Federal Government contracting is not for every organization. The Federal Government customer is a difficult customer to pursue, takes significant funds to do the business development, and the lead time can be years, rather than months.  Government contractors improve their bidding position by teaming with related companies. Government officials ask companies to bid on work they want a reputable contractor to fulfill.  Contractors chase after potential bids that, in some cases, they have no or little probability of winning.  Some Government contractors simply walk away either before or after they bid.  How difficult! But not impossible!

Turning down a business or walking away from a potentially profitable (or not) piece of work is something that Government contractors usually do not think of doing. But when you consider it in the context of every business prospect or existing customer relationship that you have, you try to focus on exactly what you enjoy doing and what you have planned for your company.

People might say it is foolhardy to let someone else get a perfectly good piece of profitable business that you could have. But what is profitability – particularly in the longer view? When you reflect on the potential real profitability, deduct your time and effort to get the business, and then what it takes to maintain it, sometimes it just plain makes sense to let your competition have it. Oftentimes, getting the business that you do not want distracts you from what you enjoy doing most. Other times it may just be that it does not fit your line of business. If you answer yes to any of these five points, the opportunity you examine is a candidate for the trash basket. Let us look at our suggested tests for pursuing the work or turning it down.

Core Business

The piece of business is not part of your core capabilities nor is it in your plans to develop this talent. You must ask yourself why you would spend time pursuing work that is not what you like to do, nor will it ever be. There are times when you may chase business that is tangential to what you do. It is an area that supports what you are good at doing now. The new area is not a long stretch for you to add by using your existing talent who have the experience already. Depending upon the chops your staff has, it may be a good choice. If it is irrelevant to what you do now though, just walk away.

Loser
It is a losing proposition. This applies to all Federal Government contracting companies who pursue low-price technically acceptable (LPTA) contracts! Unless your company is accustomed to bidding LPTA work regularly and you are accustomed to commodity-type pricing, avoid these types of opportunities. Typically, these are losing projects or so minimally profitable that it does not cover your unallowable costs. If this is the only world you work in, keep in mind you may want to change your focus, so you are not in this challenging game permanently. Your pricing strategy when you have an LPTA bid is to simply price only the minimum acceptable products, specifications, qualifications, hours, and salaries. Eliminate nice-to-have items or solutions.

Stiff Competition
You are unlikely to unseat your competition. You know this when the Federal Government contracting procurement comes out – there is a statement of work that ONLY the favored competitor can fulfill. Or the pricing requirement has one or more items identified that only the preferred opponent can satisfy. Sometimes, the customer just likes the competitor so much that they do not want to change – or it is too difficult to do so. Your pricing strategy must answer whether your price is likely to be higher than your competition. Gather your information about the competition and what your customer thinks about them before the opportunity becomes a reality. Read: do your homework.

Challenging Customer
Satisfying this customer is an impossible task. The demands of the customer are extraordinary. You know this because you do not sleep when you are working for them. They ask for services at the last minute, always on their terms, or the challenges become extraordinary. Just because the customer wants your services, does not mean you have to satisfy them. The cost of providing the services, while profitable, may be too unwieldy, demanding, or onerous for your organization to satisfy. Not all work is good work. Also, just because the Government exercises an option, does not mean you have to take the work. Read your contract to determine if this is an option for you.

Business Philosophy
The demands of the situation are not in concert with your philosophy of doing business. This can include anything that compromises your integrity, the sensibility of how you work, or the contentment of your employees. Your pricing strategy involves a process that starts with your organization’s overall business philosophy. Moreover, your business philosophy must align with your customer, or the road to success for both of you will be rocky. When you agree to work with someone, be sure you have a kickoff meeting and regular meetings to assure yourself and the customer that you are in alignment.

Company Strategic Planning
When you have good profitable and satisfying work, it makes for not only positive outcomes for your reputation, bottom line, and continued work. It also serves your customer well too. Make evaluations of your customer work part of your company’s strategic planning process. Evaluate not only the financial rewards of each project but the wisdom of continuing with each customer.

Marsha Lindquist
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