’t steal away a wired opportunity. Now for the difficult part &mdash If you are a government contractor you need to recognize that the government buyer (although it's often true for others as well) is both risk and change averse. You need to take risks, but the story has to be about how they don't have to take any risks or how they face more risks by continuing the status quo. This approach may be easier since changing vendors is an obvious risk no matter what you say to the contrary. If you are in a rapidly changing environment, it's a lot easier to make the case that failing to keep up is itself too big of a risk. You must offer change, but not a change in the customer. While the customer may have some bias, it's extremely rare that an opportunity is truly wired. Also, keep in mind that a procurement that looks wired may scare away other companies, making the competitive field much smaller.  This could make you the only viable alternative and helps boost the odds from terrible to merely bad. And winning a wired procurement against all odds is even more sweet than winning a normal proposal.
You need to play to the chance that the opportunity isn't truly wired, meaning that the customer is willing to change if given a good enough reason.  All you need to do to win is to find that reason. And don't focus on price. Yes, it's best to come in with lower pricing, but that can't be your whole story or else they'll wonder what they have to give up if they pick you and view their preferred vendor as lower risk. You want them thinking about what they're going to get. Try giving them something they didn't even ask for, but probably want. Bring them a brighter future by offering something new. And that something new doesn’t even have to cost you anything — it can be a better way of doing things or a more responsive partner.
Make them question why the incumbent hasn't offered them anything new in all the time they've known them. Give them something they want more than the comfort of staying with what they've got. To do that, it will help to understand their goals and motivations. But if you don't know (probably the case because it's wired for someone else who knows them better), then take a risk and guess.
Remember: the procurement is wired. The odds are you are going to lose. To change the odds you have to change the rules. You can't do that without taking a risk.
Now just for fun, play it back and this time be the incumbent
If you are the incumbent, then everything above describes your competition...
So you've got to beat them to it. You need to say how you've been bound by the limitations of the current contract, but the recompete gives you the opportunity to make the changes for the better that you've been dying to implement. And with your history of lessons learned, you are the only one who knows what they are. Because you understand their goals and preferences so well you can actually deliver a brighter future and they won't have to take any risks to achieve it. You'll not only give them more of what they've come to love and rely on, but you'll give them something new as well. Put a major emphasis on price realism. You are the only one who knows how much things cost in their environment and therefore are in the best position to make trade-off decisions and deliver the best value. All anyone else can do is guess. Focus on trustworthiness, how they know you will deliver what you promise, and how you're not like those Other Contractors who will promise anything to get a contract and then quickly become ordinary. The only problem with this approach is that it has to be true.

14 Ways You Can Tell If An RFP Is Wired For Someone Else... ALL RFPs look wired.
It's easy to psych yourself out.
Hardly any RFPs are actuallywired. Even if the customer has some bias, they can usually be stolen away if they get a better offer. Think about how you buy things. Most folks will give someone they've done business with for a long time the benefit of the doubt, but if someone has a better product or a significantly lower price, they sometimes make a switch. This is especially true if the relationship has gone stale. You may have no way of knowing without bidding.
Use of the word "wired" makes it sound like either it is or it isn't, when in reality it's a question of how much. We deal in odds, not in certainties.
Here are some signs that the odds may be stacked against you.  None of them are conclusive on their own, and one or more will likely be true on every bid.  But if several are true they may add up to something...
Emphasis on evaluation criteria that only an incumbent will be able to get top marks in. For example experience of the staff being bid with obscure or customer specific tools. Overemphasis on the relevance of experience might be another. Emphasis on criteria that are easy to bias. Risk mitigation and quality are good examples. Prohibitions against contacting or rehiring incumbent staff. Unusual labeling of key staff. If all of the staff are considered key and resumes are required for all staff being bid it's a bad sign. Evaluation practices that are outside the norm for that agency. If pricing is normally evaluated at 40% and on this RFP it's being evaluated at 10% you have to wonder why. But this also requires you to know what the norms and trends are for that customer. Use of multiple evaluation criteria to address the same thing. For example, requiring that past performance projects include the staff being bid so that in essence staffing is getting counted twice (and acceptable past performance is hard to find). When combined these can make one particular element count out of proportion. Short, inflexible deadlines. On its own it doesn't mean much, but it can favor a contractor who is expecting the bid. Ambiguity that favors an incumbent. For example, requirement to supply custom software without the requirements being defined. Scopes that aren't defined. Deliverables that are named, but not described. Statements of Work that require you to know the customer's undocumented standard operating procedures. So much detail that it's overwhelming. Page limitations that make it impossible to respond to all of the requirements so that only the preferred bidder will know what to focus on and what they can skip without being branded "noncompliant." Fixed price proposals where you don't have enough information to know how long things will take. Unusually brief responses to questions, especially when there are only a handful of bidders or when they are unresponsive to questions they could easily answer. Unusually lengthy answers to questions, often delivered at the last minute without an extension. "Processes" specified in the RFP that can't be mapped or flow charted so that only someone who has experience with them can figure out how they work. I once helped implement a task order response center where we had to respond to 5-10 day turnarounds on bids that were notoriously supposed to be wired, generally poorly written, and probably failed at least half of the items above on every bid. If they were wired, we stole a lot of them away. I think it scared people away and reduced the competitive field so much that if the incumbent let their guard down we could sneak in.