Formal opportunities come with all sorts of labels. The following are parts of the tender process. These can be broken down into those where you are invited to pitch for contracts, and those where, at this stage, they just want information from you:
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ITT – Invitation to Tender
When faced with an ITT – Invitation to Tender it is a really good idea to take a great big deep breath! The task can be daunting, and if you are not careful you can be totally overwhelmed – leading to a nervous, rushed response, and a submission that doesn’t do you any justice at all!
So take that big, deep breath, calm yourself down, and take a cool, measured approach. The first thing to do is to size up the task. You will probably need to browse through the information several times before you really get a handle on it. If you are anything like me it is not a good idea to read through it from start to finish. There is usually so much information to deal with that your brain will go completely numb – and not in a comfortable way.
Once you have assessed what is involved you can start to get to grips with the relevant detail, and put a plan together. Now is the time to start to get some tasks underway. It is nice to be able to have some quick wins, maybe by completing some of the forms requiring straightforward information. But take caution, it is really important to identify early on the tasks that are going to be particularly onerous, or take some time to complete. These need to be started early and a realistic deadline fixed for their completion. Once everything is planned in and on track you will find that you are on top of the job. This is really significant. This is the right place to be in which to create an outstanding tender response. Your writing will begin to really flow, and you will come up with some creative ideas – and this can make all the difference between winning and losing a tender.
PQQ – Pre Qualification Questionnaire
Are the days of the PQQ – Pre Qualification Questionnaire numbered?
It seems that for larger tenders it may still have a role to play, but for smaller tenders it is deemed that they are not relevant. I, for one, am a little unsure of the logic. If the logic is that for smaller tenders it is not necessary to have a two stage, and therefore more onerous, process, then I believe that the logic may be flawed.
The purpose of the PQQ – Pre Qualification Questionnaire was to reduce the burden on tenderers who stood little or no chance of being shortlisted. The idea was that the first stage was to complete a simple questionnaire which effectively “weeded out” the least likely bidders, leaving the serious contenders to complete the full tender process. The new all-in-one process means that all bidders will have to complete all the documentation.
An interesting case is a tender in which I am currently involved. This was originally released as a PQQ and an ITT, but having had all the bids in for both stages, the process, for reasons I won’t go into here, was abandoned. It was then re-released as a single document with no pre-qualification stage. The new document simply combines everything from the PQQ plus everything from the ITT. This means that all the bidders have to complete all the paperwork. Where is the sense in that? At least first time around those bidders who were not serious contenders only had to complete part of the process, thus saving time for everybody!
However, all is not as simple as that. Now we have the prospect of the European Single Procurement Document. Does this initiative represent more administration designed to simplify the process – whilst actually complicating it – or will it really make things easier. More to come!
RFI – Request for Information
An RFI – Request for Information differs from an ITT or a PQQ inasmuch as it is a preliminary assessment of the market.
With an ITT (Invitation to Tender) or a PQQ (Pre-qualification) the procurement exercise has been pre-determined. The purpose of an RFI – Request for Information is to provide the information required to decide
the procurement process. There are a number of ways in which this information can help:
- It can help establish the level of interest there may be in supplying the product or service
- It can show how the relationship between supplier and buyer might work
- It can identify the benefits of working in a particular way
- It can reveal the weaknesses in working in a particular way – sometimes more difficult to identify
- It can provide the basis for making commercial decisions
This information may be vital in terms of deciding whether or not an internal initiative may be viable. The internal payback may depend on external factors.
In order to respond effectively to an RFI – Request for Information it is really important to understand:
1. What is being asked for
2. What is really needed
… and these may not be the same?
How do you handle the situation if they are not the same. If you can see the perfect solution for what they need, but they have asked for something different, you need to establish a dialogue, so that you can start working in harmony. However, the RFI – Request for Information process may preclude this. In which case you need to successfully negotiate the RFI process and move on to the next stage. If you provide them with information that they haven’t asked for you will not get very far – however beneficial your solution might be. You need to provide the information requested. You may also be able to proffer additional information *for consideration”. If this is not possible your basic response needs to be of a sufficiently high quality to get you through.
RFP – Request for Proposal
The great thing about an RFP – Request for Proposal is that it gives you the opportunity to really pitch your product or service. This is because an RFP is not looking for a response that sticks rigidly to a prescribed format. It will give you the opportunity to describe your proposition in the way that best enables you to explain how your solution will meet their needs.
