The Bid Business
May 15, 2014

With many defence budgets around the world frozen or falling, defence contractors are chasing less business in a more competitive environment. In Ottawa, the procurement puzzle is probably one of the most difficult for companies to solve. Some, like the FWSAR replacement have dragged on for a decade, while the Joint Strike Fighter was simply announced as a fait accompli. Two different approaches but with similar outcomes: both projects are wrapped in layers of controversy and committees, presumably awaiting some decision from a secretive centre.

The same government that announced the formation of a new secretariat aimed at better managed defence purchasing is the same one that simply cancelled the Close Combat Vehicle program, a time and resource consuming exercise that dragged three major contracting teams through two rounds of rigorous and expensive testing before dismissing them all. That led to one of the bidders, Nexter Systems, saying in public what others only mutter in ­private. Vice-president Patrick Lier said ­“it would be our expectation that the Government would compensate industry bidders for the cost of their bids.” The intrepid statement underscored the fact that bidding on defence contracts is both risky and expensive.

The Harper government is deeply committed to budget cuts these days, and the Department of National Defence has been a major target. However, there are still multi-billion dollar defence contracts in the near future as the military moves to replace aging ship, aircraft and vehicle fleets. Defence contractors have no choice but to chase the business. But they can choose to pursue those opportunities more efficiently.

To organize their bids, large corporations use proprietary software or bid preparation modules running on their Enterprise Resource Planning (ERP) systems – Oracle, SAP, Siebel and Microsoft are ERP vendors. There are many advantages to centralizing bid planning on one software package: less data entry; one single version of the ‘truth’; rapid, closed communication between departments. In effect, companies can run ‘what if’ scenarios to make sure its bid is not only competitive but profitable as well.

However, not many software companies cater specifically to the defence bid preparation market. Unlike construction, hospitality, or other wide-reaching sectors, the military market is not only small but expensive to serve, with requirements to meet security and offset criteria that other businesses can ignore.

One of the few products that does serve the defence market is ProPricer by Executive Business Services Ltd. of Temecula, California. Marketing vice-president Ken Silver says “we find our competition is Excel spreadsheets or home-grown pricing systems that were put together years ago.” Among the disadvantages of a home-built system is continuity when the person who built the spreadsheet leaves the company, along with the mysteries of how it actually works. “A proposal pricing system is a pretty important part of the toolset that a company has for mission-critical stuff,” he asserts, suggesting that multiple worksheets put together to create a pricing system, isn’t dependable.

Companies that build their RFP responses manually or with spreadsheets not only risk inaccuracies or omissions, they may be diverting engineers and other specialists from attending to the technical nuts and bolts of the proposal itself. Automation can cut the amount of time to prepare a bid, both by person-hours and by the calendar.

Companies that go into crisis mode to prepare every bid may benefit from the structure and predictability of a business process that, as Executive Business Services CEO Joseph Shurance explains, “Once you start getting a good grip on a database of proposals you’ve bid, and you can see which ones you have won and which you lost, and why. That business intelligence is very valuable.”

Richard Bray Senior Writer FrontLine.
© FrontLine Magazines 2014