Bid versus No-Bid Decisions: Internal Strategy
Contract Bid Evaluation
One of the most important activities that an entity considering bidding on new public sector business has to perform is deciding when to bid and when to forego a potential opportunity. Frequently prospective bidders spend so much time, effort, and resources during the contract evaluation phase that making a “no-bid” decision is hard even when it is the right thing to do for the organization, so they go forward with the ‘bid.’ In these cases, the decision is emotional rather than strategic.
Formalized “bid no-bid” review processes can take the emotion out of the decision and bring it back to business strategy. There are several actions that are essential to the evaluation and review. The prospective bidder must have:
- A thorough understanding of the business for which you are bidding and determination if the new business is aligned with strategic organizational goals
- Intelligence about the political environment (for example, is a competitor favored by the customer releasing the RFP? Where does the bidder’s company stand in the political arena?)
- Detailed knowledge of the capabilities and approaches of your competitors
- Knowledge about the Capabilities and Gaps (called Cap and Gap) relating to the opportunity
- Costs estimates for infrastructure requirements
- Expected contract value (in the case of state contracts, the budgeted contract amount may be noted in the state’s annual budget).
Once this information is compiled, the entities executives and subject matter experts can perform an honest contract bid evaluation based on all necessary angles of factual research and be best prepared to make a fully informed “bid no-bid” decision that is both strategic and tactical.