This is, in fact, absolutely key – how you will meet their needs. The first step in the process is to understand exactly what their needs are. This information can be gathered in a combination of different ways. Face to face is my favourite. This way you can ask questions, and probe areas of particular interest. It also enables you to read body language, and explore aspects that might not be immediately apparent, and it is this way that you might unearth some nuggets that may make the crucial difference in winning the business.
As well as face to face meetings, and general relationship building with all relevant individuals, take some time to research the organisation in question. It is likely that there will be corporate or organisational themes that it would be good for you to tune in to. These may be expressed as mission statements or as a corporate vision or as organisational values. Any solution that is proposed by you that enable individuals within the organisation to contribute towards the achievement of these aims is going to well received.
Now; addressing the RFP – Request for Proposal, this needs to reflect all the things that you have learned during your fact finding, and your proposal needs to be built around these. The best format I have found is that of NOSE:
- Needs – what they want in terms of a solution
- Outcomes – what they want to achieve from this solution
- Solution – what your solution is, and how you will deliver it
- Evidence – assurance that you can and will deliver the solution, and that it will work
RFQ – Request for Quotation
Is an RFQ – Request for Quotation any different from an ITT – Invitation to Tender?
Well, yes it is. At least the inference is different. In response to an ITT you will probably be expected to provide supporting information, and your bid will be measured on quality aspects as well as price. In response to an RFQ you will probably just be required to provide a price for a bid that is fully compliant with the requirements of the specification. You will also probably be required to accept the Terms and Conditions of the procurer.
Does this mean that there is no opportunity to make a pitch? Not necessarily. Usually with an RFQ there will be the opportunity to submit a covering letter, or email. Maybe even some supporting information. The chances are that, whereas, on the face of it, the procurer is just looking to compare prices, in reality they will be considering best value.
It is definitely worth with an RFQ – Request for Quotation, taking into account any mandated response requirements, outlining the value that comes with your offer. At the very least, your bid will show up in a good light when compared with bids at a similar level. It will also be an opportunity to showcase your professionalism.
There is always a balance to be struck, of course, between pitching your product, and irritating the buyer by overdoing the “sell”. The less “salesy”, therefore, the better. A good tip is to make sure that what you do submit is relevant. If what might be seen as marketing material is actually perceived as relevant technical information that is good. An RFQ – Request for Quotation, may occur at an early stage in the buying process. The buyer may be assessing the market prior to engaging with potential suppliers. Alternatively it may come later on, after the buyer has assessed potential suppliers. If this is the case it could mean that things are becoming seriously competitive. Either way it is essential to demonstrate competitive edge.
EOI – Expression of Interest
When tenders for contracts are advertised interested parties are generally directed to an online portal. A summary of the tender is given, and prospective tenderers are invited to register an initial EOI – Expression of Interest.
The issue many prospective tenderers face at this point is that they are not sure whether they are interested in the tender or not. In order to be able to establish if the tender is of interest to them they need to access the contract documentation. But they can’t access the contract documentation until they have expressed interest.
This is not a problem. It is possible to register an initial EOI – Expression of Interest, access the contract documents, assess the tender, decide not to proceed and withdraw the initial EOI – Expression of Interest. This can all be done without obligation, and the initial EOI – Expression of Interest can be withdrawn in such a way as to be able to opt back in at a later stage.
Being able to do this is an essential part of the bid / no bid decision making process. Without the full contract documentation it may be impossible to make an informed decision.
Furthermore, the next stage in the online tendering process is to confirm your intention to respond. As with registering an initial EOI – Initial Expression of Interest – this can be withdrawn at a later stage. It is important of course to be fair with the tendering organisation, and to withdraw as soon as you know. It is important for them, in the interests of running a professional tendering process, to know how many bids to expect. As with all tender related activity it is important to act sooner rather than later. The clock is always ticking.
ESPD – European Single Procurement Document
Other Tender Abbreviations
QHSE (SHE / SHEQ) – Quality, Health, Safety, Environment
CSR – Corporate Social Responsibility
A company that publishes a robust corporate social responsibility statement is essentially declaring its bona fides in terms of always aiming to “do the right thing”. This means doing the right thing in the community, doing the right thing by its customers, doing the right thing for its staff, doing the right thing by its suppliers, doing the right thing for its shareholders and doing the right thing in society generally. In other words they are saying that they are a business with integrity – a business with a conscience.
