When considering the development of a proposal, every company faces the same question: Do we use our in-house, permanent staff or do we outsource the proposal by using consultants? This question is especially important to government contractors, because a large and expensive effort is usually required to prepare winning proposals. The issue is how to best invest Bid & Proposal (B&P) dollars.

During the past 30 years, I have seen many companies face decisions about how to invest their B&P dollars. Their solutions have ranged from keeping proposal preparation as a total in-house operation to outsourcing the entire proposal preparation process. Most companies fall between these two extremes using a mix of in-house staff and consultants. In these mixed solutions, the issue revolves around the most cost-effective mix of staff and proposal consultants.

The following factors may help you decide what is best for your company:

1. How large are the business development goals?
2. How even is the flow of incoming, biddable RFPs?
3. What is the availability of in-house personnel with the necessary and appropriate proposal skills?
4. How does the cost of the in-house personnel compare to the cost of consultant personnel?

Business Development Goals

It comes as no surprise that the more aggressive the business development goals are, the greater the need to outsource. If a company has large growth goals — say 20-25 per cent or more — it is usually not possible to handle proposal workload successfully by staffing up internally. At least, not in the short run. Conversely, companies with more modest development goals have a better chance of meeting proposal goals with in-house staffing.

Evenness of Proposal Flow

"My experience has been that very few firms deal with an even flow of proposal activity, and the more common situation is to have peaks and valleys in the workload. Firms typically hire consultants to meet peak-and-valley situations in the work flow."

Although business development goals help define the quantity of efforts needed to get the bids prepared, the granularity of the bids is even more important in determining how much proposal work the company will outsource and how much they will keep in-house. A company bidding a large number of smaller contracts may be able to spread the effort so that they can handle all of their proposals in-house. In contrast, a company bidding a few large programs, with gaps of inactivity between bids, can usually get the work done more economically using proposal consultants.

My experience has been that very few firms experience an even flow of proposal activity, and the more common situation is to have peaks and valleys in the workload. Firms typically hire consultants to meet peak-and-valley situations in the work flow. Usually the only firms experiencing an even flow in workload are those that submit a large number of proposals for relatively small contracts. For companies bidding on large contracts, life in the proposal shop is typically a constant round of peaks and valleys.

"Given the uncertainty of RFP releases, it is impossible to predict the timing of proposal efforts."

For many companies, the issue of whether to outsource or not and, if so, how much, is not clear-cut. Given the uncertainty of RFP releases, for example, it is impossible to predict the timing of proposal efforts. Consequently, good luck in the release schedules may mean an evenly spaced workload that the in-house staff can handle well. However, when too many bids stack up at the same time, due to simultaneous due dates, the only solution may be to outsource.

Availability of Skills Needed for Proposals

"Proposal consulting groups can frequently provide the best available solution to companies needing additional talent or specialty talent."

Most firms maintain a group of full-time proposal process professionals. Typically, they augment the proposal staff with technical talent drawn from other in-house groups, as needed, to develop technical content. Then, they augment the need for proposal process or technical personnel with consultants when the supply of in-house resources is exhausted. The proposal personnel typically include proposal managers, technical writers, coordinators, desktop publishers, pricing staff, orals coaches, and the like. The in-house personnel assisting with technical proposals often are system engineers, network engineers, and other similar personnel that are matrixed from line organizations to a proposal effort as needed. Outside consultants may include proposal process personnel, technical personnel, or assorted specialists – graphic artists, for example – and subject matter experts (SMEs).

The more manageable situation for the professional proposal group is that of assigning the in-house proposal talent, because those personnel are usually under the direct control of the proposal group manager. Often the more difficult situation is finding available technical talent needed for the solution. These in-house technical personnel often have conflicting priorities. For example, they are frequently direct-bill personnel working on a Government site during the day. Consequently, they contribute to the proposal, in worst-case situations, after hours — during the evenings and on weekends. A somewhat better situation is when the technical talent is not just overtime workers, but instead supports the proposal work during normal business hours. Some large businesses maintain a cadre of full-time system engineers and architects whose only job is to work the technical proposals.

Proposal consulting groups frequently provide the best available solution to companies needing additional talent or specialty talent. Nearly all proposal consulting firms have a ready source of proposal talent such as proposal managers, desktop publishers, pricing personnel, and technical writers that can be provided within one or two days. Some consulting firms with large numbers of consultants can readily provide highly focused specialists, such as a subject matter expert (SME) in a system, an agency, a process, a technology or a program, given a week or so of lead time.

Relative Cost of In-House Personnel vs. Consultants

I have seen Fortune 50 companies try and fail at attempting to use inexperienced in-house personnel for completing proposal process assignments.

The question of the relative costs of in-house personnel and consultants is complex and challenging to answer. It has been my experience that even high-level decision-makers in large businesses often do not understand this question. For example, the cost to employ a full-time staff member must take into account the total cost to employ, which includes not only salary and fringe benefits, but also such variables as the cost of downtime on the job, the cost to replace employees, and many other costs. Likewise, the cost of using consultants must take into consideration the fact that the consultant does not arrive with a depth of knowledge on the company.

I have seen Fortune 50 companies try and fail at attempting to use inexperienced in-house personnel for completing proposal process assignments. The great attraction is that they can select personnel who are on the bench without incurring any added cost. Companies try to fit these personnel into proposal process tasks such as volume management and section writing. The companies seem to think that nearly any educated and intelligent and motivated person can make a significant contribution to the proposal process work. Never mind that they may not have done proposal process work once in the past.

This approach nearly always fails to achieve the desired results.

