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Solicitations, Bids/Proposals, & Source Selections – Building a Winning Contract. Breakout Session # 202 Gail Parrott, NCMA Fellow Contracts & Pricing, 767 Tanker International Programs The Boeing Company April 23, 2007 1:40 – 2:40. Outline. Buyer expectations

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Breakout Session # 202 Gail Parrott, NCMA Fellow

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Solicitations, Bids/Proposals, & Source Selections – Building a Winning Contract

Breakout Session # 202

Gail Parrott, NCMA Fellow

Contracts & Pricing, 767 Tanker International Programs

The Boeing Company

April 23, 2007

1:40 – 2:40


Outline

  • Buyer expectations

  • Seller’s need to achieve loyalty, create value

  • Buying & Selling Life-Cycle

    • Structured Approach

    • Utilization value

    • 3 Phases


Buyers Have High Expectations

  • Knowledgeable

    • What options are available

    • What their rights are

  • Highest quality products/services

  • Low tolerance for poor performance

  • Needs/wants quickly change


Buyer/Seller Relationship is comparable to

Ballroom Dancing


Achieving Customer Loyalty Can Be Complex

  • Similar to a dance partner that

    • Sets a faster pace

    • changes the music

    • varies the dance steps


How a Seller “dances” with a Buyer

  • Listen to buyer’s needs

  • Proactively offer products/services/ business solutions

  • Meet or exceed buyer’s expectations

    Note: The partnership is important, but you must establish the correct dance space to not overstep boundaries and to not step over each others foot.


Buyer and Seller Feedback is crucial

  • Know the difference between a partner’s needs and wants

  • Know how to treat your partner

  • Work together to achieve success


Creating Value for Customers


Inadequate Customer Value


Key to Success

  • Understand and implement the 3 Phases of Buying & Selling Life-Cycle

  • Buyers & Sellers must work together


The Dance Between Buyer and Seller

  • More complex, lengthy and dynamic than ever before

    • Constant demand for rapid response

    • New competitors arise almost daily

    • Buyers want to cut cost and improve performance

    • Sellers must cut cost to compete


Buyers & Sellers, regardless of industry, must work together via a structured approach to prioritize and focus resources to maximize the opportunity to achieve mutual success.


Buying & Selling Life-Cycle’s Structured Approach

  • Utilized in both commercial and government marketplace

  • Domestic, international, and global opportunities

  • Reactive – RFI, RFQ, RFP, RFT

  • Proactive – unsolicited offer


Buying & Selling Life-Cycle’s Structured Approach (cont.)

  • Independent of geography and time zones

  • Utilized by single or global organizations

  • Supports a better, faster, cheaper business life


Buying & Selling Life-Cycle

  • Focus is on the customer’s problems/objectives

  • Meets seller’s requirements for profitability and risk

  • Drives both buyer and seller to the best solution


3 Phases of Buying & Selling Life-Cycle

  • Pre-Bid/Proposal Phase

  • Bid/Proposal Phase

  • Post-Bid/Proposal Phase


From: Solicitations, Bids, Proposals, & Source Selection- Building a Winning Contract, by Gregory A. Garrett and Gail A. Parrott, CCH 2007

Buying & Selling Life-Cycle


From: Solicitations, Bids, Proposals, & Source Selection- Building a Winning Contract, by Gregory A. Garrett and Gail A. Parrott, CCH 2007

Phase 1: Pre-Bid/Proposal Phase


Phase 1: Pre-Bid/Proposal Phase – Buyer’s Steps

  • Step 1: Procurement Planning

    • Know “what” to procure and “when”

    • Determine which goods/services to provide “in-house” or “outsource”


Phase 1: Pre-Bid/Proposal Phase – Buyer’s Steps

  • Step 2: Solicitation Planning

    • Determine specific requirements and deliverables

    • Identify potential sources

    • Analyze each source’s uncertainty & risk

    • Develop T’s & C’s

    • Choose methods & criteria for proposal evaluation and selecting seller


Phase 1: Pre-Bid/Proposal Phase – Buyer’s Steps

  • Step 3: Solicitation Preparation

    • Request bids, quotes, tenders or proposals orally, in writing, or electronically

