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An Informal Guide to Understanding Capture Management Technical Applications Group LLC www.techappsgroup.org http://wordpress.techappsgroup.org 25 July 2010 When we talk to new companies about “selling to the military” many times, we get blank stares because it really is vastly different from selling things to the private sector. Whether a project has been funded, where that money actually comes from, whether or not there is documentation to support the funding, and understanding the requirement are just a few of the very basic things that are totally foreign to most businesses. In the B2G world, we use concepts like “business development” and “capture management” but often, many commercially-focused business, particularly small businesses, and/or businesses run by inventors (or what I affectionately refer to as “smart guys who think stuff up”), don’t understand the process or why things are done a certain way. When you’re talking about military/government business opportunities, capture management is a very important aspect, if not the most important aspect. Earlier today, I was going through some old articles I had printed a while back and found this article from Washington Technology, written by Bob Lohfeld. In his article, he states that,

“When we examine why companies win or lose new business in the government market, the reasons are amazingly similar. Companies win more often when they focus on understanding customer requirements and objectives. They predictably lose more often when they don’t. Similarly, qualifying new business opportunities early in the business development life cycle results in better win rates, while late qualification results in fewer wins and cost increases in business development.”

I remember interviewing for a job at a big government prime contractor when I returned from Iraq in 2005. The person interviewing me asked one question: “define capture management.” Fortunately, I knew the answer very well, although I opted for another job with another company. However, many people don’t understand what capture management is other than it’s “something like project management for the sales cycle.” Or, people use business development and capture management interchangeably. At its heart, capture management is a strategic process. More than just a one-off procedure, capture management can be the process by which all business development is conducted and includes what business is actually pursued. In simplest possible terms, it’s the process by which you capture (win) business and business development is just one part of that overarching process. Business development is sales and marketing (generating awareness), whereas capture management starts with business development and ends, at minimum, with winning a contract. It includes the marketing, BD, your bid/no bid decision matrix, teaming, tactics, proposal generation, and submission. For some, it even includes the delivery aspect if a contract is won.

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According to Mr Lohfeld, capture management involves several steps:

Qualify the opportunity.

Build the capture plan and resource the capture team. Understand the

customer’s objectives and requirements

Develop a preliminary solution linked to objectives.

Position with the customer.

Assess the competition.

Develop a win strategy.

Establish a price to win.

Plan and execute a teaming strategy.

Assess risk. Understanding the requirement. Much of the success our company has had in the past, or the success we had as individuals before starting Tech Apps Group, was that we built solutions around stated requirements, while simultaneously working on things for future – unstated – requirements. In our minds, we support the warfighter, not a company, or personal interest; we look at everything from the warfighter’s standpoint. Of course, we have it easier because we understand the requirements based on experience in Iraq, Afghanistan, other deployments, military service, FTXs, etc. However, you don’t need to be a former warfighter to understand military requirements. You can ask and they’ll be more than happy to tell you. In fact, the military wants to tell you their requirements (“capability gaps”) so industry will come up with solutions. Also keep in mind that, as I’ve said in this series before, a lot of requirements have hardly anything to do with the warfighter’s actual need and much more to do with some program manager or contracting officer’s idea of what the requirement may be, or their understanding of what the warfighter “really needs.” I’ve heard way too many program managers say that the warfighter or end-user doesn’t truly understand his/her own requirements. That’s nonsense but a fact of life. If someone says, “I need a nail” it would help if you knew what they were using it for so you would know what kind of nail to bring them. Do they need a big nail, a small nail, or do they in fact need something else altogether that they’re simply calling a nail? Understanding military requirements is very similar. If you know the requirement is for new body armor, for example, but don’t understand the mission or how it’s being used, there are hundreds of possible options, and your chances of success are slim. Soft armor, hard armor, stand-alone, covert, plate carrier, maritime use, load bearing, etc? What capability gap is the new armor trying to address? Size, weight, comfort, ballistic characterisits? An important thing to keep in mind is that selling to the military is a lengthy, costly process, especially when the contract value is potentially huge. One of the hardest things for people to grasp is that even if your solution is the “perfect fit” for a requirement, it still may take months, even a year or more, to see a return. We always tell people that if they can’t give us 18 months, we can’t do much for them. And I need to reiterate that business development is only a piece of capture management, not vice versa.

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I mention the timing because the process is the key factor. The process from identifying a requirement to the military buying it can be complex and time consuming. If it’s something simple, like a flashlight, you may have a shorter timeline than a large system integration, but the process is pretty much the same.

Defining the process. As Mr Lohfeld states,

“Defining your process is the first step toward implementing capture management. This requires developing detailed procedures that mesh with your company’s corporate culture, along with supporting templates to make the process efficient. It takes several iterations to ensure that you establish a defined, repeatable process that works.”

