Winning In the Post-Proposal Centric World (4-15-11)
It's official! "The Pentagon will place a greater emphasis on price when negotiating weapons or service purchases." Thus spake Shay Assad, DoD's director of defense procurement and acquisition policy, in front of an audience at a Defense Acquisition University-sponsored conference at Fort Belvoir, VA on April 12, 2011. Hopefully we can now move beyond the Shipleyesque notion that one's proposal is of greater importance as an award determinant than the evaluated price. Please note that I am not suggesting that proposals are irrelevant, just that their role is to convey technical, management and past performance acceptability - but do so within a winning price.
So how does a bidder fashion a winning price? A guiding principle of Game Theory is that you should view the game through your opponents’ eyes, not just your own
. So, as a matter of urgency, let's do just that by engaging in a comprehensive Price To Win (PTW) process. The first step centers on Competitive Analysis to develop a deep understanding of our competition - their teams, likely solutions, SWOTs, and where they are most likely to target their bid prices within a known addressable budget.
The second step of our PTW process selects the fiercest competitive bid teams and develops their "partially gamed" PTWs - or the competitor prices to DO the job. This second step uses a bottoms up, WBS-driven approach to develop a detailed basis of estimates (BOE) for each targeted competitive bid team.
The third step of our PTW process engages in various price gaming techniques to transform the "partially gamed" results into the competitor prices to WIN the job.
So, if we have done a good Competitive Analysis within a rigorous PTW process, we should have developed a target price that can overcome our fiercest competitors' likely bid prices. To meet or beat targeted bidder prices, we will employ Strategic Pricing to meld Competitive Analysis and PTW results and probabilities with a Pricing Strategy and a comprehensive bid cost basis, to develop a winning, yet profitable, solution and bid price.
Good luck and happy hunting!