Transcript Navigating the Public Sector Procurement Maze

Selling to the Public Sector – helping
Leicestershire SMEs unlock their potential
Bob Moodie
NJM European, Economic & Management Consultants Limited
Navigating the Public Procurement Maze
1.
The Procurement Context & Process
2.
Identifying tendering opportunities in the
local economy
3.
Developing a strategic approach to bidding
4.
Pre-Qualification Questionnaires
5.
Invitations To Tender
The Procurement Context & Process
The Procurement Context: Regulatory Framework
EU Procurement Directives
(Competition Policy)
European
National
Government Strategy
Statutory Requirements
Local
LA Procedures,
Statutory Requirements
Local Agreements
EU Procurement Thresholds
Supplies
Central Government
plus some ‘Quangos’
(see Schedule 1 List)
Other Public Sector e.g.
Local Authorities,
Universities, FE, etc
Services
Works
€125,000
€125,000
€4,845,000
(£101,323)
(£101,323)
(£3,927,260)
€193,000
€193,000
€4,845,000
(£156,442)
(£156,442)
(£3,927,260)
Thresholds relate to Total Contract Values (including any extension options),
are applicable from 1st of January 2010 and are NET of VAT
Principles: Open competition, non-discrimination, equal treatment and
transparency.
Note: Exchange Rates
Context: Legal
 Regulatory Framework
 Search and rescue helicopter service:
Privatisation bid process is halted
Reason: Preferred supplier, admitted
it had access to commercially
sensitive information from Department
for Transport and Ministry of Defence
(MoD).
Context: Policies


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
The Comprehensive Spending Review (2010)
SME Concordat
Equality of Access (SME & Third Sector)
Coalition Government’s aspiration to award 25% of central
contracts to SMEs
 Leicestershire County Council’s Sustainable Commissioning
& Procurement Strategy (2009-13)
- % expenditure with SMEs
- No. of local SMEs submitting Pre-Qualification
Questionnaires to ESPO when expressing an interest in
Council requirements
 Leicester City Council et al - Selling to the Public Sector:
Helping SMEs in Leicester and Leicestershire Win Public
Contracts
Context: Economics
 Price & Value for Money (VfM): VfM is the optimum
combination of Cost and Quality - Most Economically
Advantageous Tender (MEAT) rather than Lowest Price
 Collaborative buying by authorities – purchasing consortia
 Rationalisation & Framework Agreements, Contract Bundling
 Reduction of public sector in house management overhead
and increase in outsourcing
 Pressure on contractor margins
 Declining markets – big companies going for small contracts
Context: Society & Environment
 Corporate Social Responsibility
 Sustainability & Equality
 Innovation & non contractual outcomes (Added
Value)
 Local Government Act 2000 – Wellbeing Powers
- Leicestershire County Council’s Sustainable
Commissioning & Procurement Strategy (200913) performance measures:
- No. of contracts with a Total Value exceeding £1m that include a
Social Clause
- No. of high risk contracts where environmental considerations are
included in the contract award (weighting 15% or more)
Context: Technology
E-Procurement: Transition from paper based
to electronic based systems and processes:
 E-Portals
 E-tendering
 E-auctions
 Iprocurement
 Purchasing Cards (pCards)
 Real time reporting
 Payment and Servicing
Procurement Procedure
Procedure
Characteristics
When the procedure is adopted
Open
All qualified applicants must be
given the opportunity to bid
For lower risk procurement where supplier
capability is less important or where the
focus is on price
Restricted
Two stage process with facility to
shortlist (PQQ + Tender)
Where capability of supplier is key
determining factor in the delivery of the
contract, market response likely to be
huge to allow short-listing
Negotiated
Two stage process with facility to
negotiate at second stage
Specification is not clear or some creative,
artistic or expert input is required.
Competitive
Dialogue
Two stage process with facility to
enter into a dialogue with potential
suppliers to consider potential
solutions and refine specification
before invitation to tender
Complex procurement where suppliers
expertise has significant impact on the
development of the specification
Framework
Agreement
Stage One: Suppliers selected
through open/restricted procedure to
a panel of suppliers for given period
Stage Two: Call-Off or Mini
competition will be held when
services/goods required
Capability and Capacity is important and
is generally a recurring/constant
requirement (max 4 years; including
extension options)
Procurement Procedures:
The formality of the procedures and process increases in line with the
contract value and risk.
Lower value contracts