A capture management process provides a “defined, repeatable, managed, measured and optimized approach,” which will “result in winning more business from fewer, better-qualified opportunities,” while raising “overall win probability and decreasing costs.” Let’s put it this

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way: your goal should be to win more and bid less. Bidding takes up time, money, and other resources. As the proverb says, “Choose your battles wisely.” Now, there are many different schools of thought on this subject. I’m sure a lot of people will disagree with me, but the success I’ve had in the past is based on a process I started using over a decade ago and has never failed me. And for the sake of full disclosure, it was a system passed down to me from my mentor. I’ve made changes and modifications over the years, but generally speaking, it works well and creates confidence between me and the customer. A good working relationship is the best possible method to achieve long-term, repeatable success. Anyone who has had any real success will tell you that. Sure, I’ve lost business (everyone’s lost business), and I’ve screwed up plenty of times, but not because I was chasing something that was a waste of my time or trying to fit a square peg into a round hole. Some people think that if they just submit enough proposals, eventually they’ll win a contract. Leveraging the law of large numbers when pursuing military business is definitely a way to go, but it’s not the best way to go… not by a long shot. Here are some questions you need to consider before pursuing any military business opportunities and will also help you define your capture management process: Are you providing a solution to an opportunity or trying to fit the opportunity into your proposed solution? Are you trying to fit a square peg into a round hole? Be honest with yourself. Have you done a cost-benefit analysis? Does the return justify the expense? What kind of contract is it? Can your business financially support delivery of the contract? Do you have personnel on staff to support delivery of the contract? If you don’t, have you looked into the cost of obtaining them? If you’re based in Topeka Kansas and are trying to win a contract in Washington DC, have you taken cost of living adjustments and increased salaries into consideration, if applicable? With economic times as they are, if you need lines of credit from your bank, will you get them? Most contracts expect delivery and then issue payment. Meaning, from the time you win the contract, it could be 45-90-180 days before you see a penny. Can your business sustain that? Don’t be one of those companies that thinks because they’re doing poorly in the commercial market that they can just jump to the government. Do you really have enough time to put together a solid plan, a proposal, and set-up the required teaming partners (if applicable)? Is it too late to pursue the opportunity? Again, be honest with yourself. You don’t want to waste time and resources (ie, money) chasing business you’ll never win because you’re late to the game. If you have teaming partners, what are their strengths and weaknesses? How does each member of your team benefit and complement each other? Have you taken the time to thoroughly analyze the opportunity? Have you spoken with the customer? Do you truly understand their requirements? Just because you know what the requirement is, doesn’t mean you understand the requirement. You’ve got to get your hands dirty and spend some time talking with the actual customer (end user). A contracting officer can’t give you this kind of information. You need to understand their operational environment and determine what they’re currently using that’s a problem (or what they need to fix a problem they have). What’s the capability gap? Educate yourself on the customer’s mission. Again, they’ll tell you because they want you to know.

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A common statement you’ll hear is this: If it’s on Fed Biz, it’s too late. That’s both true and false. Just because it’s posted doesn’t mean it’s “wired” for someone. What it does mean, however, is that you’re behind the curve. Most military contractors are tracking opportunities for months, if not years, before it is ever posted. This is where the relationship aspect of the military capture management process is important. Talk to your customers and understand their requirements. If you do this, you’ll have an advantage and know about things before they become public. Who is your competition? Is there an incumbent? Does the customer like the incumbent? Ask about past performance. Is this a new project or program? If the opportunity is a re-compete for a current program and the customer likes the incumbent, you might want to seriously consider moving on to something else. What’s the budget? If you don’t know, you can ask. Maybe they’ll tell you, maybe they won’t, but you should always ask. Search the internet. The defense budget is a great source of information if you want to know what programs and projects are funded (and how much they have). The art of collecting accurate and reliable business intelligence takes time but it’s the game-changer for winning military business. Put together a proposal that, at minimum, demonstrates that you clearly understand the requirement, understand the mission, and can deliver a true solution to the stated requirement. Your proposal should address the solicitation – nothing more, nothing less. Don’t try to sell them on what you think they need. The contracting shop is looking for key items, phrases, etc that demonstrate your capability in delivering on your proposal. If you’re not the cheapest game in town, that’s fine – explain what you do that sets you apart from the competition. You won’t win or lose an opportunity based solely on price unless you’re just submitting a quote for some commodity lots of people have (ie, part number products). But price is absolutely important. Think about “best value” and remember that while best value isn’t just about price, but you do need to justify your price. Think of it like this: If you go car shopping and you look at a BMW and a Hyundai, the BMW sure as hell isn’t the cheapest, but it’s value may be better than the Hyundai over time (total cost of ownership). Budget doesn’t determine best value, but you don’t want to submit a bid for $800,000 if the budget is $150,000. You need to articulate why your offer is the best value and highlight the return on investment (ROI). A couple more comments on this subject. I don’t care how great you think whatever you have, or can do, may be. It’s not. Arrogance will end you in this business. You don’t know more than the customer. In reality, who knows, maybe you do, but if you take the approach that you’re their savior, you’ll get a black eye. Adopt the mentality that you’re there to help them, not sell something to them. Let me share a story with you: We had a customer that kept forcing us to submit bids that were causing government sticker shock and they couldn’t figure out why they never won anything. Over 40 times we submitted proposals for them, and over 40 times they lost. They refused to adjust their prices; then became frustrated because we couldn’t win them business. It didn’t matter what we said, or the advice we gave, their proposals were always 200-500% too high. They incorrectly assumed that their capability was so terrific, and that their engineers so superior, that they didn’t need to adjust their costs. Wrong. When you send someone in the military a proposal, their jaw drops, and they start calling for the medic because they can’t breathe, reevaluate your proposal. Yes, there are exceptions to everything. But while you’re busy writing bad proposals that won’t ever get funded, your competition is winning the business you’ll never get. And the government is starting to

