Developing an Invitation to Tender in the Third Sector
Many organisations in the Third Sector have experience of bidding for contracts and are familiar with the tendering process from a supplier perspective. Not surprisingly they do not have the same extensive knowledge of developing their own invitations to tender (ITT) for products and services.
Tendering is a process that is a requirement for organisations in the public sector and therefore by extension to organisations in the Third Sector as a means of providing good governance practices for the provision and use of public funding.
If approached in the correct manner the invitation to tender process can be an effective business practice that helps organisations get the best value for money and quality of service consistent with its objectives. At the same time it gives an organisation the opportunity to examine their current processes and develop a strategy for improvement.
From my experience of developing IT based tenders for clients I have found it to be a mixture of defining what is required, what is available and what is beneficial to the client, combined with a strict adherence to the organisation's governance rules and the relevant legislation. The past year has seen a significant refinement of the rules with regard to the evaluation of tenders and the subsequent awarding of contracts.
Here are my top tips for developing a tender :
1. Develop a Business Case
This is really about establishing the business need. It may be a requirement to procure due to the obsolescence of the status quo. For example an IT procurement may be required because either hardware or software is reaching its end of life. It may be as part of an expansion project where new products and services are required to allow an organisation to achieve its business objectives.
2. Examine what is available in the Marketplace
Use the requirement to develop a tender as an opportunity to see what the marketplace has to offer by way of new methods and technologies that would be relevant to the organisation. It may be that an organisation requires outside consultancy help to both analyse the current setup and advise on what is desirable going forward.
3. Stick to the Rules
It is important to keep abreast of changing rules statutes and directives. There are three basic principles in procurement distilled from European directives and case law which are :
This relates to the openness of the procurement process including the publication of the evaluation criteria in advance. In addition, the awarding organisation must disclose the same information to all the bidders. For example, during the process some bidders may ask for clarification of points in the ITT. These questions and answers must be distributed to all the bidders.
The awarding organisation must be able to show that the information they require from bidders and the subsequent evaluation criteria is relevant to the proposed contract.
• Equal Treatment
All bidders must be treated equally and all given the information they require to submit a bid. This is especially important if there is an incumbent supplier who should neither be advantaged nor disadvantaged in the procurement process.
4. Define the criteria for the selection of bidders
Selection criteria are the rules that determine whether a bidder is able to provide the service that satisfies the purposes of the contract. Selection is related to the shortlisting of bidders. For large contracts there is often a pre-qualification stage that defines the selection criteria. In simple terms a bidder should not be short listed unless they meet the mandatory requirements.
Requirements that are mandatory should be shown as such on the documentation.
5. Define the criteria for the awarding of contracts
Award criteria identify the tender which is the most economically advantageous (MEAT) in terms of price and quality. It should be noted that the latest UK Public Contract Regulations 2015 have extended the definition of MEAT to include lowest price only. Another significant change is clarification of the legal position with regard to the experience and skills of bidders in the award criteria, "that buyers can take into account the relevant skills and experience of individuals when awarding contracts for consultants, lawyers, architects, etc."
6. Weight the criteria
There are no hard and fast rules as to the weighting of criteria between the quality of service and the cost of the service to be provided. Sometimes the cost weighting may be as high as 70%. In other cases especially in highly technical procurements like in Information Technology the cost weighting is as low as 30%. The quality of service criteria may be further sub divided, but it is important that these weightings are communicated to the bidders.
7. Use a scoring system to evaluate the criteria
It is important to score the answers in a reply to a tender. For example a typical scoring range could be whole numbers 0 through 5. A score of 0 indicates that the bidder has failed to satisfy any of the requirements and a score of 5 indicates that a bidder has exceeded the requirement.
Normally there will be more than one assessor of the replies to a tender and it is important to use statistical normalisation formulas to make sure that the scoring is consistent between the assessors.
8. Keep an Audit Trail
It is most important to keep a record of all the replies all correspondence, scoring sheets, emails and award letters for both funder auditing requirements and possible bidder challenges to the award.
Tendering can be a difficult process for both the procuring organisation and the potential bidders in terms of its complexity, its costs and the governance requirements. However it does focus the procurer on what are its core business needs and focuses the bidder on satisfying those requirements in a mutually beneficial manner.