The business currently performing a contract that is being competed again. Incumbents know the customer, the site, and the real workload, which is a genuine edge. It is not an unbeatable one: incumbents get complacent, price high, or wear out their welcome, and award records tell you who they are.

In a sentence

"The incumbent has held this work since 2019." Your bid needs a reason the agency should switch, and "cheaper" is only sometimes it.