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There are thousands of public sector tenders active at any given time in the UK alone and many could look like a good fit for your company. Unfortunately, it’s unlikely your sales or bid team will have the resources to chase after every opportunity, in fact if you’re a small company you might not even have someone devoted to bidding. So how do you prioritise to make sure you only bid where you have a good chance of winning? We spoke to Philip Norman, Director of Bidbetter, for advice on making the decision: ‘To bid or not to bid.’
Can you tell us a bit about your company and your expertise?
Bidbetter helps businesses win public contracts through bid writing, bid review, training and consultancy, with my specific background being in public procurement. I worked within the NHS, then I had a six year stint in the Scottish government. I set up the business four years ago to bridge the gap between how public bodies try to buy goods and services and how suppliers are trying to sell their goods and services into the public sector. We position ourselves as the conduit between them.
What steps should a supplier that’s interested in a tender go through to make the bid/no bid decision?
There’s many things they should be considering and you could probably break that down into a commercial decision, based on price, profitability, the revenue they’re going to get from the contract, and then considerations around deliverables, such as whether the opportunity is fit for purpose, what kind of competition is involved, do they have a genuine chance of winning? Do they have the resource to deliver within the timeframes? Do they need additional partners to help deliver the contract? And what is their overarching corporate strategy?
When you qualify an opportunity, you have to find the right ones. Do you have any specific advice on whether you should go for a tender if you have not already delivered precisely what the buyer is asking for?
The tender is really the tip of the iceberg. Procurement departments develop specifications and procurement strategies, but they’re not necessarily an expert in what they buy, it could be stationary one week and prosthetic legs the next (in the case of the NHS!). They rely upon trusted suppliers to gain an understanding of that particular market. Therefore, businesses have to try their hardest to engage with public bodies, because those that engage are the ones that affect what the requirement looks like and, whether it be a deliberate strategy or not, steer it around to what their offering is. Compare that to a supplier that’s never engaged with that particular buyer. They see the opportunity cold at the point of tender and then they try to stuff their offering into the requirements.
So if you’ve not had engagement with the buyer, you probably shouldn’t bid?
That couldn’t be a categorical 'No', but there are definite merits in the pre-engagement piece. A bid no bid process with a heavy weighting given to the relationship and pre-engagement with the buyer would be a sensible approach. If there hasn’t been any engagement, that’s got to go some way towards deciding against bidding.
In the stringent bid/no bid process, would you encourage people to be quite self-critical?
Definitely. I think especially where businesses don’t have a bid writer, they’re prone to going for everything. The more tenders they go for, the more they fail, and the worse habits they pick up. For example, they will reuse the previous tender content that hasn’t been tested and certainly hasn’t been successful. Whereas, if they’re picking the opportunities that are absolutely right for their business based on scoring for the bid/no bid decision, that’s a genuine opportunity. Then if they’re successful, they know why, and if they’re unsuccessful, there’s the opportunity to focus on the feedback so they can use it next time. If they’re churning out tender after tender after tender, there is no opportunity to stop and undertake that really valuable lessons learned process.
Then there’s the win rate. The more opportunities you go for without the correct infrastructure in place, the worse your win rate is going to be. If you’re picking the right opportunity because you’ve undertaken a bid/no bid decision process, the higher your win rate will be. As a bid writer, that really is the key performance indicator.
So if you’ve failed in a bid and you’ve got your feedback, what should you be taking forward to your next bid? Particularly if the feedback you get is anodyne, as it sometimes is.
There are some public bodies that give really generic feedback, but there are others whose feedback is very good, perhaps because they’re dealing with fewer suppliers. I think some bidders just accept the first feedback they get, but there are opportunities to push for more, including an option to have a face-to-face talk. If public bodies are supporting SMEs, that’s the kind of practice that they should be adopting.
Even if you do get good feedback, it’s quite easy to not take that through to your next bid/no bid decision. What can you do to ensure that you’re learning the lessons from lost bids?
