In the past several years, incumbents have lost their advantage in the Federal Government market. Industry studies show that incumbent contractors now have approximately the same win rate on rebids as non-incumbents. Rapid technological change, as well as fiscal constraints, mean that customers are more willing to consider alternatives. Still, winning a bid against an incumbent contractor is a challenge because best informed wins, and the incumbent is still the best informed.
In this webinar, Lisa Pafe, CPP APMP and Lohfeld Consulting Group Principal Consultant, provides 10 proven best practices to create a competitive edge over the incumbent in today’s changing environment.
(Look for Part 2 of The End of the Incumbent Empire: Remaining as Incumbent in the next couple of months.)
Here is Part 3 of the questions we received during the webinar with answers from Lisa Pafe.
Q: One of the hardest steps for large and small businesses who first encounter an opportunity at the RFP/RFQ stage is the bid/no-bid decision. The hardest thing about that—if you don’t see the opportunity until the RFP/RFQ is published, which is late in the game—is deciding if the opportunity is wired or not. What are the top three ways to assign a probability of a given opportunity being wired and therefore not worth investing effort?
A: If you do not know about an RFP/RFQ before it is issued, then you are at an extreme disadvantage regarding customer intimacy and competitive assessment. Therefore, your win probability is below 10%. A rule of thumb is to no bid if you have no previous knowledge.
Q: How can an incumbent best counter the tendency of a customer to be “too” fair by walling out the incumbent early—even after good performance—while giving competitors a chance for dialogue?
A: Even if the customer “walls off” the incumbent, the incumbent can still do an honest assessment of its own performance. Tap into the knowledge of your program/project manager as to what is going on. The program/project manager and his/her team have daily access to a variety of stakeholders, giving them information that the challenger cannot easily access. Encourage the on-site team to engage in informal dialogue and report back to the capture manager.
Q: How do you build customer intimacy when the incumbent already has a strong relationship with the customer—especially if they are on site and you can only access the customer by appointment or industry events? What about when the leadership declares they are happy with the incumbent and doesn’t want to go through the huge pain of transition to another contractor especially when they are making progress? What about when the leadership declares they are happy with the incumbent, but when you talk to mid-level leadership they are not as thrilled and somehow their frustrations are not being clearly communicated up the ladder?
A: You cannot achieve the same level of customer intimacy as the incumbent. You must counter customer intimacy by building a strengths-based solution and ghosting incumbent weaknesses. Statements regarding happiness with the incumbent do not necessarily translate into a higher-scored proposal by the Source Selection Board. Focus your proposal on proving that your solution has the greatest number of strengths and no weaknesses with low performance risk.
Q: How do we compete in the world of LPTA contracts?
A: Part of your shaping effort during capture should focus on why the opportunity should be best value rather than LPTA. If the customer still insists on LPTA, focus more of your resources on Price to Win. If you cannot execute successfully at the lowest price, then do not bid that opportunity.
Q: How does LPTA play into your strategies? How do you convince a client they get what they pay for? Many bids are going to the lowest bidder technically acceptable, and in many cases the clients are not satisfied with the work or products they get. We are finding too often that awards are being delivered based on cost, not necessarily best qualified. We understand from a business standpoint that delivering the best-qualified people, though it may cost a client a little more money, in the end can reduce the bottom line. How do you overcome this obstacle?
A: Part of your shaping effort during capture should focus on why the opportunity should be best value rather than LPTA. Convince the client by providing substantiated proof that the work cannot be performed successfully at lowest price. Make your business case and provide concrete examples.
Q: How does the strength of the commercial economy affect this dynamic? If the commercial economy continues to strengthen, will it tend to reverse this trend?
A: I would wager a guess that as the economy strengthens, the pendulum will switch back to best value procurements, thus favoring the incumbents.
Q: How do you surpass the benefits that the incumbent has in terms of customer knowledge?
A: The best way to offset incumbent strengths is to propose better and/or more strengths that benefit the customer by exceeding requirements, helping meet contract or mission requirements, and/or offering value-add. You encourage competition by positioning your strengths with the customer during the capture phase. The best method to use in crafting your solution is focusing on building the greatest number of strengths and mitigating all weaknesses prior to RFP release.
Q: I’m interested in how these best practices translate to the state/local market—also, how to turn the tables if we are the incumbent.
A: The best practices discussed do translate to the state and local market. Within the next 2 months, I will deliver Part 2 of my webinar, which will focus on how to protect your position as incumbent. I will address your question at that time.
Q: I am interested in strategies to overcome the knowledge gap, including ways to get the buying organization to level the playing field.
A: The best way to overcome the knowledge gap is by conducting a listening campaign—meeting with a variety of customer stakeholders to suggest solutions, listening to their responses, and then shaping your solution accordingly. You can also gather information by researching and then connecting with current and former employees and contractors using LinkedIn, Web searches, and customer/incumbent websites. The customer will have incentive to level the playing field if they like the solutions you are offering during capture.
Q: Is there a common mistake that incumbents are making that opens the door for them to be unseated? Are price cuts the main way that companies are taking incumbent business? What role do subcontractors play? Are they leaving the incumbent team and going to the competition? Do incumbents change the core subcontractors for recompetes?
A: The biggest mistake the incumbent can make is to assume the customer loves them. Price cuts are certainly a large part of challengers’ taking away incumbent business, along with proposing innovations that drive efficiencies. Subcontractors are leaving incumbent teams a bit more often now if they see a challenger offering a better value proposition (for them and the customer).