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
Advertising not essential
Officer discretion
Approved supplier lists
Verbal and Written Quotes common or formal tender process
Easiest to compete and win – harder to find
Higher value contracts





Advertised
Formal Tender process only
Essential above EU Thresholds
Framework agreements
Easiest to find – harder to win
Identifying Tendering
Opportunities in the Local
Economy
Opportunities: Public Sector
 UK Public procurement is estimated at over £175 billion per annum
(13% of UK GDP).
 Leicestershire County Council spends over £300 million each year
on goods, works and services. From 2011-12 to 2014-15, the
Council will need to make savings of around £82m, including £22m
from commissioning and procurement.
 Leicester City Council’s estimated procurement budget for the
Authority was £260 million p.a. (2007-2008). From 2011-12 to
2014-15, the Council will need to make savings of around £100m
from its total annual budget of circa £1bn.
 NHS Leicestershire & Rutland Procurement Partnership influences
spend of approximately £250 million on goods and services each
year.
Opportunities: Public Sector
9 Local Authorities:
 Leicestershire County Council
 Leicester City Council
 North West Leicestershire District Council
 Charnwood Borough Council
 Melton Borough Council
 Blaby District Council
 Harborough District Council
 Oadby & Wigston Borough Council
 Hinckley & Bosworth District Council


3 Universities: Leicester, Loughborough, De Montfort
7 FE colleges: Stephenson, Loughborough, Brooksby Melton, North
Warwickshire & Hinckley, South Leicestershire, Leicester, Loughborough
University School of Art & Design
 Schools
Other:
 NHS (subject to major review)
 Housing Associations / RSLs
 The Emergency Services
Leicestershire County Council Procurement Expenditure (2008-09)
1.0% 1.0%
1.0% 0.3%
1.0%
2.0%
Social Care
2.0%
3.0%
Building and Civil Engineering
Transport
Consultancy and Professional Services
4.0%
Miscellaneous
4.0%
37.0%
Waste
HR
5.0%
ICT & Telecommunications
Food and Catering Equipment / Services
5.0%
Utilities
Vehicles & Plant
6.0%
Books, Journals and Multimedia
Design, Printing and Marketing Services
10.0%
Facilities Management
18.0%
Stationery and Office Supplies
Furniture & Furnishings
Local Procedures
Public Sector
Organisation
Threshold (goods &
supplies)
Procurement Process & Source
Leicestershire County
Council
<£1k
£1k – £20k
>£20k - £100k
1 Oral / Written Quote
3 Written Quotes or www.sourceleicestershire.co.uk
Request for Quotation www.sourceleicestershire.co.uk
>£100k - EU
threshold (£156,442)
Formal Tender Process www.sourceleicestershire.co.uk
Or www.espo.org
< £5k
Quotes (officer discretion)
£5k - £20k
2 Written Quotes
£20k - £50k
3 Written Quotes
£50k – EU Threshold
(£156,442)
Formal tender process/local press
www.sourceleicestershire.co.uk
(Building &
maintenance related
works only)
Also use www.constructionline.co.uk
£5k - £25k
>£25k – EU threshold
(£156,442)
3 Oral / Written Quotes
Formal Tender via departments or www.in-tend.co.uk
Hinckley & Bosworth
District Council
University of Leicester
Finding Opportunities
 Where should you look / who should you know?
PUBLISHED
UNPUBLISHED SOURCES
Tender websites & Supplier
portals
Networking / relationship building
Organisational / Sector websites Procurement Teams / Category
Managers
Tenders Electronic Daily (TED)
Operational departments and units
Local / National press / Press
releases
Market analysis / competitor intelligence
Trade Press
Partners / sub contractors
Meet the buyer events /
briefings
Second / Third Tier Contractors /
Supply chains
Contract Notices
KEY TENDER WEBSITES
Name:
Source:
Used by:
Source Leicestershire
www.sourceleicestershire.co.uk
LAs, NHS in Leicestershire
Eastern Shires
Purchasing
Organisation
www.espo.org
LAs, NHS in Leicestershire, OJEU
tenders
Leicestershire County & http://www.lcr.nhs.uk
Rutland NHS
NHS
Voluntary Action
Leicestershire
www.valonline.org.uk
Contract opportunities for voluntary
sector
In-Tend
www.in-tend.co.uk
Universities, Colleges, Schools,
LAs (some in Leicestershire and
nationally)
Blue Light
www.blpd.gov.uk
Police, Fire & Rescue Services
(including Leicestershire
Constabulary & across UK)
Supply to Government
www.supply2.gov.uk
www.supply2health.nhs.uk
Lower value government tenders
(*website will be replaced by
‘Contracts Finder’ March 2011)
OJEU
www.ted.europa.eu
Any public sector contract above
EU Threshold
Finding Opportunities: e-portals
 Identify a number of key tender websites
 Familiarise yourself with the website format and
content
 Register and or publish company details
 Set up for Alerts service, newsletters etc
 Appoint key individual(s) to monitor regularly for
new contract opportunities
 Apply filters to your search words (decide which
opportunities to focus on)
Be Systematic & Get Organised
 What is your target market?
 In your target market who are the key buyers - Personnel




