202 Parrott

Slide2: 

Breakout Session # 202 Gail Parrott, NCMA Fellow Contracts & Pricing, 767 Tanker International Programs The Boeing Company April 23, 2007 1:40 – 2:40 Solicitations, Bids/Proposals, & Source Selections – Building a Winning Contract

Outline: 

Outline Buyer expectations Seller’s need to achieve loyalty, create value Buying & Selling Life-Cycle Structured Approach Utilization value 3 Phases

Buyers Have High Expectations: 

Buyers Have High Expectations Knowledgeable What options are available What their rights are Highest quality products/services Low tolerance for poor performance Needs/wants quickly change

Buyer/Seller Relationship is comparable to : 

Buyer/Seller Relationship is comparable to Ballroom Dancing

Achieving Customer Loyalty Can Be Complex : 

Achieving Customer Loyalty Can Be Complex Similar to a dance partner that Sets a faster pace changes the music varies the dance steps

How a Seller “dances” with a Buyer : 

How a Seller “dances” with a Buyer Listen to buyer’s needs Proactively offer products/services/ business solutions Meet or exceed buyer’s expectations Note: The partnership is important, but you must establish the correct dance space to not overstep boundaries and to not step over each others foot.

Buyer and Seller Feedback is crucial: 

Buyer and Seller Feedback is crucial Know the difference between a partner’s needs and wants Know how to treat your partner Work together to achieve success

Creating Value for Customers : 

Creating Value for Customers

Inadequate Customer Value : 

Inadequate Customer Value

Key to Success : 

Key to Success Understand and implement the 3 Phases of Buying & Selling Life-Cycle Buyers & Sellers must work together

The Dance Between Buyer and Seller: 

The Dance Between Buyer and Seller More complex, lengthy and dynamic than ever before Constant demand for rapid response New competitors arise almost daily Buyers want to cut cost and improve performance Sellers must cut cost to compete

Buyers & Sellers, regardless of industry, must work together via a structured approach to prioritize and focus resources to maximize the opportunity to achieve mutual success. : 

Buyers & Sellers, regardless of industry, must work together via a structured approach to prioritize and focus resources to maximize the opportunity to achieve mutual success.

Buying & Selling Life-Cycle’s Structured Approach: 

Buying & Selling Life-Cycle’s Structured Approach Utilized in both commercial and government marketplace Domestic, international, and global opportunities Reactive – RFI, RFQ, RFP, RFT Proactive – unsolicited offer

Buying & Selling Life-Cycle’s Structured Approach (cont.): 

Buying & Selling Life-Cycle’s Structured Approach (cont.) Independent of geography and time zones Utilized by single or global organizations Supports a better, faster, cheaper business life

Buying & Selling Life-Cycle : 

Buying & Selling Life-Cycle Focus is on the customer’s problems/objectives Meets seller’s requirements for profitability and risk Drives both buyer and seller to the best solution

3 Phases of Buying & Selling Life-Cycle: 

3 Phases of Buying & Selling Life-Cycle Pre-Bid/Proposal Phase Bid/Proposal Phase Post-Bid/Proposal Phase

Buying & Selling Life-Cycle : 

Buying & Selling Life-Cycle

Phase 1: Pre-Bid/Proposal Phase: 

Phase 1: Pre-Bid/Proposal Phase

Phase 1: Pre-Bid/Proposal Phase – Buyer’s Steps: 

Phase 1: Pre-Bid/Proposal Phase – Buyer’s Steps Step 1: Procurement Planning Know “what” to procure and “when” Determine which goods/services to provide “in-house” or “outsource”

Phase 1: Pre-Bid/Proposal Phase – Buyer’s Steps: 

Phase 1: Pre-Bid/Proposal Phase – Buyer’s Steps Step 2: Solicitation Planning Determine specific requirements and deliverables Identify potential sources Analyze each source’s uncertainty & risk Develop T’s & C’s Choose methods & criteria for proposal evaluation and selecting seller

Phase 1: Pre-Bid/Proposal Phase – Buyer’s Steps: 

Phase 1: Pre-Bid/Proposal Phase – Buyer’s Steps Step 3: Solicitation Preparation Request bids, quotes, tenders or proposals orally, in writing, or electronically Communicate requirements to all sellers Better solicitations result in better quotes

