2008 NES Presentation Solicitations, Bids, Proposals, And Source Selection)
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Transcript of 2008 NES Presentation Solicitations, Bids, Proposals, And Source Selection)
Morning Session
AgendaKEY TOPICS
Unit 1 The Buying and Selling Life Cycle
Agenda
Unit 1 The Buying and Selling Life CycleLearning to Dance Together Exercise: Q&A
Unit 2 Pre-bid/Proposal PhaseUnit 2 Pre bid/Proposal PhaseProcurement Planning, Solicitation Planning, and Preparation Exercise: Q&A
Case Study Acquisition Strategy
BREAK
Unit 3 Pre-bid/Proposal PhasePre-sales Activities and Bid/No-Bid Decision-Making Exercise: Q&A
Unit 4 Bid/Proposal PhaseBid/Proposal Development and Reviews/Approvals
2
Bid/Proposal Development and Reviews/Approvals
LUNCH
UNIT 1
THE BUYING AND SELLING LIFE CYCLETHE BUYING AND SELLING LIFE CYCLELearning to Dance Together
3
The Buying and Selling Life Cycle
Learning to Dance TogetherIn both the public and private business sectors, buyers are far more knowledgeable about their rights,
have higher expectations regarding the quality of products and services, have little tolerance for poor
performance, are quick to change their minds, and frequently complain if they do not get what they
want when they want it. y
Just like dancing, partner feedback is critical. You must know the difference between a partner's needs
and desires You must know how to treat your partner so you do not start out or end up on the wrong and desires. You must know how to treat your partner, so you do not start out or end up on the wrong
foot. Business partners must work together to achieve success, otherwise, one or both will stumble and
fall.
4
Reference Text: Solicitations, Bids, Proposals, and Source Selection: Building a Winning Contract, by Gregory A. Garrett and Gail A. Parrott, CCH, Chicago, IL, 2007, pg. 2
Creating Customer Value
Quality of Service
Supply-Chain Management
Speed Maintainability
Supply-Chain Management
On-TimeDelivery
Best-in-Class Service Trust
A il bilit
Best-in-Class ProductsTrust
Customer Loyalty
Availability of Resources
On-TimeDelivery
Breakthrough TechnologyReliability
Value
PriceType of Contract
Trust
Discounts
Financing
Payment Terms
Best-ValueDeal
5Reference Text pg. 4
RelationshipThird Parties
Quantity
Inadequate Customer ValuePoor Supplier
Low StockPrice
DownsizingEmployees
MarginTargets
R&D CostsToo High INSUFFICIENT
Lack ofChannel
Incentives
Poor SupplierSelection
High Turnoverof Key PeopleHigh-Risk
Contract
TargetsToo High
Too High INSUFFICIENTTRUST
WRONGPRICETOO HIGH
BadContractInsufficient
Volume
Marketing and Sales Costs
Too HighProduction
INADEQUATE CUSTOMER
VALUE
CUSTOMERTOO HIGH
Poor MarketSelectionToo High Costs Too High
Lack ofRight
Features
Lack ofTimely
DeliveryINSUFFICIENT
SelectionPoor Market
Segmentation
Features
Lack ofResponsive
ServicesPoor Product
Reliability
yINSUFFICIENT
QUALITY
6Reference Text pg. 5
Poor Supply-ChainManagement
Services
The Buying and Selling Life Cycle
Buyer Step 2Solicitation Planning
Buyer Step 3Solicitation Preparation
Seller Step 1Pre-sales Activities
Pre-bid/Proposal Phase
Buyer Step 1Procurement Planning
Seller Step 2Bid/No-Bid
Decision-Making
THE BUYING AND SELLING LIFE CYCLE
Seller Step 3Bid/Proposal Developments
Buyer & Seller Step 7
Contract Administration &
Closeout
Bid/Proposal Phase
Post-bid/Proposal Phase
Buyer Step 4Source-Selection Planning
Buyer & Seller Step 6
Contract N ti ti &
BuyerSeller
Phase
Seller Step 4Bid/Proposal
Reviews & ApprovalsSeller Step 5Verbal Presentation & Response to Questions
Negotiation & Formation
7Reference Text pg. 7
SellerBuyer & Seller Buyer Step 5
Source-Selection Evaluation
Response to Questions
Selected Interview
Job Title: Contracting Officer
Linda Riviera
Organization: National Aeronautics and Space Administration (NASA), Office of Procurement, Johnson Space Center (JSC)
Location: Houston TexasLocation: Houston, Texas
Major Responsibilities: Currently supporting source-selection evaluation board activities within the Center Operations Directorate as the contracting officer on a major acquisition. Other major activities include supporting the as the contracting officer on a major acquisition. Other major activities include supporting the Institutional Procurement Office as a contracting officer in the contract extension activities for a major contract within the Center Operations Directorate.
Background: Linda Riviera is a Level III contracting officer working for the Office of Procurement at g g gthe NASA Johnson Space Center in Houston, Texas. During her 15-year career with NASA, she has supported various center organizations including the Mission Operations Directorate, the International Space Station Program, and most recently, the Center Operations Directorate.
8Reference Text pg. 18
Selected Interview
QUESTIONWhat actions do you suggest sellers take to ethically and appropriately influence buyers’
Linda Riviera
y gg y pp p y yrequirements?
ANSWERS
Th b t t it f ll t i fl b i t i i th i iti lThe best opportunity for sellers to influence buyer requirements is in the initialstages of the acquisition planning.
The government buyer may solicit from industry comments to the acquisitionstrategy in general and to specific areas of the strategy such as contract type, periodof performance and performance incentives of performance, and performance incentives.
Sellers should articulate their understanding of the strategy, provide positive ornegative comments with supporting rationale, and provide examples of theircompany best practices with similar types of contracts.
9Reference Text pg. 20
Selected Interview
QUESTIONWhat do you consider to be the top five seller best practices for developing a winning bid or proposal?
Linda Riviera
ANSWERS
The seller must develop their internal acquisition strategy, which includes researching the marketplace, knowing the competition, and understanding the buyer requirements.
The seller must read the requirements of the request for proposal (RFP) and generate a technical The seller must read the requirements of the request for proposal (RFP) and generate a technical and cost proposal that clearly articulate the seller’s methodology for fulfilling the buyer’s requirements.
The seller must prepare for verbal discussions by clearly identifying the roles of the selling team, articulating the selling teams commitment, and understanding the acquisition and being prepared with solutions to any weaknesses identified to the seller before verbal discussions. y
The seller should ensure that all issues or questions regarding the solicitation are asked earlyon by submitting questions about the RFP to the buying team.
The seller should ensure that the best and final proposal has been reviewed, over and over i t k t i th t it’ th b t d t th t it b d th t k id tifi d i b l again, to make certain that it’s the best product that it can be and that weaknesses identified in verbal
discussions have been addressed.
10Reference Text pgs. 20–21
Exercise
Q&A
1 Wh t d id t b i ti ’ b i / lli t th ?
Q&A
1. What do you consider to be your organization’s buying/selling strengths?
2. What do you consider to be your organization’s buying/selling weaknesses?a do you o s d o b you o ga a o s buy g/s g a ss s
3. On a scale of 1 (low/poor performance) to 10 (high/excellent performance), how do you rate your organization’s ability to efficiently and effectively manage the y y g y y y gbuying and selling life cycle?
11
UNIT 2
PRE-BID/PROPOSAL PHASEPRE-BID/PROPOSAL PHASEProcurement Planning, Solicitation Planning, and Preparation
12
Purchasing Studies
Cross Industry BenchmarksTable 2-1Center for Advanced Purchasing Studies (CAPS) Research Report of Cross-Industry Benchmarks (May 2006)
Aerospace
Cross-Industry Benchmarks
Benchmark Cross-IndustryAverage
TelecommunicationsAverage
Aerospaceand Defense
Average
Purchase Spend as a Percent of Sales $ 43.69% 43.46% 44.77%
Purchase Operating Expense as a Percent of 0 39% 0 24% 1 05%Purchase Operating Expense as a Percent of Sales Dollars 0.39% 0.24% 1.05%
Purchasing Operating Expense per Purchasing Employee $110,320 $124,908 $120,238
Percent Spend Managed by Purchasing 80.62% 76.31% 93.28%
Percent of Companies Outsourcing Some of their Purchasing Activities 29% 30% 30%
Active Suppliers Accounting for 80% of Purchase Spend 6.46% 1.73% 4.79%
P t f A ti S li h Percent of Active Suppliers who are e-Procurement Enabled 11.16% 8.53% 8.42%
Percent Purchase Spend via E-Procurement 16.45% 7.00% 5.65%
Percent of Purchase Spend with Diversity Suppliers 9.63% 7.27% 12.69%
13
Suppliers
Reference Text pg. 29
The Buying and Selling Life Cycle
Buyer Step 3Solicitation Preparation
Seller Step 1Pre-sales Activities
Buyer Step 2Solicitation Planning
Pre-bid/Proposal Phase
Buyer Step 1Procurement Planning
Seller Step 2Bid/No-Bid
Decision-Making
B &
THE BUYING AND SELLING LIFE CYCLE
Seller Step 3Bid/Proposal Developments
Buyer & Seller Step 7
Contract Administration &
Closeout
Bid/Proposal Phase
Post-bid/Proposal Phase
Buyer & Seller Step 6
Contract Negotiation &
Buyer
Seller Step 4Bid/Proposal
Reviews & ApprovalsSeller Step 5Verbal Presentation & Response to Questions
gFormation
14Reference Text pg. 30
SellerBuyer & Seller
Buyer Step 5Source-Selection Evaluation
Buyer Step 1
Procurement Planning ProcessProcurement Planning Process
Inputs Tools + Techniques Outputs
Similar past performance work
Outsource analysis Procurement management planperformance work
statements (PWS), statements of objectives (SOO), or solicitations
Market Research
Expert judgment
E-procurement +
management plan
Seller participation and feedback
Procurement resources
Market conditions
Business constraints
contracting methods
Contract type or pricing arrangements
Business constraints
Business assumptions
15
Adapted from World-Class Contracting, by Gregory A. Garrett, CCH, Inc., 2006.
