Fireblog

Wow! We won the contract!

A roller coaster ride filled with luck, a bit of cheating, and financial strategy.

About 1 year ago, there was a tender we joined half-heartedly because we found out that it was supposed to be "rigged". It turns out the "winner-to-be" bid much too high over the proposed budget. The client then decides to use a MS Excell based application which was free. This was a legit and proven application. What happened next could only be considered as luck.

Someone close to upper management saw the Excell-based application and thought that the users developed an Excell application for their work. He then spread the word and it reached upper management, specifically the IT department. The IT department boss was furious and want a "real application". Thus a couple of months ago we were suddenly called and given a RFP. Another surprise was that they wanted the source code, thus tripling the project value than what we expected last year.

At this point we decided to go for broke and spent time to develop what was wanted in the RFP. It was risky but proved to be a key move because other vendors showed up with their version of the application and explained their concept of what would need to be revised and modified. We showed up in the initial clarification of the RFP with our version of the application and when it was time for a demo the next week, our application had a complete makeover in accordance to the RFP. This gave an excellent impression on the judges that:
1. We were serious and want this project.
2. Our application is robust shown by the major changes done in a week.

The grading was normal; 70% technical, 30% financial. As expected, from the technical aspect we got the highest score. This was classified information so it was hard enough to find out the standings and we didn't get info on the points. During this time, we also snooped around to find out the budget and how the financial aspect would be graded. We got the budget value although at the time the info wasnt 100% reliable. We also found out the habit of the financial person in charge. It was to be a bidding war.

As we got ready for the financial bidding, we were a bit down because we had underbid below the budget informed (about -5%). Another stroke of luck came our way because there was a slight change of scope:
1. Add modems to the bid
2. Legal aspects of the source code. They wanted exclusivity and we would not be allowed to resell the software elsewhere.

Although the second point is easily evaded in software practices, we thought it was the perfect chance to raise the bid. We then bid 37% higher than the budget informed. This is part of our financial strategy. This is so we can freefall the bid in the bidding war. To get a view on how much we changed the budget: If the budget was 500mil, we went from 475mil to 685mil! very significant. As expected, the competitors bid around 15% over the budget. With the above example, it would be 575mil.

Then came the day of the bidding war. The rules were simple:
1. Vendors were given 15minutes to write their bid on a paper and hand it to the panel.
2. If any vendor bid within the budget, the bidding will be stopped and the total points will be counted. If the vendor that bid within the budget had the highest technical points, then the bid is over and the vendor wins. If the vendor does not have the highest technical point, then the top two vendors (tech+finance) moves on to the final round.
3. If no vendor bid within the budget, there will be another round of bidding.

We all sat in a round table and of course i chose the seat closest to the judge. he had scribbled on a piece of paper and i pretended to focus on my Mac whereas my eyes squinted at the paper (skills learned from my cheating days). I saw three numbers: 52, 34, 16. My brain started clicking and i guessed those were the technical scores! yey we got a 52 out of 70! That means a maximum score of 82, 64, and 46! The third vendor is out of contention as our points is 52. I had to get a maximum 65 points or 13 out of the last 30. That would be easy.

Bidding wars usually happen by vendors cutting costs little by little. This is quite dangerous because opponents can guess how low you are willing to go.. And just as expected, the other vendors cut about -5% of their initial bid. As for me, I dropped -37% and went for the contract value limit. Since we had the highest technical points, the bidding session ended with the other vendors going home empty handed =)

The euphoria is still felt and it feels GOOOOOD.... hehehe...

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