Phase 1: Pre-Bid/Proposal Phase – Seller’s Steps: 

Phase 1: Pre-Bid/Proposal Phase – Seller’s Steps Step 1: Presales Activities Proactive Determining needs of current/prospective customers Appropriately influencing customer requirements Evaluating their competitors

Phase 1: Pre-Bid/Proposal Phase – Seller’s Steps: 

Phase 1: Pre-Bid/Proposal Phase – Seller’s Steps Step 2: Bid/No Bid Decision Reactive Multi-part Process Understand the competitive environment Assess risks and opportunities

Phase 2: Bid/Proposal Phase: 

Phase 2: Bid/Proposal Phase

Phase 2: Bid/Proposal Phase – Buyer’s Step: 

Phase 2: Bid/Proposal Phase – Buyer’s Step Step 4: Source Selection Planning Identify sources Analyze nature of the industry/market Develop criteria, weightings and procedures to evaluate each source Select a source for contract award

Phase 2: Bid/Proposal Phase – Seller’s Steps: 

Phase 2: Bid/Proposal Phase – Seller’s Steps Step 3: Bid/Proposal Development Proactive or Reactive Simple or Complex Compliant to requirements (T,D,F,C) Plan Delivery of Solution Identify gaps & develop risk mitigation plan Develop Business Case (internal & external) Develop the proposal (E,T,D,P,C)

Phase 2: Bid/Proposal Phase – Seller’s Steps: 

Phase 2: Bid/Proposal Phase – Seller’s Steps Step 4: Bid/Proposal Reviews & Approval Type & number of reviews vary Internal Reviews (Pink Team) External Reviews (Red Team) Executive Review & Approval (Gold Team)

Phase 3: Post-Bid/Proposal Phase: 

Phase 3: Post-Bid/Proposal Phase

Phase 3: Post-Bid/Proposal Phase – Buyer’s Step: 

Phase 3: Post-Bid/Proposal Phase – Buyer’s Step Step 5: Source Selection Evaluation Evaluate sellers offers Evaluate appropriate qualifications Selection should be made efficiently, quickly and as cost effective as possible Selecting the right source is like selecting the right dance partner.

Phase 3: Post-Bid/Proposal Phase – Seller’s Step: 

Phase 3: Post-Bid/Proposal Phase – Seller’s Step Step 5: Oral Presentation & Responses to Questions Provides opportunity to reinforce seller’s win strategy with buyer’s key decision makers Oral vs. electronic

Phase 3: Post-Bid/Proposal Phase – Buyer’s & Seller’s Joint Steps: 

Phase 3: Post-Bid/Proposal Phase – Buyer’s & Seller’s Joint Steps Step 6: Contract Negotiations & Formation Follows source selection Challenges to negotiating T’s & C’s Lack understanding of own requirements Communications breakdown Cultural differences Conflicting objectives Haste

Phase 3: Post-Bid/Proposal Phase – Buyer’s & Seller’s Joint Steps: 

Phase 3: Post-Bid/Proposal Phase – Buyer’s & Seller’s Joint Steps Step 7: Contract Performance, Administration, and Closeout Follows Contract Award Periodic meetings to verify performance and expectations are being met Conflict is inevitable, but generally manageable Closeout process follows completion of deliverables, final administrative & legal details

Best Practices in Contract Administration: 

Best Practices in Contract Administration Reading the contract Ensuring all organizational elements are aware of their responsibilities in relation to the contract Providing copies of the contract to all affected organizations either paper or electronic copies Establishing systems to verify conformance with the contract’s technical and administrative requirements Conducting pre-performance (or kickoff) meetings with the buyer and seller Assigning responsibility to check actual performance against requirements

Best Practices in Contract Administration(cont.): 

Best Practices in Contract Administration (cont.) Assigning responsibility to check actual performance against requirements Identifying significant variances Analyzing each such variance to determine cause Ensuring that someone takes appropriate corrective action and then follows up Managing the contract change process Establishing and maintaining contract documentation: diaries, telephone logs, meeting minutes, inspection reports, progress reports, test reports, invoices and payment records, accounting source documents, etc.

Summary: 

Summary Sellers must strive to provide value and achieve customer loyalty Buyers and Sellers must work together Understanding and implementing the Buying & Selling Life-Cycle is key to building a winning contract and ensuring success