Reference Text pg. 30
E-Procurement and Contracting Methods
Table 2-1Two Approaches to Contracting
Competitive Noncompetitive
Simplified Purchase agreements Imprest funds or petty cash
Purchase agreementsp p y
AuctioningNet marketplacesVertical exchangesHorizontal exchangesHorizontal exchangesWeb portals
Formal Sealed biddingPrivate exchanges
Sole-source negotiationsSingle-source negotiationsPrivate exchanges
Two-step sealed biddingCompetitive proposalsCompetitive negotiations
Single source negotiations
16Reference Text pg. 32
Sealed Bidding vs. Two-Step Sealed Bidding
Buyer makes solicitation Seller submits technical
Two-StepSealed Bidding
Sealed Bidding
Buyer makes solicitationfor firm bids
Seller submits technicalproposal, and managementand company qualificationinformation
After deadline, buyerevaluates bids
Buyer evaluates everythingexcept pricing informationto determine which sellersare qualified
Two
Buyer requests pricinginformation fromqualified selles
One Step
Steps
Buyer chooses sellerbased on qualificationsand bid price
Buyer chooses seller(usually lowest bidder)
17Reference Text pg. 36
and bid price
Comparison of Contracting Methods
Noncompetitive Single-Source or
Sole-Source NegotiationCompetitive Proposals
or Negotiation
Requirement
Competitive Bidding
R i t R i tRequirement
Planning
Requisition
Requirement
Planning
Requisition
Requirement
Planning
Requisition
Request for proposals
Sellers
Invitation for bids
Sellers
Proposals
Technical proposal analysis Cost proposal analysis
Sealed Bids
Bid opening
Proposal
Final evaluation and selection
Discussions/negotiations
Short listResultsResults
Evaluation or two-step evaluationDiscussions/negotiations
18Reference Text pg. 39
Award of contract
Performance
Final evaluation and selectionp
Award of contract
PerformanceAward of contract
Performance
Contract Categories and Types
Table 2.1 Contract Categories and Types
Fixed Price Cost Reimbursement or Unit Price
Time and Materials
s
Firm-fixed price
Fixed price witheconomic price
Cost reimbursement
Cost-plus-a-percentage-of cost
Time and materials
Unit price
f C
ontr
acts
economic price adjustment
Fixed-price incentive
of cost
Cost-plus-fixed fee
Typ
es o
f
Cost-plus-incentive fee
Cost-plus-award fee
19Reference Text pg. 40
Best Practices15 Actions to Improve Your Use of Contract Incentives
These best practices should be followed when using incentive contracts:
15 Actions to Improve Your Use of Contract Incentives
1. Think creatively—creativity is a critical aspect in the success of performance-based incentive contracting.
2. Avoid rewarding sellers for simply meeting contract requirements.
3. Recognize that developing clear, concise, objectively measurable performance incentives will be a challenge, and plan accordingly.
4. Create a proper balance of objective incentives—cost, schedule, and quality 4. Create a proper balance of objective incentives cost, schedule, and quality performance.
5. Ensure that performance incentives focus the seller’s efforts on the buyer’s desired objectives.
6. Make all forms of performance incentives challenging yet attainable.
7. Ensure that incentives motivate quality control and that the results of the seller’s quality control efforts can be measured
20Reference Text pg. 52
quality control efforts can be measured.
Best Practices15 Actions to Improve Your Use of Contract Incentives
8. Consider tying on-time delivery to cost and/or quality performance criteria.
15 Actions to Improve Your Use of Contract Incentives
9. Recognize that not everything can be measured objectively—consider using a combination of objectively measured standards and subjectively determined incentives.
10. Encourage open communication and ongoing involvement with potential sellers in 10. Encourage open communication and ongoing involvement with potential sellers in developing the performance-based SOW and the incentive plan, both before and after issuing the formal request for proposals.
11. Consider including socioeconomic incentives (non-SOW-related) in the incentive plan.11. Consider including socioeconomic incentives (non SOW related) in the incentive plan.
12. Use clear, objective formulas for determining performance incentives.
13. Use a combination of positive and negative incentives.13. Use a combination of positive and negative incentives.
14. Include incentives for discounts based on early payments.
15. Ensure that all incentives, both positive and negative, have limits.
21Reference Text pg. 52
15. Ensure that all incentives, both positive and negative, have limits.
Range of Contract Types and Risk
Types of Contracts
Fixed price T&M* C t i b t
FFP CPFFFP/ FPI CST&M CPIF CPAFCR CPPC
Fixed price T&M* Cost reimbursement
HighLow Buyer’s risk
FFP CPFFFP/EPA
FPI CST&M CPIF CPAFCR CPPC
LowHigh Seller’s risk
*T&M contracts typically involve higher levels of risk for buyers.
= CPPC contract type is illegal in U.S. government contracting
22Reference Text pg. 57
Procurement Planning
D i d O t t
Th f h l i i f h f ll i i
Desired Outputs
The outputs from the procurement planning process consist of the following items:
Acquisition plan or procurement management plan: This plan should describe how the remaining procurement processes (from solicitation planning through contract closeout) will be managed The following are examples of questions to ask in developing closeout) will be managed. The following are examples of questions to ask in developing the procurement management plan:
What types of contracts will be used?
If independent estimates will be needed as evaluation criteria, who will
prepare them and when?
If standardized procurement documents are needed, where can they be found?If standardized procurement documents are needed, where can they be found?
How will multiple providers be managed?
23Reference Text pg. 57
Selected InterviewRene G RendonRene G. Rendon
Job Title: Professor
Organization: Naval Postgraduate School
Location: Monterey, California
Major Responsibilities: Teach program management and contract management courses in MBA programs
Background: 22 years of Air Force acquisition management. Bachelor’s, master’s, and doctorate degree in business administration.
24Reference Text pg. 59
Selected Interview
Rene G Rendon
QUESTIONWhat do you consider to be the top five seller best practices for developing a winning bid
Rene G. Rendon
What do you consider to be the top five seller best practices for developing a winning bid or proposal?
ANSWER
Use an integrated team effort.
Use a solicitation compliance matrix to ensure compliance with the solicitation requirements.q
Conduct a competitive analysis report to assess yourself against competitors.
Review past proposals that were successful and those that were not successful as a means of improving the proposal development processmeans of improving the proposal development process.
Use an external review team to evaluate the proposal before submission to the buyer.
25Reference Text pgs. 60
Selected Interview
Rene G RendonRene G. Rendon
QUESTIONHow can U.S. government agencies truly streamline and improve their source-selection process?process?
ANSWERUse electronic source-selection tools that will automate the paper process; educate and train source-selection personnel to ensure they have the appropriate knowledge, skills,
d biliti t d t b t l l ti M i t i d f and abilities to conduct best-value source selections. Maintain a cadre of source-selection experts to augment source-selection teams.
26Reference Text pgs. 60-61
Buyer Step 2
Solicitation Planning
Inputs Tools +T h i Outputs
Solicitation Planning
Inputs Techniques Outputs
Procurement managementplan
Standard forms
Expert judgment
Procurement documents
plan
Statement of work, performance work statement, or
Expert judgment Evaluation criteria
Statement of work updates
statementof objective
Other procurementplanning output
Due diligence
planning output
27Reference Text pg. 61
Buyer Step 3
Solicitation Preparation
Inputs Tools + Techniques Outputs
Solicitation Preparation
Inputs Tools + Techniques Outputs
Procurement documents
Seller focus groups, meetings, conferences, or Web-
Solicitation that leads to submission of quality bids or
Qualified seller lists,
based surveys
Advertising
Solicitation review(s)
q yproposals from qualified sources
Solicitation review(s)
Request for Information (RFI)
Draft request for proposal (RFP)
Understanding the seller’s perspective
28
seller s perspective
Reference Text pg. 66
Straight Talk
Suggestions for Significant Improvement
In both the public and private business sectors, buyers are usually in a rush to get something they need and they often want it badly As a result buyers often get what they
Suggestions for Significant Improvement
something they need, and they often want it badly. As a result, buyers often get what they want—however, it is often delivered late, over budget, does not meet their customer/user expectations, requires more service than expected, requires more upgrades than planned, and has a higher life-cycle cost than expected.
Thus, the buyers first three steps discussed in this unit must be properly staffed in both quality and quantity of resources with realistic schedules that should be mutually developed.
Buyers should conduct market research; should seek and obtain seller’s feedback via seller focus groups, meetings, or conference; use request for information; draft solicitations and appropriate means, using the appropriate communication technologies, such as Webinars, teleconferences and videoconferences etc teleconferences, and videoconferences, etc.
Further, buyers must stop vendor-bashing suppliers and create real partnerships in order to maximize the opportunities for everyone involved in the buying and selling life cycle.
29Reference Text pg. 69
Exercise
Q&AQ&A
1. On a scale of 1 (low/poor performance) to 10 (high/excellent performance), how effectively does your organization conduct procurement and solicitation planning?
2. Does your organization have the number of skilled resources needed to effectively conduct the procurement and solicitation planning steps?
3. How well does your buying organization review solicitations for clarity, accuracy, and brevity before submission to potential sellers?
