Companies that do not have extensive experience in responding to Government tenders often experience difficulties in developing business in Government, and may end up giving up the market altogether. The Government sector differs from the private sector. For example, sales cycles are typically longer and more complex. But just like with any system: if you know the rules of the system, i.e. if you know how the system works, you can succeed.
Preparing and Responding To Public Tenders
While the procurement process is much longer than a tender, the tender process is the heart of the process, because this is where the award decision is made. This is where the supplier is selected; formally. The tender is preceded by a long process in which Government officials prepare the tender and decide which requirements to include in the tender. Preparing good tender specifications is an art by itself. I’ve seen numerous bad tenders in my life. They were written in such a way, that I could tell even before the tender has been awarded that these projects are doomed to become problematic: they will significantly exceed the budget, they will not be delivered on time, they will often not deliver the desired functionality and they will result in endless discussions about what is in scope and what is not. But in today’s blog I will not focus on how to prepare good tender specifications. Instead, I’ll write about how to successfully respond to a Government tender.
What Is a Public Tender?
Government procurement or public procurement is the procurement of goods, services and works on behalf of a public authority, such as a government agency. Taking the EU as an example, there are several types of public procurement: open procedure, restricted procedure, competitive negotiated procedure, competitive dialogue and more. The most challenging one is the open procedure, because theoretically anyone might be your competitor. For simplicity, in the current blog we consider all of these procedures combined, and refer to them as “public tenders”. Thus a public tender is any contract opportunity that is based on a public procurement process.
Public Tender: Fair Competition! (?)
Public procurement rules are designed to ensure fair competition. As such, a tender procedure is designed in such a way that the supplier with the best offer wins. One may question whether this by definition entails that competition is fair (the answer is: no (imho)), but for the sake of the current discussion, let’s assume that it is. As such, all suppliers have the same chance to win the tender, as long as they have a good solution and are willing to offer an attractive price. Yet suppliers without much experience with Government contracts are more likely to fail to win, even if they have the best solution. They lose because they lack the knowledge of how to respond to a public tender. If you are new to this domain, start by familiarizing yourself with public procurement procedures (or: tender procedures) that are relevant yo your market. For example, the European Commission has a website describing public tender procedures in the EU.
Tips and Guidance for Responding to Public Tenders
So let’s look at some concrete tips for writing successful proposals in response to Government (public) tenders.
Start with “Why”
In his book Start With Why, Simon Sinek talks about the importance of putting the Why (the purpose) before the How (the process), or the What (the product). Yet the “rookie mistake” in responding to Government tenders is to assume that the why is obvious (i.e. known), and to jump immediately into the solution description. Why is this such a big mistake? Because most solutions in the market are designed primarily for the private sector and not for Government. Consequently, the rationale of using the solution – which commercial staff can tell flawlessly even if you wake them up in the middle of the night – often does not apply to Government clients. When you present such a solution to a Government client, you have to rewrite your sales pitch, and tailor it to the specific use cases of Government, and to use “Government lingo”. “Why” stands here for the purpose, or the use case, for which the Government seeks a solution. I’ve seen cases where solutions that were deemed inferior in the private sector were actually superior in the public sector, because they enabled certain features that were hardly ever required by private sector clients, but they were of great use for Government officials. If the provider of such a solution is unable to describe the value of the solution for Government clients, they will fail to write a winning proposal. You may think that this is obvious and easy, but in my experience, most sales and pre-sales professionals who lack experience in Government will fail here. Knowledge of Government, its processes, its rationale and its definition of “value” is a critical success factor.
