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What the Great Recession means for competitive bidding

by on October 6, 2009
Last updated on
One prebid meeting I went to had over 150 people there. In the past I would have expected ten at a prebid and six to propose.

Betty Brennan
Taylor Studios, Inc.



This economy, the so-called Great Recession, is a different and challenging situation for business prospectors who likely have never faced the retrenchment that is occurring in both private and public spending. According to some estimates the economy has contracted at an annual rate of 3.8%, a number not seen since this information was tracked in 1947, including a drop of over 6% in the first quarter. Businesses, faced with declining sales, are faced with a choice of laying off workers or delaying purchases, so are trying to do a combination of both. Less spending in Corporate America is pushing companies into trying their hand at public/government projects, but even that isn't safe. States and local municipalities are facing revenue shortfalls themselves and are being forced to cut spending... and then cut them again as revenue projections are lowered a few months later.
I remember spending weeks writing a proposal only to find out that no funds were going to be available. The project was stalled for over 2 years and when the funds did become available, we had to go through the process all over again. We stuck with it because we knew we'd received high marks from the selection committee the first time, and we know we're the right firm for the contract.

Donna Stuart
Glen Group, Inc.

Many hoped that the Recovery Act would provide the resources necessary to take "shovel ready" projects that were delayed due to lack of funding and put companies immediately to work, jump-starting the economy and spending. It is possible that they severely underestimated the situation. In July the Lee County Board of County Commissioners issued a RFP for a firm or firms to provide "civil, architectural, structural, landscape architectural, land surveying & mapping, utility, mechanical and electrical traffic" services. They anticipated the awarding of contracts to "numerous" firms.

The project was canceled. The Board's cancellation message reads: "Based upon the overwhelming response received (167 Letters of Interest), the Committee has canceled this procurement process and Lee County will not proceed with awarding any contracts under this solicitation".

We don't know for sure if this project was to be funded by the Recovery Act, but we've heard similar stories from multiple sources expressing amazement, frustration, and a bit of hopelessness in trying to bid on projects where you're competing against so many other companies. Firms are now competing hard for projects that they would have rejected in the past because of low profit margins, ridiculous requirements, impossible deadlines, etc., and they're doing it because they need to survive.

And this isn't limited to the public sector. As many in the advertising industry know, Zappos issued a RFP this summer seeking a new advertising agency to represent it. Advertising agencies responded as if they were cattle in a stampede and over 100 agencies responded. We gave an interview recently discussing the Zappos RFP hubbub entitled RFP Etiquette: Dos and Don’ts for Business Matchmaking.

Regardless of the competition and the odds stacked against them companies continue, and must continue, to bid on these projects. Guy Iannuzzi, CEO of Mentus, explains his reasons for competing for a large and very competitive marketing services RFP for water conservation as:
  1. It was a very large budget, which while very competitive, still was attractive.
  2. The high profile of the project would be useful in promoting the agency in the community.
  3. The campaign opened the water conservation and sustainability markets to the agency.
  4. The agency had background in producing several of the organization’s annual reports for the previous years.
  5. The agency had previously answered another large branding RFP for outdoor conservations the previous year, and had come a very close second (by a half point), which gave us confidence

His advice, and the advice of many others, teaches us that we need to become much smarter in our business development strategies and how they relate to competitive bidding. We can all agree that jumping into a competition like the ones mentioned above is awful, but that sometimes there is little choice. There are lots of resources for learning how to better respond to RFPs, and the companies that will win more of these projects are the companies that put time and effort into strengthening their RFP/proposal strategies.

What can RFP issuers do?
We're certain that the companies, organizations and municipal agencies that are issuing these RFPs are equally overwhelmed at receive 100+ proposals, each running 10-100 pages in length. But just as vendors can get smarter at choosing which RFPs to respond to, issuers can get smarter about determining who they request proposals from while still using a RFP process.  We don't advocate the "open the yellow pages and choose 3 vendors" approach, but what issuers can do is put out a Request for Qualifications (RFQ) or a Request for Information (RFI). The purpose of these documents would be to get vendors to supply and answer basic qualification questions related to the project at hand in a shorter format (perhaps 5 pages instead of 50). Simple questions such as corporate history, examples of similar projects (scope, request, budget, etc.), executive summary for why they believe they are the most qualified or best fit, etc. The issuer would evaluate these responses and choose a handful of companies that they want to receive full proposals from instead of receiving 100 proposals from all around the globe.

Another suggestion would be to have issuers re-think their standard RFP and revise it so that the requirements of the RFP are more in-line with the scope of the project; vendors shouldn't need to write 100 page proposals for a 5 page website redesign.

Some vendor-side words of wisdom
The suggestions below were sent to us in response to a Help a Reporter Out request that read:

We're looking for stories of businesses that responded to a RFP and endured a lengthy/difficult/ridiculous RFP process to win a project. Looking for details such as 1) why it was so lengthy/difficult/ridiculous, 2) why you stuck with it, 3) whether it was worth it in the end and 4) what 1 piece of advice you'd give to other RFP issuers so they can learn from what you went through (besides directly hiring you)

The responses we received all showed companies who understood the process, were continually working to improve their win ratio and proposal ROI, and actively engaged in competitive bidding. Reading their stories it is fair to say that they all overcame adversity to win their projects, but they all continue to engage in competitive bidding. A selection of the advice that was sent to us is included below.

"I would advise people that it's all about the Q&A process. Reviewing the RFP immediately upon receipt and then preparing a thorough set of questions for the issuer is the most important thing you can do. In this example (and dozens of others) the Q&A process allowed us to develop a connection with the client and really understand what they wanted. Effectively, they trusted us before they even saw our response and that was why they asked us to resubmit when it wasn’t what they wanted."
-Mike D'Abramo, Youthography

"First, to examine what information is truly needed in order to make an informed decision - not just to ask for detail because every other prior RFP the organization has sent out has asked for it. And to be honest up front whether the issuer is willing to work with a firm that's not local. So often the knee jerk answer is "Of course, we'd consider working with an agency that's out of the area/state/region," but in actuality they really want someone down the street."
-Donna Stuart, Glen Group, Inc.

"The key to remember is that RFP are meant to be a framework for enabling a structured response but is not the final word. You still have to perform all the sales process steps and make sure you get a chance to speak to a human being who is the decision maker. Since then we have made a rule. If we cannot speak to a decision maker in an RFP, we will not bid. Better to save the time and pursue other meaningful clients or just improve your work life balance."
-Vivek Khanna, Neeyamo Enterprise Solutions

"I remember bidding on a rather small identity job (maybe $10,000) that had 20 open-ended questions that required a week to complete and ran about 6-8 pages with answers. At the same time  I was asked to bid on a $100,000 project, met with the prospective for an hour input, and submitted a bid three days later. This contrast of open ended, time consumption vs. a quick and direct input session highlighted for me the difference between a good process and a weak one."
-David Langton, Langton Cherubino Group, Ltd.

"My advice is to not stint on the effort of demonstrating your competence or abilities in answering the RFP. As a consequence, you will need to choose wisely – you cannot afford to provide that level of effort unless the RFP is VERY closely aligned with your organization’s mission and competency."
-Guy Iannuzzi, Mentus


For more articles on RFPs and proposals please visit our other articles on the subject at http://www.confluentforms.com. We encourage our readers to sign up to receive our articles by email (top right corner) as we post them on an irregular basis.

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