Northrop Is Tired of Being the Rabbit

We often talk about the need to take a serious look at how firms respond to RFP’s.  The general rule is to before you spend a bunch of time responding to them, spend time thinking about whether it’s a good idea to respond.  Ask yourself whether or not you have a serious chance of winning it.  Ask your bid team whether they think they can win it.  There is a fair percentage of RFP’s that you don’t stand a chance of winning.  So, don’t waste your time on them and spend your time doing a better job working the customer at the ones you do have a chance of winning. 

If you don’t know what your chances are of winning an RFP, it tells you that you need to understand the bid situation better.  Blind RFP’s are the biggest wast of time in the pricing business.  Put together a set of questions that need to be answered before you will put time into the bid.  Make that rule rock solid.  Work on understanding the bid before you work on the bid.

Congratulations to Northrop Grumman for finally recognizing they don’t have a snowball’s chance of winning the $40 Billion bid for air tankers.  In yesterday’s WSJ article, they finally realize that a) the Airforce is struggling to figure out how to run a fair bid process and b) the politics is so bad that their partnership with Airbus is going to kill their chances of winning it  anyway.   That evidence is clear since Boeing, who lost the bid in 2002 due to contract rigging is a lock on winning it this time.  That’s becuase Northrop won it in 2008 but the political complaints were so bad that the Airforce was supporting a European supplier that they ran it again.  This time, Northrop decided to quit while the quiting was good.

If they had bid and lost, no one would have done anything.   By quiting before the bid they send a better signal that they weren’t going to waste their time.  That puts the onus on the Airforce–do they want to have a real bidding process or do they just want to give the order to Boeing.  Now the politicians will have to weigh in on that one but Northrop did the right thing.  It is clear that in this cycle, Northrop was just filling the “rabbit” position.  That is, they are there to keep Boeing honest.  The rule here is that if you’re the rabbit, run fast away from the bid.

I guess the message is to think before you bid.  You know that you are wasting your time on some of them.  If you can make educated guesses about which ones are the bad ones, you are saving some time.  It’s the smart thing to do.

Be well.

reed

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