How to Tender – A Jargon-Free Guide to Help You Win Public Sector Business (Continued)
How to Tender – Choosing to Bid
This may seem an obvious point but companies should only bid for tenders they think they can win. Choosing the wrong tender can mean wasted time and wasted money. It’s not just a question of whether one can be successful in the tendering exercise, it’s also whether the tender gives more than it takes: If you win it will it give too little profit and take up too much work? The balance between profit and investment has to be right.
- Is it too big or too small for your company? Will fulfilling it exhaust your company’s resources, or will it provide too minuscule a reward for the effort it requires? (Bear in mind, there’s nothing wrong with planning to expand your company if a tender is won – on the basis that preparation has been previously made for a strategic transformation; it’s when changes are forced on an organisation unexpectedly that problems start).
- Do the requirements of the tender fit within your company’s skillsets? Be realistic.
- Do you know to create a working partnership with another company to fulfil the tender? Eg – your company may supply photocopiers but only offer service locally; to work regionally it may need to subcontract another company to provide service regionally.
- Does your company possess both the time and finances to fulfil the tender? It may be you have another big contract which demands your company’s full resources at particular times of the year which prevent taking on additional business. How would winning the business fit alongside your current work?
These are all commonsensical issues that any company has to deal with when bidding for work – whether from the public sector or the private sector. The key is to think in terms of public sector as potentially repeat business; that you will be developing a relation that will last over many years, so you wish to provide the service you would provide to any valued customer.
How to Tender – Find Out What the Client Wants
If you’re bidding for a large tender (above £100,000) or a large sub-OJEU contract (above £50,000) you need to find out as closely as you can what the client actually wants. Sometimes there may be unhappiness with a current supplier – for which there may be a very specific reason. Sometimes there may be a need for a new technology, or new service that’s not been used by the organisation before. Try and discover what the buyer is looking for. This may require a little bit of historical research. Knowledge of the current supplier and their strengths and weaknesses may be critical information for you in choosing to put in a bid. If there’s a Supplier Open Day (usually mentioned in Prior Information Notices) try and attend it, to get a real sense of the buyer and their priorities. It’s often the case that would be suppliers misread what public sector bodies are looking for by not listening to what they have to say. It can be done. Most successful suppliers I’m aware have a clear understanding of the character of their public sector clients, which is much more than just reading tender adverts published in the Official Journal.
Commodities are usually the only things for which the lowest price is regarded as enough to win the contract. Whole life costs always have to be taken into account when a purchasing decision is made. That should be built into the pricing structure in completed bids. Whole life costs are additional factors besides the bare cost:
- Maintenance and Usage. To use the example of reprographics again – the cost of a photocopier on its own may be £700, which would be cheap, but if the cost per copy for black and white printing is 10 pence per sheet, then the overall cost of the copier over its lifetime usage will be exorbitantly higher than the original outlay. Therefore buying a photocopier for £1000 could work out cheaper. When the volume of printing is 50,000 copies per quarter the economics of spending more to save will not be lost on public sector buyers.
- Servicing. Does the machine sole require servicing? Photocopiers regularly need parts removing and replaced. The annual service costs, or individual service visits, may make a cheap photocopier inordinately expensive.
It is possible to carry on down this line of argument, but I’m sure you understand the gist of what is being said. Think of your own sector or industry and determine what the whole life costs are.
It should be noted, if whole life costs are not stated explicitly, sometimes they can be missed by the buyer. The Invitation to Tender documents should be used as guidance – they normally give a set weighting to particular factors: For example, outright cost may be 50%, maintenance and servicing may be 25%, environmental issues may be 15%, and the calibre of the company, including professional expertise, similar clients, and financial stability may make up 10%. It can then be concluded that cost, though important, would not be enough on its win a contract. The other matters have to be taken into account as well.
Structure of Tender Documents
Tender documents are usually have the following structure:
- Covering Letter
- Contents Page
- Some Background Information
- Technical Specifications
- Main Response Form
- Terms and Conditions
- Award Criteria
The Instructions will include deadlines for Expression of Interest, Submission of Documents, Presentation of Bid (that’s if there’s a requirement to give a presentation or demonstration), Opening of the Documents, Award Date, and Communication with Suppliers, once the winning bid has been ascertained. There should also be information on an Appeal Procedure, should you think your company has been treated unfairly, and the bidding process was not impartial. The Award Criteria should give a clear definition of the criteria by which the tender will be awarded. These are usually defined by points or percentages, as indicated in the section on pricing. The Appendices may request company information – Accounts, Health and Safety, Environmental, Equal Opportunities and other policies, as well as professional certificates and qualifications gained by the company. It’s a good idea to have company information prepared and kept up to date, so you you don’t have to go through additional work every time you bid for a tender.
