New vistas in competitive bidding strategies

Abstract

Competitive bidding has tended to be based on the principle of pricing over other criteria, rather than on a specific business relationship in the past. This implies that the bidder will generally place himself in a position that reinforces his chances of award on a “one off” basis, without looking to the buyer with an open intention of strengthening ties on a long-term co-operative basis. This has reduced the bidders role to that of a supplier of services based on a competitive policy in which price has always been the predominant ploy. The bidder will thus look for any means that will allow him to cut corners, without creating a direct qualitative impact on the bidder/buyer relationships, but which will allow the bidder to increase his profitability and ensures that the bid remains cost effective. Recent trends in the eighties have transformed this approach substantially. Internationalisation of procurement has exerted greater pressure on the firm's capacity to provide cost effective “one off” bids, due to the bidding firm's structures, the time factor in response to bids and the identification of a greater number of bidders that are in a position to respond to the buyers' specification. The direct consequence of this phenomenon is that the bidder wishing to remain competitive must be perceived by the future buyer as the most adequate business partner in future business development. This in turn will encourage the bidder to find other arguments to win the award, which will be specifically oriented away from value/cost analysis of the specific deal in question.