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Winning in the Federal Marketplace: Does the Incumbent Still Have the Advantage?

businessman-signing-contract

Time was when incumbents nearly always won the day in the federal marketplace. Typically, service contracts repeat themselves at the end of a 3–5 year contract period, and, despite the incumbent’s inherent advantage, federal agencies allow these contractors to bid on the repeat contract. I can’t give you the exact statistic, but I have been paying attention, and I estimate that it used to be that over 90 percent of incumbent contractors were successful in winning the contract again… and again.

It used to be that unless your Competitive Analysis (CA) was indicating that the incumbent was underperforming or had fallen out of favor for some other reason, submitting a bid was close to an exercise in futility. Government agencies used to view the transition from one contractor to another as costly and full of risk; therefore, come rebid time, the incumbent was more than likely to capture — again. Unfair? Maybe. But when you play in the government’s sandbox, they make the rules. You can take your pail and shovel and go home, or stick around and learn how to play the game when you are not the incumbent.

Today, incumbents have a very large target on their backs. Where at one time their past history with the federal agency was nothing but an advantage, in many ways, that’s changed. For one thing, incumbents have established price and performance expectations with the customer that may not be viable anymore. The incumbent’s numbers may have changed, yet the customer nevertheless expects the same pricing structure. Regardless, incumbents are often stuck with the structure and approach they’ve always used and may be penalized when they try to convert it to one that is more efficient and cost-effective now.

Another disadvantage the incumbent may have is that, at the end of the day, they know too much. You’ve probably heard the adage “A little knowledge is a dangerous thing.” If you believe that, you’ll understand when I mean when I tell you that, in the federal marketplace, a lot of knowledge is an even more dangerous thing.

Translation?

Anyone who’s been around the block even once in the federal contracting world knows that nothing is more important than 1. understanding what a solicitation’s requirements actually are, and 2. addressing them in meticulous detail. However, when an incumbent reads a new proposal from a contractor for whom they have worked — especially on the same contract — they often “read between the lines” rather than focus on what the solicitation is actually asking for. And that’s a big mistake.

Certainly, leveraging CA and your own intuition about the customer and their solicitation makes sense, but only up to a point. When you have knowledge about a customer that you have gained from experience, even if it’s not germane to the solicitation at hand, it can be difficult NOT to think you know more than the customer does about what they want. Thinking you understand what the customer really, really, REALLY wants more than they do is the beginning of the end.

Bottom line? If you’re a non-incumbent, you have a better shot at winning than you used to… especially if you follow a few basic rules that will amplify your advantages:

  1. Understand in detail what the solicitation requirements are. Whether you’re the incumbent or not, you need to understand what represents the most value to the customer. That said, as a non-incumbent, you have the advantage of viewing a solicitation with fresh eyes, making you more likely to focus on what’s actually being requested, and that’s a big plus. 
  2. Understand how the evaluation process will be performed. Do your homework so you can understand the process the decision-makers are likely to use as well as any bias that the people doing the evaluation may have. Address these, but make absolutely certain your response sticks to the requirements as written and that you adhere scrupulously to the eval process.
  3. Create a solution. Your solution needs to be minimally compliant with the requirements defined at a price point that is competitive with where you believe the incumbent will be in the competition. This is no time to show off. Don’t provide too much value. You don’t want to be kicked to the curb because your solution is either too expensive or not achievable.

Finally, capture strategies are very much based on “What have you done for me lately?” Incumbents tend to think that the customer is more invested in their future working relationship with them than they probably are. It’s a mistake to think that a customer you’re currently working with really, really, REALLY wants to keep you and will do so at all costs. After 30 years in the federal marketplace, I can tell you that if someone else builds a better mousetrap and/or at a lower price point, most customers are all over it, which is good news for the non-incumbent.