Suppliers need to respond to the tender in the manner indicated in the documents. At first they may look confusing, but after a while they will be straightforward. Remember, buyers are only human and occasionally make mistakes – if there are apparent mistakes in the documents, re-check them, then look at any questions that have been asked by other bidders (you may often find these online on a web page designated by the buyer) or ask the buyer directly. Keep in mind, though, this is a commercial process, and if you misunderstand the documents you may ask a question that will be viewed publicly by other bidders which may put your company at a disadvantage: Don’t disclose information prejudicial to your business. In addition to the above document you may also be requested to provide the following:
- An Alternative Proposal
- Case Studies (where applicable)
- Biographies of Team Members
It’s regularly the case that buyers ask for alternative solutions to the ones they offer themselves. This is usually when the buyer is aware of different methods for meeting the contractual requirements, however it can occasionally be suggested by suppliers themselves. In the latter case, it’s very important the supplier asks permission to provide an alternative proposal. The alternative proposal must always be physically separate from the main proposal, to avoid confusion.
References and Case Studies are to be sent in to give credence to the supplier’s bid – to show they possess the necessary expertise to fulfil the terms of the tender. They should, therefore, be tailored to the bid, or the organisation showing how the supplier has met the requirements of similar institutions in similar situations. Relevance is the key here. A great reference of itself may avail little if it does not genuinely apply to the buyer. Make sure references are used intelligently, with the aim of enhancing the reputation of the bidder, and demonstrating that the capacity to meet the required business needs is clear.
Preparation of Tender Documents
Tender documents need to be printed and not handwritten. It’s often the case that tender bids need to be bound, in order to make them as presentable as possible. The writing style should be precise, using short sentences, an explanation of all abbreviations (at the least the first time they are brought up), and without any long-winded explanations. Straightforward English is better than a complex, convoluted style. Avoid colloquialisms, as well.
Many potential suppliers make the mistake of not asking questions. If something is unclear in the ITT and clarification can’t be found in any of the communications to and from the buyer, then ask. It is best to ask all questions in one go, rather one after another, after another. All questions are sent to other bidders as well – a fact previously mentioned – so say enough without saying too much.
- Tendering is an anonymous process – with occasional exceptions – and so envelopes containing bids need to be unmarked, without any company or product logos to prevent identification of the bidder. This maintains the impartiality of the process and stops favouritism.
- The covering letter should be written on company stationery.
- Tender bids must be typed rather than handwritten.
- The right number of copies should be sent. It’s often the case that multiple copies are required by decision-makers. The exact number will be specified in the tender documents.
- Deadlines must be met. Tender bids are rejected if they do not reach their destination on time. It’s not unusual for tender deadlines to be extended, but when that happens all bidders are informed of the date change.
- Contact personnel must be clearly defined – with telephone, fax, email and address details. If there is a tender team putting in the bid there should be a single point of liaison to avoid confusion.
- Tender documents should be compiled in a neat, attractive, presentable fashion. It should be easy to tell which is the covering letter, which the actual bid, which the references, etc.
- Whether successful or unsuccessful, suppliers should always seek feedback on their bid. Those who’ve been unsuccessful need to know why, without applying guesswork. It is extraordinary the number of suppliers who’ve been successful one time and then failed another, who do not clearly know why their fortunes have been so different. Buyers are actually legally obliged under European law to give feedback; don’t neglect the opportunity for increasing your business intelligence. It may be helpful on another occasion.
Preparing Information on your Company and its Services
Government organisations need to know that all suppliers are obeying the law and acting within the legal and ethical constraints of current legislation. Because it’s public money they are spending, they need to be certain they are buying from good quality companies that do not discriminate against their employees or potentially harm them by making them work in a dangerous environment. Suppliers therefore have to prove they meet the requirements of the public sector, which are in part demonstrated by the business policies they have compiled. The main policies are as follows:
- Health and Safety
- Equal Opportunities
- Data Protection
Don’t panic if your company hasn’t drawn these up, there are many organisations from which it’s possible to buy template documents which can used to fulfil the standard criteria, often very cheaply. You can also search online for council websites which offer free copies for download. (You can use the search terms template equality and diversity or template health and safety to locate free versions you can copy and use for your business. Note: Some of these policies may only be 2 pages long.)
