How to tell a firm it was not selected, yet keep it in the next chase

A downside of any competitive bid process is that several firms lose. They are all disappointed and crave some explanation or lesson to be learned – other than the evident fact they may conclude that the selection was wired (See my posts of Sept. 3, 2006 about sham competitions; Oct. 29, 2006 about the unfounded belief; and Feb. 15, 2006 about the incumbent advantage.) Let me offer seven actions that will slightly appease the spurned partners.

1. Treat them during the process just the same as every other firm is treated.
2. Assure them after they are cut that the process was objective.
3. Explain the rating and culling process.
4. Tell them as specifically and usefully as possible why they were not selected.
5. Suggest what they can do better with your department next time, or with other departments.
6. Make sure they had equal opportunity to learn about the work and muster arguments in favor of themselves.
7. Hold out prospects of future work, if that work is realistically available for them.

If you treat the firms considerately and open the mystical black box, they will do their best in the next competition (See my post of Aug. 9, 2006 on polite treatment of vendors.).