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Tendering Together Glasgow 11 th October 2011 WELCOME.

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1 Tendering Together Glasgow 11 th October 2011 WELCOME

2 Who’s Who Martin Grigg, Jillian Moffat: Scottish Enterprise Pauline Wallace, Supplier Development Prog Jim Maxwell, Co-operative Development Scotland Gill Joy, Intend Business Development Gavin Tosh, Clerwood Legal Services Ruth Webber, The Very People Graeme Cook, Scottish Government

3 Aim of the Tendering Together programme Roundtable

4 Public Sector Procurement – Collaborative Buying Trends Gill Joy Intend Business Development

5 Procurement Reform – Scotland, UK, EU Collaborative Purchasing – who? what? Regulations for consortium bids

6 Procurement Reform Scotland Since 2006 McClelland report: e-Procurement system (ePS etc) Standard PQQ format (sPQQ project underway for 2012) Public Contracts Scotland + Quick Quote Procurement Toolkit + Capability Assessments Single Point of Enquiry Community Benefit clauses Collaborative buying organisations

7 Procurement Reform UK Contracts Finder portal >£10K central govt. SME product surgeries Greater use of Lots/outcome based specifications Mystery Shopper 14 departments have completely eliminated use of PQQ (below £100k) Published Departmental spend with SMEs 09/10 Early indications of greater use of open procedure

8 Procurement Reform EU Revised Public Procurement Legislation foreseen for end of 2012 (part of Single Market Act 2012) Consultation with all Member States re changes to improve Regulations Evaluation of impact of current PP Regulations 47% increase in use of Lots Frameworks increase four fold SMEs won 34% of OJEU contracts

9 Scottish Response to Consultation Allow broader view of value for money to include local economic impact Simplify rules for rural based contracts No compulsory targets for SME involvement or Lots Raise thresholds for OJEU contracts (from £156K) More leeway for dialogue with suppliers

10 Scottish Procurement Scotland Excel, APUC NHS Services, Scottish Police Fire & Rescue Scotland

11 Collaborative Contracts in Place Central Govt Design, Print, Publishing & Assoc Services Office Supplies Marketing Services Media Buying Press cutting Applications & Web development Web hosting Video & TV production unit National Courier Services

12 Collaborative Contracts in Place APUC (Universities and Colleges Scotland) IT Applications & Web External Print Media Buying APUC Contracts register download Scotland Excel Signage Advertising Scotland Excel register

13 UK Collaborative Buying Organisations Buying Solutions http://www.buyingsolutio http://www.buyingsolutio Yorkshire Purchasing Organisation (general supplies) NE Procurement procontract procontract NHS Collaborative Procurement Hubs Procure Plus (social housing) Sell2Wales

14 Regulations for Consortium bids Consortia 28. —(1) In this regulation a "consortium" means two or more persons, at least one of whom is an economic operator, acting jointly for the purpose of being awarded a public contract. (2) Subject to paragraph (3), a contracting authority shall not treat the tender of a consortium as ineligible nor decide not to include a consortium amongst those economic operators from which it will make the selection of economic operators to be invited to tender on the grounds that the consortium has not formed a legal entity for the purposes of tendering. (3) Where a contracting authority awards a public contract to a consortium it may, if it is justified for the satisfactory performance of the contract, require the consortium to form a legal entity before entering into, or as a term of, the contract. (4) In these Regulations references to an economic operator where the economic operator is a consortium includes a reference to each person who is a member of that consortium.

15 Why Collaborate? Gavin Tosh Jim Maxwell

16 What is collaboration? “Two or more parties working together to achieve a common goal which would be difficult to achieve individually.”

17 Group Discussion What are the benefits of collaboration? What are the risks? What might the customer be concerned about?