Obviously, information on your company and its services will also need to be supplied:
- Product and Service Information (including Technical Specifications)
- Biographies of Team Members
- Copies of Certificates or Accreditations from Professional Organisations
- Information on Partners and / or Subcontractors
- Case Studies (when applicable)
Issues Relating to Accounts
It’s often the case that would-be suppliers are asked to provide 3 years’ copies of accounts, and this can present a major stumbling block for small organisations that have only recently started trading. It’s not insuperable; on many occasions it can be overcome by offering an alternative financial view of the company.
If 3 years’ accounts aren’t available, do you have 2 years’ accounts? If not 2 years’ accounts do you have 1 years’ accounts? If you’ve only recently started the company do you have a Business Plan, with financial projections for the forthcoming years?
Where the buyer isn’t under a strict necessity of ensuring 3 years’ accounts are available, you will find they will be happy to accept a professional Business Plan, that shows the company is on a firm footing and can deliver on any contracts it wins. Remember, the aim of the public sector isn’t to penalise small companies – who make up the vast majority of public sector suppliers – the aim is to ensure that if a contract is awarded the winner can meet its obligations. It’s no good paying for a product delivery in a month’s time if the supplier goes out of business next week. The general attitude of most buyers is to encourage SMEs and to try to give them a reasonable opportunity to bid for contracts. There are actually government policies recommending that all areas of the public sector do more business with small companies (Cabinet Office’s Lean Review into Procurement Processes, SME product surgeries, Prompt Payment Terms, Small Business Concordat, etc). The door is well and truly open to SMEs if they are prepared to learn how to tender effectually.
If you’re a subcontractor there are a number of ways in which public sector work may be found. For a start, some private sector companies that have previously won tenders, offer specific subcontracting opportunities. The nature of the contract will be specified in the advert. But the main method most use is through monitoring Contract Awards and marketing directly to the successful bidders. The other method is to use the lists operated by the Government Procurement Service (it used to be called the Office for Government Commerce) for Government Frameworks, and then to do the same again.
Here are some useful URLs:
http://gps.cabinetoffice.gov.uk/i-am-supplier/find-a-supplier (list of suppliers to Government Framework Agreements).
http://gps.cabinetoffice.gov.uk/i-am-buyer/find-a-product-or-service (this is a generic search for products with their suppliers)
Construction companies can register on the Constructionline website, which is the official UK register of pre-qualified suppliers for constructions tenders and contracts.
Individual organisations as well as purchasing consortia regularly advertise standing lists – or approved lists – of suppliers, which are used for maintaining an ongoing database of contacts. They’re operated on a cyclic basis – eg for 12 months, or 36 months. Government Online regularly advertises approved lists of suppliers along with tenders. They can be accessed free of charge at www.government-online.net/government-tenders/.
Requesting Copies of Successful Tenders Under the Freedom of Information Act
Theoretically, it is possible to request copies of successful tenders under the terms of the Freedom of Information Act 2000. In practise, it is a little more difficult to get hold of them, as it’s something of a hit and miss affair as to whether the organisation contacted may consider the completed tenders to be confidential information or not. When applications are successful it will be found that personal identifying details have been blanked out, however it’s still very useful to obtain copies of completed tenders even with these limitations. Seeing a winning bid can be extremely helpful in clarifying what one should and should not write in tender documents.
There are always complaints’ procedures for every tender, whether it is overly stated in the advertisement or not. If it isn’t it will be possible to find out who to complain to by contacting the purchasing officer responsible for the tender. There’s usually and address with appropriate details for complaints on the lower half of each tender advertisement.
In conclusion, suppliers need to systematise the tendering process: that means choosing the right tender, allocating effect resources to it, having company, product and policy information prepared, asking relevant questions, preparing and, if necessary, presenting the bid, post-tender analysis, contract monitoring if successful, and then repeating the process. Each bid should add to the sum of corporate knowledge. Don’t be put off by paperwork; once you understand it preparing a bid will become like second nature. Every company that offers a good quality product or service can succeed in the public sector, if its resources are marshalled effectively, and if the advantages of doing business with it are communicated in a convincing and attractive manner.
Need to find tenders for your business? Free access to the latest tenders at: www.government-online.net/government-tenders/
Administrator, Government Online
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