Washington Dispatch No. 8: Roundtable Discussion on Transparency and the Cost to Suppliers

Posted on June 10, 2010


As previously mentioned, the Government takes great interest in the health of SMEs and is making it a priority in wanting to “cut the red tape faced by the private and not-for-profit sectors when doing business with the government [and fixing procurement]” (2008 Speech from the Throne).  The Government is proud that it has done much in improving SME access to government contract opportunities by reducing procurement barriers, simplifying the contracting process, improving training and education to SMEs wishing to do business with the Government.  The Government also believes that it can do more and will do so as outlined in the Response.

Additionally, through the OSME, the Government is committed to creating an ongoing dialogue between the Government and SMEs to create a better understanding of SMEs’ concerns and to ensure these concerns are continually addressed by the Government in the future.

from GOVERNMENT RESPONSE TO THE SEVENTH REPORT OF THE STANDING COMMITTEE ON GOVERNMENT OPERATIONS AND ESTIMATES: In Pursuit of Balance: Assisting Small and Medium Enterprises in Accessing Federal Procurement (Report No. 7, June 2009)

Once again, there was no shortage of unique perspectives, valuable insights and thought-provoking dialogue that occurred during the course of our Roundtable discussion on transparency within the government procurement process this past April in Washington, D.C.

However, and looking to conclude the train of thought that started with the previous post which initially focused on technology and naturally evolved to today’s excerpt post on supplier engagement and utilization, the words of Judy Bradt earlier in the broadcast took on an even greater significance.

Specifically Bradt, who is a Washington-based expert author on the subject of winning government contracts, made the statement that the Canadian government tends to hold their contracting and disclosure cards very closely to their proverbial vests.  In short, Canada’s public sector procurement apparatus operates on a strict, narrowly defined need to know basis.

Perhaps this is why the word “relationship” only appears once (and that was used in reference to horizontal internal engagement) throughout the entire Standing Committee of Government Operations and Estimates’ Report No. 7.  Or why, the reported findings seem to focus more on centralizing control versus building true stakeholder relationships, creating and introducing procedures and policies in place of meaningful collaboration and, the pursuit of functional exchanges versus practical outcomes.

These are not merely semantical reference points as they actually strike at the heart of the Roundtable discussion on how suppliers view the public sector procurement practice – regardless of country.  Particularly as it relates to the costs for suppliers to get into the game.

While generally unknown by those procuring goods and services on behalf of the government, it is worth noting that the majority of suppliers also lack the needed understanding of the “true cost” of doing business in the public sector.  This is a critical knowledge gap that needs to be filled according to Bradt, for any vendor looking to navigate what she referred to as a “non-linear process.”

It is therefore immensely important for these companies to take the time to “very carefully” gain a clear understanding of what pursuing, let alone winning, government contracts will cost which Bradt stressed usually takes “a lot more time and investment of resources than initially expected.”

The first step in this exercise begins with the relationships a vendor has with their teaming partners and even competitors, the practical advice a vendor receives through agency briefings that are in the case of the United States held at the Offices of Small and Disadvantaged Business Utilization “OSDBU” and, one-on-one counseling sessions with small business specialists within the government.  These according to Bradt, who has helped more than 6,000 clients win in excess of $300 million in government contracts, all add up to a supplier being able to really understand the process and help them to legitimately and transparently gain buyer preference.

What may be most surprising about the above revelations for many, especially those who champion the automated electronic tendering services such as a MERX or FedOpps, is that those vendors who are consistently successful at winning government contracts usually hear about business opportunities first through these “preferential” relationships.  Examples of alternative intelligence venues include referrals from a client or a friend telling them about an upcoming acquisition plan or, an “on the street” tip from someone in the the know.

In fact and as previously stated in earlier excerpts, if you are only hearing about an opportunity and/or getting involved at the RFP issue point you are already a day late and a dollar short.  It is through the above mentioned relationships stressed Bradt, that you gain the heads-up lead time that enables you to compete versus simply respond to a government tender.

