DEVIL IN THE DETAILS: The proposal development process is a huge and sometimes expensive undertaking. Winning business can dictate whether the company can stay in that line of business. (Image by Getty Images)
How industry responds to a request for proposal.
by Dr. Charles K. Pickar
The U.S. defense industry and DOD communicate with each other in many ways, but none is as significant as a request for proposal (RFP), nor carries such high stakes. RFPs are long, tedious, confusing and filled with legalese, which is not a very good way to communicate. But to paraphrase Winston Churchill, an RFP is the worst form of government-industry communication, except for every other form of communication.
In some of the acquisition classes I teach at the Naval Postgraduate School (NPS), I use an RFP as a catalyst for term group projects. Students are divided into teams and role-play as government program management offices and contractor companies. Actual RFPs provide NPS students an opportunity to think about the way we communicate with the defense industry and to learn project management. Ultimately, they can compare their thoughts to what is actually happening in the contract. That’s because the tasks usually required of a contractor to respond to an RFP closely mirror the tasks necessary to plan and manage a project. These tasks range from developing a statement of work to defining a work-breakdown structure, to building a schedule, conducting a risk assessment and more.
These activities also feed the cost estimation process, a critical factor in ensuring a competitive proposal. And, of course, quality control through reviews is necessary at every step, often many times, to make sure the contractor’s proposal is perfect. Once the contractor’s technical, pricing and management issues are defined, the proposal design teams, artists and professional proposal writers step in to edit and make the proposal the document you see the day after it is delivered. Understanding this process, how we in government cause proposals to be submitted, is essential to understanding the defense industry.
THE FOUR METRICS
Four key metrics drive that industry: orders, sales, EBIT and cash. For those unfamiliar, EBIT stands for earnings before interest and taxes, a measure of the company’s performance before accounting for the costs that influence profit. Those four metrics drive the private sector, and they’re what drives defense contractors.
- An order comes from the result, with any luck, of the proposal the contractor submits. Orders are new business and become backlog for a company, and they represent its health and future. In the case of publicly listed defense-focused corporations, orders are one of the fundamental measures stock analysts watch to determine whether they will buy or sell.
- Sales happen when a product is delivered and accepted. Acceptance triggers typically some kind of payment, which directly influences that last category—cash.
- EBIT levels the market, letting everyone see how effective and efficient a company is at making money.
- Cash represents cash flow, how much comes in and how much leaves. Just like your household, businesses must have more money coming in than going out to survive.
A contractor program manager’s (PM) career turns on how well he or she can meet targets set on these goals. That PM is responsible for the deliverables required in the RFP. Orders keep happening when government customers are happy with what the company delivers and how well the government rates them in the Contractor Performance Assessment Reporting System, along with other relevant data.
While all these metrics are essential to staying in business, the orders metric is the one that leads the process and often means the most to the people working there. Landing new contracts and building an orders backlog is how a company grows. And, in our economy, companies must always grow or they are destined to go out of business. Being able to win a competition requires significant, coordinated actions from identifying an opportunity to developing a solution to writing it up in something we call a proposal.
IT ALL STARTS WITH BUSINESS DEVELOPMENT
Among the many jobs I had in the defense industry, some of the most interesting were working in the business development area and responding to proposals. Business development discovers, tracks and eventually wins potential business for contractor companies. Defense contractors must consistently book new business (orders)—win competitions—to stay in business. They also must “keep programs sold,” that is, make sure the contract and quantities contracted don’t get changed or canceled by Dod or Congress. This means business developers must have an in-depth understanding of warfighter issues and position the company to solve those problems. That’s why the industry is always interested in former military personnel. Former Soldiers, Sailors, Airmen and Marines provide a perspective most industry people don’t have—an understanding of the culture and the way the systems will be used.
“Capture” is a defense contractor-unique term. It is the process contractors use to concentrate on winning the weapon system development business. These front-end activities are critical to developing a winning proposal in response to an RFP.
THE RFP ROAD MAP
Writing a proposal requires the contractor to analyze the RFP to thoroughly understand what the government wants so they can develop a technical solution. The only purpose of a proposal is to persuade the government that their answer is the best choice. They follow a disciplined, formal process to produce a convincing document according to strict rules and within restrictive deadlines. And, they often spend significant amounts of money on engineering, labor, travel, intellectual property and other costs to deliver a competitive proposal.
They usually have professional in-house artists to create the graphics and will even hire voice and acting coaches should the RFP require an oral presentation. They may also employ a company that specializes in developing and managing proposals. If a contractor commits to responding to an RFP, they are in it to win it. I have worked on small proposals for which the company spent less than $2,000 and proposals that cost over $500,000 and, in some cases, even more.