at Department level and Procurement Officers (important
for low value contracts that are not formally advertised)?
Engage procurement personnel - make sure they know
you exist, seed ideas
Find out about approved (accredited) supplier lists
however note that authorities are moving towards
framework agreements
Register and publish on tender e-portals
Network (buyers/commissioners, meet the buyer events)
Be Systematic & Get Organised
 Set up internal processes and individual(s) to monitor

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

tender portals, alerts, sources and review feedback
Search for potential business partners / collaborators /
subcontractors
Develop / improve your key policies e.g. Make them
relevant and articulating business benefit
Accreditation (e.g. CHAS, ISO, IiP etc)
Bid writing is a skill – invest the time in developing the
capability
Developing a Strategic Approach
To bid or not to bid?
Strategic Decision Making
 Is the tender a good fit in relation to your company’s





activities?
Can you meet the eligibility criteria (technical
qualifications, policy compliance e.g. Quality Assurance,
Insurance) ?
Do you have a good track record in relation to the
opportunity?
Do you have the trading history (e.g. 2 years Accounts)?
Do you have the capability and capacity to deliver the
contract if successful?
Can you make sense of the budget and can you deliver
the contract on time?
Strategic Decision Making
 What are the risks?
 Who are your competitors?
 What percentage of your turnover does the contract
represent?
 Do you need a partner(s) or will you use
subcontractors?
 What is the percentage chance of success?
 Do you have the time and resources to devote to
preparing a good bid?
Strategic Decision Making
Solo or Collaborative Bidding?
 Form a consortium if:
 You don’t have the capability or capacity
 You can’t meet the 20% rule
 Options:
 Consortium
 Joint Bidding
 Lead Contractor & Subcontractor
 Legal basics – will you be jointly and severally liable?
 Memorandum of understanding (MoU) / Partnership agreement /
(Non Disclosure agreement (NDA); Agreement not to compete in
other tender)
 Service level agreement (SLA)/contract
 NB. consortium should be properly led, constructed and managed
Consortia
Benefits:
Risks:
Increase capacity and scope to bid e.g.
Overcome PQQ impediments
Partner selection and getting Agreement / legal
document
Shared trade history (combined capability
and capacity)
Trust relationship (how well do you know your
partner – can you be confident they can and will
deliver)
Business Development: Access new
clients and markets
Complex decision-making, loss of autonomy,
compromises and concessions
Spread risk
Sharing sensitive information
Mutual learning and innovative
approaches
Logistics (Co-ordinating bid)
Delivered additional added value (the
Logistics (Contract delivery)
whole is greater than the sum of the parts)
Improve chance of success
Converting Opportunities
Pre-Qualification Questionnaires (PQQs)
& Invitations To Tender (ITT)
Procurement Process Overview
Procure
Contract
Notice
EOI
Tender
Commission
Review
PQQ
Manage
Award
Evaluate
Procedures
Pre Qualification Questionnaire (PQQ):
 Evaluation of organisation
 Are you safe and appropriate choice?
 Compliance
 Past performance / track record
 Selection criteria (short-listing)
Invitation to Tender Stage (ITT):
 Evaluation of bids
 Your service / product / works offer
 Future performance
 Award criteria
Get Bid Ready: Preparing the Documents
 Make note of instructions, word limits and submission format
 Try to understand what each question is asking and why they
are being asked. Be compliant!
 Note the scoring / weighting of criteria and spend time / effort on
your response accordingly
 Make careful note of the deadline and make sure you submit
well in advance of the deadline (avoid last minute submissions)
 Anything you are not sure of, contact the buyer (but be aware
that any question you ask will be notified to other suppliers)
 Answer all questions honestly and be keen and positive in your
responses (emphasise your USP).
 Double check your response / second pair of eyes
 Ensure you complete and submit all the documents required
PQQ Information
General Business Information
 Business Details
 Status (Sole contractor / consortium)
 Ownership
 Business Probity
 Professional Conduct
Documentation required may include:
 Company History
 HR Information
