Public Procurement: Demystifying the Process

Selling to the Public Sector – helping
Leicestershire SMEs unlock their potential
Bob Moodie
NJM European, Economic & Management Consultants Limited
What we will look at:
1. The Context & Opportunities
2. Understanding Procurement Processes
3. Finding tender opportunities
4. Developing a strategic approach
5. Becoming ‘Bid Ready’
Context: Policies
 Coalition Government’s aspiration to award 25% of central
contracts to SMEs
 Leicestershire County Council’s Sustainable Commissioning
& Procurement Strategy (2009-13)
- % expenditure with SMEs
- No. of local SMEs submitting Pre-Qualification
Questionnaires to ESPO when expressing an interest in
Council requirements
The Comprehensive Spending Review (2010)
SME Concordat
Equality of Access (SME & Third Sector)
EU Procurement Directives (OJEU)
UK Government strategy and statutory requirements
Local authority procedures, statutory requirements
Context: Economics
 Extensive public sector budget cuts and spending pressures
 Price & Value for Money (VfM)
 Most Economically Advantageous Tender (MEAT) rather than
Lowest Price
 Collaborative buying by authorities – purchasing consortia
 Rationalisation & Framework Agreements, Contract
 Reduction of public sector in house management overhead
and increase in outsourcing
NB Suppliers’ ability to deliver efficiency savings and
Context: Economics
 VfM is the optimum combination of cost, quality
and fitness for purpose to meet the buyer’s
requirements (it is not about the lowest price)
 Local authorities are subject to the Best Value
 Embraces the concept of the ‘price-quality’
 Selection usually will be made on the most
economically advantageous tender (MEAT)
Context: Society & Environment
 Corporate Social Responsibility
 Sustainability & Equality
 Innovation & non contractual outcomes (Added
 Local Government Act 2000 – Wellbeing Powers
- Leicestershire County Council’s Sustainable
Commissioning & Procurement Strategy (200913) performance measures:
- No. of contracts with a Total Value exceeding £1m that include a Social
- No. of high risk contracts where environmental considerations are
included in the contract award (weighting 15% or more)
Context: Technology
E-Procurement: Transition from paper based to
electronic based systems and processes:
 E-Portals
 E-tendering
 E-auctions
 Iprocurement
 Purchasing Cards (pCards)
 Real time reporting
 Payment and Servicing
Opportunities: Public Sector
9 Local Authorities:
 Leicestershire County Council
 Leicester City Council
 North West Leicestershire District Council
 Charnwood Borough Council
 Melton Borough Council
 Blaby District Council
 Harborough District Council
 Oadby & Wigston Borough Council
 Hinckley & Bosworth District Council
3 Universities: Leicester, Loughborough, De Montfort
7 FE colleges: Stephenson, Loughborough, Brooksby Melton, North
Warwickshire & Hinckley, South Leicestershire, Leicester, Loughborough
University School of Art & Design
 Schools
 NHS (subject to major review
 Housing Associations / RSLs
 The Emergency Services
 UK Public procurement is estimated at over £175 billion per annum
(13% of UK GDP).
 Leicestershire County Council spends over £300 million each year
on goods, works and services. Over the next three to four years, to
2012-13, the Council will need to make savings of around £70m that’s 25% of its budget.
 Leicester City Council estimated procurement budget for the
Authority is £260 million p.a. (2007-2008).
 NHS Leicestershire & Rutland Procurement Partnership influences
spend of approximately £250 million on goods and services each
Leicestershire County Council Procurement Expenditure (2008-09)
1.0% 1.0%
1.0% 0.3%
Social Care
Building and Civil Engineering
Consultancy and Professional Services
ICT & Telecommunications
Food and Catering Equipment / Services
Vehicles & Plant
Books, Journals and Multimedia
Design, Printing and Marketing Services
Facilities Management
Stationery and Office Supplies
Furniture & Furnishings
 Policies to encourage SME involvement and a more level
playing field
 Better transparency and simplified procurement
 Equal treatment and fair competition
 Open markets & better access to information
 Procedures can be complex, time consuming and open
access creates more competition
 Adopt a strategic approach
 Willingness to be involve
Opportunities: SMEs
 Brings greater competition
 Lower cost base
 Innovation
 Responsiveness
 Flexibility
 Quality of service
 Specialists
 Customer focus
 Local Knowledge
Bear this in mind when you are developing your USP for
a particular contract!
