Our top ten tips for tendering

What is this e-brief about?

Although agency template documents and standard request for tender processes are usually OK for smaller, single supplier tenders, a more tailored approach (e.g. some modifications to your agency’s usual tender templates) are worth considering, particularly if you’re handling significant procurements such as:

  • higher value procurements (e.g. the total estimated procurement cost exceeds $1m);
  • tender processes to engage multiple suppliers (e.g. panels and tenders for multiple suppliers divided into regions around Australia); and
  • politically crucial procurements, e.g. a tender process to deliver that major, new, don’t-miss-this-deadline-or-else, government announcement.

Standard agency tender templates and processes tend to focus on complying with procurement-related rules and policies. In this e-brief we offer our Top Ten Tips on how to run not just a compliant but a Great-Tender-Process where getting the best result really does matter.

Why should you read this e-brief?

Don’t you want to…?

  • minimise the need for addenda and clarifications in your tender process
  • not confuse tenderers or deter organisations from tendering
  • avoid the risk of unhappy tender outcomes, such as:
    • having to cancel and start the tender process again
    • not meeting critical deadlines, e.g. commencing that major new election promise
    • having to contract with someone who isn’t offering what you really wanted
  • maximise your choice of quality suppliers who offer great value-for-money for exactly what you wanted

OK, I’m interested…

Based on our experience (we talk about this later), in no particular order we offer these hints and tips.

# 1 Get to know the market

Sounds obvious doesn’t it? But do you? Understanding the relevant industry/market can really help you to achieve a positive response from a range of quality suppliers. Getting to know the market (e.g. typical suppliers, qualifications, what they offer and how they usually price their products or services) will help you to draft the RFT to properly deal with issues like:

  • what you’re looking to buy (the Statement of Requirement);
  • e.g. minimum qualifications, licences, etc for tenderers to participate in the tender process (Conditions for Participation); and
  • pricing structures (our next point below).

Search the interweb, consider consulting with industry, talk to people in your agency who understand that industry and, if necessary, engage consultants who have the technical expertise to help you to procure especially technical products/services.

#2 Make tendered pricing easier to compare

Have you ever tried comparing mobile phone offers from different telcos? Hard, isn’t it?! By specifying a mandatory form of pricing (e.g. tables for tenderers to insert their pricing information) you can make it much easier to compare pricing across competing tenders come evaluation time. But, be warned… Most industries have their own unique industry-specific way of pricing their goods and services (e.g. lawyers traditionally charge per unit of time). Therefore, if you’re going to specify pricing, check that it matches how that industry usually prices its products/services (or run the risk of confusing or deterring organisations from tendering).

However, if you’re going to be prescriptive about pricing structures, consider allowing for alternative pricing proposals (in addition to one that meets your mandatory format), just in case there’s a more economical pricing arrangement that you haven’t considered. For multi-supplier tenders, you will generally want all tenders to specify pricing in the same format (for ease of comparison and later for contracting).

#3 Write great evaluation criteria

We’re talking about the percentage weighted evaluation criteria used to evaluate the quality of a tender bid.

First, a lot of RFTs just use the usual “capacity”, “capability”, “strategy”, “experience”, blah blah blah. These are OK, but is there something which is actually REALLY IMPORTANT? If yes, consider making that its very own and specific evaluation criteria and weighting it accordingly. In other words, consider tailoring the evaluation criteria to what is actually important for your RFT process, rather than using a one-size-fits-all cookie-cutter approach.

Secondly, if you are going to use sub-criteria (to provide further detail about a particular evaluation criteria), resist the urge to use sub-weightings for each of those sub-criteria. Sub-weightings mean extra work, remove the benefits of being able to award a more ‘global’ score for each criteria, and can also produce an unwanted averaging effect with scoring. The same observations apply to using too many weighted evaluation criteria. Between three and six evaluation criteria is probably about right.

Thirdly, express quality criteria in ‘qualitative’ terms. In other words, express the criteria in such a way that it actually tells the tenderer what you are looking for. For example:

Instead of saying:

“1. Tenderer’s corporate governance. (25%)” (This tells tenderers nothing about what sort of corporate governance you’re looking for!)

