Bidders will be pleased to know that many public sector organisations have been busy in the past few months, working to improve procurement processes across the board.
Where are these improvements headed? Here are five changes that you can expect to see in procurement over the next year, for many major government organisations.
1. Stronger focus on procurement planning
Government’s Five Principles of Procurement start with emphasising the importance of good planning. Clients are putting more time and effort into understanding their project and their market, before releasing RFTs. Why is this good news? Because they are more likely to know what they want (and what they don’t want!) and this is more likely to be reflected in the way they purchase it.
Expect more consultation, and take advantage of opportunities to talk with your clients about their plans. There will be more opportunity to know what’s in the pipeline and line up your resources to meet those needs.
2. More structured procurement processes
Most clients are learning that it’s a waste of everyone’s time and money if there are large numbers of unsuitable bidders tendering for a project. It makes sense for everyone to screen out tenderers who don’t have the basic resources or experience to provide what the client is looking for.
What does this mean? We’re more likely to see two-stage processes, pre-qualification systems, and supplier panels as a means of reducing the number of bidders to a small group which the client has confidence can deliver what they want. On some RFTs, we’ll see ‘preconditions’ – a series of pass/ fail descriptors that allow tenderers to self-check to see if they qualify to bid.
While this may seem a hard approach for those who are desperate to win new work (often in a new field of business for them), in the long run it will work to streamline the process.
The good news is that this also helps to reduce the focus on cheapest price, as the second stage is usually aimed at differentiating outstanding suppliers from the merely good ones. With a two-stage process, the information sought at that second stage is frequently more tightly focused on what’s important to the project – rather than wasting everyone’s time on generics.
3. They’re really interested in your bright ideas!
Clients are keener than they’ve ever been to explore how you can deliver better outcomes for their project. Many evaluators that we talk to recognise that their suppliers are far more expert in their field than they are, and therefore more likely to come up with ideas that will make a difference.
What innovations can you propose, that will save on future maintenance costs? Enhance safety? Bring the programme of works forward? Make your client look great in the eyes of their stakeholders?
Wherever you can, it’s a worthwhile exercise to quantify the benefits that your smart solutions will bring. If your widget saves 20% on power consumption, what’s the net present value of that over its expected life? If you can finish the works a month early, use congestion pricing models to estimate the savings to motorists!
Naturally your client will want to see good justification for the savings you claim, or they’ll get an expert to check out your logic. But the appetite for innovation is infectious… put your thinking cap on!
4. More intelligent, targeted, project-specific questions
Assuming your bid gets through the initial screen-out stage, you can expect smart clients to be putting more time and effort into tailoring their RFTs to the project in hand. Their questions will be about the factors that will differentiate a spectacular delivery of the project, from a merely compliant one.
For those who hate writing attributes and would prefer to win work by pricing the job with a hairs-breadth margin, this will naturally be annoying. But for those businesses who genuinely want to provide a clever solution to their clients, there should be cheering in the aisles. If you’ve got something smart to offer, clients are far more interested and more likely to pay for it than they were a year or two ago.
You have the opportunity to win work based on how good you are, not just how far you’re prepared to take on financial risk. But you’ll need to be ready to articulate it in a way that helps your client to see why you can provide the best solution. That’s your challenge!
5. More focus on proper procurement procedures
Let’s face it, New Zealand is a minefield when it comes to probity and conflicts of interest. Everybody knows everyone (or at least their friend, according to the ‘Two Degrees’ mentality). In this environment, accusations of unfair bias in decisions on public spending have been rife – but have traditionally been muzzled by the fear of reprisal.
Government has front-footed this issue in the latest set of amendments to its Rules of Sourcing. There’s a clear message that if weightings are used, they need to be transparent; and that evaluators need to be able to show they are impartial. Conflicts must be declared and managed. There’s a steady move towards objective definitions for scoring attributes, rather than the traditional reliance on subjective descriptors like ‘exceptional’ or ‘unacceptable’.
This is good news for tenderers, who can move forward with greater confidence that the process of procurement will be transparent, impartial, cost-efficient and fit-for-purpose.
We’re often asked how New Zealand’s procurement environment compares with the rest of the world. As much as New Zealand tenderers have expressed concern when the outcomes of evaluation decisions don’t go their way, it’s fair to say that there’s greater transparency and scientific process in our public procurement environment than most places in the world.
Good luck with your bids in 2015.