Public Procurement:
Demystifying the Process
Procurement Procedures:
The formality of the procedures and process increases in line with the
contract value and risk.
Lower value contracts
Advertising not essential
Officer discretion
Approved supplier lists
Verbal and Written Quotes common or tender process
Easiest to compete and win – harder to find
Higher value contracts
Formal Tender process only
Essential above EU Thresholds
Framework agreements
Easiest to find – harder to win
Procedures – Example
Each organisation has its own published procurement policy, procedures, processes
and contract value thresholds in place. For example.........
Contract Type
Contract Value
Very low quote
Under £5,000
No formal procedure
‘shop around’
Lower value quotes /
small lots
£ 5,000 - £20,000
Two written quotes
Low - Medium
£21,000 - £49,000
Three written quotes /
formal tender process
Sub EC Threshold
£50k - EC threshold
Formal tender process
EC Threshold
£156,442 (Supplies)
£156,442 (Services Part ‘A’)
£3,927,260 (works)
OJEU published
Full EU procedure
Local Procedures
Public Sector
Threshold (goods &
Procurement Process & Source
Leicestershire County
£1k – £20k
>£20k - £100k
1 Verbal / Written Quote
3 Written Quotes or
Request for Quotation
>£100k - EU
threshold (£156,442)
Formal Tender Process
< £10k
£10k - £49k
Verbal / Written Quotes (officer discretion)
3 Written Quotes or Formal Tender Process (officer
£50K - EU threshold
(£156,442) or
Up to £250k (works
£10k – £50k
£50 - EU threshold
3 Verbal Quotes
3 Written Quotes
Formal Tender
Construction works
Invite tenders from pre qualified suppliers registered with
Leicester City Council
North West
Leicestershire District
Common Procurement Procedures:
 OPEN - One Stage Process
 Each applicant submits a full priced tender
 RESTRICTED – Two Stage Process
 i) Pre Qualification Questionnaire (PQQ) to select
shortlist of potential suppliers
 ii) Invitation to Tender (ITT) to shortlisted potential
suppliers –full priced tender required
 FRAMEWORK – Two Stages or More
 Suppliers selected through an open / restricted procedure
to a ‘panel’ of suppliers for given period
 Call offs or mini competitions may be held when services /
goods required
Less common:
 NEGOTIATED - Two Stages
 Very complex, high value
 Tender specification not clear – supplier input required
 COMPETITIVE – Two Stages
 Tender specification requires development – dialogue with
Pre Qualification Questionnaire (PQQ):
 Evaluation of organisation
 Are you safe and appropriate choice?
 Compliance
 Past performance / track record
 Selection criteria
Invitation to Tender Stage (ITT):
 Evaluation of bids
 Your service / product / works offer
 Future performance
 Award criteria
Procurement Process Overview
PQQ Information
General Business Information
 Business Details
 Status (Sole contractor / consortium)
 Ownership
 Business Probity
 Professional Conduct
Documentation required may include:
 Company History
 HR Information
 Administrative Information (Company Registration/VAT Number)
 Quality Standards Accreditation / Certificates
PQQ Information
Financial & Insurance Information:
 Turnover
 Accounts
 Insurance
Documentation Required may include:
 Audited accounts, Management accounts, Parent company accounts
 Bankers statements & references
 Financial projections, including cashflow forecasts
 Details of previous contracts and values
 Capital availability
 Certification of Incorporation, Certificate of Name Change
 Insurance Certificates
PQQ Information
Business Activities, Track Record, References
 Business Activities
 HR Information (FTEs / Training Records / CVs)
 Referee Contact Details for recent contracts
 Relevant Contract Performance
 Subcontractors
 Capability Statements
 Case Studies
 References (norm = 3 recent referees)
PQQ Information
Essential Policies:
 Quality Management
 Equality & Diversity
 Health & Safety
 Environment Management & Sustainability
Others Policies:
 Business Ethics
 Corporate Social Responsibility
 Business Continuity
 Sub Contracting
PQQ may require you to supply : specific responses, outline of
strategy, copy of statements, copy of certifications etc
PQQ Evaluation
PQQ will be evaluated to select potential suppliers to invite
to tender. Based on:
 Business Probity
 Technical Capability and Capacity
 Financial Information
 Contract Compliance
 Policy Conformity
NB: Evaluation includes:
 Pass / Fail criteria
 Financial risk based assessment
 Criteria have different scores with weightings
Example Scoring Framework
Score Weighting
Organisation Details
Financial Information
N/A or Risk Based Assessment
Business Activities
Business Practices
30% (Total)
Health & Safety
Quality Assurance
Environmental Management
Requirement - specific
Experience & References
Professional & Business Standing
ITT Information
 If you are shortlisted from the PQQ or for the Open Tender
 Invitation to Tender documents will normally identify the
information required and how to structure your response.