During my career, I have been in a position to see how scores of companies manage their proposal operations. Based on that experience, I can offer a few guidelines.

Largely Permanent Staff Solutions

The following situations make it advantageous for a company to use permanent staff for proposal development:

• Bids are highly granular, and it is easy to maintain a steady-state proposal preparation operation.
• The company has critical trade secrets that might be compromised by using consultants.
• Business development goals are modest and the traditional in-house approach is satisfactory.

Largely Outsourced Solutions

The following situations support the outsourced approach to staffing the proposal operation:

• The company typically bids substantial programs, producing a peak-and-valley workload in proposal preparation.
• The company is bidding programs in which the specialized subject matter expertise (SME) needed to win the contract is not available in-house.
• The company wishes to make a large and dramatic increase in the volume of contract wins.
• Several companies are forming a team to bid a large and complex program.

Relative Cost of In-House Personnel vs. Consultants

Some of the cost advantages of using consultants to prepare the proposals are as follows:

• The company can bring in the consultant on an as-needed basis and then release him or her when the task is done with no loss of productivity due to downtime.
• The company can obtain highly specialized marketing or technical talent from consulting firms without having to incur an inordinate overhead cost.
• The company can readily expand and contract the proposal teams, as needed to meet typical peak and valley situations for an affordable price.
• The company can get a more precise match between personnel skills and task requirements than would ever be possible using only in-house talent.
• The company can avoid losing billable time when pulling technical personnel off the job to assist with the proposal.

Typical cost advantages of using in-house personnel to prepare proposals include:

• The skills developed in preparing the proposal enrich the company by staying in-house rather than leaving the company when the consultant departs.
• Usually there is no learning curve required for the employee to come up to speed on knowledge of how the company does business.
• The possibility of proprietary information leakage is lower.
• The capability to use employee overtime in proposal preparation helps keep the costs down, at least in the short run.

Selecting the Best Proposal Consultant Group

The problem of selecting the most effective proposal group is critical — the optimal selection of a proposal consulting group can make a real impact on the company's bottom line. Having a clear idea of your business development goals can help decide whether outsourcing is right for your company and if so how much.

The problem of selecting the most effective proposal group is critical, considering the costs involved and the possibility of gaining a competitive advantage to win more contracts. The optimal selection of a proposal-consulting group can make a real impact on the company's bottom line through increased contract wins for a cost-effective price. Some of the factors involved in making the most effective selection include those mentioned in the list above.

Things to Look for When Hiring a Proposal Consulting Group or Individual

Following below are key items to consider in selecting a proposal consultant firm:

• Quality – The consultant group selected needs to have an excellent track record in providing the desired service, whether that service is a coordinator to work for a month or a proposal team of 20 to prepare the winning bid for a $500M telecommunications program.
• Cost – The consultant group should be able to deliver the desired service for a price that is competitive.
• Depth – The consultant group needs to have a sufficient quantity of qualified personnel in the skill categories needed to meet the anticipated requirements in a reasonable time throughout the year. If the company needs specialty talent such as SMEs or cleared personnel, then obviously the consultant firm must be able to supply this talent.
• Reputation – The consultant group should have a demonstrated record of providing responsible service and solving problems as necessary to complete tasks like the customer needs in accordance with expectations.
• Proposal Process – The consultant group must have the capability to either use the customer's proposal preparation process or to provide a proposal preparation process that is sufficiently robust and repeatable to handle the anticipated work assignments.
• Name Brand – Some firms feel most comfortable in selecting a proposal consultant group with a well-known national name, and they usually pay a premium of 30-40 per cent over the cost of a local firm for the prestige of the brand name.
• Personality and Culture – Service delivery works best when the company has succeeded in selecting a consultant group that is not only technically qualified, but that also has a corporate culture and personnel who are highly compatible with the customer's own culture and personnel.

Conclusion

The question as to how much and what proposal service to outsource and what to keep in-house is a never-ending problem.

The question as to how much and what proposal service to outsource and what to keep in-house is a never-ending problem. It sometimes seems that if a company has been doing proposals in-house for the past five years, they will be outsourcing the next five years, and vice versa. Although some situations are clear-cut, making a decision is often as much of an art as a science, and it depends heavily on a company's business development strategy. Since simplification in contracting, most companies have moved more toward the outsourcing solution.

Permanent staff vs. consultants – find your winning combination!

However, nearly all the federal bidders we have seen maintain some type of permanent proposal staff. In the case of those firms bidding large opportunities very infrequently, the permanent staff may be just a part-time coordinator. A more common behaviour is for a firm to maintain at least the staff needed to pursue one proposal at any given time. This typically includes, at a minimum, a proposal manager, technical writer, editor, and combined coordinator/desktop publisher/graphic artist. A few robust divisions of larger firms still maintain large departments with 30 or 40 or more permanent personnel including proposal process personnel, technical, and pricing personnel.

I have seen some companies that outsourced very little proposal work. They chose not to outsource because they believed they could achieve their goals with only permanent staff. I believe that many of those companies could have grown faster and achieved greater profits by using outside assistance to bid and win additional programs.

*Russell Smith, a 30-year proposal professional, is President of Organizational Communications Incorporated (OCI), a business development and proposal management consulting firm located outside Washington, DC. Over the last 26 years, OCI has helped clients win more than $300B of contracts with a win rate of 83 percent by dollar volume. Dr. Smith’s firm specializes in providing proposal consultants, proposal teams, and training for proposal professionals. He is a past president of the National Capital Area Chapter of APMP. You can contact him at rsmith@orgcom.com