It might be better to say:

“1. How the Tenderer’s corporate governance arrangements (including corporate structure, management oversight and policies) will ensure that the Tenderer will deliver a quality service to the Department. (25%)”

#4 How many suppliers do you need?

For many procurements, you’ll just want one supplier. But for larger, multi-supplier procurements (e.g. panels and tenders for national services) you’ll need several suppliers. When releasing the RFT, you may not know exactly how many suppliers you need. For tenderers in multi-supplier procurements, it is equally important for them about:

  • where they are ranked in terms of value-for-money (i.e. their place in the batting order); and
  • where on the ranked list you draw the cut-off point when awarding contracts (i.e. those above the line get a contract; those below the line don’t).

Consider including some statements in the RFT (e.g. the Statement of Requirement) and probity/evaluation plan about how you will decide the number of suppliers as the outcome of the RFT process.

#5 Minimum form and content requirements

With some exceptions, if a tenderer fails to comply with a minimum form and content requirement, the tender will be non-compliant and must be excluded from evaluation. Which might be a great shame if it was actually a great proposal! The message: Would you really want to exclude a tender which doesn’t comply with that requirement? For example:

  • CVs — If you ask for CVs but a tenderer fails to provide them, that could instead be dealt with by scoring the tenderer lower against relevant evaluation criteria (e.g. “experience of key personnel”).
  • Page limits — Specifying page limits can be a good idea, to avoid pages & pages of marketing gumpf. However, in every RFT process (where the RFT specifies page limits), invariably at least one tenderer will exceed the page limit. An alternative approach is to say in the RFT that any tender which exceeds a page limit won’t be evaluated past the pages within the page limit. That keeps things fair for all tenderers but also doesn’t result in (a) tenders being excluded or (b) you having to ask your probity adviser: “But they’ve only exceeded the page limit by one paragraph. Do we really have to exclude them?”

#6 The Statement of Requirement

Obviously, you should say what you’re looking to buy, including all timeframes, specifications, etc. However, it’s also helpful to be explicit about what’s most important to you in how they provide the product. A couple of examples:

“A key priority is for the Department to maximise service coverage across the region, including in metropolitan, regional and remote areas.”

“The Department wishes to procure high quality products for which the Tenderer offers highly responsive local service support.”

#7 Identifying unsuitable tenders

If, at the end of a RFT process:

  • higher ranked tenderers withdraw their offer (which they can do, despite what RFT templates usually say); or
  • contract negotiations fail with higher ranked tenderers; or
  • you only have a small number of tenderers to choose from when awarding contracts in a multi-supplier procurement,

You may shudder at the prospect of having to offer a contract to a tenderer towards the bottom of the value-for-money ranked list. Can you avoid this? Yes. Consider including in the probity/evaluation plan:

“Any tender that scores below 5 out of 10 against one or more of the weighted evaluation criteria will not represent value for money and, as such, will be rated unsuitable and not considered for offer of contracts.”

This helps avoid any risk of you having to offer a contract to a tenderer who represents poor value-for-money. Also, failure to achieve a sufficient number of suitable tenderers can mean a failed procurement (an exception which can justify a limited tender).

#8 Build in some flexibility when ranking tenders based on value-for-money

If you’re looking to engage multiple suppliers, consider building in some flexibility to allow a final value-for-money ranking of tenders relative to other tenders.

Here’s an example of what we mean. You want to contract multiple suppliers to deliver outsourced services across NSW. You also want to achieve maximum service coverage including across metropolitan, regional and remote locations, whilst minimising overlap in coverage by different suppliers in the same locations. It would be very useful to say in the RFT and the probity/evaluation plan that:

  • In offering contracts, the Department will do that in order of value-for-money from highest to lowest, subject to the following.
  • The Department may offer a contract to a lower ranked tenderer over a higher ranked tenderer where that would maximise geographical coverage and minimise overlap in locations serviced by a higher ranked tenderer.

Without including a statement along the lines above, the Department would probably just have to award contracts in order of merit (value-for-money) but without any re-ordering to enable the policy objective being achieved. Refer back to our initial comment about ensuring that the RFT process actually achieves what you want.

#9 Do I have to include a draft contract with the RFT?