 The areas covered are usually as follows:
 What are you going to do
 How are you going to do it
 How much will it cost
 Who is going to do it
 What is your track record / prior experience
 Compliance
 References
ITT Information
Invitation to Tender (ITT) pack will include:
 Instructions to Tenderers
 The Specification
 Form of Tender
 Draft Contract Terms and Conditions
 Declarations / Bona Fide
 Pricing Schedule
Costing the Proposal
 Personnel & Tasks
 Charging Rate(s) (Daily/Hourly) & Time
 Fixed Cost / Variable Cost
 Expenses & Disbursements
 Contingency
 Innovative Cost Proposals
 Discounted Cost e.g. 5% early payment, economies of scale and
efficiency savings linked to contract term and/or number of
contracts (Lots) awarded
 Buyer comfort: Offer 10% Contract Price Withheld until
Adopt a Strategic Approach: Tactics
 Before you start: is the tender opportunity right for your
organisation? (To Bid or Not To Bid?)
 Download / print off ALL PQQ / tender documents and read
them carefully:
Is the specification relevant to your business activities?
Do you have a track record in the area?
What % of turnover does the contract represent – 20% rule?
What are the risks, who are your competitors and what is the % chance of
Is there an incumbent?
Can you answer each question with the information required?
Do you have the supporting documentation in place for compliance?
Can you make commercial sense of the contract price?
Do you have the in-house resources to deliver – do you need partners /
Do you have the time / resources to prepare the bid by the deadline?
Adopt a Strategic Approach: Key Points
Address each element of the tender specification and structure your
response accordingly
Do not cut and paste from previous bids
Be specific in your response – do not provide generic information
Understand what the buyer requires – show how your solution goes the
‘extra mile’
Respond to the questions with relevant evidence and / or provide
appropriate examples e.g. Case studies
Use diagrams, illustrations, graphics
Realistically price your offer and use any financial model provided
Review the drafts against the criteria, scores , weightings and revise
Proof read and check any figures / costings
Aim for clarity, brevity, readability and persuasion
Adopt a Strategic Approach: Key Points
 Review the evaluation criteria, scores and
weighting (this should influence time / effort spent
on each criterion response)
Beware of yes / no, pass / fail criteria
References – recent and relevant
Use tender envelope / label if provided
Ensure the submission is complete AND signed
Include copies of requested documentation e.g.
Insurance certificates, accounts, policies etc
Respond by the correct format, date + time
(electronic, electronic + post, post?)
Tender Preparation: Key Steps
Appoint a bid manager / individual and team of key people
Meeting(s) with tender team for detailed review and interpretation of
tender requirements & criteria (including scores & weightings).
Prepare work plan & allocation of roles/tasks/milestones with reference to
tender & submission deadline.
o NB: Build in time to review, refine and style bid
Determine whether you require clarification of any aspect of the tender
and ask the question(s) allowing enough time for a response. Check
regularly to see if any questions/answers have been submitted by
Conduct regular reviews of the draft tender
Conduct a mock assessment against the scoring matrix
Ensure you have enough time for signing and submission
Post submission ask for feedback
Finding Opportunities
 Where should you look / who should you know?
