Just as in any industry, the world of tendering is constantly evolving as new trends and innovations arrive. Three trends currently capturing attention are output-focused procurement, a growing awareness of false economy, and sustainable practice.
These are sometimes written into the tender itself, and non-negotiable, or they can be suggested through the use of terms like “best practice must apply” and “communities must be at the forefront of all government activity”.
Here’s a look at these trends, and tips to make sure you are creating a competitive bid.
Deirdre Diamante, director of government procurement advisory service Mia, raised the question of output-focused procurement early in 2017.
Diamante suggested that by ignoring non-compliant bids, governments were missing out on innovation.
“When a procurement starts focusing on outputs, it can begin to accept ‘non-compliant’ bids, and this is what drives real innovation and value for money,” she said.
A non-compliant bid under this definition still complies with government procurement requirements. What it doesn’t do is comply with a predetermined solution specified by government in the bid. Rather than focusing on the solution, the focus is on the outcome – achieving the goal in a way that might make it more suitable, scalable, even cheaper.
“Every single procurement should have benefits and outcomes identified, with every procurement decision made on achieving those – not on achieving process milestones,” Diamante says.
False economy, price wars and the race to the bottom
Another tendering trend is the realisation that cheaper and faster isn’t necessarily better. A survey of suppliers presented at the NZTA/NZIHT 2016 conference by procurement advisor Caroline Boot found “insufficient time” was their biggest concern. But tenders that were too focused on price was also a big concern.
“Suppliers say they don’t want to engage in a price war, especially when work is plentiful,” Boot said. “Lowest price conforming is seen to be a race to the bottom.”
There’s a growing awareness that governments are making false economies by choosing lowest bidders. UK procurement specialists NexTenders claim that for a complex project, choosing a lower tender than average is more likely to result in:
- Delays as the tenderer struggles to acquire the materials and subcontractors for the project.
- Lower quality subcontractors.
- Inferior materials and the resultant poor products.
- Additional costs from over-running and delays, or from fixing problems.
- Failure to cover a contractor’s costs leading to claims and disputes.
- Possible damage to a company’s finances and reputation.
Governments are becoming more aware that the public wants an eye kept on sustainable practices during the construction of public assets. This can include the use of water, how waste is disposed of and onsite energy use.
The Australian Government guide points out that the disposal of waste to landfill is associated with adverse environmental impacts. Typically, the decomposition of organic material, such as food, in landfills produces methane gas – a greenhouse gas 23 times more potent than carbon dioxide. Service providers commonly dispose of food organics, copy paper and office consumables such as toner cartridges – much of which can be recycled.
Another suggestion is that “tenderers install power-saving features on appliances where possible”. For example, an appliance could be programmed to enter ‘suspend’ mode within 15 minutes of becoming inactive.
To keep track of all these requirements, both mandatory and implied, takes a degree of skill that professional bid writers can bring to your tender application.