GO WITH THE FLOW
Different companies have different processes, but there is a universal flow of in-house events from the time an RFP is released to the submission deadline. Every company uses this typical flow from prime contractors to their subsystem, component and parts suppliers. The steps include gate reviews to provide company leadership an assessment of the probability of winning, analyzing the RFP, developing and writing the solution, plus a series of quality reviews to ensure compliance, quality and profitability. “Color team” reviews address compliance and quality. Gate reviews address profitability and the probability of winning and culminate in a bid or no-bid decision. Assuming the company decides to bid, the initial proposal activity, examining the RFP, is to communicate what the government wants to the proposal team.
It is important to note that while the RFP release starts the formal proposal process within a company, several critical pre-proposal activities happen before RFP release. These contractor activities include engaging the warfighter and PM office and gathering business intelligence for competitive assessments, to name a few. Of these, developing a win strategy is often the most challenging. A win strategy is conceptually simple—the plan for winning the competition. It requires a clear-eyed appraisal of company strengths and weaknesses, whether a proposed solution would address all the government’s issues, an assessment of the competition and an evaluation of what a win or a loss might mean to the company.
SHREDDING THE RFP
Analysis of the RFP, the first phase in the proposal process, is often referred to as shredding the RFP because it entails literally taking the RFP apart to identify requirements, instructions, evaluation factors and deliverables. Once the shred is complete, the RFP is broken out by sections into smaller parts for assignment to the proposal team.
There are software applications that not only automate the process but also assign, schedule and track writing tasks. Decomposing or shredding the RFP gives the proposal team insight into the specifics the government seeks, and results in a rule book, or compliance matrix, to ensure that the team is addressing everything the RFP requests.
Finding all of the government “asks” in an RFP is challenging because deliverables and requirements are frequently dispersed throughout the document. My students, even those who have worked on RFPs, are often amazed at how hard this job can be. The shredding process provides the key players of the proposal team, the proposal manager and the “book bosses” of the necessary volumes—cost, technical, management, past performance and others—what they need to get to work.
GETTING DOWN TO PROPOSAL BUSINESS
Once the RFP is released, the proposal manager assumes control of all activities associated with the solicitation. If developing the proposal is like a system development, the proposal manager is the PM. The proposal manager’s job often goes beyond PM-type activities, though. Large companies frequently have a full-time proposal manager and dedicated workspaces, including secured areas, if necessary.
The proposal manager in a large company is the go-to resource manager, but there is often another senior person appointed as proposal manager as well. That person could be someone from the business development organization, an engineer or even a senior executive, depending on the person’s familiarity with the customer and the solution, as well as the importance of the submission. The significance of the RFP to the company is recognized well in advance of any business development work being done. A basic rule of thumb states that if the release is the first time you hear of an RFP, then there’s no point in competing. In the industry, the earlier they start, the better.
SIMPLE TO SUBLIME
RFPs range from the routine task-order type worksmall-dollar but quick-response activitiesto complex RFPs for major weapon systems. Given the structure of the U.S. defense industry today, those large RFPs often determine not only which companies will win, but those that will stay in that line of business. For example, when Lockheed won the F-35 contract, it also became the sole developer of fifth-generation fighter aircraft. While Boeing is still building older, fourth-generation F-15 and F-18 aircraft, Lockheed, with a trained workforce and already-developed intellectual property and software, is uniquely positioned to be ready for a sixth-generation program should one develop. RFPs for these generational-type systems are often designated as must-wins for a company because a loss has such far-reaching potential business effects. Must-win proposals have virtually unlimited budgets and are carefully managed. (Whether this is a good thing for the government is another column.)
The proposal manager backward-plans a proposed delivery schedule based on the submission due date. Planning estimates are measured by the individual writer in pages, by section, by day. Proposal sections are combined to construct volumes (or books) with the overall number of pages set by Section L of the RFP. (Section L is the part of the RFP that contains instructions, conditions and notices to offerors or respondents.) Given the relatively short turnaround time between RFP release and submission of proposals, actual solution development must start early in the pre-RFP process. RFP turnaround times are measured in weeks, or maybe a month or two.
Solution development is executed like an actual project, only accelerated. Costs and schedules must be estimated. Risk assessments are ongoing. Proposal team members are gearing up for 12- to 16-hour days to stay on schedule. The crunch can be even worse when the government releases an RFP shortly before a major holiday.
WRITING THE FIRST (AND THE SECOND AND THIRD … ) DRAFTS
Writing the proposal is the nuts and bolts of developing it. Experts across the proposal sections are sequestered in the proposal development center or another dedicated space so they can focus on the writing as well as collaborate with other team members. Speed is of the essence. Bigger, more complex proposals often require people from outside the central organization to join the team, which complicates this process.
