Kiwi companies have gritted their teeth for decades about unfair tendering practices. We’ve heard war stories about substantial procurement decisions being made, based on processes that are different to those described in the RFT. Ridiculously short time frames that simply don’t give enough time to put together a quality response – ring any bells?

As the Government’s Five Principles of Procurement and Rules of Sourcing start to gain influence, tenderers have tangible backing to challenge unfair procurement practices.

In this first of a series of articles on the new principles and rules, Plan A’s Managing Partner Caroline Boot discusses the minimum time frames for responses.

Government’s Principles of Procurement are Mandatory

Firstly, you should know that the Five Principles of Procurement are mandatory for all government organisations, and they are supposed to train all of their procurement people on those.

But that’s not all. The Government Rules of Sourcing have been designed to align our public procurement practices to international best practice. They are to encourage agencies to stimulate competition and innovation, work with suppliers to develop better solutions, and provide better value for the New Zealand public.

They are compulsory for Public Service departments, and any other government agencies should be following them as good practice. In other words, even public service organisations like councils will need good reasons for not complying with the Rules of Sourcing.

Minimum Response Time Frames will help Improve Value for Money

A key area that the Rules cover is the timelines for tender responses. Always a bug-bear for tenderers in the contracting industry, unrealistically tight deadlines have resulted in poor quality responses, mistakes in pricing, and a heavy handbrake on the potential for innovative alternatives.

Put simply, it’s hard to be clever, accurate, comprehensive and compliant when you’re strung out from working ungodly hours simply to get the tender in the box on time. It’s a relief that minimum time periods are clearly specified in the rules:

  • 8 business days for an RFQ (e.g. for an off-the-shelf, easy to describe product or hourly rates type contract)
  • 15 business days for a one-step RFP or RFT (where they require more information from the supplier than the price, delivery date and unit costs)
  • 25 business days (10 days plus 15 days) for a two-step process that includes an expression of interest followed by an RFP or RFT.

These mandatory time frames assume that the project has been previously listed in an annual procurement plan AND tendering documents are all available electronically AND the client will receive responses electronically.

These time frames have, to date, very frequently been shortened by purchasers. This has resulted in rushed, poor quality responses from tenderers that have not delivered value for money. In future, many government buyers will need to plan longer response times to tenders – this can only improve the quality, potential for innovation, and fitness for purpose of the products and services that are bought through tendering.

On a broader note, the government’s procurement reform initiatives really are great news for those who are involved in marketing their products or services through tendering. Although it is (predictably) taking some time for many government agencies to recognise their obligations to procure goods and services in a fair and transparent manner, the reforms are starting to have impact.

There’s a strong focus on value for money over the life of assets – a welcome departure from post-GFC austerity measures that drove obsessions with tender box penny-pinching. Clients are encouraged to make balanced decisions that consider total costs of ownership, promote innovations and minimise whole-of-life costs.

More on that topic in our next newsletter.