Understanding Capture, Pursuit, and Competitive Solution Development

1. Understanding Capture, Pursuit, and Competitive Solution Development Daniel Price Red Team Industries, Inc.

2. Course Objectives • Identify Core Capture Principles, Concepts and Techniques • Outline Process for Competitive Solution Development • Discuss Effective Approaches to Customer Marketing • Define the Process for Competitive Analysis • Review the Process for Strengths and Weaknesses Evaluations

3. Key Topics • Capture Process • Customer Marketing • Competitive Analysis • Company Strengths and Weakness Evaluation • Solution Development • Building Effective Win Strategies

4. References Upfront • Opportunity tracking sites • www.fbo.gov • http://epipeline.com/ • http://govwin.com/ • www.input.com • Reading • Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant , W. Chan Kim and Renee Mauborgne, Harvard Business Press; 1 edition (February 3, 2005) • In a Downturn, Provoke Your Customers, Philip Lay, Todd Hewlin and Geoffrey Moore, Harvard Business Review, March 2009 • The Art of War, Sun Tzu • Think and Grow Rich, Napoleon Hill • The E-Myth Revisited: Why Most Small Businesses Don't Work and What to Do About It , Michael E. Gerber, HarperCollins; Third Edition (March 3, 1995)

5. References Upfront • http://farsite.hill.af.mil/ • Comprehensive resource for researching FAR and DFAR clauses • www.cbo.gov • Congressional budget office publishes reports, forecasts and analysis • http://comptroller.defense.gov/budgetindex.html • Detailed allocations for next FY defense spending

6. Capture Process

7. Capture Process • Overview • Typical Acquisition Timeline • Filtering Opportunities • Building the Business Case for Pursuit • Gaining Internal Buy-In and Resources • Establishing Decision Gates • Establishing Go/No-Go Criteria • Transition to Proposal

8. Overview • Each opportunity and each company is unique • Capture process conforms to the size, scope, complexity and strategic value of opportunities • Process: Requires input and standardized internal actions to produce a consistent output efficiently • A process can become unwieldy • A process is only as good as the efficiency and consistency of the output • A process must not be a self-serving entity: the output is what is important Input Process Output Output of the capture process is a competitive, executable win strategy.

9. U.S. Government Acquisition Cycle 18 to 24 Month Lapse from Identified Need to Award. (Size Dependent)

10. U.S. Government Acquisition Cycle Sweet Spot 100% Reactive Proactive, but highest cost and risk

11. Filtering Opportunities • Can we do it? vs. Do we do it? • i.e., Is this within our core competency? • Does the opportunity fit our strategic direction? • Is there an incumbent? (Are they liked?) • Are we the incumbent? (Are we liked?) • Do we know the customer? • (Does the customer know us?) • (Does the customer like us?) • Can we self-perform 51+% of the SOW? • Can we make a profit? • Can we win? * If we win, can we execute AND make a profit?* $703.2B DoD Spend in FY2011 Filter Pipeline Opportunities (~ 6 per BD/ Capture Mgr)

12. Building the Business Case • Evaluate Base and Option Periods • Determine Likely Margin Based on Industry Average • Determine Capital Expenditure (CAPEX) Required • Calculate ROI and Break-Even • Calculate Risk and Contingency • Contract TYPE factors into risk (Ex. FFP is inherently more risky than T&M) Unknowns generate risk, and thus contingency $, which in turn drives up cost, and price. Capture planning seeks to eliminate unknowns, to reduce final price and increase win probability.

13. Gaining Internal Buy-In and Resources • Present the case early, but only after the opportunity clears the filter and the business case • Present a capture budget • Separate from the proposal budget • Based on contact plan • Get signatures • Get commitments from functional staff • Set a timeline with hard milestones and decision gates • Clearly articulate risks and weaknesses up front

14. Establishing Decision Gates • Decision gates keep internal stakeholders informed and invested in the capture process • Decision gates keep capture managers motivated • Decision gates can be based on internal or external factors • Internal: Key RFI’s answered, risk issues resolved, teaming approach ready for approval, resource allocation requirements, etc. • External: Industry conferences, Draft RFP release, Q&A release, site surveys, acquisition decisions, etc.

15. Establishing Go/No-Go Criteria Go/No-Go Criteria are those information elements that, when known, indicate a strong probability of success or failure. Clear Go/No-Go Criteria enable efficient vetting of capture efforts throughout the process. Examples: • 8a Set-Aside. A HUB-Zone company that proposed a HUB or general SB set-aside during the Sources Sought will vote No-Go in this event. • Prime Partner refuses to sign Teaming Agreement, even after RFP release. Depending on the Prime partner’s reputation, this indication suggests the Prime has changed its position. No-Go. • Draft RFP validates earlier assumptions on Base Period, Option Years, and Capital Expenditure. Go.