Key initial activities include developing and approving storyboards and identifying graphics, while always checking the rules in Section L of the RFP. The prime directive for the team at this point is to get something on paper for editing and revisions, and the pressure is significant. Everyone knows that the best proposals, much like academic work, come from constant revision.
Short timelines, tension and the complexity of answering RFPs often cause real problems on a team. I have worked on proposal teams where we had to physically separate engineers after disagreements on the finer points of the technology. An oft-repeated phrase around the proposal center goes, “Tell them what they (the government) want to hearnot what you want to tell them.” That is harder to do than it sounds. Hours turn into days into weeks and so on. For the many people writing a proposal, their world becomes focused on two things: writing deliverables and making sure these products conform precisely to requirements stated in the RFP.
QUALITY CONTROL AND A METRIC FOR PROGRESS
Whatever the differences among different companies’ proposal processes, most use a series of reviews, generically referred to as color teams, because of their designation. Part of the planning process is establishing and scheduling the color teams. While varying from company to company, they consist of a series of events shown in the Table below.
A Red Team review is the big event for proposal developers. It is a complete review of the technical and management volumes from the government evaluator’s perspective. The Red Team simulates the government evaluation board process as best it can, and its end state is the identification of issues the team believes require improvement. Once the proposal has gotten past the Red Team, the pressure to get it fixed, completed and out the door drives everything the proposal manager does.
DELIVERED, AT LAST
The last step (which is actually a series of steps) before a proposal can be delivered is to gain the necessary internal approvals. The approvals range from the technical solution to the cost. Most proposal managers engage the company leadership throughout the process because no one wants to be surprised.
While the proposal manager is finalizing the proposal, functional managers are meeting with the company president or their business unit brass for final approvals. If the proposal manager is lucky, this last approval meeting occurs well before the required submission date. However, the many moving parts, people, processes and decisions can push these final meetings to just hours before deadline.
Finalizing the proposal means putting it into production. In ways reminiscent of publishing a newspaper or book, the editing process—making sure graphics are what they should be, where they are supposed to go, with captions that explain what they are supposed to explain—is a huge undertaking. A proposal must be perfect because it represents what that company can do. If it is professional and without flaws, it can convey the idea that here is a company that is professional, detail-focused and competent. Conversely, errors in a proposal convey the opposite. Finally, the government will reject any proposal not in compliance with the instructions in Section L of the RFP. While the stakes are very high throughout the process, impeccable delivery is crucial.
Once the proposal manager gains final approval, the proposal is delivered per the RFP instructions. At this point, most of the proposal writers are finished. However, there remains a small core of people who will stay in the proposal center, ready to address any questions coming from the government evaluation board. Keeping these people together is crucial because they have the information, understand the solution and, most importantly, can explain what they meant should the government need clarification. Depending on the issues, this group may be tied down for many weeks.
The defense industry wants to show the Army that they get it, that they can do the job that needs doing. By the same token, the Army wants the best proposals from the best contractors. That sets up a potential win-win situation. The defense industry must make a profit to stay in business, and we need quality weapon systems that ensure mission accomplishment.
Winning proposals aren’t written in a vacuum. The proposal process for every company in the industry is predicated on understanding what we in the government want, what we want it to do, when we want it and how much we are willing to pay. We make the rules. Industry wants to work with us—and no, they don’t expect any unfair advantages. They are probably more aware than we are of the law and work hard to prevent any illegalities.
For industry, communication is critical to this process of proposals. We should always keep in mind the value of communicating with the industry because the RFP is a means of communication. You would be surprised at the value you can get from engaging your industry partners.
For more information on RFPs, go to: https://www.acq.osd.mil/dpap/ccap/cc/jcchb/html/Topical/rfps.html, https://www.acquisition.gov/content/15203-requests-proposals, https://www.sba.gov/sites/default/files/2018-02/proposals_workbook.pdf or http://acqnotes.com/acqnote/tasks/request-for-proposalproposal-development.
- CHARLES K. PICKAR is a senior lecturer at the Naval Postgraduate School (NPS) in Monterey, California, where he teaches program management, acquisition, and systems engineering in the Graduate School of Defense Management. He has more than 30 years of management and research experience, including leadership positions at the Johns Hopkins University Applied Physics Laboratory, Science Applications International Corp. and Lockheed Martin Corp. He holds a doctorate in business administration from Nova Southeastern University, an M.S. in systems engineering from The Johns Hopkins University, an M.A. in national security affairs from NPS and a B.A in business from the University of Maryland. He is a graduate of the U.S. Army School of Advanced .Military Studies. The author’s last Been There, Done That column was “AI Needs Data,” in the Summer 2020 issue.