How to Be the Highest Bidder -- and Still Win the Contract

By Cuyler Morris, president, Morris Yachts, Bass Harbor, Maine
Morris Yachts has been in business since 1972, but we've never seen an economic downturn as severe as the current one. As a builder of handcrafted luxury boats, we were hit hard by this recession, with business down more than 50 percent.

Fortunately, right in the middle of it a new potential customer came our way: We had the opportunity to bid on a project to build eight sailboats for the U.S. Coast Guard. If we could win the contract, it would be a lifeline for our company.

The only problem was, we knew our bid would be high and that we'd need to prove our value.

Here's how we landed the deal -- through sheer hard work and attention to detail -- and kept our company afloat.

From boom to bust
The introduction of our new line of boats in 2003-2004 was a great success and overwhelmed us in a good way. We grew quickly to respond to the high demand, and had to spend money to increase our capacity. Our high water mark was 130 employees in 2007, with revenue of about $18 million. We were building 15 to 18 boats a year.

Then someone turned off the spigot. By 2009, before winning the contract in August, we were down to 65 employees, and about $7.5 million in revenue. We built only six boats that year, and so we were left with the challenge of covering increased debt and overhead.

Opportunity and challenge
Our company was invited to bid on the Coast Guard Academy's new boat program in the summer of 2008. I jumped at the chance, and we began the bidding process with 11 competitors.

We realized this was a valuable opportunity and we had a very good chance of landing it. However, we also knew that we'd face one obstacle -- we wouldn't be submitting the least expensive bid.

We're known for building very high quality, semi-custom boats, and not inexpensive ones. So, here we are bidding against 11 other companies in a crumbling economy, and knowing that our bid would be on the high side. We needed to bust our butts to show the Coast Guard why they should hire us -- even though we were pricey. (We eventually learned that we were the Coast Guard's most expensive choice.)

Getting personal
First, we decided to take a more personal approach to the contract. I visited the Coast Guard Academy in New London, Conn., and went sailing with the cadets. I wanted to make the effort to see how the boats would be used. None of the other builders did that. We worked hard to demonstrate our personal commitment to the project -- unlike other companies in the running.

Attention to detail
It was also crucial for us to show how detail-oriented we are. It's important to prove that you can manage a project efficiently and avoid costly delays.

For starters, we met all of the deadlines. When the Coast Guard said they wanted something by "X" date, we had it to them by "X" date. This sounds basic, but surprisingly some of the other builders didn't do this.

We were also very thorough in the actual bid package, and it paid off. For example, the Coast Guard checked around by calling vendors to see if bidders had gotten the necessary quotes. Sometimes the Coast Guard found that Morris Yachts was the only company that vendors had heard from. In doing their homework, the Coast Guard discovered that we'd done our homework.

The sweetener
Because of our price disadvantage, we knew that we needed to take advantage of any opportunity to sweeten the deal.

So when the Coast Guard people asked if we would consider selling a "consumer version" of their newly designed boats after we completed their project, we jumped at the chance and immediately said yes. We knew that building the consumer boats would allow the Coast Guard to earn money in the future by charging for the use of the custom molds that they purchased for their project.

Our ability and willingness to do this became a big selling point. We understood that this would really sweeten the Coast Guard's return on investment. And, of course, we also realized that the added consumer sales could help our yard after the Coast Guard job ended.
The lifeline
Each of these Coast Guard boats costs about $800,000, plus extra for design work. So we've made close to $7 million over two years with this chunk of business. We're now up to 90 employees, and expect this year's revenues to be back in the mid-teens.

The contract couldn't have come at a more crucial time for us. To show how much that contract meant -- several of our bidding competitors are now out of business. I don't think we would have been in that situation, but it would be very, very difficult right now if we hadn't gotten this project.

-- As told to Peter Weed

Cuyler Morris, president of Morris Yachts, joined the company in 1995. His father, Tom, and mother, Tina, founded the company in 1972.
Resources:

• Follow 10 steps toward a successful government contract bid.
• Learn about pricing strategies for bids.