Competition for Federal Government contracts is fierce–maybe more fierce than ever. Continuing budget uncertainty means that some acquisitions are delayed (or canceled); funding for others may be reduced. The advent of IDIQs and GWACs means that contractors are forced to compete just for a “seat at the table”–and then compete again for task orders. “Low Price Technically Acceptable” still holds sway as a basis for award in too many cases, often turning competitive acquisitions into “a race to the bottom.” Set-asides for Small Business lead to increased competition in that arena; at the same time, “full and open” acquisitions often are becoming free-for-alls as billion-dollar companies compete for more and more contracts to maintain their growth goals. Mid-size companies find themselves squeezed between the set-asides (for which they are not eligible) and the “big boys” (who have far more resources). And when small businesses “graduate” they find themselves in the same boat.

Meanwhile, internal pressures continue to mount. Public companies face shareholder pressure to increase revenues and profits, and private companies struggle to meet their own fiscal goals.

For many companies, the response is something out of Crazy Eddie’s playbook: Volume, volume, volume! They bid virtually every opportunity that comes their way. It’s a shotgun approach–shoot at everything, and hope to hit something.

Unfortunately, this approach only makes things worse. It stretches company resources to the breaking point, crushes staff morale, and reduces the likelihood of winning any particular bid. It reflects an approach built primarily on hope. And let’s be clear: Hope is NOT a strategy.

A better way to raise your win rate and increase both revenues and profits is to be more selective about which opportunities you pursue–and, in particular, which ones NOT to pursue. But how do you know which is which?

I suggest a simple, visual schema to define your “sweet spot” (and clearly identify the opportunities you should say NO to):

Obviously, opportunities that fall in the “Sweet Spot” where all three circles overlap are the ones to focus on. Just as obviously, any opportunities that fall only within one of the three circles should be easy to say NO to. (Surely we don’t even need to mention the ones that are outside all of the circles, right?)

The areas where two of the three circles overlap are where you need to be truly discerning. I advise caution in all of these areas.

• Opportunities in the Bittersweet spot may appear attractive: You have the capability to do the work, and you have confidence you can win it. But if you can’t make money on it, what is your incentive? If your focus is solely on revenue rather than profit, that might argue in favor of pursuing it. Or you might view such an opportunity as a way to “get your foot in the door”—to open a new market for yourself. Fair enough. But be sure you go in with eyes open, and manage your expectations accordingly. And be willing to say NO to some (perhaps most) of these opportunities.
• Opportunities in the Semi Sweet spot may look promising as well. You know you can do it, and you know you can make money. But—and this is a very large BUT—if you can’t win the work, why would you want to spend time, energy, and resources (especially money) chasing it? This area is where you need to be really honest about your PWin. Are you truly making a fair assessment of your chances? Or are you merely setting your PWin to some arbitrary level that matches your internal rules for pursuits? Beware the latter—you’ll end up just chasing your tail, and wasting effort doing it. Truth is, you probably should say NO to most of these opportunities.
• Finally, there are the opportunities in the Dangerously Sweet spot. These are the ones you feel confident you can win, and know you can make money on. If you’re being truly honest with yourself, though, you have to acknowledge that you’re not sure you can actually perform the work. This truly is dangerous territory, because the ramifications of failure are severe and far-reaching. You may damage your reputation, not only with that customer but with others who can easily find information about your failure. Your record on Past Performance will have a black mark for years to come. Worse, your failure to perform will affect your customer’s ability to achieve its mission—and, in some cases, put end users (such as warfighters in the DoD arena, taxpayers anywhere in the Government) at risk. My advice: Don’t try it!

There are many questions within the three primary questions in the diagram, and you’ll want to create your own schema, tailored to your company’s particular circumstances. The important point, though, is that you have a defined, structured process that supports your ability to make good decisions—and, especially, that you know when to say NO.