Dilemma of Mid-size Federal Business Development—Rob Kelly
Mid-size companies are at a disadvantage pursuing federal contracts because federal clients (the
project manager) prefer large, full service companies; and, contracting officers prefer small and
minority companies to meet federal equal opportunity goals. That leaves mid-size companies out of
favor. What to do?
First evaluate how important is a federal contract to the company and is the company committed to the
extra effort it will take to overcome their disadvantage. There are upsides and downsides.
First the downsides of pursuing and winning a federal contract:
• The company must invest in a government-approved cost accounting system, and comply with
about a ten auditable requirements to do business with the federal government.
• The federal government demands competitive rates, prices and profits; little chance of a
• The company generally needs a business development person who understands the Federal
Acquisition Regulation and the techniques of federal marketing and proposal writing.
• Contract opportunities usually need to be identified 3 to 12 months before the solicitation is
announced in order to position for the RFP.
• Marketing an identified contract opportunity requires an investment; usually about 3 to 5 visits
to develop a relationship with the decision maker over a 4 to 12 month period and get the
needed market intelligence to have an edge.
• Preparing a federal proposal takes time, budget and skill; expect to expend about one percent of
the contract value on the proposal, and win one out of four.
• It is difficult for a company that is proud of its capabilities to realistically assess their chances
to win a contract, and therefore waste money trying.
Now, the upsides:
• The contracts are usually large, in the millions.
• The contracts often extend over long periods (years) leveling out low periods in a company’s
• The federal government ALWAYS pays. There is no risk.
• The federal government pays dependably in 30 days without haggling; no risk.
• The federal government usually indemnifies its contracts; minimal risk of a lawsuit or loss.
• If one win and there is a recompete, the incumbent usually has the edge.
• The auditable systems that the government requires are mostly good business practices that a
reputable company would or will eventually have anyway.
How can a mid size company overcome the downsides and play up the upsides?
• Sub to a small or minority company for set-aside contracts.
• Sub to a large company for unrestricted contracts.
• Realistically assess contract opportunities before pursuing as a prime.
• Both small and large companies do not want to give their subs any more work than necessary,
if any at all, after they win. See article on teaming to deal with this situation.
• The “wanna be” factor can easily over ride an attempted realistic assessment of a contract
opportunity. See the “Go-No Go” article to reign in temptation
Federal Business Development: Shotgun or Rifle Shot
Rob Kelly, President, PPI
Two approaches to federal business development - shotgun and rifle shot. The shotgun approach is
proposing on anything that comes close to your interests. Rifle shot is proposing on only those that you
think you have a good chance to win. Both approaches are used, but with obviously different
ramifications. The shotgun approach is self evident, but be prepared to write lots of proposals before
winning a contract.
The rifle shot approach requires self-discipline and a rational analysis of each opportunity. The
value of this approach becomes increasingly self evident as the cost of preparing a proposal increases.
What is the break point? Depends on how cheaply you can produce a compelling proposal, the size of
your marketing budget, and the anticipated payback. Not easy to estimate and pretty much a
management decision. But, there are guidelines.
“Go-no go” criteria. Most sizeable firms eventually move to the rifle shot approach and develop “go-
no go” criteria. They estimate the odds of winning, cost of proposing, and estimate the win-to-cost
ratio. Typically firms like a 30 percent or better chance of winning, budget one-half to one percent of
the contract value for preparing the proposal, and want a fifty-to-one or better return-to-cost ratio. For
example, you think your chance of winning is 25%, contract value is $2,500,000, and cost of proposal
preparation is $15,000. The win-to-cost ratio is (25%)($2,500,000)/($15,000) = 41/1. Close, but this
would be a “no go,” unless you could determine a way to improve your chances of winning. You might
do this, for example, by adding a subcontractor, on an exclusive basis, to your team that has cutting
edge technology, or may be favored by the client.
You question the $15,000 to prepare the proposal? Let’s add it up at typical overhead rates.
