Incumbent public sector contractors: leveling the playing field

Early identification and management of incumbent contractor issues will make the tender process more effective.

Long-term contracts between government and the private sector for the provision of services or support to government are common. When it comes time to re-tender the service or support function, government may face a number of challenges in conducting an effective tender process due to the existence of the incumbent contractor.

The incumbent contractor will already have the personnel, equipment, business processes and know how to perform the new contract. This perceived advantage of the incumbent contractor can result in prospective contractors in the market not tendering for the new contract. We have seen a number of instances where the only tender (or the only tender with the potential to offer value for money) submitted for the new contract is from the incumbent contractor.

This article looks at some of the issues which arise from having an incumbent contractor participate in a tender process in these circumstances and some practical steps which can be taken by government to manage these issues and to level the playing field for bidders.

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