30
UNIT 3
PRE-BID/PROPOSAL PHASEPRE BID/PROPOSAL PHASEPre-sales Activities and Bid/No-Bid Decision-Making
31
The Buying and Selling Life Cycle
Buyer Step 1
Buyer Step 2Solicitation Planning
Buyer Step 3Solicitation Preparation
Seller Step 1Pre-sales Activities
Pre-bid/Proposal Phase
Buyer Step 1Procurement
PlanningSeller Step 2Bid/No-Bid
Decision-Making
THE BUYING AND SELLING LIFE CYCLE
Seller Step 3Bid/Proposal Developments
Buyer & Seller Step 7
Contract Administration &
Closeout
Bid/Proposal Phase
Post-bid/Proposal Buyer Step 4Source Selection Planning
DevelopmentsCloseout
Buyer & Seller Step 6
Phase Source-Selection Planning
Seller Step 4Bid/Proposal
Reviews & ApprovalsSeller Step 5
Seller Step 6Contract
Negotiation & Formation
BuyerS ll
32Reference Text pg. 72Buyer Step 5
Source-Selection Evaluation
ppVerbal Presentation & Response to Questions
SellerBuyer & Seller
Seller Step 1
Pre sales Activities ProcessInputs Tools + Techniques Outputs
K l d f Q lifi d
Pre-sales Activities Process
Knowledge of yourcustomer
Knowledge of your company
Qualify opportunity and risk Opportunity–risk assessment grid
(ORAG) ORAG with bid/no-bid line
Elements of oppo t nit
Qualified opportunity
Competitor profile
Win strategy Knowledge of your
competitors
Elements of opportunity Elements of risk Opportunity quantification tool Risk quantification tool Gather competitive intelligence
Win strategy
Outline of offer–Stakeholders
review presentation Gather competitive intelligence
Competitor profile Sources of competitive intelligence Develop win strategy Sweet spot-sour spot analysisp p y Win theme and strategy form Customer positioning plan Customer contact plan Outline the opportunity
33Reference Text pg. 73
Stakeholder presentation outline
The Three Inputs of Knowledge
Knowledge of your customer
Knowledge of your
Opportunity
34Reference Text pg. 74
Knowledge of your competitors Knowledge of your company
Opportunity–Risk Assessment Grid
High OpportunityLow Risk
High OpportunityHigh Risk
Hig
h 16
0Low Risk High Risk
ty BID
Opp
ortu
nit
120
BID
L O t it L O t it
NO BID
Low OpportunityLow Risk
Low Opportunity High Risk
Ri kHigh 160120Low 40
Low
40
35Reference Text pg. 78
Risk
Elements of Opportunity and Elements of Risk
Elements of Opportunity Elements of Risk
Corporate Direction Match Customer Commitmentp
Competitive Environment Corporate Competence
Revenue Value External Obstacles
Potential Profitability Opportunity Engagement
In-House Content Solution Life-Cycle Match
Future Business Potential Period of Performance
Resources to Bid Delivery Schedule
b b l dProbability to Success Resource Coordination
Collateral Benefit Nonperformance Penalties
Overall Strategic Value Overall Feasibility
36Reference Text pg. 79
Overall Strategic Value Overall Feasibility
Opportunity Quantification Tool
OPPORTUNITY ELEMENT
SCORE WEIGHT WEIGHTED SCORE
1 2 3 4
Core Business/Corporate Direction
Counter to core business and corporate direction
Neutral to core business and corporate direction
Partially aligned to core business and corporate direction
Fully aligned to core business and corporate direction
6
Competitive Environment
Competitor is clear leader and is favored by customer
Customer favors the competitor and is neutral to your company
No clear leader and customer has no supplier preference
Your company is clear leader and is favored by customer
5
Revenue Value Greater than $500K Between $500K and $2.5M Between $2.5M and $5M Over $5M4
Potential Profitability is negative or Profitability is between 0- Profitability is between 50- Profitability is over 100% Potential Profitability
Profitability is negative or break even
Profitability is between 050% of corporate requirements
Profitability is between 50100% of corporate requirements
Profitability is over 100% of corporate requirements 4
In-House Content
Less than 50% of content is from your company
Between 50%–75% of content is from your company
Between 75%–90% of content is from your company
Over 90% of content is from your company 4
Future Business Little or no connection to Possible link to future Likely link to future Assured or mandatory link Future Business Potential
Little or no connection to future business
Possible link to future business
Likely link to future business
Assured or mandatory link to future business 3
Resources to Bid Will significantly drain resources working on other opportunities
Will drain some resources working on other opportunities
Will have little or no impact on resources working on other opportunities
Will use resources currently underutilized 3
Probability of Success
Probability of success is near zero
Probability of success is less than 50%
Probability of success is over 50%
Success is almost certain3Success near zero than 50% over 50%
Collateral Benefit Little or no benefit to other projects or new company skills
Some benefit to either other projects or new company skills
Some benefit to both other projects and new company skills
Significant benefit to other projects or new company skills
3
Overall Strategic Value
It is of low importance that your company win this business
It is somewhat important that your company win this business
It is of high importance that your company win this business
It is critical that your company win this business
5
37Reference Text pg. 83
business business business business
TOTAL WEIGHTED OPPORTUNITY SCORE
Case Study
IBM (Global Services)IBM (Global Services)
To help mitigate business risks, IBM seeks not only to understand their customer’s business situation, but to influence the customer’s selection process by which they purchase products and/or services.
At IBM Global Services, they have an old saying “no blind bids,” which means IBM wants to always know the customer’s needs, risks, and opportunities before a solicitation document (i.e., invitation to bid, request f l t ) i i d b tfor proposal, etc.) is ever issued by a customer.
At IBM, opportunity and risk assessment is a proven best practice and an essential part of their business processes.p p
38Reference Text pg. 84
Risk Quantification ToolRISK ELEMENT SCORE WEIGHT WEIGHTED
SCORE1 2 3 4
Customer Commitment
Customer has assigned budget and personnel
Customer has assigned budget but not personnel
Customer has assigned personnel but not budget
Customer has not assigned personnel or budget
6
Corporate Complete replication of More than 50% replication of Less than 50% replication No replication of past Corporate Competence
Complete replication of past projects done by your company
More than 50% replication of past projects done by your company
Less than 50% replication of past projects done by your company
No replication of past projects done by your company
5
External Obstacles
No obstacles exist that are outside control of customer
Some obstacles—customer is actively working to address each
Some obstacles—customer has plan to address each
Significant obstacles—customer has no plan developed to address each
4
Opportunity Your company developed Your company guided Your company provided Our company had no Opportunity Engagement
Your company developed requirements for the customer
Your company guided customer in development of requirements
Your company provided comments after requirements were developed
Our company had no involvement in developing requirements 4
Solution Life-Cycle/Match
All requirements can be met by mature, released projects
Less than 30% of products will be pre-released or new products
Between 30%-70% of products will be pre-released or new products
70% of products will be pre-released or new products
4
P i d f C t t i f l th i C t t i b t i C t t i b t C t t i th Period of Performance
Contract is for less than six months
Contract is between six months and one year
Contract is between one year and three years
Contract is over three years 3
Delivery Schedule
Delivery schedule is flexible and will be set by your company
Delivery schedule to be negotiated by customer and your company
Delivery schedule is fixed, but no penalties for missed dates
Delivery schedule is fixed and penalties exist for missed dates
3
Resource Coordination
Need to coordinate less than five groups in your
Need to coordinate five or more groups in your company
Need to coordinate company groups and up to t t id li
Need to coordinate company groups and th t id 3company two outside suppliers three or more outside suppliers
3
Nonperformance Penalties
No penalties for nonperformance
Penalties to be negotiated between customer and your company
Fixed monetary penalties for nonperformance with a limit
Fixed monetary penalties for nonperformance with no limit
3
Overall Feasibility/Risk
Project is feasible and risks are manageable
Peroject is feasible but risks require mitigation
Project has some elements that are questionable but
Project has questionable feasibility and very high 5
39Reference Text pg. 85
risks can be mitigated risks
TOTAL WEIGHTED RISK SCORE
Competitor Profile
RANK Competitor or Competing
Solution Being Bid
Strengths of Competitor and
Weaknesses of Competitor and p g
Teamp
Solutionp
Solution
1
2
3
4
5
40Reference Text pg. 86
Sources of Competitive Intelligence
Sources of Competitive Intelligence
Public press releases,P bli W b iPublic Web sites,Public brochures,Public advertisements,Articles in trade publications,Past bids by your company to this customer,Past bids by your company to similar customers,Customer list of companies requesting solicitation,*Customer conversations,*Customer events and meetings,*Trade or industry associations, andCompetitive research or analysis companies.
* Which do not violate your company’s or competitor's rules on disclosure.
41Reference Text pg. 87
Sweet Spot–Sour Spot Analysis
Sour spot
Our weaknesses CompetitorstrengthsMitigate our weaknesses
STRATEGY
Neutralize their strengths
STRATEGY
Sweet Spot–Sour Spot AnalysisA Bidder’s Dozen: Golden Rules for Winning Work David G. Pugh, Ph.D
Customer needs
Winning Work David G. Pugh, Ph.D —Lore International Institute
Our strengthsCompetitor
kHighlight our strengths Ghost their weaknesses
Our strengths weaknessesSTRATEGY STRATEGY
42Reference Text pg. 88
Sweet spot
Win Themes and Strategies
Win Themes and Strategiesg
Win themes:
hStrategies to maximize our strengths:
Strategies to minimize our weaknesses:
Strategies to neutralize competitor's strengths:
St t i t h t tit ' kStrategies to ghost competitor's weaknesses:
43Reference Text pg. 90
Customer Positioning Planner
Customer Positioning PlannerC t C t R l P i S d F f C t t *Customer Position
Customer Name
Role PrimaryContact
Secondary Contact
Frequency of Contact *
Decision-Maker
Influencer Phone Call Personal Meeting
Dinner Entertainment
*Weekly, Bi-Weekly, Monthly, As-Needed
44Reference Text pg. 91
Customer Contact Planner
Customer Contact Planner
Customer: Prepared by: Date:
Date Event Purpose Objective(s) Customer Participants Your Company’s Participants
45Reference Text pg. 91
Desired Outputs
At the completion of the pre-sales activities step, you should have:
A qualified opportunity,
Competitor profile,
Win strategy, and
An outline of the offer for stakeholder opportunity review.
46
Selected Interview
Wayne E. Ferguson
Job Title: Manager, Contracts and Expert Compliance Officer
Organization: CAE USA Inc.
