By Caroline Boot, Clever Buying and Kerrie McEwen, Plan A Tender Specialists.

With every infrastructure dollar stretched to the limit, clients are taking a long, hard look at their procurement processes. While debate rages around ideal delivery mechanisms and complex contractual structures, some organisations are focusing on the basics.

• How well do our procurement processes identify and select the best value for money options?

• Is the process of seeking and evaluating tenders efficient?

• What can we learn from other assessment and evaluation models in the public sector?” 

The words at the start of this article were written five years ago (and are repeated here word for word). They were part of the award- winning best paper at the 2012 Ingenium [now IPWEA] conference in Rotorua, and presented at the IPWEA conference in Brisbane later that year.

With procurement still a hot topic, we thought it a good time to re-examine how far we’ve come in best practice procurement (or not).

There seems to be a common line of thought in government procurement circles on both sides of the Tasman, that the emphasis on raising procurement capability should be concentrated on strategic procurement rather than improving operational effectiveness.

Councils engage expensive consultants to guide them on procurement strategy and much time is invested by senior managers. Lengthy documents are written on procurement strategies. As a result, many client organisations are patting themselves on the back for updating their procurement strategy and policies over the last five years.

But – and here’s the rub – they still knock out the same old RFT documents. 

Time and time again, despite the work that councils invest into procurement strategy and policy development, recycled RFTs are put out to the market. RFT documents are still frequently legally cumbersome and confusing; they ask irrelevant generic questions, and do not encourage our supplier market to respond with clever, cost-effective solutions. Worst of all, they seldom value quality or innovation above cheapest price. These factors demonstrate a worrying lack of follow through - from strategy development, to effectiveness in the way procurement is carried out.

We sometimes wonder if we’re creating a luxury high-performance car with square wheels. 

In other words, the procurement strategy may be the best in the universe, but if the tools that make procurement decisions are poorly designed (like square wheels!) then implementation is frustrated and we’ve wasted our investment into strategy development.

Do we have knowledgeable people running the procurement process? Yes, at the strategic end, but those skills often don’t translate into the skills needed at the coal face to put together streamlined, effective procurement documents.

So does this provide good value for money for client organisations and their stakeholders (who are ultimately, ratepayers and taxpayers)? 

The place where procurement teams will get the most immediate bang for their investment into improving processes is not, in our view, in top- down strategising. Instead, it’s in the practical tools by which they make their decisions.

Have we made progress in those areas? 

Yes! In New Zealand, the government templates, if used well, provide a user friendly standard format that’s appropriate, scalable, and makes instructions clear for suppliers.

In Australia? Well, if you represent a Kiwi company, you could be forgiven for asking the question “what happened to the tendering rules?”. The chances of having clear weightings and processes are slight, which makes it harder for suppliers to figure out where to put their efforts. And a bit like the NZ environment was a decade or two ago, relationships play a bigger part in many procurement decisions in Australia.

On the positive side, procurement in Australia is more likely to take notice of social and environmental impacts and the implications of procurement decisions in those areas. There is a greater awareness in some sectors that those factors count, and there’s far greater acceptance of the concept of supporting local economies – so that the benefit of industrial growth is widespread and inclusive.

Are we moving away from cheapest price false economies? Yes, but slowly. Sustainability is starting to be valued more tangibly in New Zealand. The Plan A tendering team has seen a significant increase in RFTs for major contracts which integrate (and sometimes score!) some form of ‘social good’. And the Infrastructure Sustainability Council of Australia’s IS ratings are starting to be applied and adapted for use in New Zealand. The first phase of Auckland’s City Rail Link has been awarded a ‘Leading’ IS Design rating. And there’s more to come.

Tender litigation is on the rise 

Even five years ago, tenderers were extremely unlikely to challenge any perceived unfair practices, for fear that their reputation and future chances of winning work would be destroyed.

Today, it’s clear that this is changing. Unfair tendering processes are the subject of an increasing number of legal challenges every year; and what’s more, the success rate of those challenges is rising.

It’s more important than ever before to provide a transparent and relevant basis for evaluating tenders, so that tenderers understand where to put their efforts. Most important, the basis for excluding tenderers needs to be established using fact-based pass/fail criteria, which enable bidders to self-determine whether it’s worthwhile for them to bid or not.

So, where to from here? 

Procurement will only work well when evaluation criteria are objective and clearly stated; when the questions used to differentiate tenderers are aligned to the drivers for best value; and when the people tasked with responsibility for procurement are trained in the practices that will deliver the right decisions.

When that happens, our suppliers will respond readily with solutions that deliver what clients are looking for. Neither clients nor suppliers will waste time and money in irrelevant activity that doesn’t drive value. And ultimately, the value that our communities receive for the money invested on their behalf, will be well worth the care taken by both sides to engage effectively.

Caroline Boot and Kerrie McEwen form part of a team of specialists who are dedicated to improving tendering practices. Through Clever Buying, Caroline and her colleagues provide training qualification assessment and expert support for tender evaluators, predominantly in government sectors. Kerrie McEwen is a senior consultant working within the team at Plan A, an organisation that has helped suppliers to write winning tender responses in New Zealand, Australia, and globally, since 1998.

This story was first published in the July/Aug edition of inspire magazine. View the magazine here.