The Challenges and Benefits of Being the Incumbent Supplier

You’ve done a great job as the provider of services to your client for four years. You’re feeling confident about being reappointed; your past work will speak for you! You don’t feel that you need to put as much time into the tender response as you did to win it last time. Right?

Research shows that less than 50% of incumbent suppliers win in public sector retender situations. So, be confident but not complacent. You worked hard to win the work, you’ve worked hard to do a great job, and the revenue and profit you would have to replace if you lost the tender is likely substantial.

You need to challenge yourself and look at your relationship with the client, at strategic and operational levels, and your recent performance. Is your client looking for something new, more efficiencies, better value for money, more innovation, better outcomes, or tangible social value? Other bidders will be putting forward proposals to be attractive, different, promise more, etc. You have the advantage of knowing the client, the contract, price point, and the end customers.

There may be options other than retendering. If your public sector client can extend the contract, this is something you will want to explore if you want the contract on the same terms, assuming you make a profit. COVID-19 has offered further extension opportunities, so it’s worth preparing a strategic briefing paper summarising this approach’s benefits and having a discussion with your client.

A private sector client might want to market test the service seeking proposals or quotes from others. Again, you could prepare a strategic briefing paper summarising the benefits of you continuing to provide services. Highlight what you know your client wants in terms of service, what is important to them, added value, price reduction, or guaranteed pricing. We have helped companies prepare briefing papers and be successfully reappointed by giving their client what they hoped to gain from market testing without the time and effort involved.

If there is a retender, you will want to prepare well and as early as possible. A strategic briefing paper for your client with a summary of the contract experience and your delivery may help you shape the tender documents. You could include what worked well, what would benefit from changing, legislative changes, a horizon scan, potential efficiencies, and COVID-19 safe service delivery. You will also show what you have delivered and the performance you have achieved, including customer satisfaction rates.

Take a look at your organisation compared to your competitors. You know the tender timescales, so use this to your advantage to get into the best shape to bid. Remember that your excellent service will help you get over the early tender hurdles, but this is historical, and your client is looking to the future. It will help if you compare your future offer to your competitors to do well in the final stages. Look for any intelligence about the tender and your competitors; there may be committee papers, publicly available information and announcements of other contract awards, and contract meetings where the service’s future vision has been discussed.

What are you delivering on social value (community benefits in Scotland), added value, efficiencies, COVID-19 secure services, environmental and sustainability, innovation and technology? If you offer many services not being provided to your client now, consider adding some in. You don’t want the new proposal to feel like it’s a transformation rather than it’s continuously improved, or your client might feel cheated by not having your full service when others have benefitted from this.

Strategically, you will want to create a ‘feel-good’ factor before the retender. For example, talk to your client and other stakeholders about applying for partnership working awards together.

Do your homework. It’s four years since you tendered for the work initially. Times have changed, so look at other tenders your client has put out to refresh your understanding of their aims and objectives. Do they have expectations that you don’t currently meet? For example, ISO accreditations? Data security accreditation?

An external audit will help to test your position compared to your competitors. Bring in a bidding expert to help with a baseline, and identify strengths and gaps while you have time to address them.

If you have employees who work on the contract most of their time, you need to consider TUPE issues; put a list together, and start working on this 6-12 months before the tender exercise. Your client might put this out with the tender documents or might refer bidders to you. Is there any advantage in sharing, or not sharing, this at an early stage? If this might put other bidders off bidding, then share it early.

Responding to the tender. Research tells us that public sector bid evaluation panels have an average of 5.4 people on them. Panel members might or might not know how well you’ve delivered the contract. Don’t assume anything! You should respond to the tender with the same level of care and information you took when first appointed, articulating your customer value proposition, and what it means for them to appoint you. As the incumbent, you reduce the time they spend on a service transition and minimise uncertainty and doubt. But, check the specification to make sure you know what’s needed and aren’t just relying on what you do currently.

When you get to the question, ‘How will you implement your services’ answer it fully. Ensure they realise it’s little change, it will be easy and no risk, but explain how you will integrate any new services. Talk about the contract start meeting, building on the success from last time, and all the positives about how well implementation went.

At an early stage, make sure you look at the pricing model. Check that it works correctly and that it has all the information in there that you – as the incumbent – know is required. If there are areas of work that are missing, raise this as a clarification question (usually via the procurement portal) so that other bidders include this so that it’s a level playing field.

Being the incumbent has benefits and drawbacks. You can’t afford to lose the contract that others want to win! If you follow these steps, make sure you take the opportunity as seriously as last time and do your homework on your competitors; you’ll be in good shape. If you want an independent review of your position in the market or need assistance to review / sharpen your bid responses, we can help.