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The Informed Purchaser

Occasionally, you may encounter terms or concepts unique to antitrust issues, competition, and schemes to exploit purchasers. In this installment of The Informed Purchaser, let’s talk about incumbency.
Most people are familiar with the term incumbent in relation to an elected office holder; it is a similar concept with vendors. An incumbent vendor is the current contract or award winner. Incumbent vendors have many advantages in the bidding process:
· They have an existing relationship with the purchaser, and changing vendors can be complicated.
· They are familiar with the purchaser’s need for a product or service, which gives an advantage during the bidding process.
· They can accurately estimate their costs, and therefore bid pricing.
However, incumbency can sometimes have a negative effect; it can lead to vendor complacency. Moreover, an excessively high incumbency rate may be a warning sign of an agreement among vendors not to take business away from each other.