Bidding on Government Contracts - To Bid or Not to Bid?

By Michael Lisagor

Perhaps the most important but least practiced step to winning government bids is the bid decision. Too many companies expend valuable resources preparing proposals to bid on a government contract they have little or no chance of winning–and if they do discuss whether to pursue a government bid, it is an informal gathering in the hallway or over email.

As a general rule, the more complex the government contract, the less likely you are to win a government bid by submitting a blind bid with little or no knowledge of or exposure to the client.

The remedy for this lack of focus is to insist on one or two bid decision meetings for every government bid opportunity – if possible, one a few months before the release of the final RFP and a meeting upon receipt of the formal Request for Proposal or Quotation. Participants can include:

• Business unit manager
• Finance and contracts
• Capture and/or product manager
• Business development or sales lead
• Proposal manager
• Recruiting staff, if relevant

For company priority opportunities, government bid decision meetings might also include a company executive, CTO and CFO.

Utilizing A Government Bid Decision Matrix

The person responsible for capturing the business presents the government bid decision matrix at this meeting and leads a discussion of each bid decision element. Incorporating a government bid decision matrix into your company’s sales process will help you evaluate and pursue the best government bid opportunities for your company. Click here to download a government bid decision matrix for your business today.

After making any adjustments to the criteria scoring, a final government bid decision is made by the business unit manager with input from all the attendees. A company executive often has final government bid decision approval authority when bid and proposal expenditures will exceed a certain percentage of total company allocated business development budget and on all firm fixed price bids that exceed a certain threshold in expected order value.

Reasons Not To Bid on a Government Contract

Some of the reasons a decision might be made to stop pursuing an opportunity are:

• It is not consistent with the company’s strategic plan
• Funds are not available to pursue the bid
• Can’t get the right companies for the team
• No available/acceptable key personnel candidates
• Insufficient proposal resources
• Strongly positioned low cost bidder emerges
• Unacceptable contract terms and conditions
• Key client relationships have not been established

It is important to consider the probability of winning the government bid both for the purpose of maintaining a balanced bid portfolio and understanding the risk associated with bidding a specific opportunity. The following general guidelines can be used to assign a win probability. Consider the entire industry team’s win probability whether your company is a prime or subcontractor:

Government Bid Win Probabilities

• Blind bid - new market: 1-5%
• Blind bid - established market (current client): 10-25%
• Well positioned bid - new market (new client): 20-30%
• Well positioned bid - established market (current client): 25-50%
• Re-compete with satisfied client: 75%
• Sole source to company or recent win contract growth: 50 - 90%

Win probabilities and expected award dates should not be overly optimistic since they impact revenue projections.

Finally, it helps to remember that the purpose of the government bid decision process isn’t just to reach a yes or no conclusion. For those government bids you decide to proceed with, the real value is the identification of your company’s strengths and weaknesses in relation to the bid requirements and competition. Identifying corresponding improvements to your bid will greatly increase your chances of winning.

Michael Lisagor founded Celerity Works in 1999 to help industry executives win and manage government business. He is the author of the Business Development Guide for Selling to the Government.

Aliya Nagimova said,

October 21, 2009 @ 8:49 am

I would like to download bid decision matrix,and the link that you are giving on this page is not working, could you please send me the file over emial. thank you very much in advance.

Aliya Nagimova
Business Analyst
DCMBEC

Patricia Francis said,

November 13, 2009 @ 9:00 am

Need Help, just established a busines in the Augusta Area and need resources to advertise business and pay employees.

Thank you,

Mrs. Francis

editor said,

November 19, 2009 @ 10:53 pm

Hi Patria-

Thanks for the comment. Would love to help if you are looking for assistance in winning government contracts. Otherwise, you might want to check the local yellow pages or small business association.

Thanks

editor said,

November 19, 2009 @ 11:26 pm

Hi Aliya-

Thanks for the notice of the broken link on the page. We will get it fixed ASAP and will email you the matrix.

Thanks.

RSS feed for comments on this post

Leave a Comment

Name

E-mail

URI

Related Posts

• Government Bids & Contract Awards 2009
• Government Bid Strategy: Success Metrics
• 10 Common Government Bid Problems
• Finalizing a U.S. Government Contract Deal
• Government Bids: Top Ten Blunders your Bid Should Avoid