Go / No Go Decisions on Bidding for Government Contracts
Making a decision about whether or not to enter a tendering process is not as clear cut as merely throwing all the variables into a tailored balanced scorecard or decision tree, hitting a button and seeing what comes out when the wheel stops spinning. It’s often down to how mature your company is both financially and operationally. A well-established, process oriented company will be more systematic about a bid / no bid decision than a younger upstart. But no matter where you are in your life cycle the bid / no bid decision making process is more nuanced than best practice texts would have you believe.
Here are a number of areas that you typically need to discuss before deciding whether or not to bid.
Is the opportunity congruent with your business strategy? As a mature outsourcing company you may have a goal of being the dominant player providing call centre solutions in the telecommunications area. If the opportunity is outside this area and doesn’t feel like it’s a long term option it’s probably best to avoid it even though it may be within your capability.
Is it possible to make a profit that is acceptable to your board? Providing a good service is always a source of pride, but the pride can quickly turn to a feeling of resentment if you’re not making the money that such a service probably deserves. Some organisations may price “at cost” or “below cost” in order to either get a leg in the door or to build a credible reference site. You shouldn’t attempt this unless you have the cash flow to accommodate it comfortably.
Can your business design, build and deliver the product or service as specified? Are your current partners / subcontractors able to deliver what you’ll require from them? You don’t want to be negotiating with new partners during a tender process as they’ll have far more bargaining power when you’re under pressure than would otherwise be the case. Will you cannibalise your current contracts if you win the tender? This is a serious consideration as any strain placed on other contracts due to the reallocation of resources can lead to a rapid deterioration in service, strained client relationships and the eventual loss of contracts.
Is the Request for Tender (RFT) well put together, and are the requirements clear. It’s impossible to design a solution and cost it properly if the RFT is shoddy and ambiguous. Be careful, because a client who issues an unclear RFT may take a similar approach to account management.
Bid pursuits are stressful times, especially in SMEs, as they take people away from their core duties. They wind up working late, eat pizza and chips, and find their work under a higher level of scrutiny than they are used to. It can take weeks for some to recover from the process. It’s a question of judgement, but sometimes it may be wise to pass up an opportunity for the well being of your staff.
Intelligence Gathering and Capability Building
While your company may not yet be at the level required to win, it sometimes makes sense to target opportunities in order to both build intelligence and improve internal capability.
Intelligence Gathering: A bid debrief with the tendering body casts a light on where you are with respect to your competitors regarding price and delivery capability. If you are too expensive you can look at your overall cost structure and design a way to become more competitive. The debriefing should also give you an indication of what the client thinks of you and where you are in the current pecking order.
Capability Building: A tendering process provides a great opportunity to focus. A lot of important thinking and decision making about product design and investment takes place during such periods. The net result of taking part in a number of competitive processes is that your design and pricing should improve along with your scores.
Reputation and Trust
Organisations often decide to bid in order to show that they are a key industry player who wishes to be considered for future opportunities. The fear of being “out of sight, out of mind” is a common one among executives and as a result they feel that it’s good public relations to be involved in a tender process regardless of the potential outcome.
Finally, it may take a number of attempts before a client really gets to know what you’re like and is confident in your ability to deliver. It’s therefore worth taking a medium to long term view when building your business by engaging in tendering processes. It’s a slow burn after all.
Hopefully this piece will help you with your thinking about go / no go strategies when considering whether or not to bid for a government contract.
For more information on go / no go bid strategies contact us on the form below.