A point that was driven home by NSI Chief Executive Officer Alfred Gordon, who over a dinner one evening shared his experience with an audience of vendors who were looking for ways to gain an edge in both pursuing and winning government contracts.

As Gordon explained it, he asked every individual who was in attendance to tell him how many government contracts each one’s company pursued over the previous year, and at what cost?  The responses ranged from a dozen bids to several hundred being submitted, at a cost that was as high as a couple hundred thousand dollars.  Now here is the telling part of the Gordon story; when he asked how many of them won the bids to which they invested so much time and money, not a single person raised their hand.  Not one win for those vendors whose primary point of initial engagement was responding to an RFP.

Gordon’s findings are in line with Bradt’s analogy about waiting to get into the game until after an RFP has been issued being tantamount to a runner showing up at the starting line on race day without having trained in the months leading up to the race and expecting to win.  The only things you can expect to achieve by simply responding to opportunities through a MERX or FedOpps tendering system is a lower bank balance and increasing disillusionment.

The only exception to what the Washington-based expert called “bidding cold” (and it is a big one), is if you have been trying to get into an agency that has been unresponsive to your calls.  Under circumstances such as this, where you “do not know the buyer, the incumbent or the budget,” in other words you haven’t been able to talk to anybody in the agency, but you believe that there is a good fit based on the written requirements, going in blind can serve a purpose.

According to Bradt, the only legitimate reason for blind bidding is that by submitting an offer, you can ask for a debriefing.  Like a sales call on steroids, it may be the only way to get a face-to-face and thus establish both a rapport as well as determine the factors upon which the agency makes its purchasing decisions.  This suggestion is not only logical but Bradt can point to an actual example where this first step towards establishing a relationship resulted in a $500K contract for the supplier down the road.

Given the above, and the consensus by our guest panelists that establishing relationships are a critical and often overlooked part of a successful bid, it could be said that electronic tendering platforms such as MERX and FedOpps are icebreakers that are as much a part of the sales process as they are the acquisition process.

At the end of the day, and this once again is perhaps the most important point relative to a supplier’s view (and understanding) of the government procurement process . . . you will have to spend time and resources in building relationships long before an RFP is issued.  Therefore it is incumbent upon you to be strategic perhaps even surgical in terms of where you will focus your energies so that the odds of a return on your significant investment will increase.  In short, pursuing government contracts is a calculated risk, one in which you need to thoroughly understand the math.

By approaching it in accordance with a method to the madness mindset, the eventual outcome can be rewarding as illustrated by a story Bradt shared during the broadcast.

In her recounting of the events, Bradt referenced a woman who owned a communications company and how, over a period of two years, she worked to build relationships within the Office of Personnel Management and Budget leading up to a response to a tender request for the very services her firm could provide.

It took 8 people 6 weeks at a total cost of $200K to put together the proposal that ultimately led to her to winning a $6 million contract that to this day is her flagship account.

There is an important point to be made at this juncture in that how many vendors would spend $200K over a 6 week period responding to an RFP but – and this is key, have not spent the preceding 2 years establishing the necessary relationships to make that expenditure count?

Regardless of the amount of money or time involved in responding to an RFP, it is a supplier’s level of commitment leading up to the release of a tender that will likely determine success or failure.

Referring once again to the protagonist in Bradt’s story, after being informed that her firm had won the contract, she went into the office of her program manager and said “I have this contract, but I have no furniture in my living room.  But, I have this contract!

This spoke volumes as to the level of investment this individual was willing to make to succeed,  starting with taking the time to build the rapport and the relationships that provided a clear picture in terms of what it was going to take to win the business.

As a movie buff, I am reminded of the 1987 film The Untouchables, where towards the end of the picture as Elliot Ness (Kevin Costner) is kneeling over a dying Jim Malone (Sean Connery), the veteran beat cop grabs Ness by the collar and asks him “now, what are you prepared to do?”

This is a good question, and one that every vendor wanting to pursue government contracts should ask themselves.  What are you prepared to do?!

Next White Paper Excerpt: The Economic Impact of Government Procurement

NOTE: The post came from the new Essential Connections Blog. For complete summit information including additional articles, visit the Essential Connections Blog

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