 Administrative Information (Company Registration/VAT Number)
 Quality Standards Accreditation / Certificates
PQQ Information
Financial & Insurance Information:
 Turnover
 Accounts
 Insurance
Documentation Required may include:
 Audited accounts, Management accounts, Parent company accounts
 Bankers statements & accountants’ references
 Financial projections, including cashflow forecasts
 Details of previous contracts and values
 Capital availability
 Certification of Incorporation, Certificate of Name Change
 Insurance Certificates
NB financial vetting is based on sound business judgement and not just the
application of financial formulae
PQQ Information
Business Activities, Track Record, References
 Business Activities
 HR Information (FTEs / Training Records / CVs)
 Referee Contact Details for recent contracts
 Relevant Contract Performance
 Subcontractors
 Capability Statements
 Case Studies
 References (norm = 3 recent referees)
 NB Make sure information supplied is relevant to PQQ &
Tender Specification
PQQ Information
Essential Policies:
 Quality Management
 Equality & Diversity
 Health & Safety
 Environment Management & Sustainability
Others Policies:
 Business Ethics
 Corporate Social Responsibility
 Business Continuity
 Sub Contracting
PQQ may require you to supply: specific responses, outline of strategy,
copy of statements, copy of certifications etc
PQQ Evaluation
PQQ will be evaluated to select potential suppliers to invite
to tender. Based on:
 Business Probity
 Technical Capability and Capacity
 Financial Information
 Contract Compliance
 Policy Conformity
NB: Evaluation includes:
 Pass / Fail criteria
 Financial risk based assessment
 Criteria have different scores with weightings
PQQ: Example Scoring Framework
Section
Score Weighting
1
Organisation Details
N/A
2
Financial Information
N/A or Risk Based Assessment
Pass/Fail
3
Insurance
4
Business Activities
15%
5
Business Practices
30% (Total)
Pass/Fail
Health & Safety
5-10%
Quality Assurance
5-10%
Environmental Management
5-10%
Equality
5-10%
6
Requirement - specific
40%
7
Experience & References
15%
8
Professional & Business Standing
Pass/Fail
Example ‘Scoring’ Criteria
Score
Response Type
Reason indicated for Score
0
Non compliant response
No relevant information / solution provided in response
to contract requirements.
1
Unacceptable response
Partially compliant response but with serious
deficiencies in solution offered, indicating serious
difficulties / inability to deliver contract requirements.
2
Unsatisfactory response
Partially compliant response with shortfalls in solution
offered, indicating not all contract requirements could
be met and thus difficulty in delivery of the contract.
3
Acceptable response
Compliant response, indicating basic contract
requirements are met but not exceeded. Contract could
be delivered.
4
Good response
Compliant response, clearly indicating entire delivery
can be met and solution offers some limited benefits
beyond stated requirements.
5
Excellent response
Compliant response, bidder illustrated comprehensive
understanding of contract reqs. Proposed solution
provides significant additional benefits beyond stated
reqs.
Invitation To Tender (ITT)
ITT Information
 If you are shortlisted from the PQQ or for the Open Tender
procedure
 Invitation to Tender documents will normally identify the
information required and how to structure your response.
 The areas covered are usually as follows:
 What are you going to do
 How are you going to do it
 How much will it cost
 Who is going to do it
 What is your track record / prior experience
 Compliance
 References
ITT Information
Invitation to Tender (ITT) pack will include:
 Instructions to Tenderers
 Introduction from buyer who will set out the vision
 The Specification
 The Evaluation Criteria & Relative Weighting
 Form of Tender
 Draft Contract Terms and Conditions
 Declarations / Bona Fide
 Pricing Schedule
Preparing the Tender
 Get your team together, appoint a bid manager and conduct
detailed review and interpretation of tender requirements.
 Determine whether you require clarification of any aspect of the
tender and ask the question(s) allowing enough time for a
response.
 Check regularly to see if any questions/answers have been
submitted by competitors. Be aware that any question you ask will
be notified to other suppliers)
 Prepare work plan & allocation of roles/tasks/milestones with
reference to tender & submission deadline.
