Many businesses in the Tucson region generate part or all of their revenues from competitive bids and proposals, not just from direct sales opportunities.
Typically we think that only large companies, such as defense and construction contractors and their subs, software developers, architects and engineers, play in that arena.
But the reality is that a host of smaller companies are eligible to bid on opportunities offered by city, county, state and federal agencies, the University of Arizona, school districts, hospitals and Raytheon Missile Systems, just to name a few.
For this column, I’m interviewed Sandy DiCosola, who is president of Summit Contract Management and an expert at helping companies to become qualified vendors, to find bids and requests for proposals (RFPs) and to write winning proposals.
Sam Williams: Sandy, how is this process different from the direct sales processes I normally write about?
Sandy DiCosola: In direct sales, often prospects haven’t yet identified a particular need, so the sales person must convince prospects that they really do have a need for their products or services. If they do have a need, prospects may slow the sales process, keeping the sales person in the dark, so that they can quietly ‘shop around’ for a better deal.
In other cases, where prospects’ needs are already being addressed, the sales person has to displace the incumbent, a time consuming and tricky process.
On the other hand, RFPs and IFBs (invitations for bids) result from needs that have already been clearly identified. This process results in the creation of a formal written description of the need, the products or services required, the qualifications of vendors and deadlines for responses.
Since it’s called a “competitive bidding process,” everyone, including an incumbent, knows that the deal is being shopped. It appears to me to be a far more orderly and rational process than the chaos of direct sales.
Williams: Many business owners avoid responding to RFPs. They believe that the efforts required to qualify as a vendor and to complete the proposal are too great, that the odds of winning are too small, and that even if they do win, their margins will be “beaten down” by the procurement departments.
DiCosola: First, it’s easy to register online as a vendor for the federal, state, county and city governments. Part of the registration process involves identifying the types of opportunities they would like to bid on.
Some sites will actually push notices of RFPs to them. Other sites require them to monitor the postings of RFPs.
Then they need to learn how to prepare winning proposals. This involves briefly and clearly addressing each requirement listed in the RFP.
It is always a good idea to have a “red team” - qualified people who had nothing to do with writing the proposal, carefully review it before submitting it.
Finally, it’s true that their pricing can be “beaten down” when the goods or services that they provide are commodities and where the risks of fulfilling the contract are very low.
But price isn’t the most important criterion as the risks of on-time project completion rise. For example, if they have a unique capability or have performed well as a contract vendor in the past, they definitely have an edge.
Williams: Some business owners say that even their best pricing can still be undercut by “bid pricing preferences” made available to “set asides” categories of business such as minority- or woman-owned businesses (MWBE); disadvantaged business enterprises (DBE); and small business enterprise (SBE) programs.
DiCosola: Their best defense is to qualify for one or more of these programs themselves. After all, a small business is defined as 500 or fewer employees. That means that most businesses in Pima County can qualify.
Williams: Isn’t all of this very time consuming? Don’t they have to be certified with the city, state, county and federal governments?
DiCosola: Many, but not all, agencies honor the Unified Arizona Certification Program. This process can take about 20 hours, and most businesses have the required information readily at hand.
Williams: Often direct sales people first attempt to contact the CEO, chief financial officer, director of IT or vice president of production. Is there a different point of contact for bids and proposals?
DiCosola: Yes. The RFP clearly specifies the names of the people who can answer questions and to whom the completed proposal should be submitted. There’s very little guesswork.
Williams: Is there any role at all for people skilled in direct sales?
DiCosola: Yes, there is at the front-end of the process, finding the opportunities. Often this process can be identified even before an RPF is issued, and the efforts of good outside sales people often lead them to identify projects in their earliest stages and to influence the terms of the RFP in their favor.
They can also help at the back-end of the process. Many times there are several promising proposals. When that happens, those on the short list are invited to an “interview,” an opportunity to present their solutions to a team of reviewers. Really good direct sales people often have the best presentation and consultative sales skills.
Williams: So, how would you advise companies to find more competitive bidding opportunities and RFPs?
DiCosola: Let’s start with the concept of the “sales funnel.” All sales opportunities from multiple sources pour out of specific “pipes” and into the top of the funnel. Each source of bidding opportunities is a “pipe.” So, the best way to find more opportunities is to find more “pipes,” such as those I have already mentioned.
You can’t just wait for an opportunity to come out of any pipe, though. It’s OK to go to its source, the company or agency headquarters, its regional office, its website or to their project or purchasing managers in order to learn what is currently being considered.
Often you will learn of an RFI (request for information), which precedes the writing of an RFP. If you learn about a project before the specifications and RFP are written, you may be able to significantly influence both so that you are better qualified to win. Sometimes this is called “wiring an RFP.”
Williams: So, you still have to qualify these opportunities to see if they fit your capabilities, don’t you?
DiCosola: Yes, but that usually happens at the front-end of the entire process. The owner and management team must decide what its niches will be. Then, as an opportunity arises, they check to see if it fits into one of these niches and if they can realistically perform to the specifications of the RFP.
A fair number of RFPs may be discarded at this point, leaving a smaller number to progress though each of the next stages. There may be a fair amount of attrition along the way, and those proposals that are won and emerge from the narrow end of the funnel may be as few as 10% of those that enter at the top.
Williams: What if the sales cycle time - the time from when you first hear about an opportunity until the time you win it - and the job starts, has increased significantly?
DiCosola: That can be frustrating, because it’s almost impossible to accelerate these opportunities. So, if their sales cycle times have doubled, they will have to double the number of qualified leads entering the top of the funnel in order to hit their revenue projections.
Williams: Thanks, Sandy.
Readers, I know we have glanced over a lot of detail here, but that will be the subject of a two-hour workshop on “How to Find and Win More Bids and RFPs.” Sandy and I will be leading the session from 8:30 to 10:30 a.m. Aug. 24. It’s being sponsored by the Tucson Hispanic Chamber of Commerce.
To register go online at www.tucsonhispanicchamber.org/ click on “events.” The cost is $49 for members of the Hispanic chamber, $59 for non-members.
Contact Sam Williams, president of New View Group LLC, at email@example.com or (520) 390-0586. Also, contact Gale McGuire at Robert Half International at (520) 548-3490 and Sandy DiCosola at Summit Contract Management at info@summitcontractmanagement or (520)-797-3408. Williams is looking for topics readers would like to see covered as well as questions and comments. New View Group provides revenue development consulting to CEOs and sales skills and sales management training to B2B sales teams. Read his blog at blog.azbiz.com. His Sales Judo appears the first and third weeks of each month in Inside Tucson Business.