To win business within the public sector, and particularly contracts with the NHS, the relevant Commissioning Organisation will nearly always enter into a procurement process that ensures that their decision making is:
- Open and transparent and follows correct procurement rules e.g. OJEU
- Effective in that the best bid is selected (based on cost and quality)
- Auditable
- Avoids a subsequent challenge.
Such procurements are time-consuming and costly…and that’s just for Commissioners!
We know as bidding organisations that:
- There will be a number of competing bidders
- That we will have to register interest and often pass through a prequalification (PQQ) exercise before being invited to tender. Sometimes the PQQ process can be like a “mini-ITT”.
- That significant resource will have to be committed to the response process, not only from our Business Development team but also resources in most of the other areas in our organisation including our clinical, technical, operational, finance, HR, IM&T, estates, project management, procurement. Legal and Senior Managerial and Director resources. In fact, nearly every area of the organisation will be involved.
- This creates a substantial cost not only financially but also organisational stress in taking staff away from their “day jobs” to support the tender, who may have to be “backfilled”.
- However good we are at bidding we cannot expect to win everything we tender for.
- De-qualifying, at the earliest opportunity, those bids that we are least likely to win, is essential in limiting costs, wasted staff resources and disruption to existing operational services
What this white paper does:
Sets out a framework and methodology for decreasing the number of unsuccessful tenders using robust identification and qualification techniques, utilising internal and external tools o achieve our aim to:
Bid less – win more
Within the narrative, we refer to services (rather than products). We are not excluding the provision of products by bidders, but for simpler reading, we refer to services.
Many organisations focus on bidding on an opportunistic basis without having done much or indeed any groundwork. There is a 2 or 3-year time frame (depending on the complexity, extent of service reconfiguration and size of contract) between commissioners deciding to tender services and service implementation by the successful bidder. By the time a tender is advertised a year or more may have elapsed from the decision to start a procurement process.
The identification & qualification (IQ) stage
Successful organisations will:-
- Identify potential opportunities at the earliest moment and have a 1-3 year pipeline of potential opportunities.
- Fully research these opportunities
- Have engaged and ideally built a relationship with Commissioners (if your organisation is not local, you can be sure that the incumbent and other bidders will be on “first name terms” with Commissioners). Bidding “cold” will put your organisation in the position of an outsider.
- Qualify those opportunities which “fit” with the organisation’s strategy, are winnable and will deliver the financial outcome in line with the organisation’s financial criteria
- Present the opportunities within the organisation either in a meeting and/or by conference call and agree to progress a bid or make a no-bid decision
Low IQ – limited pipeline – no personalisation – low win rate
An ambitious healthcare provider trying to grow its business from a low base had some early initial success in bidding for contracts procured centrally by the NHS. However, as it tried to win business from regionally-based commissioners their success rate dropped.
Feedback after a number of unsuccessful bids was that commissioners felt the provider could deliver the services, but tender submissions were not personalised/tailored. Bids were almost a standard template and never referred to local issues e.g. locations for service delivery, interworking with the other members of the local healthcare economy, specific local population needs e.g., higher prevalence of older people, areas of deprivation or particular health conditions.
Commissioners felt they were being offered a “one size fits all” impersonal service that was not structured to their needs.
The provider did not set up an account management structure whereby Business Development team members would be allocated accounts by area or service line to develop. Attempts to create this structure were frustrated by an “all hands to the pumps” requirement when bids that were attractive to the organisation came in groups. During these bid “spikes” the BD team would switch from IQ to Bid mode (and back again 3/6 months later).
Whilst the provider had the success it never achieved its full potential for much more significant market gains as it did not build a pipeline during the identification and qualification (IQ) stage.
If you know where you are going you are more likely to get there
What do we want to bid for and why?
All organisations will (or should) have a strategy that creates a common understanding of the organisation’s objectives in the short and longer-term. This is often expressed in terms of:
- Creating a strong/leading market position
- Profitable revenue growth
- Increased geographical areas of coverage
- Developing new services for existing markets
- Defending the current revenue and activity base to keep the organisation viable
Can we deliver?
Planning for success – is the organisation ready to win tenders and equally important, deliver the services well
Does the organisation have the resources to bid for new business or re-bid for existing services that are re-tendered? If an organisation’s operational capacity and capability do not keep up with the success of the Business Development/Sales department – service implementation and delivery may be poor, incurring at best some contract penalties and at worst jeopardise the contract award.
Organisations need to be aware of, and resourced, not only in the Business Development Department but also across all areas of the organisation. Failure to commit resources to the pursuit of new business (and/or the retention of existing services) will result in:
- Sub Optimal bids which fail to score well against competitors
- Detriment to existing services as staff are distracted undertaking bid activity
- Staff supporting bids and having to work additional hours to maintain the output from their existing role.
