Winning as the Incumbent
The number-one enemy of an incumbent contractor is complacency. By collecting customer feedback and monitoring performance throughout the life of a contract, incumbents can increase their chances of winning recompetes.
In a tough competitive market, retaining the business you have is just as difficult as winning new business, if not more so. When recompeting for work, follow the same best practices. Pursue incumbent contracts just as aggressively as new business. Leveraging incumbency without becoming complacent is the key to winning recompetes. Complacency is the number-one reason incumbent contractors lose.
Incumbent contractors usually have a competitive advantage during a recompete because they have been performing the work and know the scope, environment, and customer better than any challenger. The curse of incumbency is also based on this intimate knowledge, because sometimes the incumbent knows too much. Knowing too much about a contract can lead to an incumbent bidding to existing work, and not the RFP.
Capture of a current contract starts on the day it is awarded, because performance and planning throughout the period of performance sets up an effective recapture. While opportunity and proposal best practices are the same for recompete and new business, when preparing for a recompete, actual project performance becomes a part of the capture process.
Winning recompetes entails three phases:
- Performing to win. Making sure performance is on track, soliciting customer feedback, capturing metrics, and identifying trends
- Preparing to win. Capturing rebid with the vigor of new business, shaping acquisition and solicitation, and preparing price-to-win and the solution from the ground up
- Proposing to win. Writing a compelling proposal aligned to evaluation criteria, bidding to the solicitation (not what you know), and not assuming that the evaluator knows your performance history
1. During performance, collect customer feedback and identify areas for improvement.
Incumbent contractors have the added challenge of project execution and must perform well throughout the contract period of performance. If a contractor can show performance improvement over time, it can use that to its advantage during the recompete. Performing a contract with the mindset of capturing the next contract is difficult for contract teams, so the people performing the work are the best people to collect opportunity information.
Consider training the contract team in business development best practices so they are able to collect customer intelligence. Contract personnel, from the Program/Project Manager to the technical team, can all contribute to the opportunity effort during performance. They have access to customers on a daily basis and can gather important information to improve performance on the current contract and identify innovations for the next contract. Ad hoc discussions with customers at all levels can provide feedback on performance, identify customer issues/hot buttons, and give insight into future initiatives or challenges for the contract.
In U.S. government environments, for example, methods of collecting customer feedback on the current contract include Contractor Performance Assessment Reports (CPAR), Award Fee Determinations, and internal or external customer satisfaction surveys. A CPAR is not always provided, so a contractor may need to request a yearly report. Offer a self-assessment, and always discuss the CPAR or Award Fee Determination with the evaluator. This discussion should be focused on performance improvement, even if a contractor is rated highly.
Customer satisfaction surveys may seem redundant if a CPAR is submitted, but they can be used for different purposes and provide contractors with different types of information:
- The CPAR is a report on how well the contractor performed during the evaluated timeframe. A customer satisfaction survey can be used for identifying improvements in the future.
- The CPAR is a formal record of performance that is housed in the Past Performance Information Retrieval System (PPIRS). It can be accessed by any government agency. A customer satisfaction survey is a good way to identify issues that a customer may not want on the formal record but would like to address.
In European environments, organizations may complete statements of reference, which are filled out by the applicant and signed by the applicant’s customer. These statements usually require three references and sometimes ask for statements on both run and transition no more than 3 years old.
Informal ways of collecting feedback include customer reference visits, conference calls (sometimes without the contractor present), and visits/audits of the sites where services are to be provided.
By doing both formal and informal assessments, the customer can provide feedback on past performance and discuss options for future improvements.
2. Add value and provide continuous improvement while collecting metrics.
When you rebid as an incumbent, make sure you delivered on what was promised in the original proposal. No company wants to go into a recompetition with the win theme of “This time we mean it.”
During performance of the contract, document when you complete proposed achievements. Instead of performing a gap analysis right before the recompete, have the project team keep a log or register of accomplishments. A simple tool called an achievement tracking register can be used as a checklist.
|PROPOSAL SECTION||PROPOSED ACHIEVEMENT||DELIVERY DATE||COMMENTS|
|A.1.1||Implement training portal||2/12/13||Customer requested three additional courses, which were added prior to implementation. Delivered on schedule.|
An incumbent must also show performance improvement over the course of the contract. By determining meaningful performance measures or key performance indicators (KPI), a contractor can collect metrics that can be used for the recompete.