Location: Tampa, Florida
Major Responsibilities: Management and administration of all CAE USA contracts.
Background: BS in Management and MBA in Management, both from Wright State University, Dayton, Ohio. Former USAF “Copper Cap” at Wright Patterson Air Force Base, Ohio. More than 20 years of experience both as a USAF civilian procurement contracting officer and in industry.
47Reference Text pgs. 95-96
Selected Interview
QUESTIONWhat actions do you suggest sellers take to ethically and appropriately influence a buyer’s
Wayne E. Ferguson
a a o do you ugg a o a y a d app op a y u a buyrequirements?
ANSWERHave the “marketers” coordinate early with their contracts personnel and follow the “letter of the Have the marketers coordinate early with their contracts personnel and follow the letter of the law” regarding influence attempts. Establish an atmosphere of trust and mutual respect with the customer.
QUESTIONQUESTIONWhat actions should sellers take to ensure they make intelligent bid/no-bid decisions on their critical deals?
ANSWERANSWERDo not “chase” every opportunity—look at those opportunities that match the seller’s “core” business plans/competencies and stick with them. Have a formal bid/no-bid process and follow it.
48Reference Text pg. 96
Selected Interview
QUESTIONWhat do you consider to be the top five seller best practices for developing a winning
Wayne E. Ferguson
What do you consider to be the top five seller best practices for developing a winning bid or proposal?
ANSWER
Read and follow the RFP requirements “to a T.”
Get to know the buyer's and the users' real needs and attempt to roll these into the proposal.p p
Establish a formal proposal team if one does not exist in the organization, and written processes/procedures for the team.
Aim the proposal at the RFP requirements—do not include "fluff" in the proposal.
Be timely in every action taken.
49Reference Text pg. 96
Seller Step 2
Bid/No Bid Decision Making ProcessBid/No-Bid Decision-Making Process
Inputs Tools + Techniques Outputs
Qualified opportunity Outline of offer—
Stakeholder opportunity review
t ti
Bid/no-bid decision-makingOutline of offer
stakeholder review Presentation Introduction Customer profile
presentation Stakeholder
opportunity review outline Tips for an effective
Alignment on strategy Resource
commitment Escalation supportp
Opportunity profile Competitor profileWin strategy Issues and concerns
Tips for an effective stakeholder review Escalation support
Stakeholder opportunity review package Capture core teamIssues and concerns
Response requirements Bid/no-bid decision-
making
p
50Reference Text pg. 97
Exercise
Q&AQ&A
1. On a scale of 1 to 10, how well does your organization qualify opportunities, gather competitive intelligence, develop win strategies, develop customer positioning plans, p g p ,and obtain stakeholder buy-in to pursue opportunities?
2 H ff i l d i i lk f i i ? 2. How effectively does your organization walk away from poor opportunities?
51
UNIT 4
BID/PROPOSAL PHASEBID/PROPOSAL PHASEBid/Proposal Development and Reviews/Approvals
52
The Buying and Selling Life CycleBuyer Step 2
Buyer Step 3Solicitation Preparation
Seller Step 1Pre-sales Activities
Buyer Step 2Solicitation Planning
Pre-bid/Proposal Phase
Buyer Step 1Procurement Planning
Seller Step 2Bid/No-Bid
Decision-Making
THE BUYING AND SELLING LIFE CYCLE
Seller Step 3Bid/Proposal
Developments
Buyer & Seller Step 7
Contract Administration &
Closeout
Bid/Proposal Phase
Post-bid/Proposal Ph
Buyer Step 4Source-Selection Planning
pCloseout
Buyer & Seller Step 6
Buyer
Seller
Phaseg
Seller Step 4Bid/Proposal
Reviews & ApprovalsSeller Step 5
Verbal Presentation &
Seller Step 6Contract Negotiation
& Formation
53Reference Text pg. 108
Seller
Buyer & Seller
Response to Questions
Buyer Step 5Source-Selection Evaluation
Seller Step 3Bid/Proposal Development Process
Inputs Tools + Techniques Outputs
Select a capture team Conduct a capture team kickoff Customer solution
Bid/Proposal Development Process
Select a capture team Draft a preliminary capture
project plan Draft a communication plan Review past lessons learned
and best practices
Conduct a capture team kickoff meeting
Execute the capture project plan Capture team status meetings Action item register Stakeholder status report
St keholde t t e ie o tline
Customer solution Design Pricing Delivery plan Risk mitigation plansand best practices Stakeholder status review outline
Develop solution Solution architecture Compliance matrix Solution linkage matrix Delivery plan
Business cases Customer proposal Executive summary Technical response Delivery response
Develop risk mitigation plans Sources of risk Ways of mitigating risks Risk mitigation plan Risk mitigation plan log
D l b i
Delivery response Pricing response Contractual response
Develop business case Business case scenarios Business case models Product and service profile Customer business case Common business case terms
54Reference Text pg. 109
Develop proposal Attributes of winning proposals
Selected Interview
John (Jack) A Bishop JrJohn (Jack) A. Bishop Jr.
Job Title: Director of Operations
Organization: Anteon Corporation (now General Dynamics Information Technology)
Location: Albuquerque, New Mexico
Major Responsibilities: Program management, contract management and administration, and business development
Background: Education—MS/MBA, Abilene Christian University/Webster University. Experience—Contracting Division Chief/PCO, USAF/Air Force Research Laboratory and Contracts Director, Information Systems Group, Anteon Corporation, Fairfax, VA.
55Reference Text pgs. 110
Selected Interview
John (Jack) A Bishop JrQUESTIONWhat actions should sellers take to ensure they make intelligent bid/no-bid decisions on their critical deals?
John (Jack) A. Bishop Jr.
their critical deals?
ANSWERPerform thorough due diligence concerning the procurement using all appropriate means. Authorize “capture managers” to recommend/make bid/no-bid determinations at any time prior to bid submittal. Ensure chasing the procurement is worth the B&P investment involved.
QUESTION QUESTION What do you consider to be the top five seller best practices for developing a winning bid or proposal?
ANSWERK h i ldKnow the requirement cold.Know buyer’s needs & wants.Don’t skimp on bid and proposal costs.Hire the right capture manager.Manage cost, quality, schedule to the “nth” degree.
56
Manage cost, quality, schedule to the nth degree.
Reference Text pg. 111
Capture Team Kickoff Checklist
Capture Team Kickoff ChecklistChecklist Agenda Topics Reference Documents Discussion
Leader
Introduction Purpose agenda limit
Capture manager
Purpose, agenda, limit Introduce team members
manager
Review Opportunity Customer profile Opportunity profile Competitor profile
Stakeholder opportunity review package Sales leader
p p Win theme and strategies Issues and concerns
Validate Capture Plan Work tasks Resources
Work breakdown structure (WBS) Organization breakdown structure (OBS) Responsibility assignment matrix (RAM)
Capture manager
Timeline Communication plans
Team leader roles and responsibilities Task list schedule Customer positioning and contact plans Project communication plan Change request plan Alert-jeopardy-escalation Plan
Review Proposal Development Plans Development process Production requirements Layout and assignments Proposal reviews
Proposal development checklist Proposal production checklist Proposal layout with assignments Pink team and red team checklists
Proposal manager
57Reference Text pg. 113
Action Items and Next Steps Action items Meeting schedule
Action item register Capture manager
Action Item Register
Status No. Issue Action Required Owner Due Date Severity Progress
58Reference Text pg. 116
Stakeholder Status Report
Capture Manager: Due Date:
Customer: Tracking #:
Opportunity:
R t D t L t R t N t R tReport Date: Last Report: Next Report:
Solution Assessment
Red Yellow Green Proposal Assessment
Red Yellow Green Budget Assessment
Red Yellow Green
Work tasks completed since last report
Work tasks due before next report
59Reference Text pg. 118
Holistic Compliance
DELIVERYTECHNICAL DELIVERYTECHNICAL
PRICING CONTRACTUAL
60Reference Text pg. 120
Compliance Matrix
Solicitation R f
Functional R i t
Compliance ExplanationReference Requirement
Full Partial None
61Reference Text pg. 121
Solution Linkage Matrix
Solicitation Reference
Functional Requirement
Solution Product/Service Individual Accountable for Solutionq /
Design Description Pricing Overall Linkage
62Reference Text pg. 121
Sources of Risk
Technical Risks Delivery Risks Financial Risks
Hardware design Material availability Reliability Changes in COGSerrors
Software design errors
Testing and modeling
Personnel availability
Personnel skills
Safety
Maintainability
Operations and support equipment availability
Changes in SG&A expenses
Changes in interest rates
Changes in exchange ratesTesting and modeling
Integration/interfacesafety
Requirement
Safety
Security
Environmental impact
Transportation
Training availability
Documentation accuracy
Changes in exchange rates
Pricing errors
Customer financial stabilityRequirement
changes
Fault detection
Operating
Communication problems
Labor strikes
Requirement changes
Documentation accuracy
Zoning-regulatory approval
Degree of concurrency
Supplier financial stability
Contractual Risks
environment
Unproven technology
System complexity
Subcontractor stabilityNumber of critical path items
Terms and conditionsSupplier contracts
63Reference Text pg. 122
Ways of Mitigating or Avoiding Risk
Portfolio Risks Operational Risks
Share risks by having partners Hire contractors under turnkey contracts
Spread risks over time Tailor risk-sharing contract clauses
P ti i t i t U f t i b ild d if d iParticipate in many ventures Use safety margins; overbuild and overspecify designs
Group complementary risks into portfolios Have backup and redundant equipment
Seek lower-risk ventures Increase training