18 Benefits Get larger contracts Increasing trend by public sector to aggregate contracts “20% rule” Widen resources & skills available – complementary or supplementary Share costs, burden, hassle Look and act bigger

19 Focus on your core strengths More eyes to spot opportunities

20 Risks of collaboration Less profit Disputes High level of commitment Overwhelmed by partner Blocking possibilities of relationships with alternative partners Exposure/Disclosure

21 Customer perspective Risk-averse – Confidence – Security – Reputation Management – Economy – One point of contact – Responsibility

22 Wider opportunities: The collaborative journey.......

23 7 Steps to Collaboration 1Identify opportunity and interested parties 2Developing / confirm shared purpose 3Feasibility 4Business plan / identify financial needs 5Structuring and establishing the consortium 6Commencing operations 7Ongoing support and monitoring


25 Types of Collaboration

26 Forms of Collaboration JVC (Joint Venture Company) Partnership LLP Company Limited by Guarantee Contractual Informal

27 Consortium Company Limited by Guarantee (CCLG) Limited liability Recognised legal structure Durable framework for collaboration Includes confidentiality provisions

28 Also......... Some expenses payable by members Administration Directors personal liability Commitment Likely to pay VAT Relative customer unfamiliarity Contractually binding

29 Teaming Agreement/Lead Contractor Model Contracts required between the parties following award Liability borne by lead contractor and apportioned contractually Pre-award exposure – Agreement itself probably not legally binding No expenses incurred by relationship Terms of relationship need to be agreed

30 Also.......... Flexibility Separate binding Confidentiality Agreement required.

31 Common to both models Requires agreement of members’ duties and responsibilities, e.g. – Basis of apportionment of work – Roles of tender lead and supporting members – Customer interface arrangements Arrangements to split work not legally binding until main contract awarded

32 Next...... The Consortium Co-operative

33 Jim Maxwell

34 Key Features … Members are independent businesses Shared ‘agenda’ Consortium is legally separate from members Governed on co-operative basis by members Usually free of corporation tax Limited liability

35 Consortium F A E D B C

36 F A E D B C

37 F A E D B C

38 F C A E D B C Supplier or Customer Contract

39 Consortium ‘Buying’ Model F C A E D B C Supplier £ £ £ Contract

40 Consortium ‘Selling’ Model F C A E D B C Customer £ £ £ Contract

41 Consortium Opportunity for scale Opportunity for cost reduction Low financial risk Low reputational risk Low bureaucracy Easy in – easy out

42 Membership formats ‘All the same’ v ‘All different’ (complementary) Open membership v Closed membership

43 Recent start-ups Yellow Brick House High In Demand PUC Design Interactive Learning institute

44 CDS Support (all free!) Idea development Advice on structure / governance Legal documentation Feasibility / opportunity analysis

45 Think about collaborative working… Buying Selling Marketing Sharing premises Sharing other facilities

46 Thank you

47 Case study of Successful consortium “The Very People” Ruth Webber

48 The Buyers’ Perspective Graeme Cook Scottish Procurement

49 Disclaimers These slides do not refer to any current or future tender. This presentation contains generic suggestions on what procurement departments might hope to see in collaborative bids for contracts. The messages here are based on past tenders for professional services but should be applicable across all procurements

50 Who are Scottish Procurement? The Scottish Procurement and Commercial Directorate (SPCD), also known as Scottish Procurement is responsible for developing and advising on procurement policy for the public sector in Scotland. We also ensure that procurement processes within the Scottish Government are effective and efficient by ensuring that staff are aware of their responsibilities and authority, and have the necessary information and tools. Our Goal - To lead and enable public sector procurement reform in Scotland, working creatively and collaboratively to deliver value for money, promote best practice in project delivery, and contribute to sustainable economic growth. Objectives –CAPABILITY –COMPETITIVENESS –CAPTURING SAVINGS AND BENEFITS –COVERAGE –COLLABORATION –CORPORATE SOCIAL RESPONSIBILITY COMMUNICATIONS

51 Collaborative Bidding in a Strategic Context Scottish Procurement recognises the significant contribution of SMEs to the Scottish economy and is therefore committed to “Improving access to public sector contracts, particularly for SMEs” This commitment is set against a background of statutory requirements which require equal treatment of all bidders, regardless of their size or country of origin The result is a commitment to encourage and facilitate competition from SMEs (including collaborative bidding) but not to award business to SMEs Good public sector procurement awards business to the bidder that meets the basic financial and statutory requirements and that is able to offer the Most Economically Advantageous Tender (MEAT), as defined in the Procurement regulations. Current EU rules define MEAT as a balance between cost and quality. All bids, regardless of who they come from, are evaluated in the same way.

