How Bad Business Communication Lost $60 Million

by | Jun 27, 2012

If you had the opportunity for a five-year, estimated $60 million contract, would you go for it?

Is that a rhetorical question?

This is a sad tale of how bad business communication lost the potential sale.

The Money’s in the Details

Imagine my surprise when I read about this in the Idaho Statesman newspaper.

Idaho abandoned the bidding process for the purchase of laptops for public schools.

  • The Request for Proposal (RFP) received 3 responses
  • One vendor missed the RFP deadline
  • Another failed to meet state requirements
  • That left one vendor standing

The state plans on negotiating directly with suppliers for a deal.

What the heck happened?

For me, it boils down to bad business communication.

Missed Opportunity

Unless the economy took a right turn I haven’t heard about, how is it that the RFP garnered only three responses?

Putting politics aside – and you can be sure it exists – the story had me thinking about reasons for failed RFPs.

Poor Organization

In my insurance and broker days, I was responsible for a LOT of RFPs – both creating and responding to them.

Granted, I do not know all the details of the laptop debacle, but poor organizational skills have contributed to more than one missed RFP opportunity.

  • RFPs go undetected in an overflowing email inbox
  • Team members for creating a response do not deliver
  • There is no accountable person for the RFP process

Perhaps poor organization contributed to the lack of responses.

Simple business communication processes improve your chances on potential sales.

  1. Schedule regular clean-ups of your email
  2. Assign tasks and deadlines to team members
  3. Identify the accountable person for RFPs

Missed Deadline

If you have ever bid on a state proposal, you know deadlines are sacred.

One time in my insurance career, an overnight carrier delivered a bid on an RFP for health insurance for the state of Arizona after the 3 P.M. deadline.

  • The state returned the bid unopened
  • The overnight carrier was never used again

By the way, I was not responsible for that RFP. Since I’m perfect and all.

Here are some simple business communication solutions.

  1. Identify the deadline immediately
  2. Develop your internal timeline with the RFP deadline in mind
  3. Allow wiggle room for completion to avoid delivery disasters

Sometimes creators of RFPs do not allow sufficient response time.

If that’s the case – communicate.

  • Ask for an extension
  • You may not get it, but often you do
  • Decide if the aggressive deadline is worth the scramble

Failure to Follow Instructions

Most RFPs, and particularly government RFPs, have specific criteria for bidders.

Instructions may include:

  • The number of copies required
  • The format for response
  • The required qualifications for bidders

Ads for a specific project are a smaller scale of RFPs. Both require the same response ~

Follow the instructions exactly as written.

  1. List all requirements
  2. Communicate them to your team
  3. Answer every question – in the order received

Some RFP creators love to wrap 3 – 4 questions in one.

  • Don’t let multi-part questions trip you up
  • Create a review process that ensures every part of a question is answered

Responses are often divided up for reading. By answering the questions in the same order, you enhance your chances that your message is delivered.

Bringing it Home

Whether it’s a $60 million proposal or an ad for a single project, these business communication tips will help you bring home the sale.

  • Improve your organization
  • Treat deadlines as sacred
  • Follow instructions to the letter of the law

What RFP tips do you have?

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6 Comments

  1. Wade Finnegan

    Isn’t communication the heart of all business? Following instructions, listening, asking for clarification is the cornerstone for good business operations. I wonder if anyone lost their job over this debacle? My hunch is yes.

    Reply
  2. Cathy

    You bet it is, Wade. 🙂 I don’t know about lost jobs, but I can guarantee there was a lot of finger-pointing going on.

    Thanks for sharing your thoughts, Wade.

    Reply
  3. Roy A. Ackerman, Ph.D., E.A.

    I think this is true more often than not. But, it may also be related to the fact that the offeror has a reputation for NOT picking the best bid, for NOT having the funds to execute the contract, for using the bidding process to press it’s existing vendor to ratchet down prices, etc.

    Reply
  4. Anne Wayman

    Like Roy, I’m wondering if Idaho somehow dropped the ball… I could have figured out how to deliver laptops there for that price… do you have any clue how they spread the word about their rfp? It’s a two-way street imo.

    Reply
  5. Cathy

    Excellent point, Roy (per usual), except you would think that the 3 who did respond actually wanted the business.

    Even if in this case the creator of the RFP has that reputation, I’ve seen more than my share of poor responses to RFPs.

    Thanks for giving the other side of the coin, Roy. 🙂

    Reply
  6. Cathy

    Hi Anne: As I said to Roy, that is a very good point; however, despite Idaho’s success or failure at issuing an RFP, there are plenty of vendors who could benefit from better business communication in the RFP process. Having been on both sides of the process, I have seen first-hand proof of that.

    Thanks for weighing in, Anne.

    Reply

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