Breakout Session # 202 Gail Parrott, NCMA Fellow

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

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

4. 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

5. Buyer/Seller Relationship is comparable to Ballroom Dancing

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

7. 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.

8. 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

9. Creating Value for Customers

10. Inadequate Customer Value

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

12. 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

13. 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.

14. 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

15. 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

16. 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

17. 3 Phases of Buying & Selling Life-Cycle • Pre-Bid/Proposal Phase • Bid/Proposal Phase • Post-Bid/Proposal Phase

18. From: Solicitations, Bids, Proposals, & Source Selection- Building a Winning Contract, by Gregory A. Garrett and Gail A. Parrott, CCH 2007 Buying & Selling Life-Cycle

19. From: Solicitations, Bids, Proposals, & Source Selection- Building a Winning Contract, by Gregory A. Garrett and Gail A. Parrott, CCH 2007 Phase 1: Pre-Bid/Proposal Phase

20. 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”

21. 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

22. 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

23. 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

24. 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

25. From: Solicitations, Bids, Proposals, & Source Selection- Building a Winning Contract, by Gregory A. Garrett and Gail A. Parrott, CCH 2007 Phase 2: Bid/Proposal Phase

26. 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

27. 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)

28. 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)

29. From: Solicitations, Bids, Proposals, & Source Selection- Building a Winning Contract, by Gregory A. Garrett and Gail A. Parrott, CCH 2007 Phase 3: Post-Bid/Proposal Phase

30. 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.

31. 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

32. 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

33. 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

34. 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

35. 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.

36. 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