Worth It to Win It, or Bad Losers? September 9, 2015 at 11:05 am

It’s a delicate decision to challenge a lost bid decision and possibly alienate yourself as a “troublemaker”. Should you acquiesce or fight for what’s right for everyone?

I don’t think that there is an easy answer to this. However, I think that often, bid teams get their answer wrong, back off a justifiable challenge and potentially lose business that should have been theirs.

Commercial Competitions

The decision whether or not to challenge a bid competition result will normally rely upon a fairly forensic examination of the circumstances. My expertise lies, most recently, in Public Sector procurement. But if I look at my past experience across both commercial and Public Sector bidding I perceive a large difference: in a commercial bid, if you are not selected by the client, that’s tough and there is usually not much you can do about it. Unless, of course, you can play heavyweight politics, in which case, anything is possible!

Can the client’s staff then hold a grudge in such a situation? Of course they can and this is part of the balance you must consider when you decide to push back on their decision. If the decision is altered in your favour, then someone in the client’s staff will be hurt by it. Part of your strategy will be to work out who, and how much influence they will have now and in the future. Then you can do a pain/gain calculation and plan accordingly.

Public Sector

In the Public Sector, things are very markedly different. The first point is that the adherence to the process is more important than the outcome. If you don’t believe me, try lodging your bid ten minutes after the cut off! The next point is that if something has truly gone awry with the process, and the wrong result has been declared, you will get very little opposition when you highlight this from the majority of the Public Sector staff. Excepting, that is, those who either sought to manipulate the process to meet their own agenda or, just “screwed it up” without any intention to favour any bid. The general perception will be one of “it is good that this process fault has been identified so we can prevent any reoccurrence”. It may be difficult and complex to recover the situation, but the supplier who identified the issue will normally, by the wider Public Sector audience, not be seen as a troublemaker.

Nevertheless, an unsubstantiated accusation that an error has occurred will be treated differently. Unless the process aberration is obvious, then the complainant’s challenge might well be seen as “sour grapes”. This will always be the case if the complaint is based upon, “this is not the best outcome for the taxpayer”, or “the decision is wrong because we have the better product and our price was lower”! You cannot challenge on the basis of common sense or fairness; only that the process has been misapplied.

Discovering the Details

Of course, if you have been told you have not won the bid, you will have asked for a debrief. After all, if you have lost the bid, the lessons learned are the ONLY return you will get on your investment. You owe it to your business to recover at least something from the investment it has made in the bid process. Also, if you have your suspicions that something has gone wrong with the process, this is the point where you might be able to confirm these suspicions.

If your suspicions are confirmed in the debrief, and you could not be sure of this beforehand, then a formal challenge to the procurement team will halt the contract award whilst the problems are resolved under the “Standstill” or “Alcatel” arrangements. In my experience, this is the point that most easily and most often resolves the bidder’s problems satisfactorily.

Timing

On the other hand, you may already know exactly what the problem is and who is responsible. Now your activity begins with one of determining the timing. If you knew, or should have known, about the process error 30 days or more beforehand, you can forget a challenge. They have got away with it (except in some very specific circumstances). The 30 day time limit rule is well established and there is case law to back this up. However, if the discovery is before the 30 day point, then you have the time remaining up to 30 days to lodge a legal challenge in the courts.

In other words, you cannot “bank” an issue you knew about early in the bid cycle and then initiate a challenge to the decision only after you find you have not won. You have got to act within the 30 days.

Catching Them Out

But let us presume that you have caught some Public Sector official blatantly misapplying the rules. In a recent case, at the debrief it became evident that the procurement team had weighted the evaluation scores in a different way to that which they had set out in the bid documents. This altered the total scores to the point that the positions of the top two bidders were reversed. This case is well known to me and what happened here was that the challenge was immediately lodged when this became apparent.

If you mount a challenge, you have to ensure you have the corporate resolve to see the challenge through. Moreover, you and your corporate management must be very clear about the outcome you are prepared to accept. In the case above, the Public Sector procurement team acknowledged they had made a mistake. However, they offered to rerun the competition again and the aggrieved second place competitor accepted this offer, even though its bid had clearly won under the published rules. So all the three original competitors settled down to produce another full proposal. The final result, the third place competitor from the first round did much better in the second competition and won. Neither of the two organisations whose bids led in the first evaluation got the prize.

Of course, having proved it had clearly won under the rules of the competition if they were fairly applied, the disputing bidder in the first competition could and should have stood its ground, and demanded the contract be awarded in accordance with the corrected evaluation result.

Lack of Resolve

So why did this bidding team’s management back away from exercising its right to get the contract? Probably because someone in a senior position was worried about what the impact of making such waves might be. The organisation had other Public Sector contracts and it is likely the management was worried about its reputation if it challenged too hard. So the safest way forward may have appeared to be, to accept that the evaluators had recognised their errors and then give them the let-out of allowing a recompetition. At least this would give their bidding team the opportunity to have their bid re-evaluated. Then they would win as they had before, wouldn’t they?

The outcome was that this bidding team paid for not one, but two, entire bids and then got nothing in return.

Reputation Damage

Let us suppose that the bidding team had stood its ground, insisted on the first competition being re-evaluated properly and then been awarded the contract. And let us suppose that the Public Sector team were mightily embarrassed that their incompetence had been exposed, to the point that they wanted to get revenge on the bidding organisation. What could they do?

If they interfered with the evaluation of the next bid, their chances of being exposed would be high and unlikely to be successful. Their peers would have known they had been caught because the process had been misused once before and would be looking out for any similar future embarrassment. The bid team, also, would be reviewing the details of the process very carefully and ready to complain if anything went wrong. The risks would be far too great to get revenge and it is more likely that this next competition would be run more fairly and with greater regard to the process than ever before.

If the client had other contracts with the same Public Sector body which were being performed satisfactorily, why would the Public Sector staff involved with them allow others in their department (who had been caught interfering with their own procurement processes) have any involvement with these other projects? After all, they were caught before and there would be a high likelihood of them being caught again if they did something untoward.

Of course, senior and influential Public Sector staff can, individually sway things for or against any supplier. But what they can do outside what is “reasonable” is very limited on their own. Ultimately, the risk to the bid team of a robust but fair challenge to a faulty decision would be very unlikely to have any substantial impact on any other contract, now or in the future because the processes don’t permit it.

Summary

So, in summary, I believe that if you have a legitimate grievance in a Public Sector competition you should evaluate the tactical advantages of a challenge and if it is decided to proceed, pursue the challenge as robustly as possible until you get the outcome you want. Of course you have to recognise the 30 day rule and make a decision to meet that timescale. Also, you should never try to challenge for any other reason than the process has been misused. But once you have taken the decision to proceed, don’t wimp out once things start to go your way.