Myth: RFPs drive government business.
Updated: Jun 30, 2021
Lots of folks believe that RFPs (or bids, requests for proposals, whatever) drive government business development and securing government contracts. It’s simply a myth.
Business owners hear about people getting rich winning government contracts and becoming government contractors. They hear about the huge amounts of money the government is spending through government bids. They want in on the action, and think the main thing they need to do to become a government contractor is respond to government bids after perusing government contract databases. Even experienced government business bosses think responding to RFPs is how they’re making money. They are wrong!
We work with a client who, for more than thirty years, earned an impressive record of winning procurement. Their win rate is well over 80%. (We didn’t believe it when we first heard it.) Meantime, we know another company with a win rate of less than 10%. Both bid on hundred-thousand-dollar plus contracts. Both have strong credentials and impressive stories to tell. Both are priced competitively.
Here’s where they are different: the winning company will not submit a proposal to try to win a government contract through an RFP unless they have an established relationship. And, they believe they shouldn’t respond…unless they’ve been involved well before the RFP was even issued. The losing company will bid on virtually any opportunity where they could possibly meet the specifications…prior relationship or not.
Imagine the difference in efficiency and effectiveness. Enormous amounts of time and energy are expended in the RFP-oriented company, (the 10-percenter). Lead generation, relationship building, and product development suffer because everyone is too, air quotes here, “busy”. After all, there’s an RFP deadline approaching.
In the less RFP-oriented company (the 80-percenter), emphasis is placed on understanding needs early on, establishing strong value propositions, proving themselves at every turn, and…this is a big one…gracefully walking away when they cannot help or cannot win.
And, here’s the deal: The 80-percenter is growing. The 10-percenter is not. It’s even shrinking.
Don’t misunderstand. Responding to government RFPs is certainly a requirement for winning government contracts… and doing it effectively is both an art and a science. You won’t be able to eliminate RFP responses completely…however, if the bulk of your opportunity strategy is built around uncovering and responding to RFPs, yours will be a rough ride.
By the time a bid is published, contract specifications and requirements are set in stone. You’re probably already too late to the party. The government won’t admit it, but often preferences for a certain vendor have been established. Plus, by the time it gets to bid, all of your competitors have the same information at the same time as you do. Even if you manage to ask a question, it’s likely your question and the answers will be provided to your competition. Not the ideal situation.
Nope, our real goal is to get in front of prospects BEFORE contract technical specifications are developed so we can have an impact on the requirements before they’re locked in.
So, you’re probably wondering, how do you get in the door before the RFP is issued? Well, it’s all about relationship-building. Yes, you can do that in government. When we talk about relationships in the local, state and federal government space, we’re not talking about making buddies and BFFs. We’re talking more about relationships that genuinely serve the mutual needs of everyone involved. They don’t have to be especially friendly relationships, but they do need to be ones where a foundation of trust has been forged and a structure of reliance and competence has been built.
“Isn’t that true of selling to anyone?” you ask.
Yes, you’re right… to some degree…but it’s more acute in government contracting. People in a position to buy something for the government are not risk-takers. In the first place, they generally take very seriously their duty to spend tax money wisely. Those who don’t do so won’t stay in a position-to-buy long. They may not lose their jobs. They may not be demoted. They may not even know they’ve lost their clout…but lose it, they will.
Government buyers…and when we say buyers, we don’t mean just the people who have “buyer” or procurement in their title; we mean anyone involved in the process know that, if they make a mistake, it will not be a quiet mistake. People will know. And, they know their mistakes will stick… even if they do well later. Since government moves at a slower pace than the private sector, when a mistake is made, it takes longer for people to forget about it.
Because of this, it only makes sense that folks in the government want to do business with people and companies they trust. And, that trust only comes through positive relationships…sometimes made over years, and others made pretty fast.
This is important. Re member the nature of these folks, and work to build relationships with them. How do you do that? You might be surprised. We’ll take a look in future posts, or in our podcast Myths of Selling to Government, which is available, well, everywhere, or our book Seven Myths of Selling to Government, available through Amazon.