Staff will resent the extra workload of supporting bids where the organisation is unsuccessful and this will only be exacerbated by a low win ratio (less than one win in three). There could be a loss of confidence in the Business Development department and the organisation’s management and strategy.
Identification and qualification (IQ) stage
Pre-bid engagement, before procurement rules prevent contact, can influence specifications, opinions and even prevent tenders being issued.
1. Data Mining/Desk Research
It is important for the Business Development Team to “data mine” Websites such as those of CCGs and Local Authorities. There are many sources of information on these sites including published minutes of Board Meetings which often reveal interesting developments. This activity will be complemented by the Contract Advance Service.
The Business Development Team should routinely carry out extensive Desk Research on target markets especially where either services are to be tendered or the tender process has started.
The key objectives of the Business Development department are to:
- Search for new business opportunities through horizon scanning of markets to identify opportunities.
- Develop relationships with key Customers/Commissioners and identify Commissioning Intentions and further enable access to opportunities at the market testing stage.
- Compile a list of Contracts held by each Commissioning Organisation including:-
- The current provider
- The current initial term (and any possible extensions)
- The current provider’s performance
- The value of the contract
- Any Contract breaches or performance penalties
- Map the local health economy including:-
- All NHS organisations (CCGs, Secondary Care Trusts, Mental Health Trusts, Community Services Trusts, Ambulance Trusts, etc.)
- Council provided Services
- Other Independent Sector and third sector providers
- Voluntary sector organisations including charities
- GP and other provider organisations
- Build relationships within the Health Economy across all Commissioners and providers
- Support and integrate with any local operational units across each locality/region.
- Create a pipeline of opportunities allowing your organisation to identify and scope opportunities over a 1-3 year future time frame.
Success after initial no-bid
Speaking with Business Development staff, if the identification and qualification stages have been undertaken thoroughly the bidding team will have a high degree of confidence that a bid will be successful.
An extreme example of this is when a no-bid decision becomes a winning bid.
Company B had carried out a lot of pre-engagement activity for a service and had agreed internally to proceed.
However the Commissioners issued the ITT but with a significantly reduced budget, which if exceeded by bidders would result in the non-evaluation of their bid and the bid would be discarded. It was decided that Company B could not put a bid forward as they would have not been able to deliver the services AS SPECIFIED for the budget.
Because of the relationship that had been built up with commissioners Company B decided to submit a no-bid letter explaining why, based on their experience of delivering similar services in a similar environment, they did not feel the budget was sufficient to deliver the services required by Commissioners.
They were (pleasantly) surprised when a short while later they received a formal letter from the Commissioners asking them to suggest a budget for the services required. They responded with our proposed revised budget.
The ITT was re-issued and the Commissioners substantially increased the budget but not as far as the suggested budget level.
Company B reasoned that if the Commissioners were prepared to change their ITT it was clear that they wanted Company B to bid and that their chances of success were high. Company B submitted a strong tender for the services and was awarded a 5-year contract and thereafter successfully re-bid for services following the initial term.
Know your customer – “know” you have a high chance of success
From qualification to PQQ submission stage
- Review the opportunity at all stages of the Business Development Process e.g. PQQ, mid Tender, tender and post tender award to ensure that the bid should still be pursued.
- Express Interest in the Opportunity to ensure your organisation is invited to tender either after completing the Pre-Qualification Questionnaire (PQQ) – assuming that the Commissioners have this stage in their procurement process – or the tender is open to any bidder.
- (Continue to) Engage with Commissioners to build a relationship and understand the needs and key objectives of the Commissioner
- Use Clarification Questions to obtain clarity and information regarding the opportunity.
- Agree your Bid organisation structure – Identify any material subcontractors, bid partners or a lead contractor if your organisation only wants to bid for an element of the services to be delivered.
- Undertake competitive analysis
- As required submit a PQQ
Bid selection
Bid selection is hugely important to minimize activity that does not have a positive outcome. Not proceeding with a bid saves time, resources and money. The organisation can put greater effort into those tenders it judges will have the greatest chance of success and will deliver the financial outcome required to maintain and grow the business.
However good our Bid selection is it will be next to impossible to win every bid we submit. One measure of the efficiency of our Business Development process is the win ratio.
Even after submitting a PQQ you may decide not to bid because:
- There are more bid opportunities in a given time frame than the organisation can resource
- The Commissioners make significant changes to the tender e.g. reducing the budget, having an onerous performance management regime.
- There is a substantial capital investment required which the organisation cannot commit to.
- The required IM&T infrastructure cannot be provided or supported by the organisation’s existing IM&T Department
- The contracting terms are unacceptable or unduly onerous.
However, the Qualification stage should have identified some of these issues.
