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Sunday, November 08, 2009

Branding and public bidding

You might be thinking: "This 'branding' stuff might be relevant if I am competing for work with residential clients or perhaps for non-public commercial work, but what does it have to do with conventional public sector advertised bidding opportunities?"

To some extent you are right. In the purest environment, where low price rules the space, it isn't about brand as much as it is your efficiencies in keeping costs so low that you can win the work, and still make a profit (hard to do.)

But things aren't always as they seem to be, and if you are one of dozens chasing public works, you should appreciate that in many cases the game is stacked against you from the start, and you can't even see it -- because your competitor has quietly won the branding war.

I've often cited an example of a Midwestern contractor who must obviously remain unidentified. His business consistently wins work at the local hospital, even though tendering rules there are always that the lowest bid must win the work. How does he do it? The contractor and hospital administration pre-arrange change order authorizations, so he can bid the work low and know that, with the change orders approved, he will still make a profit.

You may find the ethics of this story dubious; but there is nothing fishy about why this is happening. The hospital administration had been burned too many times by low bidders not completing work well, so they want to be sure that the contractor they really wish to win the work gets the opportunity.

If you are one of the many 'outsiders' thinking you can win by bidding low, do you stand a chance?

The gaming of "low bid wins" rules almost inevitably reflect two possibilities. The first is corruption -- someone is greasing some palms to restate the rules. The second is branding -- the successful contractor has built so much trust, and such positive relations and such a healthy brand, that the game is stacked from the start.

Assuming you don't want to get into bribery, if you aren't connected (with a great 'secret' brand with the public sector purchasing authority), you often can't get in, no matter how hard you try.

And where the competition is truly fair and open, and when the project size is small, the competition is likely to be so fierce that the low bidder will be working for minimum wage, if anything. In other words it is a victory that counts for little if you want to succeed in business.

In some cases, especially for design work in the public sector in the U.S., this favoritism is formalized legally through the Brooks Act provisions which mandate that experience and quality count more than price.

Are there any answers to this problem?

  • First, you must be realistic. If you don't have a previously established relationship and some inside track knowledge of your likeliness of success, your chances of winning are remote. So focus your resources to where you have some relationships and a reasonable chance of success.
  • Second, spend far more of your marketing time building these relationships than chasing bids once the opportunity is public. In other words, get to know the people who can authorize business with you if they are comfortable with your capacities. You may find value in joining and participating in associations relevant to your potential clients.
  • Third, when you get your first job, live up to every possible standard of communication, quality, and service you can. Build your brand. Then the next time around things will be much easier.
  • Finally, while proposal presentation is more the icing on the cake than the substance, consider carefully how you document and answer the RFP and tender calls. Of course, ensure you provide all information required to comply, and don't include any information not required which might cause problems. Then consider creative options including the effective use of photos, video clips (if the application is on-line), testimonials, references, and constructive suggestions to increase the project's success. If you believe you have a realistic chance, go all out and ensure your proposal is far better than the norm.

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