A Brief Word about Types of Tender business analysis3 June 2020
The first in a series of posts guiding you through the Tendering Process.
The two key types of tender are:
- Public sector tenders — these are usually extremely standardized and include selection processes and invitations to tender. You or your company will need to be shortlisted before submitting a bid. You can search for public sector contracts online at Tenderbase which provides a gateway for suppliers, as well as high value notices, from the Official Journal of the European Union (OJEU). Smaller contracts may be let via a mini-tender.
- Private sector tenders — private tenders tend to be more liberal than those in the public sector. They usually have greater flexibility in the tendering process, allowing you to demonstrate your personality and flair for business. By and large all companies who apply for tender documents will be allowed to tender.
You may come across opportunities to tender through business clubs and networking events. Researching commercial business in your chosen sector, or registering through local authority portals, are all ways to get your business noticed. It is important to bear in mind that some public sector organizations will have a Preferred Supplier List (PSL) and you will need to be on that list to be invited to tender.
Engaging with the Process
You’ve identified the tender upon which you intend to bid, evaluated your suitability and potential for success, and assembled your bid writing team. What next?
You should now register your Expression of Interest. Often just requiring an email, or registering with the relevant department, is all that is needed for you to declare an interest in delivering the service; and that you want to be involved in the tender submission process. Be prepared to provide information to the customer regarding your financial, economic, and technical capacity.
Tender Procurement Team
This cross-functional group will set out the procedure they intend to follow, which will be based on the level of risk and total value of a contract. This is to filter out unsuitable and inexperienced suppliers.
A tender procurement team will generally include the following in its composition:
- The budget holder
- Managers of the contract
- Representatives from health and safety, human resources or quality management
For high-value contracts the procurement team will be larger, and in addition to the above personnel, possibly include:
- Senior management
Most official tender processes start with the Pre-Qualification Questionnaire (PQQ or Pre-Qual). Its purpose is to set out key information by which your suitability/ability to deliver the service will be assessed. Typical questions centre around the organizational structure of your business and its history, financial information, and any similar services previously delivered. Depending on the nature of the tender, questions may also be asked about issues such as; environmental performance, regulatory compliance, health and safety policy, and the professional qualifications of the individuals delivering the service you are bidding for. My next post will concentrate on the PQQ in more detail.
The procurement team will also further develop the tender and its evaluation criteria. The evaluation criteria will differ between each tender depending upon the customer’s needs. Scoring ranges from simple percentage splits, for example 70% / 30%, as can be seen in the chart below, to complex weighting systems numbers.
|EXAMPLE TENDER EVALUATION CRITERIA/MATRIX|
|Price||30%||Commercial||30%||Cost / Competitiveness||Cost Matrix / Spreadsheet|
|Service Delivery||15%||Flexibility & Responsiveness||5%|
|Reaction to Problems||3%|
|Innovation & added value||2%|
|Quality of Service||5%|
|Social Value||10%||Opportunities for local people||7%|
|Supporting Local Initiatives||3%|
* Don’t be afraid to ask for the evaluation matrix if it hasn’t been provided.
Contracts are usually awarded based on the ‘most economically advantageous tender,’ which translates as the tender offering best overall value for money in terms of price and quality.
Tender Evaluation Methodology
An example of how each written response will be assessed in relation to quality can be seen below. The scores in the righthand column show you what to write to get the best marks. You can also look at the lowest marks and use them as an example of what not to do.
|EXAMPLE TENDER EVALUATION METHODOLOGY|
|Excellent||Exceeds the required standard.
Response answers the questions with precision and relevance. Includes improvement through innovation/ added value.
|Good||Meets the standard required.
Comprehensive response in terms of detail and relevance to the question.
|Acceptable||Meets the standard in most aspects but fails in some areas. Acceptable level of detail, accuracy and relevance.||3|
|Limited||Fails the standard in most aspects but meets some. Limited information/ inadequate / only partially addresses the question.||2|
|Inadequate||Significantly fails to meet the standard.
Inadequate detail provided/ questions not answered / answers not directly relevant to the questions.
|Not eligible for consideration||Completely fails to meet the standard.
Response significantly deficient/ no response.
You may be asked to demonstrate how you will achieve the requirement(s) which you should do by providing examples and evidence as far as you can in your response. It is important to remember, because each customer and tender is based on different requirements, methodologies vary. Although they are all based on the same principle.
Bids are scored by pooling results, then averaging them out to get the final scores. By looking for the percentage split on the evaluation matrix, and the maximum scores for each question, you can work out which questions carry the most value. Concentrate you initial efforts on answering the high-scoring questions — the lower value questions can wait until later.
The golden rule is — if you don’t think you can score high, then don’t bid.