This sound familiar? It’s crunch time. You really need to get that RFT out. Your FAS is asking “What’s the hold up?” It’s taken longer than you thought. You’ve finally got the RFT written, approved, etc. You’ve found the department’s services contract template but you haven’t filled any of it in.

Can you just send out the contract template without having to fill in all the details (e.g. the services, milestones, etc in the contract schedule)? Yes, but in our perfect lawyery world it would be much better to send out an as-close-to-final-as-possible draft contract with the RFT, for the following reasons:

  • First, tenderers actually like to see what the end contract will look like. It helps them to assess what’s required. To a point they will get that from the RFT Statement of Requirement, but seeing a close to completed draft contract will better enable tenderers to know what they’re getting themselves into.
  • Secondly, you’ll have to draft the contract sometime anyway, so why not do it now?
  • Thirdly, you’re probably going to be very busy from here on anyway (answering tenderer questions, delivering industry briefings, issuing addenda and clarifications, evaluating tenders, writing reports, minutes and negotiating with tenderers), so you’re not going to have much time after releasing the RFT to write that contract between now and when the delegate has picked the winning tenders.
  • Fourthly, not including a close-to-final contract with the RFT = delays via extended contract negotiations later on. Let us explain.

In the RFT you’re going to ask tenderers to indicate any objections to the standard contract. And you’re supposed to take into account tenderer non-compliance with the draft contract (as a risk factor) when evaluating value-for-money. This means that there really shouldn’t be any more argy-bargy over contract terms with tenderers (if they raise new objections not canvassed in their tender bids) after the delegate has decided the tender process outcomes. But that’s a hard rule to enforce if tenderers didn’t see a close-to-final contract when they submitted their tender responses.

#10 Recording written reasons for quality scores and final value-for-money assessments

All of the above points are about planning the tender process in order to ensure that you get a great result. This 10th point is about the evaluation process, but we couldn’t in good conscience leave it out.

Read pretty much any ANAO performance audit report and you’ll note an obsession about record-keeping. We get the point. It really is important to keep good records in procurement processes, such as the RFT, tenderer questions, clarifications, addenda, other communications with tenderers, complaints, conflict of interest declarations and how conflicts are managed, delegate decisions, and all aspects of the evaluation process.

We particularly single out these:

  • For each tender, be sure to keep a good written record of:
    • how evaluators came to reach a particular score for each separate evaluation criteria, and
    • what factors contributed to the overall value for money assessment for that tender; and
  • For the overall final value for money ranking of all tenders, how was that process undertaken and what factors contributed to the final ranking of tenders and awarding of contracts?

Records (e.g. evaluation sheets for each tender) don’t have to be essays. They just have to capture the reasons for the assessment of that tender. Depending on the procurement, a paragraph or two for each weighted criteria may be good enough.

Good record keeping is useful for all manner of reasons. It will help you to:

  • debrief tenderers at the end of the process;
  • demonstrate a transparent and well-run tender process, consistent with probity; and
  • respond to complaints, ministerials, investigations, audits, challenges, etc.

The End

Most of the hints and tips in this paper are designed to pick up on issues that you won’t necessarily find in most agency procurement template documents, policies, procedures, etc. That isn’t a criticism. These are more practical issues about getting great procurement results, not just ensuring compliance with Commonwealth procurement obligations and policies. Many of these issues can be dealt with via:
relatively minor additions to agency procurement template documents; and
practical legal and/or probity advice from experienced advisers.
Can we help with those? Yes!

What we provide

We provide legal, procurement and probity advice. We also advise on competitive grant processes. We deliver advice that:

  • Is practical, helpful, solution-focussed and designed to strike the right balance between managing risk and getting you on your way to where you need to go.
  • Is timely. Tender processes move quickly and you’ll need quick, easily accessible advice, whether oral or in writing.
  • Is in plain English.
  • Helps you to comply with Australian Government laws and policies, as well as ANAO views about best practice.
  • Ensures defensible outcomes.
  • Is cost effective.

For more information please contact:

Geoff Adams — Partner — Government Advisory, Corporate and Commercial Team
(02) 6279 4377
geoff.adams@mvlawyers.com.au

Athol Opas — Special Counsel — Government Advisory, Corporate and Commercial Team
(02) 6279 4468
athol.opas@mvlawyers.com.au