Responding to Public Tenders is an Exercise in Counting Points
Each proposal is awarded points based on criteria that have been defined in the tender document (“tender specifications”, or “terms of reference”). Points are typically given for the quality of the solution and for the price. Using a formula (which is also described in the tender document), the points result in a total score that reflects a price-quality ratio (the formula it self can be complex, but I won’t get into this level of detail today). The tender specifications typically describe how many points each area of the tender is “worth”. For example, in IT tenders, functional requirements may be worth X points, non-functional requirements may be worth Y points and the TCO (total cost of ownership) may be worth Z points. Understanding the points mechanism is critical because it provides insight into what is really important. Wise suppliers will shift their focus based on their understanding of the points system. For example, if you see that some functionality is worth many points, yet you do not yet support it, you may decide to make an upfront investment to support it, knowing that else you’re not likely to win. Or alternatively, you may choose to offer a different solution. Analyzing the points allocation in a tender is, therefore, an important part of the “solutioning” process (defining the solution that you will offer). More generally, it is an important part of preparing a winning proposal. Always remember: the winning party is not necessarily the party that offers what you may think is the best solution, but rather the winning party is the party that gets the most points because they tick the boxes that are worth most points.
Track the Requirements, and Respond to All of Them
Requirements may be stated throughout the tender. Sometimes such requirements are numbered (requirement number 1, requirement number 2,…), but often the tender specifications include a “story” where statements are captured such as “the tenderer should/must”, “the solution should/must” etc. Each such statement is a requirement for which you may be awarded points, or you may lose points (if you disregard the requirement). In order to maximize the number of points that you receive, you should make a list of all these requirements throughout the whole tender specifications, and ensure – one by one – that each requirement is addressed properly in your proposal. This type of work requires eye for detail.
Don’t Assume Prior Knowledge
Because the tender procedure is aimed to ensure fair competition, you cannot make any assumptions about what is known to the client (Government). Whatever is not written in your tender is assumed not to exist. Therefore, when you prepare a proposal for Government, you need to present all the details of what you’re able to do, and not assume that things are “obvious”, even if you deem them obvious. Consider the following example. Some years ago, there was a case where a certain supplier was known worldwide primarily as a leading provider of a specific solution. A tender was published for the development of such a solution, for a Government client. The supplier submitted a proposal and provided (as requested in the tender specifications) a few references of existing clients, without further elaborately making the point of them being the leading supplier of this solution worldwide. The supplier’s proposal was however found unworthy by the Government. How did this happen? The Government provided feedback (proposals are always evaluated, in writing), saying that the given references had been disqualified for a technical reason, and as such the supplier did not demonstrate sufficient experience in the field at hand. Bear in mind again, that this was the leading supplier of such a solution worldwide. This would be similar to a tender for manufacturing aircrafts, stating that Boeing or Airbus haven’t demonstrated having sufficient experience. It may be the case that the Government agency at hand wanted to award this contract to another party, and would have found any technical reason to disqualify the provider at hand. But it’s also a good example of the rule: don’t assume prior knowledge. Whatever you do not write about your solution, experience or skills is assumed to be unknown.
Non-Standard Terms & Conditions
Government agencies often impose their own terms and conditions (T&Cs). Depending on how the tender was written, there is limited or no room for negotiating different terms and conditions. Thus a supplier’s general terms and conditions often do not apply. Is this a problem for you? Then don’t bid on Government tenders. It’s a pity because Government agencies may be losing opportunities to obtain better and cheaper solutions due to their inflexibility regarding T&Cs. The inflexibility may be the result of Government agencies being (if one may generalize) more risk-averse than private sector organizations are. Thus commercial staff bidding on Government T&Cs will need to engage with their own legal teams and stretch the boundaries of their T&Cs. In doing so, bear in mind that in many cases standard T&Cs of companies were written with certain use cases in mind (for their solutions), while Government operates differently, and uses the same solutions for other use cases. Hence risks (which have been mitigated through your standard T&Cs) may not at all apply when you sell to Government.
Best Communication is No Communication?
Typically, when you have a problem with someone, you should talk to them and solve the problem. When you have a doubt about what they want, mean or intend, you talk to them and ask explicitly. But when dealing with Government tenders, these rules do not apply. In order to ensure fair competition, Government officials are not allowed to talk to any potential supplier during the tender process (this practice may create challenges for ongoing contracts, but that’s another discussion). If you have any doubts about what is actually meant, you cannot pick up the phone and ask your client. You cannot go and meet them for a chat and discuss it. You may only ask questions through a formal procedure, such that your questions – and the answers – are published openly (i.e. your competitors will see them too). In reality, this results in a situation where suppliers avoid asking questions (so that their bid strategy is not revealed to competition), and as a result, the offered solution may be less appropriate than if questions could have been asked freely. Some may say that this is a typical lose-lose situation, and others would respond that ensuring fair competition is more important.
