Tender Guidance

The Need for a Diversity of Suppliers

 

The public sector is always looking to increase the diversity of suppliers in the marketplace. Diversity equals better value for money and fewer aborted tendering exercises. It guarantees competition and minimises the necessity of relying on a small number of suppliers for a large number of contracts. For that reason public bodies try to encourage companies of all sizes to bid for work that can be won by them; there is no prejudice against small enterprises in the public sector marketplace. On the contrary, very significant changes have been made to government purchasing over the past 6 years to increase the number of SMEs supplying to public bodies – for example, the abolition of the Compulsory Competitive Tendering policy, the introduction of Best Value, the establishment of the Small Business Concordat, legal alterations to enable small businesses to bid for higher level contracts, the passing of the Freedom of Information Act, and many others have all contributed to helping create a level playing field on which all competitors have more or less the same chance of being successful.

 

Pricing

 

Commodities are usually the only things for which – all things being equal – the lowest price is regarded as enough to win a contract. With the abolition of the Compulsory Competitive Tendering policy and the introduction of Best Value, whole life costs have to be taken into account when any purchasing decision is made. The cost of a product, any servicing or maintenance required by the product over the lifetime of its use, and the disposal of the product make up its true price. Of course, suppliers with an expert knowledge of their own products may have an in-depth knowledge of the whole life costs of what they have to sell, and public sector buyers may not, so it is always going to be incumbent on the supplier to effectively demonstrate the overall cost of those products during the presentation of tender documents. If the true cost of a product is proved over the lifetime usage of the product, it needs to be communicated explicitly and not simply accepted that the buyer will perceive the point without appropriate direction. For that reason the bidder needs to check the ITT documents carefully in order to assess the due weight given to cost as part of the tender process (cost may compose only 25% of the weighting score, service and other factors may make up the remaining 75%). The role of price in determining which company is to win a particular tender is usually clearly spelled out in the tender documents themselves; suppliers should therefore accommodate themselves to the stated requirements of the contract, and not try to impose their own personal views of what buyers ought to purchase while over-riding what they have unambiguously said they will purchase.

Next: Choosing to Bid and Structure of Tender Documents