Pre-bid conference/site visit, 8 hr at $40/hr + travel expenses $1,000
Management presentation, review, decision, 8 hr at $40/hr 320
Senior proposal writer, 80 hr at $40/hr 3,200
Staff input writers, 160 hr at $30/hr OH rate 4,800
Proposal specialist/assistant, 120 hr at $20/hr 2,400
Typist and graphic artist, 80 hr at $20/hr 1,600
Red Team review, 3 reviewers at 6 hours at $40/hr 720
Rewrites, 24 hr at $40/hr 960
Proof and correct, 8 hr at $30/hr 240
Supplies, copies, FedEx 500
If you are pursuing a $3 million, unrestricted contract, this is the kind of budget, if not hours,
you should expect to expend to successfully compete. For a small business set aside procurement, the
proposal budget would be considerably smaller, maybe only one-fourth as much especially if the
industrial size standard for the prime contractor is less than about 20 employees. I usually estimated
about 400 hours for proposing on an unrestricted $3 to $10 million-dollar contract, but only about 40
hours when it was an 8(a) set aside procurement for a $250,000 contract. The question now is how to
estimate your chances of winning and how to make a rational decision when to bid or not to bid. Read
To bid or not to bid. It is not easy making a rational decision about whether or not to propose on
a contract solicitation. The “wanna be” factor is often the culprit. You read a solicitation to perform
a service for which you have some experience and aspire to become the expert. Winning this contract
will accomplish what you “want to be.” You bid, lose, and wonder why. In so doing, you have
expended considerable time and resources that may have been wiser spent on other marketing pursuits.
This is the dilemma of business developers. On one hand we want them to think positive, be
optimistic and aggressively pursue work. On the other hand we have a business development budget
that precludes chasing every opportunity. We must be rational, practical and wisely choose what to bid
and what not to bid. To do this, the more successful firms follow a formal “go-no go” process.
What is the “go-no go” process? Generally, the business developer reviews a contract opportunity,
assesses the firm’s chances of winning, and then presents his recommendation to management. As part
of the “go” recommendation, he requests the needed budget and personnel support for the proposal
effort. This approval process inherently incurs checks and balances that will reign in an overly
optimistic business developer. However, small firms may not have such a hierarchy and the business
developer and approving manager are the same person. What then? Use a go-no go decision score
The Go-No Go Decision Score Sheet. The following go-no go decision score sheet is one that works
well, but you may want to modify it to your particular situation, or make your own list of criteria that
must be met before making a “go” decision. On this evaluation sheet you are looking for a 75 percent
or better score. If less, a business management decision is needed to proceed. If you score yourself
critically your resulting win rate should run around 20 to 50 percent, a typical corporate goal.
(Insert score sheet in separate Excel document attached to this email.)
In summary, you may be in a narrow line of business and can efficiently shot gun your proposals with
little change from proposal to proposal, but if each one requires considerable original effort, then you
would be well advised to consider a rational go-no go process to conserve resources. If there is a
dedicated business development manager in the company, then it is management’s role to critically
review his recommendations. If management and the business developer are the same person, the
“wanna be” factor can sometimes cloud rational judgment. This is where a numerical go-no-go score
sheet can be used to help make an unbiased business decision.
Myth of the Month. Close proximity of firm to the project location is only a tiebreaker or not scored
at all. Wrong! The evaluation factors may indicate that, but would you hire a firm from another state,
region, or country? Will your travel costs be the same? Will management personally check on the
project as often? Will the project manager routinely communicate in person with the client? If there is
a problem, how fast can management respond? Does the company know the laws, permitting
processes, and codes of the project location? Does the company have the required professionally
licensed personnel? Is the company licensed to work at the project location? Scoring a firm’s
proximity comes into play more so than just location and can be more than a tiebreaker.
Proposal Manager ___________________ Client Name ____________________
Office Location ___________________ Procurement Name ____________________
Business Unit ___________________ Estimated Total Value ____________________
Estimated B&P Cost_________________ Per Year Value ___________________
Go/No Go Decision
1 2 3 4 5 6 7 8 9 10
1.Are you known by the client?
2.Is this the first you heard of
3.What is our overall technical
4.Can we provide proof of
5.Are subcontractors needed?
6.What is the financial potential?
7.Can we respond with a
complete, compelling proposal?
8.Who are our competitors?