16. Customer Marketing and Opportunity Shaping

17. Customer Marketing • Go where the customer is • Visit the customer’s office • Meet the customer at Industry Days, Trade Shows, and Conferences • Go where the customer will be • Develop solutions that meet future needs of the customer • Stay abreast of policy and doctrine changes that shift the customer’s future priorities • Perform • A contract with the customer – no matter how small – is the key to future business • Help them solve their most difficult problems, through their initiatives * Power of the White Paper *

18. Shaping the Opportunity • SWOT Analysis indicates obstacles and opportunities • Shaping is the process of influencing the acquisition approach to guide the final opportunity to your strengths • Shaping is ethical, when done transparently • Collaboration is the first step • Most businesses do not develop this relationship with customers • Engage early to affect outcome

19. Customer Marketing: White Papers • Simple Format: Problem, Solution, Way-Ahead • Open Design Options • Can be literally a white paper report • Can be a slick, full-color, marketing slick with detailed graphics • Should contain sufficient research to bolster the customer’s case for additional funding and rapid decision making • Point is to provoke the customer to: • Accelerate the acquisition cycle to solve the problem • Allocate funds previously not available • Continue dialogue with you regarding solutions • Good white paper has legs, but should be introduced in person to key stakeholders • Best white papers solve existing problems and identify low-risk contracting avenues to channel funds into the ready solution

20. White Paper Case Studies • Army Air Force Exchange Service shipping contract through Jordan (2009) • Defense Reutilization and Marketing Service (DRMS) Kuwait (2008)

21. Competitive Analysis

22. Competitive Analysis *Evaluate from the customer’s perspective*

23. Competitive Analysis: Action Plan Action Plan • Strengthen Design Factor by Adding Capability: Build, Buy or Partner • Focus on Construction Planning as Key Win Theme • Look for Ways to Enhance Past Performance and/or Safety • Partnerships with strong companies in these areas will fill gaps

24. Strengths and Weaknesses Evaluation

25. SWOT Analysis Strengths Weaknesses Opportunities Threats

26. SWOT Analysis: Example

27. Using SWOT to Shape Win Strategy Team with strong reverse engineering /design firm Push for Best Value competition; develop price-to-win strategy Press for SB set-aside; team with SB if needed; look for ways to nullify OEM contribution Lobby the customer to include FAT requirements as a screening criteria

28. Solution Development

29. Solution Development • Understand the Acquisition Approach • Best Value • Technically Acceptable, Low Price • Understand the Broader Dynamics • Political Implications • Funding Streams • Understand the Customer’s Wants and Needs - Collaborate • Know the Source Selection Stakeholders * Optimize the Solution. Balance cost and performance to provide the right level of service at the right price*

30. Solution Based on Customer Expectations Provide an MWR facility U.S. Army

31. Solution Based on Customer Expectations Provide an MWR facility U.S. Air Force

32. Solution Based on Customer Expectations Provide an MWR facility USMC

33. Solution Development: Stakeholder Analysis Buyer Fiscal responsibility. Typically wants most bang for the buck, if not lowest price. End User Performance matters. Typically wants as much performance and as many features as possible. Technical Expert Compliance and performance risk managers. Typically want to feel comfortable that the proposed solution is feasible, and will meet all performance standards without intervention by the Government. Signature Authority Politically responsible. Career track, personal reputation, and the overall welfare of the units under his/her command ride on every contract award. Susceptible to external pressure, but also accessible by well-connected “network”.

34. Building Effective Win Strategies

35. Building Effective Win Strategies • Enhance Past Performance • Teaming • Performing as a Sub • Commercial • Collaborate With the Customer • Respond to Sources Sought with Innovative Options • Visit • Participate in the Customer’s Events and Organizations • Identify EEIs and Collect Intelligence • Develop Brand Recognition With the Customer • Willingness to Work for Free • Pilot Programs • Avoid Unnecessary Cost Build-Up in Solution Design

36. Intel Collection • Ask Questions of the KO • Talk to Other Players • Use Web-Based Contract Sites (Input.com) • FOIA: How, When and Why • Do it routinely (Some pay services include this) • Each agency has a congressionally mandated FOIA office, and maintains their own policies • Not as hard as it sounds • Information is power: FOIA is critical • Use a consultant to remain under-the-radar

37. Rules of Thumb • The Earlier in the Acquisition Cycle, the Higher the Win Probability • Get to Know Your Contracting Officer – Before the RFP • Get out of Your Office • GAP Analysis Early; Make the Build – Buy – Partner Decision as Soon as Possible • Secure Team Members Early • Secure the “perfect PM” as Soon as You Can, Even if Only with a Consulting Agreement • Information is Power: Get It, and Don’t Give It Away A No-Bid is never the worst case. Bidding and losing is not the worst case. Winning but failing to perform is as bad as it gets.

38. Questions?