Competing Against Incumbents: Strategies to Displace or Defend

Why incumbents usually win:

• Relationships — Know the customer, built trust over years
• Knowledge — Understand systems, processes, pain points
• Performance data — Strong past performance on this exact work
• Workforce — Staff already cleared, trained, productive
• Switching costs — Government sees risk in changing

Incumbent statistics:

• 70-80% of recompetes go to incumbents (industry estimates)
• Higher win rate with strong CPARS ratings
• Lower win rate when customer is dissatisfied

When incumbents are vulnerable:

• Performance problems documented in CPARS
• Customer relationship has deteriorated
• Requirements have significantly changed
• New technology makes old approach obsolete
• Incumbent complacency (coasting)
• Key personnel have left
• Significant price pressure

Understand the current contract:

• Contract value and structure (FPDS/USASpending)
• Incumbent company and key personnel
• Contract duration and option years
• Scope of work
• Modifications and changes

Assess incumbent performance:

• CPARS ratings (if accessible)
• Customer feedback (industry discussions)
• Incumbent self-promotion (or lack thereof)
• Staff turnover on the contract
• Protests or disputes

Identify customer pain points:

• What's not working well?
• What would they change if they could?
• What new capabilities do they need?
• Budget pressures?

Information sources:

• Industry days and conferences
• Former employees (ethically)
• Subcontractors and teammates
• Published documents (budget justifications, strategic plans)
• FOIA requests (previous RFPs, proposals)

Strategy 1: Offer something they can't

• New technology or innovation
• Capabilities the incumbent lacks
• Solution to problems they haven't solved
• Significantly better approach

Strategy 2: Exploit weaknesses

• Address known performance issues
• Propose solutions to documented problems
• Offer what customer wishes they had
• Ghost their weaknesses professionally

Strategy 3: Compete on price

• Incumbent may be priced high after years of increases
• Fresh approach may be more efficient
• New entrants often have lower overhead
• But don't buy in at unsustainable prices

Strategy 4: Hire their people

• Key personnel with customer relationships
• Staff who know the work and systems
• Transition risk reduced
• Customer sees continuity

Strategy 5: Build relationships early

• Don't wait for the RFP
• Engage during market research
• Provide value through industry days
• Become a known, trusted alternative

The customer's biggest concern:

"Will changing contractors disrupt our mission?"

What creates transition risk:

• Learning curve for new contractor
• Knowledge transfer from incumbent
• System access and security transitions
• Personnel changes
• Process and tool changes

How to address in your proposal:

• Detailed transition plan — Show you've thought it through
• Experienced personnel — Staff who know this environment
• Phased approach — Minimize disruption during transition
• Knowledge management — How you'll capture and apply knowledge
• Risk mitigation — Specific measures for common transition risks

Transition credentials:

• Past performance on similar transitions
• Experience taking over from incumbents
• Methodology for rapid onboarding

Don't get complacent:

Most incumbent losses come from internal failure, not superior competition:

• Performance problems that damage CPARS
• Relationship deterioration
• Taking the contract for granted
• Not investing in continuous improvement

Protect your position:

• Deliver excellent performance — Nothing else matters if you're not performing
• Build deep relationships — At all levels, not just the CO
• Document your value — Track and communicate accomplishments
• Stay innovative — Don't let your approach get stale
• Maintain competitive pricing — Don't let rates creep up unnecessarily

Recompete preparation:

• Start 12-18 months before contract ends
• Gather past performance documentation
• Understand how requirements may change
• Prepare your best team
• Competitive analysis — who's coming after you?

Leverage your advantages:

• Reference specific accomplishments on this contract
• Name personnel who have delivered results
• Cite customer feedback and success metrics
• Show deep understanding from direct experience

Don't just recycle the old proposal:

• Requirements may have changed
• Your approach should have evolved
• Show how you'll improve, not just continue
• Address any past concerns proactively

As incumbent, emphasize:

• No transition risk — continuity of service
• Proven team already in place
• Deep knowledge of systems and requirements
• Track record of success

As challenger, emphasize:

• Fresh perspective and new ideas
• Innovation incumbent hasn't offered
• Solutions to known problems
• Strong transition approach
• Competitive pricing

Common reasons incumbents lose:

Performance failures:

• Documented CPARS issues
• Missed deadlines or deliverables
• Quality problems
• Customer complaints

Relationship problems:

• Key personnel conflicts
• Poor communication
• Unresponsive to customer needs
• Taking customer for granted

Strategic mistakes:

• Priced too high (especially LPTA)
• Didn't take recompete seriously
• Weak proposal effort
• Lost key personnel

External factors:

• Requirements changed dramatically
• New technology made old approach obsolete
• Budget pressure drove lowest price decision
• Set-aside changed (now small business, etc.)

Warning signs for incumbents:

• Customer stops sharing information
• Bridge contract instead of option exercise
• New requirements you can't meet
• Excessive questions in industry days from competitors

Teaming to challenge an incumbent:

• Partner with someone who has customer relationship
• Team with specialists who fill capability gaps
• Consider hiring incumbent subcontractors
• Build credibility through strong teammates

Teaming to defend incumbency:

• Add capabilities that address new requirements
• Strengthen weak areas in your team
• Consider whether competitors might team against you
• Keep subcontractors loyal and satisfied

Subcontractor dynamics:

• Subcontractors know the work and may switch teams
• Treat subs well — they're assets and potential risks
• Exclusive teaming agreements where appropriate
• Know which subs are critical vs. replaceable

The "steal the incumbent's team" play:

• Hire key incumbent personnel
• Partner with incumbent's subcontractors
• Reduces your transition risk
• Weakens incumbent's proposal
• May be seen as aggressive — consider reputation effects