Our latest blog post is from our MD Neil Capstick:
I am often asked, ‘What is the biggest mistake that companies make when completing a tender?’
The answer is that it depends.
- Incumbents tend to treat the contract win as a given. They think that all they need to do is to get the price right and submit a half decent bid. Nothing could be further from tender submission reality.
- Even experienced bidders think that when bidding into a new contract that just because they can deliver the work ‘the contract is made for them.’ All they have to do is submit a good price and the description of their services and/or method statements, and voilà! They will win the contract.
Bidding when you are the incumbent
Incumbents tend to think that they know it all. If the specification of the new contract is different from what they’re providing, then the specification must be incorrect. The client doesn’t understand what it is they need, and they, as service provider, know better. Despite what the new specification says, they often think the buyer is unlikely to change because they have been doing such a great job.
Where to begin?
Incumbents nearly always fail to realise that when re-bidding they are bidding for a new contract. They treat it as an extension of the old one. They often tell me, after the process has finished, that they lost the contract. They didn’t! They just didn’t win the new one. If all incumbents treated each tender as a new opportunity and gave it the focus it deserves, many more would win.
The tendency is to make assumptions, not to read the specification, and to write descriptive, rhetorical and unsubstantiated method statements which lack detail and are not persuasive.
They need to understand the buyer’s perspective.
By issuing an invitation to tender, the buyer has an opportunity to incorporate all the lessons they have learned over the duration of the previous contract. They will want to incorporate any innovations in the marketplace that they have become aware of: emerging technologies, new approaches and accepted best practice.
An intelligent bidder will know this, and their tender response will reflect those opportunities.
Advantages of being the incumbent
Incumbents often do have an advantage: they should know the customer better than any of the other tenderers. They should understand their needs and also the challenges they face in ensuring delivery of service. However, incumbents often suffer from a misguided confidence in their own abilities and of how good their relationship is with the buyer. They often forget that it is not always the people they know who will evaluate the tender submission. It is more likely to be a team of procurement specialists who have no knowledge of either them or their services.
The only way to leverage the incumbent’s knowledge and relationship with the buyer is to clearly articulate within the bid their unique differentiators and why they should be chosen for the new contract. By treating the contract as a new opportunity, incumbents are forced to think about how they will deliver the contract. They can consider innovative ways of delivery rather than relying on potentially dated recipes and routines. Incumbents should also utilise evidence of any successes they have had on the contract by using these as examples and mini case studies to support descriptions of their systems and processes. And if they have overcome specific challenges for that client they too should be used within the tender response.
Those bidding into the contract who are not the incumbent face different challenges.
- They may have to explain and clearly articulate a transition or mobilisation period. Executive Compass has represented incumbents many, many times and I am always amazed that this is element is scored. It is obvious that an incumbent will score more highly and yet I have only been involved in one tender where the buyer had recognised this and made the question a pass/fail, removing the advantage of the incumbent who obviously did not have to mobilise.
- The bidder will only have the specification to base their tender on. This is not a disadvantage per se, but it does mean potentially that some of the nuances of the contract will be unknown to them. To combat this disadvantage, it is imperative that bidders deconstruct the specification and supporting documentation, line by line.
- Where tenders involve an element of site-based activity, the new bidder will not be familiar with the geography, layout or general idiosyncrasies of, for example, a university or hospital.