9.Is project within our geographic
10.What is our pricing
Bid Factor Scoring Scale
Negative Neutral Top
Unknown to this client Known to client, but not
relationship; previous contracts
Did not expect RFP;
Generally up-to-date; no
Known 3-12 months; good
favorable, confirmed intelligence
Not qualified; weak
Can meet/exceed every
requirement; technically superior
Limited in-house staff
Good in-house staff
Best in-house staff available
Yes, but will dilute
Yes, but will have little or
Yes, and will enhance overall
Marginal long term; no
short term return
Competitor is strongly
favored or UNKNOWN
Unclear understanding of
Reasonable & competi-
tive; reasonable risks
Good long term;
questionable short term
Maximum potential score (number of factors evaluated times 10)
Decision (Total score should be about 75+% of maximum score for a "Go" decision, or better than the top competitor.) _______Go ________No Go
We are strongly favored over
Strong geographic presence and
Honest, credible price within
known limits; acceptable risks
Total score of factors evaluated
Must cut corners; cost
Open competition with no
project & client needs;
Excellent long term; excellent
Can meet/exceed all
requirements; have compelling
story; know hot buttons
How to Write Your No-Bid Letter
Zen and the Art of Saying No
Stay Zen, don't slam the door at future opportunities. Instead, do it professionally: quietly, and
with a "I'll bid next time" smile. Indeed, you want to leave that same door wide open for future
In the case you don't really want to do business with the requester because of a prohibitory
reason (they are not financial stable, so you don't want to jeopardize your own viability), you
probably don't want to and shouldn't say it to them. At the same time, the last thing you want to
tell is that you are not, honestly, capable of doing the job because the only knowledgeable person
left your organization for, we used to say, personal reasons. Your best option is to go with the
business fit of your product or services with the requirements as they are expressed in the
Keep the door open
"I've already told you not to put your elbows on the table."
-- Your Mom. Basic table manners say that it's not acceptable to put your elbows on the table when
you're actually eating. But, unlike what people usually think, good table manners say that it's not
acceptable although you're not actually eating.
So gather your forces, sharpen your mind. Do whatever it takes to be irreproachable, and keep
your shirt immaculate while leaving the table. Your Mom will be proud of you, won't she.
Do your homework
Let's take a look at the 2 following sentences:
1. "We do not want to submit a bid for the following reasons"; and
2. "We have identified the reasons hampering us from considering a proposal submission
appropriate as follows"
Should you be able to see, I should probably say feel, the difference between the aforementioned
sentences, you would be able to write a tactful, effective, and positive no-bid letter in your own
explaining all the reasons why you won't submit a proposition without the unconscious, negative
impact of using a sequence of negative forms.
Indeed, the second sentence, unlike the first, doesn't use a negative form. Instead, a verb
expressing a negative idea but in an affirmative manner, "hampering", is coupled with a positive
adjective, "appropriate". Even better, instead of being negative and passive, it could be seen, or
felt, as positive, active, and even proactive.
To wrap up, you have to say it almost with flowers. But what to say? To succeed, or, preferably,
not to fail, you have to provide reasons that should better be valid.
Explaining Valid Reasons for No-Bid
Be very specific regarding these reasons. Not only state the reasons why no bid/proposal will be
submitted, but, above all, substantiate them carefully and thoroughly.
The best professional and successful approach is to go straight to the point, in a
clear, sweet, positive, even proactive, but always-tactful manner. Documenting the
reasons why you decided to go with a "no bid" is far more difficult than merely deciding or
feeling to do so. Spend the time needed to honestly, and properly communicate the reasons. The
more specific, exhaustive, valid, and honest the reasons for not submitting a bid or proposal are,
the better are your chances to:
1. be still considered as a valid provider;
2. not be removed from the bidders list;
3. get back more easily to your contact should a new opportunity occur;
4. be remembered as a professional, knowledgeable, dependable, courteous, and honest
prospective provider; and
5. above all, win the new contract, eventually.
