Contract Management and its impact on your rebid

 

One of the reasons why incumbents lose their rebids that we at Rebidding Solutions always emphasise is your performance on the contract. While there is often a ‘knee jerk’ reaction on losing a rebid to blame the team writing and pricing the rebid submission (not always without cause), the impact of how the contract has been managed through its life is often missed. Plans to prevent future losses (if such plans are thought of) usually focus on better submission delivery and pricing for the next rebid – they rarely focus on improvements in contract management and delivery across the existing contract portfolio.

The potential for serious impacts on your business

As our survey of procurers emphasised , procurers see things differently. 88% said contract performance has an impact on their decision at the rebid. And recent events with some of the leading outsource suppliers in the UK have emphasised how getting the management of a contract wrong can have huge impacts in the wrong circumstances. These are extreme and (hopefully) rare examples, but they do bring the impact of contract management, often overlooked, into focus.

More often the issues and problems are more subtle.  But  because of this subtlety the impacts can be missed until a rebid is lost.

Contract management is a difficult balance

As well as managing the day to day delivery of the contract services to the customer, and profit to the company, the contract manager’s role (whether that is performed by someone with that title, or whether they are called an Account Manager or something else) is also to look ahead. Over the period of the contract they should have a clear plan for how they will improve the contract delivery for the customer, and build the types of strong, broad and positive relationships within the customer organisation which will pay dividends at rebid time. Improvement and good relationships often go hand in hand. Delivering improvements that meet or beat your customer’s expectations are likely to lead to better relationships. Failing to meet expectations is likely to lead to poorer relationships.

It can be difficult for a busy contract manager with many pressing day to day issues and priorities to focus on longer term plans. But when the rebid arrives the difference between a contract where there have been significant improvements to meet key customer needs, and changes in those needs over time, vs one that has just ’muddled through’ can be dramatic.

Are you building the 'right' relationships?

We have already mentioned the impact on customer relationships. Even on a contract with little improvement to show, the contract team can still think they have good relationships with the customer. But are they the sort of relationship that will make the difference between winning and losing? Are they:

  • With a broad range of senior customer deciders and influencers who will be involved in making the final rebid decision, as well as the decision of what is included in the rebid?
  • The type of relationship where these contacts actively want to you win and will, within the ethical and legal frameworks in place in their organisation, get you involved in helping write specifications for the rebid, give you information on what they are really looking for, guide you and be influenced by your suggestions?
  • The type of relationship where the customer will give you the maximum extensions on your contract and, if they have the option, not go to rebid at all?

'Muddling along' puts you in an increasingly difficult position

One of the other impacts of ‘muddling along’ is the level of change the customer is likely to seek in the rebid. Over the period of the contract the customer’s needs, as an organisation as well as a department, end users and individual managers within the organisation, will have changed (see figure 1 below). 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. The scope, specification and focus of the next contract as expressed in the rebid could be radically different to what you are delivering today. That means you will need to radically change your solution and approach too, losing the advantage of being able to show evidence that you are already delivering what is needed. And if your relationships aren’t good you might not have warning of these changes.
figure1

The 'Double Whammy' on your rebid

And the problems will 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 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 do so 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.
figure2

Do you really start your rebid on day one of the contract?

Many people will tell you that the rebid starts on day one of the contract. We agree. But putting that advice into action is usually the responsibility of your contract team. How many incumbents follow that advice through into real actions and approaches throughout the contract, and through how the contract team are chosen, managed,  trained, incentivised, supported and challenged on a monthly and quarterly basis?

And how many incumbent, when they lose a rebid, look at the possible genesis of that loss in their contract delivery.And then look at their other contracts to ensure the same causes are not repeated in future rebids?