Specialize and concentrate in a single, well-known area Operate with redirect and bail-out options
I th ' it li ti C d t t t il t d t i lIncrease the company's capitalization Conduct tests, pilot programs, and trials
Commodity Prices Analysis Risks (Reducing Evaluation Error)
Hedge or fix in the futures markets Use better techniques (i.e., decision analysis)
Use long- or short-term sales (price and volume) contracts Seek additional information
Tailor contracts for risk-sharing Monitor key and indicator variables
Interest rate and exchange rate Validate models
Use swaps, floors, ceilings, collars, and other hedging instruments
Include evaluation practices along with project post-reviews
Restructure the balance sheet Develop redundant models with alternative approaches and people
Denominate or index certain transactions in a foreign currency
Involve multiple disciplines, and communicate cross-discipline
Environmental Hazards Provide better training and tools
64Reference Text pg. 123
Buy insuranceSource: Schuyler, John R. “Decision Analysis in Projects: Summary and Recommendations.” PM Network, October 1995.Develop and test an incident response program
Risk Mitigation Plan
Opportunity: Tracking #:
Risk Name: Risk #:
Developed by: Title: Date:Type of Risk Technical Delivery Pricing Contractual
Briefly describe the risk, its probability, and its impact:
Miti ti St t A id T f Sh RMitigation Strategy Avoid Transfer Share Reserve
Briefly describe the mitigation strategy:
Mitigation Plan Owner: Title:
65Reference Text pg. 125
Business Case Models
Item Year Total
1 2 3 4 51 2 3 4 5
# of Problems 1,500 2,500 2,000 1,000 1,000 8,000
Worst Case Scenario
% of problems solved 25% 25% 25% 0% 0%
# of solutions delivered 375.00 625.00 500.00 0 0 1,500
Most Likely Case ScenarioMost Likely Case Scenario
% of problems solved 35% 45% 55% 55% 55%
# of solutions delivered 525 1125 1100 550 550 3,850
Best Case Scenario
% of problems solved 50% 60% 70% 80% 90%
# of solutions delivered 750 1500 1400 800 900 5,350
66Reference Text pg. 127
# of solutions delivered 750 1500 1400 800 900 5,350
Attributes of a Proposal
Key Points Designed with Ease of Evaluation in Mind
A powerful executive summary Powerful proposal design
Audience designed Double exposure on a single page
1/3 visuals, 2/3 text, and ample white space Double or message column
Separately bound Themed and captioned
Customer-focused Emphatically written
Strategy-driven Active voice and personal pronouns
Benefits Rich (Answers “Why us?” and “So what?”) Effective organizationBenefits Rich (Answers Why us? and So what? ) Effective organization
Source: A Bidder's Dozen: Golden Rules for Winning Work, David G. Pugh, Ph.D. —Lore International Institute
67Reference Text pg. 130
Seller Step 4
Bid/Proposal Reviews & Approval Process
Inputs Tools + Techniques Outputs
Bid/Proposal Reviews & Approval Process
Customer solution
Design
Pricing
General actions
Why proposals lose evaluation points
Customer solution certified as “sound" and compliant
g
Delivery plan
Risk mitigation plans
Business cases
Pink team reviews
Pink team question checklist
Proposal deficiency form
Design
Pricing
Delivery
Risk mitigation plans Customer bid or
proposal
Executive summary
Technical response
Proposal deficiency log
Red team reviews
Red team question checklist
Risk mitigation plans
Business cases
Customer proposal reviewed and certified as
t d l tTechnical response
Delivery response
Pricing response
Contractual response
checklist
Red team evaluation form
Red team scoring form
Red team do's and don'ts
accurate and complete
Executive summary
Technical response
Delivery response
68
Obtain offer certifications
Offer certification form
y p
Pricing response
Contractual responseReference Text pg. 135
Why Proposals Lose Evaluation Points
Questionable or inadequate understanding of requirements or needs.
Incomplete response to the solicitation; critical sections left out of the proposal.Incomplete response to the solicitation; critical sections left out of the proposal.
Noncompliance with specifications; misinterpretation of the specifications.
Insufficient resources (time, funds, personnel, etc.) to accomplish the required services or tasksservices or tasks.
Insufficient information about the resources required for satisfactory performance under the contract.
Poor proposal organization; obstacles in correlating proposal content to the Poor proposal organization; obstacles in correlating proposal content to the solicitation or requirements.
Failure to show relevance of past experience to the proposed project.
Unsubstantiated or unconvincing rationale for proposed approaches or solutionsUnsubstantiated or unconvincing rationale for proposed approaches or solutions.
Wordiness. Mindboggling wordiness.
Repeating requirements without discussing how they will be performed.
69Reference Text pg. 136
Source: “Building a Contract: Solicitations/Bids and Proposals: A Team Effort?”
Proposal Evaluation Form
Opportunity:
Volume: Evaluator:Volume: Evaluator:
Evaluation Factor/Subfactor Excellent Good Average Poor Terrible Score Assigned
5 4 3 2 1
Organization and Emphasis
Win Themes and Strategies
Compliance and Responsiveness
Appearance and Presentation
Consistency and Brevity
Visuals
Totals
70Reference Text pg. 143
Totals
Exercise
Q&AQ&A
1. On a scale of 1 to 10, how well does your organization kickoff capture teams, develop bids, review bids, and obtain stakeholder approval to submit bids?
2. What actions has your organization taken to improve/develop skills for your sales managers, capture/proposal managers, and contract managers?
3 How well does your organization document and share your capture team kickoff 3. How well does your organization document and share your capture team kickoff, bid/proposal development, bid/proposal reviews, and approvals lessons learned?
71
Afternoon SessionAgenda
KEY TOPICS
Agenda
Case Study IT Managed Services
Unit 5 Bid/Proposal Phase: Source-Selection Planning and Evaluation
Unit 6 Post-bid/Proposal Phase: Contract Negotiation and Formation
Break
Case Study Best Advice
Unit 7 U S Federal Government Marketplace: Acquisition Planning Solicitations Unit 7 U.S. Federal Government Marketplace: Acquisition Planning, Solicitations, Bids/Proposals and Source Selection—Best Practices
Unit 8 U.S. Commercial Marketplace: Solicitations, Bids/Proposals, and Contracts—Best Practices
72
Best Practices
Summary
UNIT 5
BID/PROPOSAL PHASEBID/PROPOSAL PHASESource-Selection Planning and Evaluation
73
The Buying and Selling Life Cycle
Buyer Step 2Solicitation Planning
Buyer Step 3Solicitation Preparation
Seller Step 1Pre-sales Activities
Pre-bid/Proposal Phase
Buyer Step 1Procurement Planning
Seller Step 2Bid/No-Bid
Decision-Making
THE BUYING AND SELLING LIFE CYCLE
Seller Step 3Bid/Proposal Developments
Buyer & Seller Step 7
Contract Administration &
Closeout
Bid/Proposal Phase
Post-bid/Proposal Ph
Buyer & Seller Step 6
Buyer Step 4Source-Selection Planning
Buyer
Selle
Phase
Seller Step 4Bid/Proposal
Reviews & ApprovalsSeller Step 5
Verbal Presentation & Response to Q estions
Seller Step 6Contract Negotiation
& Formation
74Reference Text pg. 156
Seller
Buyer & Seller Buyer Step 5
Source-Selection Evaluation
Response to Questions
Buyer Step 4
Source Selection Planning ProcessSource-Selection Planning Process
Inputs Tools + Techniques Outputs
Bids or proposals Evaluation criteria
Bidder's conferenceWeighting system
Source-selection plan
Evaluation standards Source-selection
staffing
Screening system Independent estimates Source-selection process
75Reference Text pg. 157
Source-Selection Process
Request for Quote (RFQ) Process
Request for Quotation
Technical Proposal
Request for Proposal (RFP) Process
Request for Proposal
Cost and Technical Proposal
Evaluation
Final Technical and Cost Proposal
Evaluation
Evaluation
Clarifications
Award without Discussions Competitive Range
Selection
Notice to Unsuccessful Offerors
N ti ti
Award without Discussions
Notice to Unsuccessful Offerors
Debriefing
Competitive Range Determination
Notice to Offerors Outside Competitive Range
Verbal and Written Discussions Negotiation
Award
Debriefing
with all Offerors in Competitive Range
Request for Best and Final Offers
Best and Final Offers
Evaluation
Award
N ti t U f l Off
76Reference Text pg. 160
Notice to Unsuccessful Offerors
Debriefing
Eastman Kodak Sourcing Process
Identify a valid sourcing opportunity(outsourcing, resourcing,new sourcing, or insourcing).
Phase 0: Opportunity Identification Phase 1: Project DefinitionIdentify detailed requirementsto support the business case and enable project to move forward.
Phase 2: Supplier Qualification and Selection
Phase 3: Transition ReadinessIdentify and update all critical transition
Select the supplier best able tosatisfy the business case andrequirements document.
y pand implementation elements within EK and prepare to share them with the new supplier.
Phase 5: Pre-Production Verification
Share all critical transitionand implementation elementswith the new supplier to ensuretheir understanding.
Phase 4: Supplier Transition PlanningPhase 5: Pre Production VerificationObtain and evaluate pre-productionsamples of product and assesssupplier's overall performance againstbusiness case expectations.
Phase 7: Continuous ImprovementContinually improve financial, quality,and delivery performance.
Phase 6: Shipping ApprovalIdentify detailed requirementsto support the business case and enable project to move forward.
77Reference Text pg. 163
Phase 8: DiscontinuanceIf/When appropriate discontinueuse of a supplier.
Selected Interview
Rex Elliott
Job Title: Procurement Analyst/Contracting Officer
Rex Elliott
Organization: Program Procurement Division, NASA/Goddard Space Flight Center
Location: Greenbelt, Maryland
M j R ibiliti T i i d l d l t f t Major Responsibilities: Training and employee development for procurement workforce, workforce succession planning, professional certification, contracting officer warrants, employee awards, and contract terminations.
