What to Do After You've Lost a Proposal?
- by Ross McCarthy
- Sep 21, 2021
- Updated Sep 23, 2021
- 11 min read
It can be hard to accept that your proposal lost in a formal procurement process.
Independent estimates state that the opportunity cost of submitting a typical proposal can be between €2,500 and €5,000 for the most common kinds of proposals (€25k to €200k in value). It is easy to see why companies can feel aggrieved when they find out that they have been unsuccessful. In his book, Rameau's Nephew, the 18th century philosopher Denis Diderot wrote: "We swallow greedily any lie that flatters us, but we sip only little by little at a truth we find bitter." In our experience, this is often true of an aggrieved company reviewing a notification that their proposal lost.
There are three key reflections you should think about when examining an unsuccessful proposal:
- Your company should not have submitted a proposal and/or you submitted a weak proposal;
- Your company submitted a strong proposal but you are dissatisfied with the outcome; or
- Your company wishes to appeal / contest the decision.
We will deal with each of these in turn below.
Key Reflection 1: Should you have submitted a proposal?
Basic financial modelling indicates that well in excess of 500,000 losing proposals are submitted in public tendering contests alone each year across the EU. At the lower end of the scale, this represents an investment in public tendering by unsuccessful businesses in excess of €13bn per annum (the minimum estimate cost of the equivalent open market value of undertaking this activity).
Be More Discriminating
One favour many businesses could do themselves is to become more discriminating. That will automatically reduce the costs borne by businesses submitting losing proposals. You can do this by developing a set of criteria that ensures your company only bids when it is confident that it can be competitive. Sample trigger questions can include:
- Did you know the opportunity was in the pipeline?
- Does your company have sufficient contracts of an equivalent size and scale?
- Can your company be competitive on price?
- Do you have the right quality management systems and appropriately trained personnel?
In almost every procurement contest, there is a business that can give a strong or very strong yes to all these questions. You should bear this in mind when making a decision to submit a proposal.
Further to this, you should ask whether the public or corporate entity is one that has an established record of probity and integrity in procurement matters? For instance, there can be large public bodies where significant amounts of work isn’t tendered every year. There are also public bodies with reputations for mercurial decision-making at odds with established good practice. These considerations should influence whether your company should decide to submit a proposal.
Click here to view Sluamor's Bid / No Bid Evaluation Matrix.
Write Great Proposals
A further factor is proposal quality. Many businesses simply do not know how to write goods proposals. There is a direct and causal link between poor quality proposals and losing proposals. This can be because they bid infrequently, lack the capability to write good proposals, or they don't commit enough resources to the process. Sometimes, generic undifferentiated proposals are submitted. These proposals, replete with templated material, rarely do well. All proposals should focus on the buyer's needs. The more tailored they are, the more seriously the proposal tends to be taken.
Ensure that the internal capability to submit proposals is in place, and that there is a plan to improve these skills or identify external proposal specialists that can help your company to develop competitive, professional proposal material.
Click here to see all the Sluamor tutorials geared to help companies in writing better proposals.
Key Reflection 2: Your company submitted a strong proposal but is unhappy with the outcome.
Companies with losing proposals often fall short in three areas:
- Client references;
- Team composition and CVs; or
- Delivery approach.
It is rare, in a well-run and adjudicated contest, that the winning proposal has one perfect client reference (right sector, same product / service, similar size & complexity, same kind of timelines, ingenuity & methodology), let alone three or more as is typically requested. Therefore, it important to reflect on how close the experience referred in the proposal, actually is to the requirements outlined in the tender specification. Emphasise these similarities in your proposal.
Again, similar to the recommendation for providing client references, you should ensure that your proposed team and the CVs your company submits, quickly demonstrate that your team has the experience and capability to meet the requirements outlined in the tender specification.
The same principle holds true when you outline the approach your company proposes to use in completing the work being tendered, and how you will manage the contract. Showcase how closely your approach aligns to the requirements outlined by the buyer.
Obtain and Review Your Scores
Companies with losing proposals from public procurement processes are entitled to receive their scores back from the buying organisation, along with explanations of the decision taken. You should ensure that you obtain the results of the buyer’s evaluation of your proposal even if the buyer is from the private sector, especially if a set of evaluation criteria had been provided to your team prior to the submission of your company's proposal.
The decision must have been made on the evaluation criteria stipulated by the buyer. In most public sector cases, price is not the solely determinant of the outcome, since public procurement contests are primarily awarded on a MEAT (most economically advantageous tender) basis. Contracting authorities are not required to meet with losing bidders.
Ensure that you obtain and review the score your company's proposal had been assigned to determine where they had identified any shortfalls.
For legal reasons, many buyers do not give reasons beyond a breakdown of scores. This makes honest, post-tender reviews important for when you’re the losing bidder. It gives you the opportunity to learn and improve.
So, if you believe that you’ve submitted a strong proposal, have it reviewed by a third party, whether internally or externally sourced. You want to determine how well you met the brief outlined by the buyer. Ensure that the review is unbiased and ruthless. If the resulting score is worse or similar to that given to your company by the buyer, then go no further. Improve your company's standard of writing for your next proposal.
If you're concerned about the outcome even after undertaking a post-tender review, you should seek to obtain further explanation from the buyer.