This can be realised in a whole range of different ways, and in fact there are a whole range of recognised areas in which businesses can formulate policies, all of which contribute towards their overall corporate social responsibility. These include environmental and sustainability matters, equal opportunities and diversity, health & safety, whistle blowing and so on. It can also include HR policies and it will be enshrined within the company’s mission vision and values.
Importantly it will incorporate a strong charitable ethic, both at local level – supporting local good causes and institutions, often espousing one in particular – and at national or global level, promoting larger charities and worthwhile causes.
Of course, this is not all without a payoff for the company. They will benefit from positive public relations (PR) and it will help raise their profile in a good way. Furthermore it will help them tick the necessary boxes when it comes to tenders and other similarly competitive situations.
Whereas it is clearly a good thing for organisations to adopt a strong corporate social responsibity policy, it is important to be mindful of the fact that this could be just window dressing. A good way of checking for veracity is to examine the achievability of their objectives. Lofty objectives may conceal shallow intent. Meaningful detail signals genuine activity.
SLA – Service Level Agreement
Many smaller businesses are let down, when tendering for contracts, by not having the sophisticated edge of professionalism presented by the corporates. This can be despite offering a really good product or service. A classic example of this is the SLA – Service Level Agreement.
The SLA is a management tool put in place to monitor the key service elements required by the client. It will be reviewed by the supplier and client together on a periodic basis – probably monthly. The defined service levels will be measured, on a line by line basis, against agreed criteria, and given a score. This scoring process will indicate how the individual elements of the contract are performing, and build a picture of the contract as a whole. For any service element falling below par actions will be agreed, and objectives set for improvement. These will receive ongoing scrutiny.7
This SLA – Service Level Agreement process;
- Ensures objectivity when evaluating service performance
- Eliminates poor, or incomplete reporting of service status.
Implementing an SLA – Service Level Agreement as part of a contract can be regarded as being a very professional way of managing service delivery. Including an SLA process in response to a tender question, such as, “How will you provide assurance of a continuing high standard of service delivery?”, can be instrumental in helping to win contracts. If you want assistance designing or implementing an SLA – Service Level Agreement process, either as part of a tender response, or for an existing client, I can help. This process can be enormously useful in terms of building a professional relationship between supplier and client, leading in turn to longevity of contract. An SLA – Service Level Agreement can not only help win business, it can help keep it!
KPI – Key Performance Indicator
The function of a KPI – Key Performance Indicator – is to measure an aspect of the performance of a service or organisation. The idea is, that if all the key elements can be identified, they should all add up to a complete picture of how well the service or organisation is doing.
Service or organisation? if a service is being measured the objective of the KPIs will be to measure the effectiveness of the supplier of that service. KPIs are often built into an overall Service Level Agreement (SLA). These are the monitored and reported on, probably monthly, and may well form the basis of a monthly meeting. This mechanism can prove invaluable in terms of providing an objective way of assessing service levels.
If a business is being measured the KPI – Key Performance Indicator – will measure an element that will be critical to the business’s success. All the KPIs critical to business success may be represented on a “dashboard”. The implication is that the business can be effectively driven from this dashboard.
What is measured? For a business key financial elements are important – turnover, profit, margin, assets, liabilities, debts and so on. But other aspects will also be critical – and will vary from business to business. Production output may be key. New sales enquiries may be instrumental in terms of sustaining a healthy business pipeline. Alternatively this may be new contract wins – or contract losses!
When setting a KPI – Key Performance Indicator – it is important to recognise the difference between those that measure input, and those that measure output. For example profit is clearly an output. On the other hand new sales enquiries is an input – it doesn’t achieve anything in itself, but is a means to an end. When setting a KPI – Key Performance Indicator – for a department it is vital to get it right. For example, it may be considered important to place an emphasis on achieving a high level of sales calls to new prospects. If this is prioritised over, say, upselling existing customers, it may prove to be counter-productive.
MEAT – Most Economically Advantageous Tender
Is the acronym MEAT – Most Economically Advantageous Tender – code for cheapest?
Many ITTs (Invitations to Tender) state that the tender will be awarded on this basis. They will then describe the formula with which tenders will be evaluated. The criteria for written material are generally fairly straightforward; points available plus a weighting. However the criteria for pricing is not necessarily so straightforward – quite often showing a formula that wouldn’t look out of place in nuclear physics.