52 What are Procurement Departments Looking for? Coverage – Geographical & service range and a clear understanding of the technical requirement Reduced Risk - See the next slide Reduced Costs - Internal costs for the buyer’s organisation, e.g. administrative costs associated with placing orders with and processing invoices from multiple firms Fair & Open Competition - Public bodies in Scotland must adhere to EU directives and to procurement regulations in Scots law. Procurement will therefore seek to remove those legal risks that are associated with non-compliance. The majority of procurement regulations relate to transparent and open competition Competitive Pricing

53 What are Procurement Departments Looking for? Reduced Risk –PROFESSIONAL procurement might be better thought of as ‘commercial risk management’ as it is responsible for identifying high-risk goods or services and ensuring that the risk of non-delivery or service failure is minimised. Professional procurement is a dynamic and varied space in which there are no hard-and-fast rules other than the procurement regulations –Some goods or services are will present greater or more numerous risks than others. Even within the same general commodities risk profiles can vary: The delivery of the food & drink required for school meals might be considered high risk while the food and drink required for a school’s vending machine might be low risk. This is because the children’s parents are unlikely to be too upset if their the children can’t get snacks during the day but will be very concerned and vocal if lunches aren’t provided It’s likely to be more or less impossible to second-guess the risk factors that a customer attributes to particular goods or services

54 What are Procurement Departments Looking for? Reduced Risk (cont’d) –Risk, from Procurement's point of view, can include threats to: price; quality; supply; staff & public safety; the buyer/supplier relationship and reputation. –Different firms present different sets of risks. Large firms have their own particular risk profiles while small companies with low turnover values MAY: Have less experience with a varied customer types Be more susceptible to financial/cash-flow issues Not be able to respond quickly to “disaster” scenarios (Major IT failure) Be more susceptible to loss of key personnel (account manager hit by a bus)

55 What are Procurement Departments Looking for? Risks Particular to Collaborative Bidding - Complex collaborative supply arrangements present additional risks into a supply chain. For example: Dealing with multiple account managers Multiple order and invoice procedures Unclear or multiple complaints procedures Uncertain accountability for defaults or breaches of contract Financial probity and stability can be harder to evaluate The above bullets represent some of the unnecessary risks and administrative costs that poorly planned collaborations can bring. These costs can mean that working with partners will not necessarily achieve extra points during tender evaluations. All bidders, regardless of their collaborative status, should think carefully about the customer’s requirement and present the customer with as simple a model as possible. This doesn’t mean that the tender documents should be basic but rather that the operating model should be easy to understand, implement and use.

56 What are Procurement Departments Looking for? Present a Simple Proposal – Provide assurance on: Financial and statutory probity (e.g. directors may not have convictions for fraud; bidders must comply with equal opportunities regulation). Financial probity is particularly difficult to demonstrate – discuss options with the procurement team and ask them what will be acceptable (this may vary by the risk profile of the goods and services being purchased) – Try to ensure that there is ONE ‘individual’ (in a legal sense) to get issues resolved and to carry the can if things really go wrong. This ‘individual’ might be: A ‘lead’ contractor (sub-contracting relationships); A single contact backed-up by unambiguous and binding agreements between collaborative parties determining who is responsible for indemnifying each risk; or A new legal entity formed by all members of the collaboration – Try to present your collaboration as a single entity to the customer. Leave the customer in no doubt as to when and how they should interact with you as their supplier. Keep is as simple as possible for them, even if this means having very difficult conversations with your collaborative partners before submitting your bid.

57 Once you Understand the Requirement BEFORE starting to write your response Considerations for ANY tender bid ―Understand the requirement ―Understand the customer AND the procurement team – sell what they want, not what you happen to have available ―Understand risk from your own point of view, from that of the customer AND from that of the procurement team ―ASK – If something’s not clear, don’t assume, ask for clarification ―Put it in writing – if it’s not stated in your response, you can’t get credit for it ―Use all the space provided – if you’re given ‘up to 500 words’, use 500 words in your answer ―Look carefully at the weightings of each question and/or evaluation criteria and use your time & resources accordingly ―Be realistic: Do you have demonstrable experience of delivering all aspects of the requirement? Do you have the ‘capacity’ to meet the requirement? For example, do you have enough staff and financial wherewithal to take on the required scale of business? ―After the tender decision, ask for feedback, whether you’ve been successful or not