o NB: Build in time to review, refine and style bid
Preparing the Tender
What is the Buyer looking for?
 Demonstrate a clear understanding of the brief (i.e. the
challenges are understood and addressed)
 Design a clearly structured tender response aligned
against each tender requirement and criteria (e.g. core,
gateway and specific). Ensure compliance!
 Methodology: clearly show who does what, why, when,
how and benefits from buyer’s perspective).
 Identify and demonstrate clearly your capability and the
innovation of your offer (USP) - can your offer exceed
the contract requirements and provide additional
benefits, outcomes?
Preparing the Tender
Standing Out from the Crowd
 Have you articulated ‘Why choose us?’
 Have you fully defined the key features, quality and
benefits of your approach?
 Have you used and made the most of recent and
relevant case studies to illustrate your track record?
 Have you gone the extra mile in manifesting your
understanding of the brief and the design of your
solution?
 Conduct a mock assessment against the evaluation
criteria and relative weighting
SMEs: Make a virtue of your size
 Lower Cost Base
 Innovation
 Proximity to client or service point & responsiveness
 Flexibility
 Consistency of service and personnel
 Specialist and Local Knowledge
 Commitment to Sustainable procurement (Investing in
Local Supply Chain)
 Corporate Social Responsibility (Community Investment
& Involvement)
 Personnel & Tasks
Preparing the Tender
Costing Your Proposal
 Charging Rate(s) (Daily/Hourly) & Time
 Fixed Cost / Variable Cost
 Expenses & Disbursements
 Contingency
 VAT
 Innovative Cost Proposals
 Discounted Cost e.g. 5% early payment, economies of scale and
efficiency savings linked to contract term and/or number of
contracts (Lots) awarded
 Buyer comfort: Offer 10% Contract Price Withheld until
completion
Preparing the Tender
Do’s & Don’ts
 Do not attempt to find an “inside track” (canvassing)
 Respond by the correct date + time (electronic,
electronic + post, post?) avoid last minute submissions
 Ensure the submission is complete AND signed
including copies of requested documentation, e.g.
insurance certificates, policies, audited accounts etc
 Use tender envelope/label if provided and check if there
is a tender reference
 Look carefully at the evaluation criteria, scores and
“weighting”. This should influence time and effort in
preparation of answers
Preparing the Tender
Bid Writing
Language & Style:
 Write in plain English
 Avoid jargon and unexplained abbreviations
 Use ‘active’ and not ‘passive‘ verbs, refer to ‘we’ and
‘you’
 In your response try to reflect key wording as found in
the tender specification
 Short sentences and paragraphs; use introductory
headers
 Punctuation and spelling really matter
Aim for clarity, brevity, readability and persuasion
Avoiding a Poor Score
Common reasons for a poor score:
1.
Failure to follow the instructions.
2.
Writing by committee, no narrative flow and lack of
control/ownership
3.
Incomplete or missing answers/sections.
4.
Supporting documentation incomplete
5.
Repeating answers or referring to ‘see above’ (questions are
rarely repeated)
6.
Over emphasising what you sell, rather than what they are
looking to buy
7.
Recycling old tenders ‘Cutting & pasting’!
8.
Generic PQQ/Tender response
9.
Providing response on general capability instead as opposed to
specific contract requirements.
Buyer Preferences
LIKE
Don’t like
Concise and precise language
Wordy tenders, Inconsistencies and errors,
poor use of grammar
Clear structure (esp. Methodology)
Poor methodology (failure to define who
does what, where, when, why and how)
Challenges have been understood and
properly addressed
Deviation from defined requirements, lack
of understanding of client requirements and
failure to answer questions
Relevant background information
Lack of detail/explanation or ‘data dump’
Properly defined & appropriate resources
Unclear who will be involved in delivery
Systems & procedures
Exaggerated and unsubstantiated claims
Innovation – or the opposite (tradition)
Poor evidence of reliability
Risk assessment (mitigations)
No risk assessment
Case studies & references
Irrelevant case studies
Be...
Compliant
• Tender Format & Requirements
• Policies, Insurances, etc
Persuasive
• USP
• Added Value and/or Innovation
Competitive
• Quality
• Price
 Further one to one support:
 [email protected]
 [email protected]
 0191 284 4949