Incumbents step up their fight for lost contracts

A new bid protest by Serco is just the latest in a series of protests by incumbent contractors fighting to hang onto lost contracts. It is a strategy being employed by large and small companies faced with a tight and highly competitive market. But will it work?

Serco Inc. is the latest incumbent who has filed a bid protest to hang onto a contract that it lost during a recompete.

In this case, Secro has gone to the Government Accountability Office complaining about a contract it lost to Jacobs Technology Inc. to support global logistics support operations under the Army Logistics Civil Augmentation program known as LOGCAP.

The contract was awarded to Jacobs in July and is worth $135 million over the next three years. Serco has been the incumbent contractor since 2007, and the support work has been worth about $166.9 million, according to data from the market research firm Deltek.

The protest was filed Aug. 26, and a decision is due Dec. 4.

Serco joins other incumbents, including large companies such as SRA International and IBM, and smaller firms such as eTouch and InfoZen, that have filed protests recently after losing a recompete.

The cases of SRA and InfoZen offer support for the strategy.

SRA lost its contract with the Military Sealift Command to Science Applications International Corp. and filed a protest. A new competition was held, which SRA won and SAIC filed a protest, but GAO denied SAIC’s protest.

The case of InfoZen hasn't been completely resolved yet, but the company's protest of a Transportation Security Administration contract award to QineitQ North America has led the TSA to pull back the award and reopen discussions with bidders.

It’s understandable in this highly competitive market that companies are fighting to hang onto to work. Job No. 1 needs to be not losing work you already have because, in this market, everyone is gunning for you.

Customers have smaller budgets and want lower prices and more efficiency. That becomes a central selling point of competitors – we can do it cheaper and better than who you have now.

Our columnist Bob Lofheld has written about some of the traps incumbents can too easily fall into. Topping his list is complacency or believing too strongly that the customer loves you.

Lohfeld wrote:

Every incumbent contractor, with the possible exception of those who have received multiple cure notices, believes the customer loves them. To reinforce their belief, they argue that they have been performing the work satisfactorily day in and day out for years and there have been no loud complaints from the customer about their performance. Silence in this case is mistaken for love.

I love that last sentence. It reminds me of old girlfriends who dumped me. Only in hindsight did I see the warning signs.

Incumbents also fool themselves into believing they are the safer, less risky choice, and they try to prey on customers fears about the risks of failure if they shift to a new contractor.

But don’t play the fear card; instead, play the innovation and cost savings card, and do it long before a recompete. That’s a mantra I’m hearing over and over from executives.

I don’t know enough about their bids to say that these particular protesting incumbents did anything wrong in their bids, but the fact they are fighting to keep these contracts is a warning to other incumbents to take nothing for granted.

In today’s market, you can’t afford to.

NEXT STORY: IntelliDyne taps new CFO

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