Competitive Information at Your Fingertips
The procedures to ensure transparency and fair competition have some drawbacks, but they also have some positive “side effects”. For example, important information about competitors can be found in the public domain (if you know where to look for it). If you know your way in Government operations, you will be able to find this publicly available information about your competition. Such information is typically not available in the private sector, and therefore commercial staff who lacks experience in Government often wouldn’t even look for it. But beware: if the competition is just as resourceful, they may have such information about you too…
Implications for HR
When hiring commercial staff to work in the Government sector, experience with Government is highly important. Besides experience, I recommend to look for staff with these characteristics:
- Long stamina: Selling to Government is a long process. Salespeople who do not have enough patience and long-term attitude will fail.
- Creativity / consultative selling skills: Unless you’re selling a solution that has been designed for Government purposes, you’ll need to think very creatively about how your solutions (which have been designed for private-sector clients) fit in the Government space. You need solution sellers, not product sellers. When you sell to the private sector, you may have hundreds or thousands of potential clients with very similar business processes (e.g. financial institutions, electronics manufacturers etc), such that your pitch to all of them is similar. But you only have one central Government (in a country), and their business process is different from any private sector client. Most commercial staff have their “standard” sales pitch, and they will repeat it to any client who is willing to listen. That’s a recipe for failure in Government. You need to think creatively about how your solution supports the processes of Government, which is very different from all your other clients. Staff that lacks this creativity will not be able to describe why an “off-the-shelf” solution that is very popular in the private sector is suitable for a Government client too.
- Eye for detail: In public tenders you get points for each requirement. Don’t tell your own story (i.e. the story of your product) in the proposal. Instead, respond to every single detail that was included in the tender specifications. Because every detail is worth points. People that lack eye for detail will fail here.
- Structured working methods: Responding to public tenders is complex, and will typically require many activities with interdependencies. For example, your ability to offer a certain price (which sales staff may need to agree on with the Finance department) may have impact on the solution that you propose (due to the points system) and thus also on product development. And vice versa. In order to successfully navigate through this complexity, commercial staff preparing a proposal must treat the proposal as a project, and deploy project management techniques. Staff lacking structured working methods will fail here.
The Other Side of the Coin: How to Write Good Tender Specifications
The points system has been designed to ensure fair competition. It results however in a situation in which the winning party is the party that gets the most points, and not necessarily the party that has the best solution. In an ideal world, the supplier with the best solution always gets the most points, but… we do not live in an ideal world. In some cases, a supplier may even decide to offer an inferior solution (while they have a better solution) because the characteristics of the inferior solution allow them to “tick the boxes” and win. Also, the a.m. case of a proposal being disqualified or scored low because some information which is broadly known was not written explicitly in the proposal is very debatable. Is this right (fair competition: the supplier had the chance to write a good proposal but they didn’t) or is this wrong (was it really fair competition, or was the formal procedure (ab)used to award the tender to the party that the contracting authority wanted to award the tender to?). A lot of these deficiencies can be overcome by writing good tender specifications. Just like private sector suppliers often have difficulties in responding to tenders because they lack understanding of how Government works, also public sector professionals may have challenges in writing good tender specifications because they lack understanding of how the private sector works, or because they lack understanding of the solution domains. Both sides, therefore, deploy experienced consultants to help them overcome these challenges.
1, 2, 3, Action!
In this blog I list some of the key aspects of responding to Government tenders. Some of the tips are very concrete, and you can deploy them immediately (e.g. writing down the requirements, and verifying one-by-one that they have been addressed in the proposal). Other tips are less “executable”, and require a “learning by doing” process (e.g. describing how your solution fits the Government processes and rationale, rather than describing your solution like you describe it to private sector clients). Do you have questions? Do you need advice on how to implement these concepts in your organization? Do not hesitate to contact me through the contact form or through my LinkedIn profile.