Background: Master of Arts in Public Policy, 1983—Rutgers University; Bachelor of g y, g y;Public Administration, 1981—Seattle University. 1983 Class of Presidential Management Interns. Twenty years of procurement operations experience (contracting with/for major system development, construction, R&D, institutional services, information technology, cooperative agreements, educational institutions, small businesses and large businesses etc ) and three years of procurement staff small businesses, and large businesses, etc.) and three years of procurement staff work (human capital management, legislation reviews, contract terminations, policy analysis, file reviews, and training seminars, etc.)
78Reference Text pg. 170
Selected Interview
Rex ElliottRex Elliott
QUESTIONHow can U.S. government agencies truly streamline and improve their source selection process?
ANSWERAs long as these agencies' management teams are so averse to protests, they will be very conservative about conducting and documenting very thorough proposal evaluations This often conflicts with the goals of streamlining or doing things efficiently evaluations. This often conflicts with the goals of streamlining, or doing things efficiently. That said, the only obvious choices for getting more streamlined source selections are to (1) develop a procurement workforce that's more knowledgeable about the specific industries and procurement strategies/techniques/pricing structures, etc. that are specific to those industries; or (2) reduce the perceived risk of protest by (a) assuring h l h h fi i l d h i i i (b) the government personnel that the firms involved have no interest in protesting, (b)
reducing the possibility of a firm filing a protest in the first place, or (c) increasing the negative consequences for firms filing frivolous protests.
79Reference Text pg. 172
Selected Interview
Rex ElliottRex Elliott
QUESTIONWhat do you consider to be some of the source-selection best practices typically used i th i l B i t ?in the commercial Business sector?
ANSWERI am a fan of verbal proposals. They’re usually quicker and result in better quality information being exchanged. I also like to see RFPs that are lean enough to focus on g g gonly the likely discriminators in a source selection (too many ask for information that won’t affect the source selection). I’m also a fan of selecting on the initial proposals,since that usually results in a selection decision that’s easier to make.
80Reference Text pg. 172
Buyer Step 5
Source Selection Evaluation ProcessSource-Selection Evaluation Process
Inputs Tools + Techniques Outputs
Bids or proposals Opportunity and risk Selected seller(s) who ill id ti l
Source-selection plan
Evaluation criteria
Evaluation standards
W i hti t
management (ORM) model
Past-performance evaluation database
Source-selection best practices checklist
will provide timely delivery of quality products, services, and/or solutions at a fair and reasonable price
Weighting system
Screening system
Source-selection process
practices checklist
Total cost of ownership (TCO) evaluation
Source-selection Decision-making guidelines
People
Training
making guidelines
Evaluation of verbal presentations by sellers
81Reference Text pg. 174
Opportunity and Risk Management (ORM) Model
Identify opportunities and risks
1
Model
Analyze opportunities and risks
2Opportunity/Risk Assessment
Prioritize opportunities and risks3
Develop opportunity and risk action plans
4
Implement opportunity and risk Opportunity/Risk Implement opportunity and risk action plans
5
Evaluate project results
Opportunity/Risk Action Plans
82
6
Reference Text pg. 177
Source Selection
Seven Best Practices Checklist
1. Cycle-Time Targets—The buyer establishes a target of 90 days or less fromissuance of the RFP to contract award.
Seven Best Practices Checklist
2. Greater Pre-solicitation Efforts—The buyer actively encourages more definitiveprocurement planning, bidders conferences with prospective sellers, and circulationof the draft RFPs to prospective sellers.
3 Proposal Page Limitations—The buyer provides that pages in proposals over a3. Proposal Page Limitations The buyer provides that pages in proposals over aspecified number will not be read, but will be returned to the seller.
4. Reduced Number of Evaluation Factors—The buyer uses only essential evaluationfactors.factors.
5. Small Source-Selection Teams—The buyer uses a small number of evaluators, each reading all of their specialization/section (technical, management, past performance, or cost) for the proposals.
6 V b l P t ti Th b i th ll t k b l 6. Verbal Presentations—The buyer requires the sellers to make verbal presentations to the source selection team in the early stages of evaluation of the proposals.
7. Limiting the Competitive Range—The buyer require rigorous exclusion of marginal sellers from the competitive range
83Reference Text pg. 178
marginal sellers from the competitive range.
Seller Step 5 Verbal Presentations and Response to Questions ProcessVerbal Presentations and Response to Questions Process
Inputs Tools + Techniques Outputs
Bids or proposals Verbal presentations Professionally Bids or proposals
Source-selection
plan
People
Verbal presentations,
coaching, and training
Preparation and
response to buyer
Professionally
delivered verbal
presentation
Effective responses People
Training questions
Document lessons
learned/proposal
to buyer
bid/proposal
questions
debriefing
84Reference Text pg. 180
Verbal Coaching Content
Essential SkillsSpeaking and presentation skills
Content development and organization
Customer profiling and analysis
Leade ship de elopmentLeadership development
Video taping and analysis
Credibility and presence development
Team cohesionTeam cohesion
Speech-writing and script presentations
Group practice coaching
Preparation of charts and graphics
One-on-one coaching
Question-and-answer preparation
Rapport-building skills
85Reference Text pg. 182
Verbal Coaching Process
Quick study of the situation (RFP, customer needs, history of contract, and any special circumstances)
Assessment of individual and team capability
Development of presenters into a cohesive team
Video taping each presenter to determine initial strengths and weaknesses
Identification and emphasis of key discriminators
Designing a coaching plan and schedule
Monitoring the design of all charts and visualsMonitoring the design of all charts and visuals
Coaching for presentation at pink team
Conducting extensive team and one-on-one coaching with video feedback
Preparing for red teamPreparing for red team
Polishing presentations using video feedback
Finalizing plans for delivery to the source-selection board
86Reference Text pg. 183
ExerciseQ&AQ&A
1. On a scale of 1 to 10, how effectively does your buying organization plan and prepare for large and complex source selections?
2. What actions has your buying organization take to streamline source selection?
3. Does your selling organization properly train team members to provide best-in-y g g p p y pclass verbal presentations?
87
UNIT 6
POST-BID/PROPOSAL PHASEPOST BID/PROPOSAL PHASEContract Negotiation and Formation
88
The Buying and Selling Life CycleBuyer Step 2
Solicitation Planning
Buyer Step 3Solicitation Preparation
Seller Step 1Pre-sales Activities
Pre-bid/Proposal Phase
Buyer Step 1Procurement Planning
Seller Step 2Bid/No-Bid
Decision-Making
THE BUYING AND SELLING LIFE CYCLE
Seller Step 3Bid/Proposal Developments
Buyer & Seller Step 7
Contract Administration &
Closeout
Bid/Proposal Phase
Post-bid/Proposal Ph
Developments
Buyer & Seller Step 6
Contract Buyer Step 4
Source-Selection Planning
Buyer
Selle
Phase
Seller Step 4Bid/Proposal
Reviews & ApprovalsSeller Step 5
Verbal Presentation &
Contract Negotiation &
Formation
Source Selection Planning
89Reference Text pg. 188
Seller
Buyer & Seller
Buyer Step 5Source-Selection Evaluation
Response to Questions
Buyer and Seller Step 6 Contract Negotiation and Formation ProcessContract Negotiation and Formation Process
Inputs Tools + Techniques Outputs
Solicitation (RFP, RFQ, etc.) Highly skilled contract negotiators
Contract or walk away
Bid or proposal
Buyer's source selection process
Legal review
Business case approval
Seller's past performance
Previous contracts
Contract negotiation
Formation process
Competitor profile business ethics/standards of conduct guidelines
Market and industry practices
Plan negotiations
Conduct negotiations
Document the
90
practices Document the negotiation and form the contract
Reference Text pg. 191
Contract Negotiation Process
Plan the Negotiation Conduct the Negotiation Document the Negotiation + Form the Contract
Prepare yourself and your team
Know the other party
Determine who has authority
Prepare the facility
Prepare the negotiation memorandum
Send the memorandum to the other party
Know the big picture
Identify objectives
Prioritize objectives
Use an agenda
Introduce the team
Set the right tone
Offer to write the contract
Prepare the contractj
Create options
Select fair standards
Set the right tone
Exchange information
Focus on objectives
Prepare negotiation results summary
Obtain required reviews and approvals
Examine alternatives
Select your strategy, tactics, and countertactics
Use strategy, tactics, and Countertactics
Make counteroffers
Send the contracts to the other party for signature
Provide copies of the contract to affected o gani ations
91
Develop a solid and approved team negotiation plan Document the agreement or
know when to walk away
affected organizations
Document lessons learned
Reference Text pg. 195
Team Members Strengths, Weaknesses, and Interests
TEAM MEMBER TEAM MEMBER
Name Name
Job Title Job Title
Phone No. Phone No.
Fax No. Fax No.
E-Mail E-Mail
Strengths StrengthsStrengths Strengths
1. 1.
2. 2.
3. 3.
Weaknesses Weaknesses
1. 1.
2. 2.
3. 3.
Interests Interests
1. 1.
2. 2.
3 3
92Reference Text pg. 196
3. 3.
DatePrepared:__________________________
LeadNegotiator:_______________________
Things to Know About the Other Party
Buyer and Seller
1. What is the organization's overall business strategy?2. What is its reputation?p3. What is its current company business environment?4. Who is the lead negotiator?5. Who are the primary decision makers?6. What are their key objectives?y j7. What are their overall contract objectives?8. What are their personal objectives?9. Who or what influences the decision makers?10. What internal organization barriers do they face?g y
Seller Only
1. When does the buyer need our products or services?2 How much money does the buyer have to spend?2. How much money does the buyer have to spend?3. Where does the buyer want our products and services delivered?4. What benefits will our products and services provide?5. What is our company's past experiences with this buyer?
93Reference Text pg. 197
Date Prepared:_________________ Lead Negotiator:__________________
Importance of Price
Schedule
Technology (research and development)
Customer obligations
Price ServicesContract type
T d CMi ll Ts and Cs
Products
Miscellaneous contracting elements
94Reference Text pg. 198
Objectives Identification
SELLER OBJECTIVES BUYER OBJECTIVESPersonal Personal
1. 1.
