By Bob Lohfeld, Guest Contributor
President, Lohfeld Consulting Group
With sales being flat or having declined in 2013 for three out of every four government contractors, two thirds of government contractors have initiatives underway to improve their competitiveness. To get a handle on what some of these initiatives are, Market Connections and Lohfeld Consulting Group teamed up to conduct a poll of 220 government contractors.
What we found from the survey was that most companies are working on improving their business acquisition function, including reworking processes, adding tools, and moving to agile staffing strategies to better match resources to capture and proposal workloads. On the operations side, companies are restructuring organizations to better align with market strategies and moving to reduce internal costs in order to gain pricing advantages. Some of these initiatives are highlighted below.
Improving capture and proposal processes
This was one of the strongest trends we saw in the survey. Forty five percent of large companies said they are working on improving their capture and proposal processes, and 33 percent of small businesses were doing the same thing. This trend is reinforced by survey data that showed 30 percent of large businesses and 25 percent of small businesses are making investments into capture and proposal tools and enterprise infrastructure. Clearly, the competitive game has moved to the left on the business acquisition timeline, and companies are working to improve business acquisition processes, investing in tools, and building infrastructure to support these new processes.
Outsourcing proposal management, market research, and recruiting services
There is a strong trend toward outsourcing services rather than staffing up internally to provide this capability. Companies are reshaping organizations and resources to better match market dynamics. This is particularly true in capture, proposal development, market research, and recruiting. Only 12 percent of companies said they are hiring personnel to write proposals, and just 7 percent said they are hiring market researchers. We believe these low numbers indicate that most companies are using an agile staffing strategy where they contract for these skills on an as-needed basis rather than staff up internally to provide these services.
Adding business development resources
Thirty-nine percent of the companies surveyed said they were adding business development personnel. This was especially true for larger businesses. Forty-three percent of large firms reported that they were adding these skills in contrast to 32 percent of small businesses. Most likely, companies are adding these skills to address new or adjacent markets as part of their quest to seek out new sources of revenue.
Several companies reported consolidating business units as they strive to better align resources with new market strategies. For some companies, their organizational realignment included adding solution developers or support staff to business groups.
Companies are also stepping up their training in business development, capture, and proposal development. We find this a solid strategy since well-trained business acquisition teams will always return dividends to the company.
We also saw cost-cutting as a major initiative. Reducing indirect costs throughout the organization seems to be a consistent objective in large and small businesses. Operations are being reviewed to reduce fixed and variable costs wherever practical. Other companies indicated they are outsourcing services as part of their cost-cutting strategy, especially when workloads—such as proposal management and proposal writing—tend to fluctuate significantly.
Moving Forward in 2014
Now is a good time to assess your company’s overall competitiveness, particularly if your firm was one of the many contractors that had flat or negative growth sales in 2013. If you choose to continue to do the same things you did in 2013 and expect results to improve in 2014, you will likely be disappointed. Companies are changing the way they compete, and improving their competitiveness will be one of their major initiatives for 2014.