Overcoming resource and capability shortfall
Contracts Advance provide interim and contract Business Development staff as a flexible resource to organisations to increase bid capacity and capability
The advantages of using Contracts Advance, particularly on a regular basis are:
- Contracts Advance staff will complement existing resources and provide experience, energy, enthusiasm, and commitment not only during a tender process but pre and post tender.
- Contracts Advance staff will bring a fresh perspective to the organisation, suggest new ways of working and sanity check the existing processes and procedures
- Contracts Advance staff are proven, successful and capable individuals, bringing invaluable experience to the client organisation, with additional skills that will enhance the organisations capability
- Contracts Advance resources are fully focused on a specific piece of work e.g. a tender submission and ensure that the organisation follows a robust process with checks and balances to maintain the integrity of the tender.
- Contracts Advance staff can be team leaders or team players and provide reviews, reports, and feedback for Senior Managers and Directors. We set up a Governance framework to keep all bid contributors and reviewers informed, that deadlines are met and ensure that the bid is fully approved for content and financial viability before submission.
Types of bid (organisational perspective)
Bids can be categorized as:
- Defensive
- Expansive
Each category of bid has different characteristics in terms of the Business Development processes required to address them, and also in the resource requirements to support them.
Defensive: Defined as bidding (or re-bidding) for existing services that the organization already delivers and which are being re-tendered. Retention of services are critically important so that existing revenues are not eroded. Such opportunities should still be assessed for present and future profitability and, with Commissioners operating level budgets maintained at the existing level (or with minimal increases), the return that the organization can make over the full term of the (new) contract.
Company F had been delivering a county-wide community service for 4 years and the Commissioning Authority had changed from a PCT to a CCG following changes to commissioning within the NHS.
A Business Development Manager was assigned to the local unit to lead the re-bid using the local team as subject matter experts supported by central support functions at the head office. The service appeared to have been well received and commissioners had added in significant additional services that were not being provided by local NHS organisations.
The contract was very viable financially and Company F was keen to retain the service on a re-bid.
However, the local unit had not proactively engaged with the new (CCG) commissioners and the feeling was that they favoured a competitive bidder and that this was a “done deal”.
The ITT required additional service elements within a tight budget. As the ITT process was active the opportunities to engage with commissioners were limited. Additionally, the Clinical Consultant Lead for the service could not continue due to health reasons.
The local team, the BD manager, external bid writer, and some core support formed a virtual team and worked together well and productively, identifying a number of innovations to improve services and deliver the additional service elements required in the ITT.
A bid was successful and following the interview Company F was provisionally awarded the contract subject to, what turned into, protracted negotiations regarding the price of the contract. Eventually, the Commissioners accepted Company E’s proposal and costings.
The services were retained and staff roles were secured in the operational unit.
However, the outcome could have been different from the lack of commissioner engagement by the local team. This highlights that not all operational units are good at “account management” and often need support and guidance to carry out the relationship building and maintenance. Company F came to the re-bid if not “cold” then “lukewarm”.
A Hospital Trust had a department and team of clinicians who were delivering a range of services including primary/community outpatient services and significant complex secondary care services. The Commissioners wanted to move the outpatient and more straightforward elements of secondary care to a community setting to provide better, more convenient patient access and lower care costs.
They chose to procure the redesigned services by inviting existing providers to work collaboratively and propose a reconfiguration of services to achieve the outcomes the commissioners wanted.
An initial evaluation by the Trust of the costs and revenue from the existing services showed that the Trust was losing money on these services. However, the data gathering from the Trust’s financial systems was complicated and not easy to analyse, especially as only part of the services (outpatient services mainly) would be delivered by the existing community provider.
The simple solution, therefore, appeared to be to allow services to be provided by other providers thereby relinquishing (at least in part) a loss-making service.
However, the loss of the services would not necessarily mean that all costs could be simply cut out of the structure e.g. estates costs would remain as legacy costs. Further, the loss of the clinical activity would mean doctors and consultants would no longer have the scale and range of activity to make their role sufficiently interesting and challenging. This might, in turn, lead to staff leaving the Trust to seek the range and mix of clinical activity at other Trusts.
The loss of this key expertise would impact the services which would remain with the Trust (where difficult and complex issues were dealt with by the highly skilled clinical team.)
Potentially the impact of losing the tendered services would have a severe knock-on effect and it would take time to realise cost savings.
The Trust in question decided to participate in the collaborative process in order to optimise the secondary care services element and to provide consultants and other clinicians in the community service.
Expansive: This is defined as additional (new) services that the organization is interested to bid for which build on the current portfolio of services and also services that extend the organization’s geographical range or service range.
The organization needs to rigorously qualify these opportunities in order to select tenders that are both winnable and can be successfully mobilised.
A niche market but is there a market in the niche?
