Portfolio strategy and the bid decision at company level
Executive20 min
By the end you can
Set win-rate and pipeline targets that fit your capacity.
Run a bid review board with written criteria.
Every bid is a promise about capacity
Purchases shall be made from, and contracts shall be awarded to, responsible prospective contractors only 1. One of the general standards of responsibility is being able to comply with the required or proposed delivery or performance schedule, taking into consideration all existing commercial and governmental business commitments 2.
The same standards ask for adequate financial resources to perform the contract, or the ability to obtain them 3, and for the necessary organization, experience, accounting and operational controls, and technical skills, or the ability to obtain them 4.
Practice: read those standards as a portfolio test, not a proposal checklist. The question for the leadership team is not "can we win this?" but "if we win this and the two largest bids already in the pipeline, can we still perform everything we have promised, and pay for it?" A company that cannot answer that has no portfolio strategy, only a list of bids.
Check 1
Set targets from capacity, not from hope
Practice: sort the pipeline into three horizons. Core is work you already perform for customers you already serve. Adjacent changes one of the two: new work for a current customer, or current work for a new customer. New changes both. Decide each year what share of bid and proposal spending each horizon gets, and hold the line when a shiny new-horizon opportunity appears in March.
The horizons matter because of how past performance is scored. In the case of an offeror without a record of relevant past performance or for whom information on past performance is not available, the offeror may not be evaluated favorably or unfavorably on past performance 5.
Practice: "not evaluated favorably or unfavorably" is neutral, not strong. In a best-value tradeoff a competitor with relevant, well-rated work may still outscore you on that factor. Expect lower win rates in adjacent and new horizons, and set the targets for each horizon from your own recorded outcomes, not from figures quoted at conferences.
Win-rate pressure creates a second temptation. Buying-in may decrease competition or result in poor contract performance 6.
Practice: a portfolio that wins only by pricing below cost is borrowing from future performance and future margin. A sensible board rule: any bid priced below the company's own estimated cost needs written approval from the chief executive, with the recovery plan stated.
Worked example. Company A has $40 million of annual revenue and expects $10 million of it to roll off in 18 months. Its recorded win rate is 40% in core work and 15% in adjacent work. If it plans to replace the lost revenue with two-thirds core and one-third adjacent wins, it needs about $16.7 million of core proposals and $22.2 million of adjacent proposals submitted, roughly $39 million in total. Its proposal team can produce about $30 million a year at current staffing. The board therefore funds one more proposal manager before approving any new-horizon pursuit.
Check 2
Run a bid review board with written criteria
Practice: use three gates. A pursue gate early, before capture money is spent; a bid gate when the final solicitation is released; and a submit gate when price and terms are final. Write the criteria down once and use them at every gate: customer access, fit to the requirement, relevance of your past performance, competitive position, named people available to perform, price against your cost, contract type and terms, and strategic value. One executive owns each decision; the board advises.
Bids2Bank's qualification score follows the same idea of written, weighted criteria. It weighs six signals 7, and competition is one factor of the six that never decides the score alone 8. Any failed dealbreaker makes the recommendation no-bid 9. Its pursue line is 75 10 and its review line is 50 11.
When there is no award history to judge competition, the score says that missing history is not a sign that the notice is easy or hard to win 12.
Practice: treat a score as the agenda for the bid review, not its verdict. Ask what each low signal would take to fix, and whether you can fix it before the gate closes.
In Bids2Bank each pursuit has at most one owner, a person on the workspace team 13, and the measured ROI report counts the won, lost and no-bid outcomes recorded for each pursuit 14.
Practice, a quarterly review for the leadership team: pipeline value by horizon; win rate by horizon from recorded outcomes; bid and proposal spending per win; the reasons behind each no-bid and each loss; and how much of your key people's time is already committed. Questions a board should ask: Which bids did we decline, and were we right? Where are we spending to learn rather than to win, and is that deliberate? What happens to cash and staffing if our three biggest bids all win?