Tender websites & Supplier
Networking / relationship building
Organisational / Sector websites Procurement Teams / Category
Tenders Electronic Daily (TED)
Operational departments and units
Local / National press / Press
Market analysis / competitor intelligence
Trade Press
Partners / sub contractors
Meet the buyer events /
Second / Third Tier Contractors /
Supply chains
Contract Notices
Used by:
Eastern Shires
LAs, NHS in Leicestershire, OJEU
Source Leicestershire
LAs, NHS in Leicestershire
Leicestershire County &
Rutland NHS
Universities, Colleges, Schools,
LAs (some in Leicestershire and
Blue Light
Police, Fire & Rescue Services
(including Leicestershire
Constabulary & across UK)
Supply to Government
Lower value government tenders
(*website will be replaced by
‘Contracts Finder’ March 2011)
Any public sector contract above
EU Threshold
Finding Opportunities: e-portals
 Identify a number of key tender websites
 Familiarise yourself with the website format and
 Register and or publish company details
 Set up for Alerts service, newsletters etc
 Appoint key individual(s) to monitor regularly for
new contract opportunities
 Apply filters to your search words (decide which
opportunities to focus on)
Buyer Requirements
 Main evaluation criterion: ‘Most Economically
Advantageous Tender
Understanding buyer’s needs
Combining price with quality and other relevant factors
Value for money
Acceptable level of risk
Improvement in performance or cost savings
Meeting department and organisation’s objectives
Reliability, consistency
Contract management
Inspection and audit
Buyer Preferences
Don’t like
Concise and precise language
Wordy tenders, Inconsistencies and errors,
poor use of grammar
Clear structure (esp. Methodology)
Poor methodology (failure to define who
does what, where, when, why and how)
Challenges have been understood and
properly addressed
Deviation from defined requirements, lack
of understanding of client requirements and
failure to answer questions
Relevant background information
Lack of detail/explanation or ‘data dump’
Properly defined & appropriate resources
Unclear who will be involved in delivery
Systems & procedures
Exaggerated and unsubstantiated claims
Innovation – or the opposite (tradition)
Poor evidence of reliability
Risk assessment (mitigations)
No risk assessment
Case studies & references
Irrelevant case studies
Buyer Preferences
Don’t like
Concise and precise language
Wordy tenders, Inconsistencies and errors,
poor use of grammar
Clear structure (esp. Methodology)
Poor methodology (failure to define who
does what, where, when, why and how)
Challenges have been understood and
properly addressed
Deviation from defined requirements, lack
of understanding of client requirements and
failure to answer questions
Relevant background information
Lack of detail/explanation or ‘data dump’
Properly defined & appropriate resources
Unclear who will be involved in delivery
Systems & procedures
Exaggerated and unsubstantiated claims
Innovation – or the opposite (tradition)
Poor evidence of reliability
Risk assessment (mitigations)
No risk assessment
Case studies & references
Irrelevant case studies
Get Bid Ready: Preparing the Documents
 Make note of instructions, word limits and submission format
 Try to understand what each question is asking and why they
are being asked. Be compliant!
 Note the scoring / weighting of criteria and spend time / effort on
your response accordingly
 Make careful note of the deadline and make sure you submit
well in advance of the deadline (avoid last minute submissions)
 Anything you are not sure of, contact the buyer (but be aware
that any question you ask will be notified to other suppliers)
 Answer all questions honestly and be keen and positive in your
responses (emphasise your USP).
 Double check your response / second pair of eyes
 Ensure you complete and submit all the documents required
 If unsuccessful (or successful) ask for a debrief
Get Bid Ready: Action Plan
Register AND publish on e-portals
Set up internal processes and identify individual(s) to monitor tender
portals, sources, alerts
Identify and network with your local public sector buyer targets (at
departmental / procurement level)
Attend meet the buyer events / tender briefings
Develop a Tender Resource Pack (e.g. Company & financial information,
case studies, references etc)
Establish a working group for tender preparation
Search for potential partners / subcontractors
Strengthen your technical capacity, infrastructure, bid skills
Develop, improve your policies
Consider accreditation (e.g. CHAS, ISO, IiP etc)
Review unsuccessful bids
Act strategically – know when to bid and when not to bid!
• Tender Format & Requirements
• Policies, Insurances, etc
• Added Value and/or Innovation
• Quality
• Price
 Further one to one support:
 0191 284 4949