For years, people assigned to manage lessons learned and contract post mortem teams have discovered that, when a contract is re-competed, there is usually plenty of dirt to sweep under the rug. Ignorance of clients’ wishes, inaction with regard to clients’ requests, or just massive egomania are key factors in incumbent contractors losing their contracts. “Corporate calcification” is the term that Tom Peters gives this lack of vision in his book, In Search of Excellence.

Similarly, when asked about a remedy for these contract management errors, firms consistently cited the need for pro-active introspection.  Often they claimed the necessary corrections had been identified but not implemented. In other words, many talented contractor teams recognized that every contract competition should have its own pre-request-for-proposal (pre-RFP) vulnerability assessment, but they simply didn’t get it done.

Uniformly, contractors articulated these regrets after they had lost their contract. They failed to document that they did quality work for the client; failed to assess their personnel performance or turnover; didn’t “lobby” the client when the RFP was written; and didn’t try to influence draft RFPs. And lastly, no one worked on the client’s “hit list” of problems.

Vulnerability Assessments

We define a vulnerability assessment as a carefully specified contract management study based on official and unofficial correspondence, interviews, and business development intelligence. The vulnerability assessment is never the sole product of the sitting project manager and one or two key staff.  Rather, it is a broad and deep analysis of how well the contract is being performed, regardless of the personalities involved. The vulnerability study should be conducted at the direction of the chief executive (CEO) or chief operating officer (COO). The assessment should include:

? How much risk of loss the re-competition will have;
? Where the contractor’s strengths are, especially in personnel;
? Where its weakness and vulnerability may be; and
? How to best influence the RFP and its selection factors.

Further, the written vulnerability assessment should be made part of the contractor’s plan to defend incumbent contracts — defenses constructed from new ideas, new technical and contracts personnel, new technology, and new management.

Private and Public Forums

In private contracting, client satisfaction and dissatisfaction are usually more clearly visible than in government contracting. The well-managed incumbent has lots of close, personal insight into how the contract is progressing. Critics tend to be more vocal, and upper management will generally be more aware of problems. To address these issues, the person managing the vulnerability assessment should ask the client’s management, “How are we doing on the contract?” The contractor should cover all formal correspondence between it and the client in depth. Another fair question to pose is, “Where do we do our best work for you?” And naturally, the corollary question is, “Where do we let you down?”

Listening carefully to the answers, writing them down accurately, and not filtering the information to please current project managers or staff is imperative. Watering down bad news or pumping up lukewarm endorsements may be politically correct, but it is bad for business, especially when upper management has not been warned that the client has an urgent but unaddressed problem with you.

With federal and state contracts, the formal procurement process is lengthy and closed to contractors after the actual RFP is released. Similarly, criticism of a contractor is more subtle and difficult to defect, and ambivalence is always a factor. Constant scrutiny of contract award fee letters, quarterly contractor evaluations, and notices from the contracting officer are definite vulnerability assessment factors for federal contractors. How and how well the contractor responds decreases vulnerability and increases client satisfaction. Federal contractors who lost their contracts all voiced the desire to have been more responsive to client warning signs such as, “Stop referring to the contract as your firm’s cash cow,” “Mr. X falls asleep in review meetings,” and the most pervasive, “didn’t your project manager say we had a problem with that?”

Planning for the Assessment

It was a pleasure to speak to winning incumbent contractors about how they did achieve a successful vulnerability assessment and addressed client problems. What they had in common was timeliness:  The contractors who won the re-competition of their contracts got an early, organized start. How early? Winners scrutinized the contract, the client, the progress reviews, the draft RFPs, and the actual RFP for up to a year before the competition. Most took the draft RFP and wrote, staffed, and priced it to a comfortable level. They made internal adjustments, shifted managers, staffed up or cut back, and focused on client sore spots. They did not wait for the client to force or demand changes.

Cost analysis and the potential for saving (or more effective spending) went hand-in-glove for winning contractors. The successful contractors used senior managers to look closely at performance on their contracts. Several operational vice presidents and project managers performed vulnerability assessments on the contracts their colleagues managed. This cross-pollination of upper management talent was effective in helping the contractors hang on to their incumbent contracts, and helped incumbent contract mangers keep their project management jobs.

The winning formula for contract renewals seems to be to:

• Develop the ability to see the contract through the client’s eyes;
• Get started early;
• Work the issues hard for six to 12 months;
• Use the analytical skills of senior management;
• Influence the RFP as it’s being developed; and
• Make proactive changes without client pressure, and make these changes early in the contract cycle.

Thus, the vulnerability assessment is a useful tool for contractors to employ to help ensure success in recompetitions.