One of the key advantages of incumbency, aside from the relationship and familiarity with the client’s objectives, requirements and environment, is of course the incumbent’s demonstrated performance over the life of the contract to date. However, this assumes that performance in the contract has been better than just “good”, and that the client clearly understands the value provided. So preparation for the next re-tender really starts on the first day of a new contract, by:
And finally, and following on from this last point, many purchasers are now looking for fixed prices, if not actual small annual reductions, over the life of a three-year contract. Reasons for this may include mining companies seeking to drive down costs in line with falling commodity prices, or government agencies required to pass on “efficiency dividends” to the government – or a not entirely unreasonable belief that contractors may be able to identify efficiencies as they become more experienced in the contract and/or the set-up costs of the first year dissipate. This may be seen more relevant to the eventual re-tender than the current contract, but (providing the cost reductions are not so large that the customer wonders why some of them were not offered in the current contract) there is no harm in looking for such efficiencies during the current contract and then capitalising on them in the re-tender ………….