Tips for Conducting Government Procurement Activities (Part 1)

This article comments on the preparation of request documentation used in competitive Commonwealth procurement processes, particularly requests for tender (RFTs).

Value for Money

The Commonwealth Procurement Guidelines (CPGs) establish value for money as the core principle underpinning Commonwealth procurement. Importantly, achieving value for money does not necessarily mean selecting the lowest priced Tender. Rather, it "requires a comparative analysis of all relevant costs and benefits of each proposal throughout the whole procurement cycle" (CPGs, paragraph 4.1). This requires consideration of a range of factors, including the qualitative as well as the quantitative aspects of the procurement, the relevant performance history of each Tenderer, the risks associated with each Tenderer, and all costs (direct and indirect) to the Commonwealth over the life of each proposal.

The achievement of value for money is facilitated by using competitive procurement processes such as RFTs (CPGs, paragraph 4.2). RFTs must include "all information necessary to permit potential suppliers to prepare and lodge responsive submissions... ." (CPGs, paragraph 7.23). Too often, request documentation does not adequately address agency needs. This leads to problems in evaluation and selection of a value for money outcome.

It is therefore desirable to devote time upfront to determining how best to describe your requirement and selecting evaluation criteria that properly address your needs. Inadequate RFT preparation may lead to ill-informed or ill-conceived Tenders, difficulty in evaluating Tenders, substantial time spent on contract administration, cost blow-outs and even disputes.

Some practical drafting tips follow.

Exercise Care when Mandating Requirements

A key task when preparing an RFT is to determine what (if any) mandatory requirements you will include. There are three types of "mandatory requirements" that may be used in RFTs, namely Minimum Content and Format Requirements, Conditions for Participation and Essential Requirements.

If a Tenderer fails to comply with any of these "mandatory requirements", their Tender must be excluded from further evaluation. Except for the correction of "unintentional errors of form" (CPGs, paragraph 8.39), there is little scope to admit such Tenders. Accordingly, it is critical that the RFT only specifies "mandatory requirements" that are truly significant to the relevant procurement, otherwise there is a risk that you will exclude Tenders even though substantial or partial compliance with a particular "mandatory requirement" would have been satisfactory.

Mandatory requirements also need to be clearly identified - confusion can result if they are scattered throughout the RFT. It is also recommended that you use the word must (eg "the Tenderer must...") when describing mandatory requirements, rather than "may" or "should". Conversely, if a requirement is not mandatory, use "should" to describe it.

Selecting Relevant Evaluation Criteria

Evaluation criteria are used to assess and compare Tenders to determine which Tender offers you the best value for money overall. The RFT should clearly list all evaluation criteria, including sub-criteria, so that Tenderers have an opportunity to address the areas they will be assessed on and to ensure you get what you want from the RFT process.

It is in your agency’s interests to consider what criteria are relevant to your procurement – don’t just copy criteria from a previous RFT. This requires you to thoroughly consider what your agency is aiming to achieve through the procurement and what represents value for money for that procurement. Evaluation criteria should also be measurable - use of abstract concepts makes assessment of Tenders against the evaluation criteria difficult.

It is also useful to do a risk analysis of your proposed procurement which can then inform how you draft your Statement of Requirement, evaluation criteria, and contract.

The evaluation criteria will include various technical or qualitative criteria. Generally, an ability to meet the Statement of Requirement is relevant. You may also need samples of products. Past performance may be relevant, as may Tenderer personnel. In this regard, you may need to know who the Tenderer proposes to perform the work for your agency - will it be the "A team" or the "B team"?

Price will be an evaluation criterion, but you will need to consider how you want Tenderers to portray their price offering. If you do not address this issue, you may end up attempting to evaluate apples and pears. For example, consider whether you need volume bands priced; hourly rates or daily rates; unit pricing; fixed prices; or other requirements. You also need to know all price assumptions and caveats.

Once you have determined your evaluation criteria, you should outline the information the Tenderer needs to provide in order for you to evaluate their Tender against these criteria. RFTs often fail to do so, such that Tenderers fail to address important requirements and/or the evaluation team has to search through Tenders to find the relevant material to evaluate.

Another thing to consider is your evaluation methodology. This is often left until last or indeed, until after the RFT is released, with the result that it is inconsistent with your RFT. You then have to release a RFT addendum or risk compromising your objectives or the entire RFT process. While you may decide not to publish all the details of your evaluation methodology, your methodology should inform the drafting of the RFT, and particularly your evaluation criteria. For example, if one evaluation criterion is critical to your procurement, it is in both your and the Tenderer's interests for you to indicate this in the RFT.

Risk is an area that is often glossed over. However, Tenderer risk could be critical to the achievement of your objectives and of value for money. Thus, you should also consider how to factor an assessment of risk into the RFT, the evaluation process, and your contract.

Conclusion

Achieving value for money is enhanced by having clearly drafted and focussed RFTs. Your RFT should address your real objectives and be drafted in a manner that assists Tenderers to respond to it. Consideration of your objectives, procurement risks and appropriate evaluation criteria will inform the drafting of your RFT and assist you to achieve a value for money result.