Depending what the feedback is, you have to build it into your next process, so if it’s around content development, you can build that into your next bid/no bid matrix. Ultimately though, it can all be channelled into that gut feeling of ‘Are we going to win this?’. A bid/no bid decision matrix can be very technical and focus on all kinds of things, but there has to be a line in there that focuses on ‘What is our instinct?’
Sometimes, you start on a bid knowing roughly the price variations etc., but as you develop the bid, you realise you’ll have to lower your price to be competitive until you reach a point which, had you been there before you started bidding, you wouldn’t have bid at all. At that point, do you just submit the bid, almost hoping you won’t win?
I see that very often. I think at that point the businesses themselves have to make the decision as to how strategically important that particular tender is. If it is a once a year opportunity then I think those parameters might move throughout the process, because you’ve invested that time already, so your expectations of profitability might have changed. On the other hand, if you go for four or five tenders a month, you might take a completely different approach.
Sometimes we see people bidding low and then increasing costs once the contract is in place. Do you have any thoughts about that ‘land and expand’ practice?
You do get that, and I think that’s a result of a bit of conflict in the tender process between the buyer and the supplier that’s come about over the years. They’re not working in partnership, more as opponents. The partnership approach would involve inviting tenders that are going to be a win for both parties. However, we often see a ‘them and us’ approach where it’s so competitive to win a contract that a supplier tries to make additional profit once they’re on a contract. It’s happening because the buying organisation haven’t built a mechanism into their terms and conditions to stop it, and in the bigger public bodies they probably wouldn’t get away with it. These bodies have agreed break clauses and you can only discuss the price at those points.
If you’re looking at a opportunity and you think, ‘I’m not sure of my pricing on this, but it’s really important that I win’, would you say it’s better to aim lower than higher?
It’s difficult for us to talk to our clients about this, because we don’t know their commercial models as well as they do, but I would always recommend that every bid that goes in must be sustainable. I certainly wouldn’t recommend to our clients any kind of devious pricing strategy. Certainly there are businesses within markets which have a range of products at different margins. They will go in with very low margin products on the assumption that, once in, they’ll be able to sell the higher margined products that aren’t covered by that contract. It’s a really dangerous strategy to take in the public sector as buyers there are very attuned to it and you could end up taking a loss. So while we do advise on the pricing element, the advice we always give is that pricing has to be sustainable. The public body doesn’t want to have a contract collapse under them and the suppliers don’t want to be thrown off the contract because they can’t deliver their promises.
So how would Bidbetter help in bid/no bid decisions and more generally?
We provide services across the bid management process and bid/no bid falls into that. We would look at the number of bids the supplier has submitted and what their win rate is. If their win rate is really low and they’ve submitted loads of bids, we would look at the reasons why they’re pursuing these opportunities. We would put in place a bid/no bid matrix that they would score and, depending what that scoring may be, would then take to different levels of authority in that business for sign off before pursuing the opportunity. Instead of bid writing being operated in isolation, everybody should buys into the bid management process and every single bid is focused on the specific opportunity.
We find most of the time it’s just a question of raising awareness of the decision factors and putting bid infrastructure in place, because a lot of SMEs don’t have this. In a lot of cases they have a situation where bid writing is undertaken by the person who’s available at the time rather than having a bid professional. So even to introduce some basic bid management practices is alien to many of these businesses.
It can be an uncomfortable arrangement unless you’re used to spending time around the public sector, can’t it? When most people start a business, they just focus on delivering goods or services. When confronted by a tender for the first time, it can be terrifying.
It is, until you’ve done that first one. Once you’ve gone through the process, you learn those lessons really quickly.
Thank you for your time today Philip, I hope you can help lots of companies win profitable business from the public sector.
Philip is Director of Bidbetter. Find out more here: http://bid-better.co.uk/.
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