Furthermore, understanding the criteria won’t necessarily help. The start point for calculating the score for pricing often starts with awarding the lowest bid 100%. Every other bid will be graded against that. You won’t, of course, have any idea of what this is going to be, so you won’t be able to gauge your own likely score. What’s more, the lowest bidder may not qualify as a consequence of other elements of their tender. What this means is that you will have no idea of the likely differential in terms of pricing score between you and other tenderers. The implication of this is that either price is likely to be more relevant than quality, or that quality is likely to be more relevant than price. You just won’t know.
All of this means that you have to be as competitive as possible. This means submitting your best price, and submitting the best quality response.
In terms of pricing, this is a matter of finding a balance between;
- How much you need to charge for the contract to be viable
- What price you need to go in at to win the business
If there is no overlap between the two you need to consider seriously whether you should be bidding for this business. Providing there is an overlap the strategic decision is where to pitch your bid. Don’t pitch so low that you have no room for manoeuvre. On the other hand you need to be competitive enough to be seriously considered.
CPV Codes – Common Procurement Vocabulary
TUPE – Transfer of Undertakings (Protection of Employment)
Clearly TUPE – Transfer of Undertakings (Protection of Employment), is about regulation. But there is also a very human aspect to it.
It can be a very unsettling time for an individual, employed on a contract, when that contract goes out to tender. Although there are regulations in place to protect them there is what may be the daunting prospect of having a new employer, together with everything that goes with that!
It is very important for an incoming contractor to handle the transfer sensitively. Prior to the tender submission they must ensure that they are in possession of all the relevant information about potentially transferring employees. This must be factored into the bid, so that it can all be incorporated into the new contract, should they be successful. Once the contract is awarded the incoming provider must re-check all the information, and, at the earliest appropriate opportunity, engage with all employees who may transfer. It is absolutely crucial to be totally professional at this stage. This means;
- Communicating exactly what employees can expect, what their options are and how the transfer will proceed
- Conveying a welcome to potential new employees, demonstrating an open, honest and empathetic approach
As and when the transfer takes place it will be important to welcome incoming transferring employees into the team. This may involve integrating with existing employees, or new recruits. It may mean that transferring employees are on significantly different packages to existing or new employees. This is a potentially divisive situation, and may adversely affect service delivery. It will be really important to closely manage the team, and nip any issues in the bud.
Of course, although employees transferring in with the contract have a right to expect their employment to be protected, it is also quite reasonable for the standards expected of them to be established, and for them to be measured against them. If they fail to meet these standards they should be treated just like any employee, and given support to achieve the standards required. If the object of the exercise was to raise the standards of service delivery, then all members of the team will be expected to be part and parcel of this change.
Tender Terminology includes:
Form of Contract – A standard form contract is a contract between two parties, where the terms and conditions of the contract are set by one of the parties, and the other party has little or no ability to negotiate more favourable terms and is thus placed in a “take it or leave it” position.
Standstill Period – The standstill period is a pause between contract award decision and the formal award of the contract. This allows time, for example, for an appeal to be made.
Types of agreement:
Framework Agreement – This lays down terms, conditions & prices governing future business. It is not a guarantee of business.
Preferred Supplier List – is a list of suppliers, specified by a business or organisation, that may be used for a particular product or service. It is not a guarantee of business.
An agreement may also be part of a Dynamic Purchasing System (DPS), a cross between a framework agreement and a preferred supplier list. This is an arrangement which allows suppliers who meet minimum criteria to apply to join at certain points during the duration of the DPS. Various call-off procedures and arrangements then apply.
Mini Competitions – Formal mini tenders .
E Auctions – This is when a single buyer offers a contract out for bidding (using specialised software). Multiple sellers are then able to offer bids on the contract. As the auction progresses, the price decreases as sellers compete to offer lower bids than their competitors whilst still meeting all of the specifications of the contract.
Quick Quotes – Competitive mini tenders with short timescales, against a stated specification.
Spot Purchases – Orders place directly with no further process required.
Common areas of interest to tendering organisations:
Environmental Management / Sustainability / Sustainable Sourcing. Equal Opportunities / Diversity. Corporate Social Responsibility. Innovation. Added Value. Supply Chain Management