Avoiding the incumbent credibility gap

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How much change is your customer likely to make to the scope and terms of your contract in the rebid? Not much? That’s often what the initial thinking of some incumbents is as they start their preparation for the rebid. But often, when the ITT is published, they find to their dismay that the customer is making significant changes.

Sometimes it’s the geographical coverage of the new contract (the customer is moving from an office by office based approach to a regional, national or even international structure for the contract). Sometimes, the range of services included is changing (perhaps the customer is moving from individual services to a bundled or integrated approach). Or perhaps the specification (is the customer looking for technology solutions rather than people based?), payment mechanism or KPIs the customer is looking for in the future are significantly different to the present contract. Sometimes the incumbent is caught out by how the bid for the new contract is going to be evaluated – price has become more dominant, or new areas are weighted much more highly than expected.

Suddenly the incumbent finds themselves moving from a position where they thought they were safe, to one where they are struggling to work out the changes needed for the new contract and how to deliver a solution for these radically new requirements. Some succeed. Others don’t.

What is often missed in the frantic work to make changes to fit the new procurement is gaining an understanding of the reason why the customer has made such big changes – and what might have been done earlier to avoid this abrupt variation in the customer’s approach.

Often what those who do look realise, is that the changes are the result of a build-up of frustration over some period with how the previous contract has been delivering. That’s not to say the incumbent hasn’t been delivering to the measures set out in the original contract – more often than not they have. But what they haven’t been doing is changing at the pace the customer’s organisation and their needs have developed.

Over the period of the contract the customer’s needs as an organisation will have changed. These might be changes to pressures on budgets, changes to quality requirements, speed of service to the end user or a hundred other things that could impact a business or organisation over the period of 3, 5 or more years – the length of many contracts. If your contract delivery hasn’t kept up with these changes in need, not only will there be a level of frustration with the contract (a dissatisfaction gap as in figure 1), but the rebid will be the outlet of that frustration and need to ‘catch up’ with lost time and changes. And not only that, the customer will be trying to anticipate how these changes might impact them in the future too, so their requirements will be set out to cover the future as well as catch up with the past.

performance factor figure 1

Not only do you now have the problem of finding a new solution to fit these changed needs, the problems could also feed into your submission. One of the great advantages of being the incumbent is that the customer already knows what you can deliver. But if you haven’t delivered everything the customer wants, they know that too.

If you’ve failed to continuously improve, deliver innovation etc, claiming in your submission that you will do this in the next contract will be met with scepticism (the incumbent credibility gap in figure 2 below). Even if the customer believes you can and will deliver change and improvement during the contract next time around, they may well be asking why you didn’t bother to do so for the past few years. Not a recipe for winning. The same goes for pricing. Suddenly offering a significant decrease in price in the rebid can lead to questions about profiteering in the existing contract. Again, not helpful.

performance factor figure 2

So, to avoid finding yourself with an incumbent credibility gap, what can you do?

Well, it depends where you are in the contract lifecycle. If you are in the delivery stage, and your rebid is some years away, you can focus on understanding the changes your customer is facing, and see if there are any changes you can make to your delivery that will help them address these changes within your existing contract boundaries.

If you are preparing for your rebid (and hopefully have some months to go before the rebid proper starts), there might still be some, albeit probably minor changes at this stage that you can make to existing delivery to show the customer you are capable and willing to change. At the same time you can be talking to your customer to find out what changes they will be putting into the rebid, start putting together a new solution that will better meet the ‘new’ needs the customer will be including, and making sure the customer is aware that you are alive to these changes and will be looking to meet them in the new contract – not just delivering more of the same you have delivered to date.

If you are in the middle of the rebid process and have just discovered the changes the customer wants from reading the ITT, then you are probably, in the eyes of the customer, already suffering from an incumbent credibility gap. But there are still some things you can do in your proposal to alleviate the issue – although you may have to work quickly and perhaps be brutal with your own internal team:

  • Firstly you need to understand the background – why is the customer making these changes – what are they trying to achieve? Ask your contract team. They might not have spotted the impending changes until now, but focusing them on the changes the customer is asking for might get some results. Knowing why the customer is changing will give you some insight into what to do about them and how to talk about them in your rebid submission.
  • Secondly make sure you put together as solution that meets these changes. There might be a temptation to think it’s too late, and instead put forward your existing solution with some minor changes, whilst focussing your efforts on persuading the customer of the risks of changing from this proven way of doing things (and you as the proven contractor). Unfortunately this is just as likely to confirm to the customer your credibility gap – they may well end up thinking that the bigger risk is to stay with a contractor that doesn’t see the need for change and isn’t offering to deliver it. Focus your efforts instead on putting together a solution that is based on the new needs the customer is expressing, with as little reference as possible to the existing contract delivery structure or processes. As a minimum this will help you challenge your (and your team’s) existing assumptions of what works and may lead to a workable but ‘new’ solution
  • Third make sure as you are writing the submission that you emphasise your understanding that the customer is changing and needs a new solution – and that you have created a new solution that meets these changes. If you can draw on any improvements or changes you might have made during the past contract period to show you are capable of change. It might not overcome the gap you face in your customer’s perception of you to date, but at least they will realise you are looking to change and if they (or more specifically some influencers within the customer decision making group) have any preference for you as a supplier it will give them some excuse to stick with you.

None of these are fool proof solutions to the problem. But they may go some way to improving your chances of winning. Ideally of course you will have spotted the impending changes before and will have been able to follow our earlier advice during the contract delivery and rebid preparation phase.

Finally, when you are reviewing your rebid – won or lost – make sure you review not just the final submission (solution and price), but also look at your preparations and what could be improved next time, and look at your contract delivery. Customer decisions are made officially at the end of the procurement process. But rebids can be lost well before that point

 

See how we can help you avoid an incumbent credibility gap here