Again, beyond the scores, many authorities refuse to meet or will only offer to discuss what has been shared with the company.
Key Reflection 3: Contest the Outcome.
Making the Decision
When responding to public sector tenders, companies should familiarise themselves with their legal recourse options for the country in question. Some countries like Canada have a procurement ombudsman. Others (e.g., Ireland) require a company to seek a legal injunction through the courts system.
Most losing bidders do not contest decisions for pragmatic reasons. Many take the view that the potential for upside from contesting the outcome is extremely remote, especially in the case of private sector buyers. For public sector procurement contests, a judicial review (if successful) will typically result in the contract going back out to tender again, rather than it being awarded to the party contesting the outcome. This is dealt with by the EU Remedies directives across the EU.
There are key risk factors that can inform your company’s position on whether or not to contest a decision or not after losing a proposal. E.g.:
- Whether close / long-standing relationships exist between the buyer and your company;
- The extent to which supplier and/or buyer rotation occurs; or
- Whether post-tender negotiation took place.
Where any of the three factors above exist, you will have a higher chance of overturning the decision if you challenge the outcome. However, in the vast majority of cases, bidders lose for conventional, explainable reasons.
There are three typical options for companies seeking to take action after losing a proposal following a contract award.
- Take a diplomatic route.
- Instigate formal proposal review mechanisms.
- Go legal and live with the consequences.
Scenario 1: Take a diplomatic route.
This is the most common approach. There is often a fear of being blacklisted as a supplier if a company is too forthright in contesting a decision. If your company is very dissatisfied with a decision, you should let the buyer know the objective grounds for the disappointment. You can also ask what you could have done to persuade the buyer that your company could perform at least as good a job as the organisation awarded the contract. Sometimes, this can provide valuable lessons and insights you can use in the future to improve your proposal submissions.
Supplier relations endure peaks and troughs so where you can inform your former customer or a key prospective buyer that you have improved your company's abilities in the areas you lost out on, it can position you in a better light for the future.
The benefits of this approach is that the buyer is aware of your company’s issues as a supplier, but also your willingness to work hard to gain their trust. The downside is that this assumes the buyer takes supplier management seriously, thinks strategically and wants to keep their supplier options open. Some buyers are like this but others are not.
Scenario 2: Instigate formal proposal review mechanisms.
Companies can also lodge a formal challenge using either of the two options outlined in this section for public procurement contests, if they’ve lost a proposal. Once these two options are exhausted, companies can opt to move into the judicial system.
- Request a Review during the Alcatel Period.
You can request a review during the standstill period (or Alcatel period). The standstill period allows unsuccessful bidders to lodge an appeal within 10 calendar days of being notified of the outcome of a public procurement contest. It is important to understand that the process of challenging the procurement decision will be of significant concern to any public buyer. They may fear the worst and feel compelled to contact legal advisors. So, it's important for you to tread lightly while carrying the stick marked "challenge".
There are often good grounds for reviewing a public procurement decision, but at present, this tends to drive conflict between the losing party and the buyer, with the respective sides retreating to their corners, in preparation for a legal fight.
- Requesting a Review by the statutory appeal authority (where they exist).
Where it exists, a further option is to seek the assistance of a statutory appeal authority. As mentioned earlier, there is a procurement ombudsman in Canada. In Canada, about 1 in 6 of the cases the ombudsman reviews (i.e., a tiny percentage of the total each year) are overturned, with the majority ordered to go to re-tendering. There are other appellate channels in different countries, but none as powerful as the Canadian office.
Scenario 3: Go legal and live with the consequences after losing proposals.
On high-value public procurement contracts, or a large capital projects, legal challenges are more common. The downside risks of going legal are lower than when there may not be a desire for an ongoing relationship as these large projects are one-offs. For reasons outlined at the start of this post, companies hoping to maintain a commercial relationship after losing a proposal, should retain good advice before threatening legal action.
This option initially entails a judicial review of the process. It is rarely triggered in most markets.
Where a Judge decides to set aside a tender process, it is typically because they find that it was:
- Operated in a flawed or defective manner that frustrated principles of facilitating competition;
- Failed to treat suppliers equitably;
- Failed to ensure transparency in the approach; and/or
- Was not proportionate in its construction.
Where this happens, the tender process is normally rerun from scratch.
When something suspicious (e.g. possible fraud or corruption) is found in a public procurement review, other remedies can apply. For example, the contract could be awarded to the supplier that would have won the contract had the procurement contents been run fairly.
Note, a legal route after losing proposals can be slow and costly. Litigation can drag on for a long time so it is not for the faint hearted.
A concession for a mobile phone license in Ireland provided to one company after a tender process in 1995 remains subject to heavily contested litigation in 2021. The tender award predates the 2004 EU Procurement directives let alone the 2014 EU procurement directives but it rolls on nonetheless like procurement’s own Jennens vs Jennens (a well-known 117 year legal dispute over a will that finally ended when the funds ran out).
The State has very deep pockets. So, suppliers should proceed down the legal route with caution.
So there you have it. Next time you lose a proposal, consider the following:
- Determine if you should have submitted the proposal.
- Determine if your proposal was as strong enough, with or without the input of the buyer.
- Determine if you should contest the result.
Good luck in winning your next proposal.
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