2. 2.
3. 3.
4. 4.
5 55. 5.
6. 6.
7. 7.
Professional Professional
1. 1.
2. 2.
3. 3.
4 44. 4.
5. 5.
6. 6.
7. 7.
95Reference Text pg. 199
DatePrepared:________________________
Lead Negotiator:_____________________
Importance of Ts and Cs
I ti d t
Payments
Inspection and acceptanceMiscellaneous Ts and Cs
Financing
Ts and CsCost, Risk,
d V lWarrantiesParts availability
FinancingDelivery terms
and Value
Spares Taxes
GuaranteesIndemnity
d li bilit
Exchange rate
96Reference Text pg. 200
and liability
Objective Prioritization
1.
2.
3.
4.
5.
6.
7.
Date Prepared:__________________________ Lead Negotiator:___________________________
97Reference Text pg. 201
Create Options for Achieving Negotiation ObjectivesObjectives
Seller Objectives Possible Options Buyer Objectives
Date Prepared:________________ Lead Negotiator:_______________
98Reference Text pg. 202
Sample Negotiation Planning Summary
Negotiation Information
Location Date Time
1. 1. 1.
2. 2. 2.
3. 3. 3.
Key Objectives (Plot your most likely position)
1. PRICE Worst Case Best Case
2. PAYMENTS
payments
$10.5M $12.0M $12.5M
Worst Case Best Case
After Delivery Progress Payments Advancepayments
3. WARRANTY PERIODWorst Case Best Case
36 Months 18 Months 12 MonthsIndustry average
99Reference Text pg. 204
Sample Negotiation Planning Summary continued Worst Case Best Casecontinued
4.
5.
6.
7.
Worst Case Best Case
Worst Case Best Case
Worst Case Best Case
Worst Case Best Case
7.
8.
9.
10.
Worst Case Best Case
Worst Case Best Case
Worst Case Best Case
11.
12.
Possible Tactics and Countertactics
Objective Planned Tactics—Buyer Planned Countertactics—Seller
Worst Case Best Case
Worst Case Best Case
Contract Price
Range
Best Case
Most Likely
Worst Case
100Reference Text pg. 205
Date Prepared:______________________________________ Lead Negotiator:_____________________________________
Approved by:_______________________________________ Date Approved:_____________________________________
Negotiation Agenda
Contract
Title Date
Location Time
Topics of Action
Introduce team members
Provide overview and discuss purpose of negotiation
Time
___________________________________________
Provide overview and discuss purpose of negotiation
Exchange information on key interests and issues
Quality of products and services
Past performance
Delivery schedule
___________________________________________
___________________________________________
___________________________________________
Delivery schedule
Maintenance
Training
Have a break
Review agreement on all key interests and issues
__________________________________________
Review agreement on all key interests and issues
Agree on detailed terms and conditions
Agree on price
Review and summarize meeting
__________________________________________
__________________________________________
__________________________________________
__________________________________________
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Date Prepared:_______________________________ Lead Negotiator:__________________________________
Reference Text pg. 207
Negotiation Zone
LOW HIGH
Buyer’s Price Range
LOW HIGH
Seller A’s Price Range
LOW HIGH
Seller B’s Price Range
HIGHLOW
Seller C’s Price Range
102Reference Text pg. 208
Negotiation Results Summary
Contract Title Date of ContractContract Title Date of Contract
Parties Involved Date(s) of Negotiation
Brief Product Description Location
Agreed to Price
Key Changes from Approved Proposal
Date Prepared:_______________________ Lead Negotiator:_______________________
103Reference Text pg. 216
Checklist of Buyer
Contract Negotiation Best PracticesChecklist of Buyer
The Buyer Should:
Know what you want lowest price or best value? Know what you want—lowest price or best value?
State your requirements in performance terms and evaluate accordingly.
Conduct market research about potential sources before selection.
Evaluate potential sources promptly and dispassionately.
Follow the evaluation criteria stated in the solicitation—management, technical, and price.
Use absolute, minimum, or relative evaluation standards to measure performance as stated in your solicitation.
Develop organizational policies to guide and facilitate the source-selection process.
Use a weighting system to determine which evaluation criteria are most important.
Use a screening system to pre-qualify sources.
Obtain independent estimates from consultants or outside experts to assist in source selection.
Use past performance as a key aspect of source selection, and verify data accuracy. Use past performance as a key aspect of source selection, and verify data accuracy.
Conduct price realism analysis.
Create a competitive analysis report.
Use verbal presentations or proposals by sellers to improve and expedite the source-selection process.
104Reference Text, pg. 218
Checklist of Buyer and Seller
Tips to Improve Negotiation ResultsChecklist of Buyer and Seller
The Buyer and Seller Should:
Understand that contract negotiation is a process, usually involving a team effort.
Select and train highly skilled negotiators to lead the contract negotiation process.
Know market and industry practices.
Prepare yourself and your team.
Know the other party.
Know the big picture.
Identify and prioritize objectives.
Create options—be flexible in your planning.
Examine alternatives.
Select your negotiation strategy tactics and counter-tactics Select your negotiation strategy, tactics, and counter tactics.
Develop a solid and approved team negotiation plan.
Determine who has the authority to negotiate.
Prepare the negotiation facility at your location or at a neutral site.
U d d i t t ti ti Use an agenda during contract negotiation.
Set the right tone at the start of the negotiation.
Maintain your focus on your objectives.
Use interim summaries to keep on track.
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Do not be too predictable in your tactics.
Document the agreement throughout the process.
Reference Text pg. 219
Tips to Improve Negotiation ResultsChecklist of Buyer and Seller
The Buyer and Seller Should: (cont.)
Checklist of Buyer and Seller
Know when to walk away.
Offer to write the contract.
Prepare a negotiation results summary.
Obtain required reviews and approvals.
Provide copies of the contract to all affected parties.
Document negotiation lessons learned and best practices.
P t iti l f t t d i i t ti Prepare a transition plan for contract administration.
Understand that everything affects price.
Understand that the Ts and Cs have cost, risk, and value.
Tailor Ts and Cs to the deal, but understand the financial effects on price and profitability. Tailor Ts and Cs to the deal, but understand the financial effects on price and profitability.
Know what is negotiable and what is not.
106Reference Text pg. 219
ExerciseQ&AQ&A
1. How would you rate your organization’s typical contract negotiation preparation process?
2. How well do you plan, conduct, and document contract negotiations?
3. What areas of the contract negotiation process does your organization really need to improve?
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UNIT 7
U S FEDERAL GOVERNMENTU.S. FEDERAL GOVERNMENTAcquisition Planning, Solicitations, Bids/Proposals, and Source Selection—Best Practices
108
U.S. Federal Government Functional Specialists
Participating in the Acquisition Planning Process
C i li / Contract specialist/manager
Budget analyst
Business manager
C fi ti Configuration manager
Financial analyst
Logistics manager
Contracting officer (CO) Contracting officer (CO)
Contracting officer's technical representative
(COTR)
Procurement attorney/lawyer Procurement attorney/lawyer
Program/project manager (PM)
Quality assurance representative (QAR)
Small business advocate
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Small business advocate
Reference Text pg. 257
U.S. Federal Government Marketplace
Best Practices—Acquisition Streamlining
Understand and focus on performance-based mission requirements.
Streamline acquisition strategy plan in view of time, technical risk, and cost.
Conduct market research and industry-focused meetings.
Use a statement of objectives (SOO) to obtain contractors d l i f d d i d li proposed solutions, performance standards, metrics, and quality
plan.
Encourage contractors to develop creative solutions.
Use strategic sourcing.
Specify system-level broad mission performance requirements at onset of development.
Challenge every detailed requirement.
Specify what results are required, not how to manage (all phases) or how to do it.
Use verbal presentations.
Pursue economically producible, operationally suitable, and field supportable designs (all phases).
110Reference Text pg. 259
Select the best-value partner.
U.S. Federal MarketplaceBest Practices
Use of an Integrated Project Team (IPT) to Develop Objectives, Requirements, and Oversee the Acquisition Process
Best Practices
Objectives, Requirements, and Oversee the Acquisition Process
The creation of a true Integrated Project Team (IPT) is essential for a buyer to gather all of their organizations and end-user objectives, requirements, and guide the acquisition process. The IPT is typically
d f ltif ti l t i l di i t ti composed of a multifunctional team including senior representatives from:
End-customers Project/program management (PM)j /p g g ( ) Technical operations Supply-chain management Financial management/CFO Information management/CIO Contract management/purchasing Contract management/purchasing Legal
111Reference Text pg. 260
U.S. Federal MarketplaceBest Practices
Use a Performance Work Statement (PWS) or Statement of Objectives (SOO)—a Solicitation Planning Best Practice
Best Practices
a Solicitation Planning Best Practice
The WBS is the management framework of the requirement, but it is not thedescription of the government's requirement. The WBS does not contain any of thetechnical, engineering or other specific requirements. Often the buyer will chooset t t t t f bj ti (SOO) d k ti ll t to create a statement of objectives (SOO) and ask prospective sellers to assessthe SOO and propose how they would do the work via a performance workstatement with appropriate standards, measures, metrics, and performanceincentives. The performance requirements are contained in the performance workstatement (PWS), which is a form of a statement of work (SOW).( ), ( )
Contract managers frequently encounter problems with incomplete SOWs. A well-planned PWS can clearly communicate all of the performance-based requirementsto the contractor. However, these requirements must also be clearly stated. Asthe complexity and dollar value of the contract requirement increases so does thethe complexity and dollar value of the contract requirement increases, so does theneed for a structured approach.