Any measures to be used for the recompete should:
- Be relevant to the contract
- Show performance that is important to the customer
- Reflect competence and capability
- Go beyond the minimum requirements set by the contract
Many contracts include quality measures, and performance-based contracts are sometimes very detailed and robust in their requirements. Look for external benchmarks for contract performance and target against best practices. These will vary by industry and service but will lend credence to a contractor’s claims. Keep a consistent record of performance measures, along with other performance information such as:
- Monthly reports
- Added value initiatives
- Positive customer comments or publicity about the contract
- Quality audits/reviews
Consider a repository for the recompete that includes this quality information, along with the original proposal and key information about the contract that can be used for the recompete effort.
A process to gather and report quality and value metrics to the customer on a regular basis is good practice for ensuring good communication and soliciting feedback. If a standard format is used for this regular reporting, then that same format, which the customer will be used to seeing, can be used in the recompete proposal. The proposal may be the first time that the full history of the contract performance is presented to the customer, but the customer will have already seen the information and confirmed its validity.
3. Capture recompetes just as you would new business.
Recompetes must be captured with as much vigor as new business. The Program/Project Manager is a valuable part of the opportunity team but is not a good choice for the Opportunity/Capture Manager. Assign an independent Opportunity/Capture Manager early and build the opportunity/capture team to start in earnest at least a year out from the RFP. Do not take competition lightly, and perform a competitor review. Prepare and implement counterstrategies to neutralize competitor activities. Incumbents often skip over a formal customer assessment because they believe that they know everything there is to know about “their” customer. A customer assessment is important to determine what the customer truly values and helps to focus the win strategy on what matters. It can also help to identify potential evaluators.
Also include the Contracting Officer/Specialist in your customer visits to assess acquisition timeline and strategy. Understanding the acquisition timeline allows an incumbent to work with the customer to shape the solicitation. Evaluation factors are key to making sure that the customer is able to evaluate important factors. If the transition plan, past performance, and key personnel are weighted highly, that favors the incumbent.
Incumbents may also have a discriminator that can be woven into the solicitation. It often helps to “think like a non-incumbent” to make sure complacency doesn’t set in. Design the solution from the ground up based solely on the requirements, and not how it is currently done, to avoid becoming stuck in the status quo.
4. Determine price-to-win.
One of the pitfalls of incumbency is cost growth because employees remain dedicated to a contract and their salaries increase over time. Another challenge is that an incumbent usually bid real salaries of its staff, whereas a challenger can bid survey rates at a low compensation ratio. If an incumbent starts planning for the recompete on the day of award, however, the Program/Project Manager can rotate staff on the contract to avoid this salary creep.
After performing on a contract, an incumbent knows exactly how many employees it really takes to perform the work required, making it hard to bid blindly to the scope of work. An independent price-to-win is critical on a recompete to guard against complacency and the dreaded “knowing too much.” The cost estimate should be developed from the bottom up to get a fresh perspective.
5. Propose against evaluation factors.
The old adage “proposals are scored, not read” might very well apply here. As the incumbent, never assume that customer evaluators know what you have done on the current contract. The proposal is evaluated on its own merit, so make sure to get the highest score based on the evaluation factors listed in the RFP.
To score highly and stay compliant, incumbents must use knowledge of the customer and the work, but only as it relates to what is in the RFP. All best practices for winning new business apply for recompetes: incumbent proposals must provide discriminators, identify customer benefits, be compliant and compelling, ghost the competition, and substantiate claims. The key is to leverage incumbency, not rest on it.
Common Pitfalls and Misconceptions
Complacency and overconfidence
The most common pitfall of incumbency is “incumbent-itis”—the arrogance and complacency that leads to a false sense of security, including underestimating the competition. Often, incumbents underestimate the risk their customer is willing to take to change contractors. This misconception has been proven false over the past few years. Incumbent win rates are on the decline, and customers are more willing to change contractors than to pay a premium for retaining one.
Failure to innovate
The lack of forward-thinking innovation is another pitfall of incumbents. Often, the incumbent’s proposal reads like past performance addressing everything it has done, instead of what it will do during the next contract period. Phrases like, “This is how we do it” or “We will continue to…” are often found in incumbent proposals. Incumbents must challenge themselves to offer their customers the best solution to their problems, instead of simply continuing the work they currently do.
- Although incumbent contractors enter recompetes with many competitive advantages, many are hindered by complacency and “knowing too much” about a contract
- Businesses should begin capture and recompete efforts during a current contract, well before an RFP is released
- Formal and informal assessments allow customers to provide feedback on past performance and discuss options for future improvements. Contractors should share accomplishments and metrics with customers throughout the life of a contract.
- Incumbents should approach rebid fresh, leveraging customer knowledge but not becoming constrained by it