    • Communicate requirements to all sellers

    • Better solicitations result in better quotes


Phase 1: Pre-Bid/Proposal Phase – Seller’s Steps

  • Step 1: Presales Activities

    • Proactive

    • Determining needs of current/prospective customers

    • Appropriately influencing customer requirements

    • Evaluating their competitors


Phase 1: Pre-Bid/Proposal Phase – Seller’s Steps

  • Step 2: Bid/No Bid Decision

    • Reactive

    • Multi-part Process

      • Understand the competitive environment

      • Assess risks and opportunities


From: Solicitations, Bids, Proposals, & Source Selection- Building a Winning Contract, by Gregory A. Garrett and Gail A. Parrott, CCH 2007

Phase 2: Bid/Proposal Phase


Phase 2: Bid/Proposal Phase – Buyer’s Step

  • Step 4: Source Selection Planning

    • Identify sources

    • Analyze nature of the industry/market

    • Develop criteria, weightings and procedures to evaluate each source

    • Select a source for contract award


Phase 2: Bid/Proposal Phase – Seller’s Steps

  • Step 3: Bid/Proposal Development

    • Proactive or Reactive

    • Simple or Complex

    • Compliant to requirements (T,D,F,C)

    • Plan Delivery of Solution

    • Identify gaps & develop risk mitigation plan

    • Develop Business Case (internal & external)

    • Develop the proposal (E,T,D,P,C)


Phase 2: Bid/Proposal Phase – Seller’s Steps

  • Step 4: Bid/Proposal Reviews & Approval

    • Type & number of reviews vary

    • Internal Reviews (Pink Team)

    • External Reviews (Red Team)

    • Executive Review & Approval (Gold Team)


From: Solicitations, Bids, Proposals, & Source Selection- Building a Winning Contract, by Gregory A. Garrett and Gail A. Parrott, CCH 2007

Phase 3: Post-Bid/Proposal Phase


Phase 3: Post-Bid/Proposal Phase – Buyer’s Step

  • Step 5: Source Selection Evaluation

    • Evaluate sellers offers

    • Evaluate appropriate qualifications

    • Selection should be made efficiently, quickly and as cost effective as possible

      Selecting the right source is like

      selecting the right dance partner.


Phase 3: Post-Bid/Proposal Phase – Seller’s Step

  • Step 5: Oral Presentation & Responses to Questions

    • Provides opportunity to reinforce seller’s win strategy with buyer’s key decision makers

    • Oral vs. electronic


Phase 3: Post-Bid/Proposal Phase – Buyer’s & Seller’s Joint Steps

  • Step 6: Contract Negotiations & Formation

    • Follows source selection

    • Challenges to negotiating T’s & C’s

      • Lack understanding of own requirements

      • Communications breakdown

      • Cultural differences

      • Conflicting objectives

      • Haste


Phase 3: Post-Bid/Proposal Phase – Buyer’s & Seller’s Joint Steps

  • Step 7: Contract Performance, Administration, and Closeout

    • Follows Contract Award

    • Periodic meetings to verify performance and expectations are being met

    • Conflict is inevitable, but generally manageable

    • Closeout process follows completion of deliverables, final administrative & legal details


Best Practices in Contract Administration

  • Reading the contract

  • Ensuring all organizational elements are aware of their responsibilities in relation to the contract

  • Providing copies of the contract to all affected organizations either paper or electronic copies

  • Establishing systems to verify conformance with the contract’s technical and administrative requirements

  • Conducting pre-performance (or kickoff) meetings with the buyer and seller

  • Assigning responsibility to check actual performance against requirements


Best Practices in Contract Administration(cont.)

  • Assigning responsibility to check actual performance against requirements

  • Identifying significant variances

  • Analyzing each such variance to determine cause

  • Ensuring that someone takes appropriate corrective action and then follows up

  • Managing the contract change process

  • Establishing and maintaining contract documentation: diaries, telephone logs, meeting minutes, inspection reports, progress reports, test reports, invoices and payment records, accounting source documents, etc.


Summary

  • Sellers must strive to provide value and achieve customer loyalty

  • Buyers and Sellers must work together

  • Understanding and implementing the Buying & Selling Life-Cycle is key to building a winning contract and ensuring success


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