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pigeon-hole you as the company who submits ridiculous proposals. They may like the hell out of you but they can’t afford you. A couple of simple, basic points on writing proposals: Follow the solicitations instructions on how to write the proposal. Often, there is specific guidance, to include font, page length, format, etc. Just do what they say. Get several people to review the proposal if you’ve not put together a team to work on it. I can’t tell you how many times I’ve heard about someone losing an opportunity because they forgot to include something. When you’ve been staring at a document for hours, days, or weeks, it’s good to have a second, third, or fourth pair of eyes on it. Once you’ve submitted a proposal, the work isn’t over. You don’t just sit around waiting to hear if you’ve won or lost. Keep talking with the customer and keep the dialogue going with the contracting officer. This is where a lot of companies drop the ball. They have no follow-through. If you’re playing basketball, once you shoot, you don’t just stand there like an idiot. Maybe you make the shot, maybe you don’t. Either way, there are things you can be doing (getting back on defense, going for the rebound, etc). I hate sports analogies, but this is a good one because it shows that you’ve got to keep moving and maintain your situational awareness. Never forget that capture management is a constantly moving team effort. If your BD person is stuck searching for opportunities as well as writing proposals, you are shooting yourself in the foot. If you win the opportunity, that’s great. It’s time to execute. Now what? This is something we can discuss at another time. If you’ve lost, that’s fine too. Ask some questions. Who won? Why did they win? Where did your proposal fail to meet your potential customer’s expectations? Or your expectations? Did you forget to include something? Leave something a little unclear? Too cheap? Too Expensive? Fine. Learn from the mistake. Take copious notes. Add it to your capture management process for next time. In the post-award conference, or via email, the contracting office should tell you why you lost. A note on losing a contract because of price: If your price is very inexpensive compared to other proposals, there’s a good chance the contracting shop thinks that you (a) don’t understand the solicitation and requirement or (b) cannot deliver properly. If you know for whatever reason that your proposed price is going to be astronomically lower than others, clearly explain why and, as previously mentioned, demonstrate you understand the requirement(s).

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I’d also recommend reading OCI’s “47 Things to Know Before the RFP Is Released.” Summary. This is a lot of information to digest, so let me say this: Make no mistake, selling to the military is hard work. There’s no magic bullet. You can’t hire a retired general and think you’ll be rolling around in $100 bills in 90 days. Some people will tell you that if you get a GSA schedule, get on some contract vehicle through another company, and/or figure out who has government credit cards, you’ll somehow miraculously become a player in the defense contracting market. No, no. no. It just doesn’t work that way. What I’m presenting is a simplified overview. There are many intricacies to effectively winning contracts with the military or civilian sectors of the government. There are different strategies for different opportunities. But, in the end, the general process is the same. Our company has multiple customers representing a wide-range of capabilities. However, the core approach we take with each one… our capture management process… is basically the same. Our tactics may change but our basic strategy does not. In conclusion, capture management is a different process for different companies offering different things. There is no magic template that will be the best for your company or work in every situation. I can give you a starting point, which is what I am trying to do now, but then it needs to integrate into your business practices and business strategy. A capture management plan isn’t a rulebook as much as it is a set of guidelines. There are if-then statements and questions to be answered for each opportunity you encounter. What I can say with absolute certainty is that good planning, just like a military mission, will absolutely create more opportunities for success.