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Government Contracts in the Interpreting Market: The Recipe for Success

In every country, the government has a huge influence on the interpreting market. Not only because it defines language access rights, how the country is run, and who receives funding, but also by deciding how government contracts are structured. This can vary from country to country – and sometimes from contract to contract. We have identified five different types of contracts across the globe and assessed which ones work best:

Single provider

As the name suggests, in this type of government contract, the contract goes to just one single provider. It is an exclusive contract and there is no backup provider. This contract type is common in most countries. 

Our research revealed that this contract type really only works when there are enough medium-sized contracts in the market to allow for a healthy level of competition. In this scenario, everyone gets a piece of the pie and there is room for growth. However, if the single provider system is applied to only a few large contracts, it creates a monopoly position and the market can become stagnant. It also creates a high risk for the buyer if the chosen provider cannot deliver.

Fixed ranking

In this contract type, several providers are chosen and there is a fixed ranking. This means there is one primary provider that gets all assignments and only if this provider cannot deliver, the assignment is offered to the second on the list, and so on. This is again a contract type that is common in most countries.

The problem with contracts that use a fixed ranking is that all LSPs take from the same pool of interpreters. This means that if the primary provider — who is usually the largest one — cannot fill an assignment, why would the second or third on the list be able to?

Dynamic ranking

The dynamic ranking starts out the same as the fixed ranking but there is a revision every six months. Providers on the list hand in a report with any complaints and contract deviations and based on this, the ranking can be revised. 

The idea of having a dynamic ranking with a revision every six months sounds good. However, the reality is that no matter what, the ranking never changes, rendering the system useless.

Frameworks

Government frameworks are the main system in the UK. There are lots of different government frameworks, with different prices and conditions, that the different government institutions can choose to join. Language service providers (LSPs) first have to bid to be part of the framework but even if accepted, this does not guarantee any business yet. However, it allows LSPs to then bid on the different contracts that the various government institutions tender under the framework. The individual contracts are then usually awarded to one single provider.

The framework system from the UK has the upside that it also gives smaller players a chance. However, the system is extremely messy. There is a large number of buyers and no central buyer. There are, for example, 40 to 50 different healthcare contracts and 16 different police contracts that are all tendered under different frameworks. This makes it very complex for both the buyer and the provider.

Panel of providers

In this contract type, several providers are chosen for one contract (usually five or six). There is no preferred provider, no ranking, and every provider has equal access to the customers within the contract. To give an example, there could be a healthcare contract for a certain region and all hospitals are covered under this contract. The hospitals then have the list of approved providers and can choose their preferred provider. However, customers are not bound to any provider and can technically switch for every single assignment. This type of government contract is common in Australia.

Awarding a contract to a panel of providers without choosing a primary provider, is the contract type that holds most opportunities. Giving every provider on the panel equal access to clients makes for a very dynamic market that gives more players a chance. Having to compete for theoretically every assignment guarantees a healthy level of competition.

To read our full analysis of the global interpreting market, check out our report on Interpreting Across the Globe and The Nimdzi Interpreting Index.

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