Example of valid reasons for no bid
Valid, thus acceptable reasons not to bid ensure your organization to stay on the
Bidders list for future opportunities. It's a common sense, but to be considered acceptable,
reasons have to be valid. Here are examples of valid reasons for not bidding or proposing:
not the right fit:
opportunity not consistent with your organization's business, strategic, or
opportunity not in your field of expertise;
project localization not in your geographic area; or
certain mandatory conditions are redhibitory:
• project requirements,
• environmental and energy efficiency considerations, or
• contract terms and conditions.
not the right budget:
requester's project budget not realistic;
estimation of bidding costs over your budget threshold;
project not profitable, negative Return on Investment (ROI); or
no Bid and Proposal Budget (B&P), or already allocated.
not the right time:
unrealistic project timeframe; or
major business reorganization.
not the right resources:
temporary lack of internal human resources (work on other projects, but don't
say on other bids);
temporary, we expect, loss of human resources (business rationalization, or
right partners or subcontractors not available.
Don't take them for granted. Indeed, you have to customize them in order to render them valid in
your always-particular context.
We've just seen how and what to say. But how to put it in writing? To succeed, or, again, not to
fail, you have to lay down your thoughts in a valid format. Here comes the no-bid letter template.
No-Bid Letter Template, Sample, How to write, and Tips
To create your own no-bid letter, use the templates and samples provided in your FREE
Request for Proposal Letters Toolkit.
You will also find in your FREE RFP Toolkit, amongst others, templates and samples of RFP
RFP cover letter
proposal cover letter
non-binding letter of intent
decision matrix template
letter to decline a proposal
contract award letter
An RFP Proposal Cover Letter should accompany your response to the RFP questionnaire you
received from the organization requesting proposals from prospective providers.
Why and how to write an RFP proposal cover letter?
Beyond being polite and presenting what you have to offer, the RFP proposal cover letter gives
you a unique opportunity to emphasize (1) how your offering matches the RFP issuer's needs,
and (2) what are the benefits they may thus reap from identifying your solution as the best match
for their requirements. These two ensure you that your reader will seize your unique
qualifications that no one else can offer, what exactly makes your organization stand out of
competitors. At the same time, the proposal cover letter represents the official authorization of
your proposal by your organization.
Would you send your résumé without a cover letter? Have you ever realized that
your RFP Proposal Cover Letter plays exactly the same role as the Cover Letter for a résumé?
So, take a particular attention on how you write your RFP Proposal Cover letter.
It is highly recommended that you to read the suggestions below in order to properly and
successfully use the RFP proposal cover letter.
1. Your strongest weapon is in your reader's mind. Use a formal letterhead and do
not handwrite the RFP proposal cover letter. Use templates and samples provided in your
FREE RFP Letters Toolkit to create your own proposal cover letter. Some studies have
demonstrated that the serif feature (the horizontal, rounded part of the character) of
some fonts, namely Garamond, Georgia and Times New Roman, make printed documents
more readable by easing the reading movement of the eye. (More information about
usability, from Jakob Nielsen's web site).
2. Focus on benefits your reader gets, and not merely on features your solution
offers. First, indicate your interest in the RFP you received. The RFP proposal cover letter
should highlight the content of ancillary documents, namely your proposal, and specify
the time for validity of your offering, which, depending of organizations, may range from
30 to 90 days from the proposal due date.
3. Convert your vision into quantified benefits by leveraging your enemy's own
weapon: recycle text from the RFP itself and customize it with
representational statements instead of puffery. List the most important
qualifications and benefits of both your product and organization. Indeed, you are not
offering a mere product, but a partnership between two organizations. So, as a
complement to selling your product, do not forget to sell yourself.
4. Offer a brief summary of your client references. It is important to select not only the
most impressive but the most pertinent ones. Indeed, you will find that relevancy is much
more efficient than accuracy.
5. Do not be too bureaucratic in your approach. The RFP issuer has to feel your passion, or
at least your enthusiasm, not only for your product but also for their project. It's
important for your cover letter to be personalized, relevant, and passionate.
When well done, the RFP Proposal Cover Letter can show that you listened to them and
thus demonstrate your dedication towards your customers.
6. Be sure to provide correct, complete contact and reference information (name, title,
address, phone, fax, email, level of authority, etc.) for future correspondence.
7. Finally, close the letter formally with "sincerely" or a similar polite expression. Sign your
name and title.
Be clear, concise, professional, and conversational.
8. Do not forget to send the proposal cover letter, with your response to the RFP
document, via certified mail.
9. Since things sometimes get a little more complicated than usual, remember to consult a
lawyer for further information before doing anything.
10. To maximize your efforts, use templates and samples provided in your FREE RFP Letters
Toolkit to create your own proposal cover letter.
