One of my most recent RFPs (Request for Proposal) featured a well-known operator and a location that they operated quite successfully for more than five years. They had taken over (then) from another well-known operator who had performed substantially better than the former, had installed new equipment, improved operations (and financials), weathered COVID-19, and was very well-liked by the on-site property manager.
The client brought me in to look for additional revenue opportunities due to past success with this large property manager firm, and they knew our satisfaction guarantee. At the end of my first visit, as a courtesy to the current operator (whom I respect and understand their group at the highest levels), I shared several items I noticed that I believed (respectfully) they should address. Several of them were pretty fundamental and easy to fix. I even shared the substantial new revenues we had discovered in broad strokes.
I did not share the list with my client, and I made no mention to my client of anything other than I noticed quite an improvement in the operation. I completed my contract, submitted my report, and moved on to the next project. I sent a thank you note when I got paid. Case closed.
Six weeks later, I received a call from that same client, and was excited that it could likely lead to another opportunity. Instead, my client was calling to tell me that their property ownership had been in town, was pleased with our finding them more than $100,000, and wondered why the operator had yet to share any of those ideas. My client was a bit embarrassed and was now interested in putting the operating contract out to bid, which they felt was implied by their ownership. I let the operator know (as a courtesy) and told them the client was pleased with them when we met a few weeks earlier.
I sent out an RFP to seven operators, a mixture of large and small, in the market, wanting to be in the market, with a mandatory pre-bid in about seventeen days. I met with my client the day before the pre-bid. I asked them (politely) if it was to be a genuine RFP seeking a complete evaluation and possible change or if they were soliciting ideas and ‘keeping the operator “honest.”’ The Regional Manager, who was in the meeting, said, “we are not unhappy, but wanted to know if we are getting the best fit from the operator and equipment. Everyone starts at zero.”
As a former operator, I walked the garage again late that afternoon (the night before the pre-bid meeting). I was surprised to see that even the easiest and least expensive fine-tuning we had discussed several weeks earlier had yet to occur. I knew that sometimes, even if the most basic idea is shared with a client, they don’t want to make the changes or spend even a tiny amount of money. After all, it is “just” parking to many people. I made no contact with the operator since it was not out to bid, so I thought that inappropriate.
The Best & Worst Position is, of course, being the incumbent operator. This was especially true when the on-site (local) manager was happy, and it was easy to assume the RFP was just a formality for a new five-year contract.
It’s easy to forget that sometimes a happy client contact is not always guaranteed in an RFP or even without one. Being the incumbent responding to an RFP requires a delicate balance, especially if your client has been happy and you, as the operator, have gotten comfortable. Once you are exceeding budget, your client has no complaints, and your boss has other things for you to do, you get complacent.
Now, you are suddenly out to bid. You are competing (with the positives of being an incumbent). You know the location. You know the whys and hows of the current operation. You are comfortable, understand what has worked, what your client likes and doesn’t like, and have had five years to refine that relationship and bank goodwill with the operation.
It’s straightforward to stand on your record (assuming, as in this case, your team has done an excellent job operationally, especially when you compare your performance to the previous operator, who had more than their share of struggles). Fair or unfair, and understanding many variables may have had much to do with the prior operator. Why would they make a change?
A wise man once said there is a reason the windshield is so much larger than the rearview mirror. Honor that ratio.
We’ll talk about the disadvantages of being the incumbent, the twists and turns of this RFP, and the outcome next month.
