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COUP 2015

Reg Grimes

‘How Do You Get the Most from a Tender

Exercise?’ Sept 9th 2015

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Because it is the right thing to do

Why bother with a Tender exercise?

Legal requirement

It’s my Job to do so To get best value

Informs decision making

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1. Requirements

2. Market Knowledge

3. Tender Stage / Process

4. Timescales

5. Communications

6. Tender Team

7. Evaluation criteria and model

8. Contracting Arrangements

9. Understanding Value for Money

10. Negotiating Strategy

Key Areas to Consider

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Be clear on what the requirements are in terms of: Products – Hardware, Software Services Converged Technology

Be sure to have a clear specification(s) Test the market, is what I want available? Has it been provided before? Do understand the costs?

Principle should be to buy on specification, not supplier, make or model This will ensure no bias towards individual suppliers Creates environment for creativity and flexibility Provides the opportunity to consider options. Suppliers will be willing to explore options to fulfil your requirements

Requirements – What do we really want to buy?

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Have we done enough research The answer is always no but something is better than nothing Get to know when enough is enough

Be prepared to demonstrate your knowledge An intelligent buyer is a good buyer. Will drive better inaction with suppliers

Supplier research Who ? How Many? Monopoly? Market leaders? Niche players?

Market research Size? Maturity? Fragmented?

Customer research Who else is buying the same or similar products and services Which sectors are customers operating

Market Knowledge – do I know the market and who is capable of providing what I need.

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• Be prepared to run multi stage tenders : PQQ

RFI

RFP

ITP

BAFO

E-auction

• If you know what you what and the market – go to the stage that suits your timescales. Going straight to e-auction need not be a problem.

• Running unnecessary tender stages wastes time and resources for all parties.

• E-auctions should be a default stage until qualified out.

Tender Stage / Process

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When agreed stick to them

Be realistic – start from the end and work backwards.

Be reasonable – try to provide suppliers with as much time as possible to provide you with a first class proposal

Shortening timescales to meet an artificial deadline will create problems

Allow contingency.

Avoid key holiday periods if possible

Allow time at the end for final contract negotiations.

Ensure all key stakeholders are available and lined up.

Timescales

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Agree communication strategy and plan.

Be clear and concise in your instructions to bidders.

Establish single point out contact for questions coming back in from Suppliers on tender.

All responses to questions should be shared with all bidders in an open and transparent manner – state this in all tender documents.

Communication plan should include internal messaging to project sponsor and key stakeholder.

Effective communications means no surprises – particularly at approval stage.

Communications

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Ensure you have Executive sponsorship and escalation path.

Do you need a steering board Can be useful to remove obstacles

This should be led and owned by Procurement we are the experts in running tenders.

Be as encompassing as possible but do not overload, ensure you have representation from :

Business Owner

Finance

Legal

Technical owners

Ensure every understands their role within the team – no passengers

Tender Team - Not just procurement

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Be clear on what terms and conditions are to be used.

Look to re-use existing agreements if possible Saves time and resources both sides.

Be prepared to be flexible.

Have a contingency plan in place – your standard terms may not be suitable for eventual solution – e.g. SaaS, Cloud.

Do not make terms overly complex – keep them fit for purpose.

Have your red line items clear and concise.

Plan your exit now.

Contracting Arrangements

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Develop a concise and robust model.

Assign roles and responsibilities. SME’s to score their own areas. Procurement to own overall scoring. Counter measures to mitigate extreme scoring by individuals

Ensure all criteria are identified. Price?, Quality?, Technical? Cultural fit to your organisation. Service Delivery performance Tender response / proposal Adherence to contractual terms.

Allocate weightings and priorities, caution on over reliance on one criteria e.g. price.

Agree how many to take forward at each stage.

Evaluation Criteria

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It is not all about purchase costs.

Draw out all the benefits to be delivered by the tender process.

Cost reductions Process improvements Technology advancements Internal efficiencies Long term support costs. Cash flow benefits – improve payment terms / milestones.

Balance Needs vs Wants vs Desires.

Keep within your affordability envelop.

Avoid the “Bargains” from vendors, they seldom are and are often what you do need. Shelf ware is off no value.

Understanding Value for Money

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Determine how many bidders you are going to take through to contract negotiations.

If resources available always consider talking two bidders through to contract negotiations

Ensure each team has appropriate structure. Procurement x 2, Legal

Create a “War Room” use to collate information and feed negotiation teams with up to date positions.

Agree internally where the red lines are.

For each element of contract Price, Service, Contract, develop a negotiating position model – I use the B.M.W – Best, Median, Worst position.

Be brave – understand when you have a result and be prepared to walk away. Don’t to be shy to ask for that “extra” thing

Identify your tradeable items.

Look to leverage your full relationships with each bidder.

Negotiating Strategy / Plan

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Questions