A number of years ago Company D, a large independent (private) sector provider, was looking to build an operating division (with its own P&L) delivering primary care health services commissioned by the NHS. This was at a time when the government was trying to introduce both competition and extra capacity into primary healthcare by opening the market to new suppliers. Company D had no clear vision about the services it wanted to provide as this was a new venture for them, albeit within a very well established organisation.
Quite early in a rather “scattergun” approach of opportunistic bidding the company won a small contract to provide partial healthcare services in a prison. This was a niche market limited to approximately 150 prisons in England and Wales but was there a market in the niche for the organisation.
Most services were delivered by local NHS organisations and a couple of private providers delivered services in more than 1 location. There was no market leader and delivering services in a secure environment faced significant challenges. Company D built its business as new tenders for prison healthcare were commissioned and at one stage the company was winning every tender it responded to. The service line developed.
Commissioners became more ambitious and a real breakthrough moment came when all healthcare services at a large prison were tendered. Because of the size and scope of services to be delivered the tender period lasted 6 months and required Company D to lead a consortium of bidders (with Company D as a lead bidder with consortium members subcontracted to provide significant parts of the services). The bidding and delivery structure, including the contractual arrangements, had to be fully articulated within the tender.
After an exhaustive process Company D was successful and mobilised the services. From there Company D continued to build its business in this niche and became a leading provider in the market. It took 8-10 years to build this service line but it now delivers:
- Consistent revenues.
- A scalable business/delivery model that can leverage economies of scale not open to other competitors with a smaller market share.
- A proven track record that underwrites the organisations credibility.
This service line is now an overnight success after 10 years!
Commitment
A key factor in success will be the organisation’s commitment to submitting a compelling and successful tender that is competitively priced. This is achieved by having regular opportunity review meetings/discussions and getting “buy-in” from all areas of the organization.
Bid teams are virtual and formed across our organisations to focus on a particular bid opportunity. If a department or departments providing Subject Matter Experts e.g. Clinical, HR. IM&T have reservations this will be reflected in the response.
Company E had identified and qualified an opportunity that fits well with its strategy and experience of delivering similar services.
The Commissioners had organised a series of site visits in January for prequalified bidders to meet with Service Managers at 3 locations. The weather made travelling difficult and all other bidders but Company E called on the morning of the planned site visits, to withdraw from the bidder meeting.
The two representatives from Company E managed to get to the meeting and had the luxury of one to one meetings with the service managers and commissioners representatives. Apart from demonstrating commitment Company D had the opportunity to understand key operational issues and to establish a relationship with service managers two of whom would be on the evaluation panel.
Company E submitted a compelling bid and in their response (and subsequent interview) addressed issues raised by the operational service managers. Company E was successful and the initial contract term has been extended and then renewed following a re-bid. If only psychologically, attendance on a snowy day in January and a compelling bid demonstrated the commitment of Company E.
Bottom line – does it work financially?
Your organization will want to sign off a bid not only from a content perspective but also critically the business case/plan for the deliverer of the service. Clearly this has to meet the financial criteria of the bid organization, which in a time of austerity and budget constraints in the public sector, make a financially viable bid a less than a straight-forward decision.
However early you start your financial projections a full financial case, with all costs, especially costs for subcontractors can arrive late in the bid process. This can be further exacerbated by obtaining financial information from Commissioners e.g. properly detailed TUPE information.
Initial decisions to bid and a mid-bid review must carefully consider the financial viability.
Other factors can lead to a no-bid decision late on – for example, your organisation’s ability to deliver the IM&T support and infrastructure both in terms of resource support and financial outlay on new hardware and systems to support and deliver the services.
Loss leaders can turn in to loss followers
Trust B was bidding for community-delivered diagnostic services which in turn would require close working between Trust B and a new community service and transfer of patients from the community service to Trust B’s services.
The budget set in the ITT was at best not generous and at worst inadequate for service delivery as specified.
The bid team presented to the Trust board weekly meeting, identifying that the services in the bid would result in a very low margin which would not make the requisite contribution to Trust overheads. After a discussion, the Trust Board wanted to bid and the bid team sought efficiencies and a costing that would give a return above the threshold set by the Finance Department.
After submitting the bid Trust B was invited to interview, but having scored higher than the two other bidders for quality in the bid submission, lost the tender on price despite being within the budget set in the ITT.
Trust B took the opportunity to have a post-bid feedback meeting with Commissioners and once the pricing level of the winning bid became known it was clear that:
The Trust could not have matched that pricing level and hope to cover its costs let alone make a contribution to overheads.
The winning bidder was unlikely to be delivering the service as specified and to appropriate clinical guidelines.
On this occasion, the Trust, despite losing revenue was possibly better positioned in the long run to take over the service if the chosen provider could not deliver.