The No-Bid Letter
What is a No-Bid Letter?
No-Bid Letter definition
A no-bid letter is a letter to the organization that invited you to bid or submit a
proposal, notifying them that you will not do so. To remain potentially
involved in future opportunities, the provider should state in the no-bid notice
the reasons for declining such an invitation.
Before even writing a no-bid letter, you have to decide not to bid. This decision
is the result of an analytical process, the bid/no-bid analysis.
The no-bid letter is sent after having performed a bid/no-bid analysis. The
bid/no-bid analysis assesses (quantitatively, qualitatively, or both) all risks
inherent in submitting or not submitting an offer. The analysis process relies on
building a list of relevant questions, called the bid/no-bid checklist. On the
basis of this checklist, a bid/no-bid analysis matrix will be created, which will
determine the worth of sending a bid. If the decision is to bid, a letter of intent
will be sent to the purchasing officer. If the decision is not to bid, then a no-bid
letter, explaining the reasons, will be sent.
How to stay in the Bidders List
The no-bid letter is the critical factor in remaining on the bidders list, and thus
ensures future business opportunities. For the contracting officer who sent you
the invitation to bid, the no-bid letter demonstrates that, while you are not
interested in bidding for a particular project for specific and valid reasons, you
are still interested in competing for future opportunities, and want to stay on
the prospective bidder list. This is why it’s important to take the time to write a
professional no-bid letter.
How to write a No-Bid Letter
The no-bid letter is presented on the next page.
It is highly recommended that you read the recommendations below in order
use the no-bid letter template properly and successfully.
1. Use a formal letterhead. Do not handwrite your no-bid letter.
2. First, your no-bid letter should thank the person who sent you the
invitation, for showing interest in the solution your organization is
3. Next, state the reasons why you are not proposing an offer or
bidding. Be specific regarding these reasons. The best way to discover
valid, thus acceptable reasons not to bid is to perform a bid/no-bid
analysis. This step is the critical factor in remaining on the list of
4. Reiterate that you are still interested in being kept informed about
new business opportunities, for which your solution may be well suited,
or best suited.
5. Finally, end the letter formally (with sincerely, for example, or a similar
polite expression). Sign your name and indicate your title. Be sure to
provide correct and complete contact and reference information for
6. Before sending it, make sure your no-bid letter is tactful, respectful, and
goes straight to the point.
7. Send the no-bid letter via registered mail. It has to be received before
the bid/proposal opening date.
8. Since things sometimes are a little more complicated, remember to
consult a lawyer for information before doing anything.
[RFP/Invitation To Bid] for [Project title]
[RFP/ITB]#[RFP/ITB identification number]
Dear [Contact name]:
Thank you for considering our [solution/service] for your [project title] project.
We have carefully determined, as follows, the reasons that hamper us from
considering a [bid/proposal] appropriate at this time:
1. [Reason 1]
2. [Reason 2]
Having read with interest your [RFP/invitation to bid], we have also learned
more about your organization, and received confirmation that your
organization benefits from a [very strong/well-established] reputation in the
Again, [Contact First Name], I want to thank you for your interest in our
[solution/service]. I am also excited about the prospect of soon submitting
offers regarding projects for which the unique combination of our
[solution/service] and our dedicated people will ensure a superior outcome.
[Exhaustive contact information]
Statement of No Bid
NOTE: If you do not intend to bid on this requirement/project, please return this form
immediately. Thank you.
School Board of Monroe County, Florida
We, the undersigned have declined to submit a bid for No. _______
Specifications too “tight”, i.e. geared toward one brand/manufacturer/service only
Unable to meet time period for responding to ITB/RFP.
We do not offer this product or service.
Our schedule would not permit us to perform.
Unable to meet specifications.
Unable to meet Bond/Insurance requirement(s).
Specifications unclear (explain below).
Unable to Meet Insurance Requirements.
Please Remove Us from Your “Bidders List”.
Other (specify below).
We understand that if the “No Bid” letter is not executed and returned our name may be
deleted from the Bidders List of the School Board of Monroe County.
Company Name: _________________________ Email: ________________________
Bidder Number: _________________________ Date: ________________________
Signature: _________________________ Fax: ________________________