112Reference Text pgs. 260–261
U.S. Federal MarketplaceBest PracticesBest Practices
Use the Work Breakdown Structure—A Solicitation Planning Best Practice
A work breakdown structure (WBS) is a tool for organizing, defining, and graphically displaying the product or service to be provided as well as the work to be accomplished to achieve the specified product or service to be provided, as well as the work to be accomplished to achieve the specified results. In preparing an RFP, an important step is to examine the government agency’s needs. A WBS can be the first step in establishing a management framework, which the government's requirements can be clearly identified. The WBS acts as the foundation for a management control system for both government and contractor project personnel. It organizes the project and provides a consistent and visible framework that
Provides an effective management and technical baseline for planning and assigning responsibilitieswithin the government and contractor organizations.
Structures the reporting process for progress and status reports.
Organizes the project as a whole and ensures consideration of total life cycle effects when makingsystem development and acquisition decisions.
Integrate the contractor's planning, scheduling, and budgeting with each other and with the contractwork breakdown structure (CWBS).
Integrate the CWBS with the contractor's organizational structure to permit cost and scheduleperformance measurement, via an earned value management system (EVMS).
Assign each direct cost from cost accounts into a single branch of the WBS.
Report data elements and variances (budgeted costs scheduled and performed, indirect costs, and
113Reference Text pgs. 261-262
cost variances) to the level specified in the contract.
U.S. Federal MarketplaceBest PracticesBest Practices
Effectively Structure Contract Line Item Numbers—A Solicitation Planning Best Practice
In the RFP, Section B of the Uniform Contract Format describes the supplies or services to be delivered under the contract These items are referred to as contract line item numbers (CLINs) The structure under the contract. These items are referred to as contract line item numbers (CLINs). The structure and description of these items can have significant impact on both the government and the contractor. CLINs should be based on the work breakdown structure. The only effective way to determine exactly what the government requires is to analyze the work breakdown structure and then design the CLINs to match this structure.
114Reference Text pg. 263
U.S. Federal MarketplaceBest PracticesBest Practices
Use Proposal Preparation Guidelines—A Solicitation Planning Best Practice
The portion of a solicitation upon which most contractors initially focus is the proposal preparation instructions located in Section L of the Uniform Contract Format. This section depicts the proposal format and content that the government desires.
Formatting Best Practices
The government can provide very specific or very general instructions on how it would like to see the contractor's proposal. For ease of evaluation and selection of the best contractor, however, the government must ensure that the proposals it receives contain the critical information in an appropriate g p p pp pformat. Solicitations should provide guidance to offerors regarding proposal page limitations, number of copies required, and the division of proposals into separate volumes on technical, management cost, and other criteria.
115Reference Text pg. 263
U.S. Federal Government Marketplace
Solicitations Best Practices Checklist
Draft RFP—Providing industry with the most complete draft package possible and then allowing sufficient time to analyze industry's response and incorporate good ideas into the actual RFP helps create a clearer time to analyze industry s response and incorporate good ideas into the actual RFP helps create a clearer, more effective solicitation.
Electronic Submission of Solicitation Notices, Frequently Asked Questions and Answers, andIndustry Pre-solicitation Meetings—Can be used to identify interested sources and to explain complicated requirements to interested sources. They can reduce undue expenditures of time, effort, and moneymoney.
Amendments to Solicitations—If changes need to be made or ambiguities need to be corrected in a solicitation, a formal amendment can be issued to all prospective offerors.
RFP Tracking—An RFP is made up of many separate components: line items, statement of work, data requirements, proposal preparation instructions, and evaluation criteria, which have been prepared by a requirements, proposal preparation instructions, and evaluation criteria, which have been prepared by a variety of personnel. Therefore, it is extremely important to ensure that the parts constituting the whole, communicate a consistent message to prospective offerors.
Solicitation Review Board—Sometimes referred to as a "Murder Board," a solicitation review board is comprised of functional experts from outside the RFP process.
Executive Summary—A concise introductory letter that conveys the salient features of the solicitation. It normally will include a brief description of the program.
Verbal presentation(s)—The use of verbal presentations by contractors can facilitate better and more effectivedecision-making by the U.S. government.
116Reference Text pg. 264
g y g
Elimination or Limited Use of the Bid Protest Process—Details already provided in Chapter 5.
Source Selection Best PracticesThe Common Framework
Performance Requirements
Work BreakdownStructure
(WBS)
The Common Framework
PerformanceWork
Statement(PWS)
Contract DataRequirements List
(CDRL)
ResponsibilitiesAssignment
Matrix(RAM)
MasterIntegratedSchedule
(MIS)
Quality AssuranceSurveillance Plan
(QASP)
Selection Criteria1. For Contractor2. For Proposed Product/Service/Solution
Evaluation Criteria
Requirements forSelectionProposal Preparation
Instructions
Budgeted ResourceRequirements/Performance
Contractor Plan/Qualifications
Proposed Product/Service
Technical Proposal Management Proposal Cost Proposal
117Reference Text pg. 267
Adapted from: NCMA, “Solicitations, Bids, & Proposal,” Seminar Manual, 1990.
Requirements/PerformanceBaseline
QualificationsService
Checklist Best-Value NegotiationsDos
Develop or obtain proven best-value pricing tools.
Select best-value measurement tools that are easy to understand and use.
Ensure quality factors do not become secondary to cost issues, except for
Dos
Ensure quality factors do not become secondary to cost issues, except fornoncomplex acquisitions.
Consider using automation tools for best-value decision-making.
Tailor best-value measurement tools to specific procurement situations, realizingthat complexity increases with the size and scope of the acquisition.
Use a contract type that fairly allocates risks.
Provide contract incentives for superior (quality) performance.
Implement guidance throughout the agency or company.
Continue to improve techniques.
Make each best-value decision a team effort among contracts, finance,engineering, production, quality assurance, and other related offices.
Ensure best-value approach supports the overall negotiation strategy.
Realize the best-value approach works only if you know what you’re buying.
Document the rationale for best value decisions Document the rationale for best-value decisions.
Allow flexibility for tradeoffs.
From Negotiating a Quality Contract, NCMA, 1992.
118Reference Text pg. 271
Checklist Best-Value NegotiationsDon’ts
Don’t use (1) the low bid or (2) the lowest cost, technically acceptable offer oras a substitute for best value, when best value is applicable.
D ’t t t k d b t l d i i ith t l l d fi i
Don ts
Don’t expect to make a good best-value decision without clearly defining yourapproach up front.
Don’t attempt to implement best-value contracting without properly trainingacquisition personnel.
Don’t forget to research all relevant issues, especially technical factors.g , p y
Don’t make best-value decision tools unnecessarily complex.
Don’t allow for such practices as a “buy-in” or uncompensated overtime.
Don’t use auctioning, technical leveling, or technical transfusion techniques asa substitute for best-value contracting.g
Don’t forget to formalize the elements of the best-value agreement as soon aspossible after contract negotiation.
Don’t allow an offeror’s low initial price to overshadow life-cycle cost considerations.
Don’t expect to obtain the maximum level of economy when buying noncommercialoff-the-shelf items.
From Negotiating a Quality Contract, NCMA, 1992.
119Reference Text pg. 272
ExerciseQ&AQ&A
1. On a scale of 1 to 10, how well does your organization conduct acquisition planning?
2. Does your organization implement all of the solicitation planning best practices contained within the units?
3. How effectively has your organization streamlined your buying/acquisition process?
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UNIT 8
U.S. COMMERCIAL MARKETPLACEU.S. COMMERCIAL MARKETPLACESolicitations, Bids/Proposals, and Contracts—Best Practices
121
What Buyers Most Want from Sellers/Distributors
The following get top priority (on a scale of 1–10, with 10 the highest):
2006 2005
Quality 7.8 7.2
Price 6 9 5 8Price 6.9 5.8
Availability 6.5 4.6
Total cost 5.9 5.7
Service 5.2 5.7
Ease of doing business 3.3 NA
Brands carried 3.0 NA
Inventory assistance 2.1 3.6
E-commerce capability 2.1 NA
Technical assistance 1.9 3.7
Emergency assistance 1.3 NA
Source: Purchasing Survey (2005)
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Source: Purchasing Survey (2005)
Reference Text pg. 275
What Buyers Like About Sellers/Distributors
(Order of Responses)
1. Customer service
2. Geographic range of service
3. E-commerce capability
4. Range of products
5. Handling of delivery and lead time issues
123Reference Text pg. 275
Buyers’ Biggest Problem with Sellers/DistributorsSellers/Distributors
(Order of Responses)
1. Product and technical knowledge
2. Cost
3. Availability
4. Relationships with manufacturer suppliers
5. Quality
Source: Purchasing Survey (2005)
124Reference Text pg. 276
U.S. Commercial Best Practices to Improve Solicitations, Bids/Proposals, and Contracts
Use a contract management methodology.
Commit to a contract management professional development program.
Establish a list of pre-qualified suppliers Establish a list of pre-qualified suppliers.
Take advantage of electronic contract management software applications.
Use corporate credit cards.
Adopt value-based pricing when sensible.
Use universal sales agreements.
Conduct risk vs. opportunity assessment.
Simplify standard contract terms and conditions.
P it b l t ti f l Permit verbal presentation of proposals.
Employ highly skilled contract negotiators.
Conduct mock contract negotiations.
Adopt uniform solicitations, proposal, and contract format.
Create a paperless contracting process.
Use of key performance indicators (KPIs).
Implement strategic sourcing.
125Reference Text pgs. 276–278
Conduct market research.
U.S. Commercial Best Practices to Improve Solicitations, Bids/Proposals, and Contracts
The most popular U.S. commercial procurement KPIs include:
Total indirect and direct spend
Percentage of spend managed thru procure-to-pay system
Percentage of invoices paid late Percentage of invoices paid late
Percentage of purchase orders (POs) generated after receipt of invoice
Number of active suppliers and percentage decrease
Discounts taken
POs and invoices per employee
126Reference Text pg. 279
ExerciseQ&AQ&A
1. How many of the best practices discussed in this unit does your organization routinely practice?
2. What other commercial best practices does your organization practice?
3. How well educated and trained are your organization’s contract managers, sales managers, and/or purchasing managers in commercial contracting best practices?
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