58 Once You Understand the Requirement Specific Considerations for Collaborative tender bids —Ask whether or not collaborative bids are acceptable and if so, what form they may take —Be open and transparent with your collaborative partners – a poorly constructed collaboration will result in a poorly constructed tender bid —If a financial turnover threshold has been set, ask the Procurement team whether or not they will accept the collective turnover of all parties in a collaborative bid as meeting their requirement – NB: they may not! —Determine what parts of the requirement you have demonstrable experience of and what parts, if any, would be better demonstrated by a collaborative partner’s experience —You and your collaborative partners will still be required to demonstrate the required ‘capacity’ – if you still can’t do this, consider getting more partners —Different customers and their procurement teams will consider different goods and services to carry different risks. This is reasonable but will mean that their approaches to collaborative bids will vary. ALWAYS ask up-front what forms of bid are acceptable before spending too much time considering and preparing your collaborative bid

59 National Frameworks for Temporary Staff and Consultancy CASE STUDY Customer feedback and market research indicated that smaller firms often offered better value than larger firms Generally speaking, large firms offered reduced risk, reduced (internal) administrative costs and wider coverage (service and geographical range) relative to small firms To ensure wide competition we encouraged larger firms to match the value standards of smaller firms and encouraged smaller firms to reduce their risk profile and increase coverage and capacity. This required additional commitment of resource from both Scottish Procurement and from the supply market Well before we published or even drafted our tender documents, we engaged with the market to understand how they operated and to identify how improvements could be made to both their and our operations

60 National Frameworks for Temporary Staff and Consultancy CASE STUDY The bids received varied widely in quality, cost and structure Many firms appeared to have ignored the challenges we set them and simply submitted their standard “off-the-shelf” answers Many consortia bids did not provide the standard financial and statutory assurances for all partners Several bids claimed to be collaborative but demonstrated no joined-up thinking and seemed to be based on a single firm’s answers with the name of an additional firms merely appended as an afterthought The best collaborative bids had clearly overcome past rivalries and had spent time understanding how best to structure their collaboration in order to meet our requirement. They were innovative and obviously based on meeting the customer requirement rather than a need to be seen as part of a collaborative bid – They offered best value over-all (MEAT) 15 consortia won places on the frameworks 33 further firms are named as consortia members or sub-contractors Up to 46% price reductions were achieved

61 Take Home Messages There is no set of simple rules for winning business Always work hard to understand the view of the customer AND that of their procurement team (don’t assume anything) Always ask the customer and procurement team what business structures and what methods of demonstrating financial probity will be acceptable (these will vary according to the level of risk ascribed to the goods or services) Collaborative bidding can help to remove some of the ‘risks’ that smaller firms can sometimes present to procurement teams By their nature, collaborative bids can present additional risks but with a bit of planning and preparation between the collaborative partners, these risks can be minimised or even removed Before submitting a tender, it’s better to ask too many questions than too few If it’s not written down in your tender submission you can’t get any points for it


63 Approaches for Partner Assessment & Selection Gill Joy

64 Finding Partners & Subcontractors A “needle in a haystack” - Suggestions?

65 Finding Partners Existing partners, sub-contractors Own networks (incl Linked-In etc? Professional/trade associations Referrals from trusted organisations/people Public sector contract award notices Public sector contract registers Suppliers to target organisation types etc

66 Requirements Mapping Must be specific to the contract (use Invitation to Tender doc or Contract Notice to create a partner requirement) Map generic needs first – avoid “shoehorning” an existing partner into team immediately Look at the Buyers perspective Consider the skills/experience mix that competitors will be presenting Prioritise criteria for assessment (Essential, Desirable, etc or similar)

67 Group Exercise For sample contract: what combination of partners – lead/subcontracts possible? What criteria for the assessment / selection stage of partners?


69 Assessing Partners CRITERIA ESSENTIALDESIRABLECOMMENT, SCORING SCHEME, MINIMUM STANDARD MET/NOT MET Skills criteria - Experience criteria - Added value criteria - Compliance criteria -

70 Presenting a collaborative team or consortium in a tender Gill Joy

71 Topics 1.Key challenges in presenting group experience, capacity and suitability for the contract 2.Presenting added value 1+1=3 3. Tips for presenting a joint bid: – Joint methodology – Roles in project and quality management – Risk and contingency – Team experience & CVs

72 Challenges PQQ and tender forms geared to single bidder approach Countering perceptions of risk associated with joint bid Choosing the right lead partner Compliance – who has Financials/ Health & Safety/ Insurance/Credit check cover? How to demonstrate added value of collaborative approach?

73 Presenting Added Value Structured approach to make roles and responsibilities clear for the client Map your skills and experience to client’s specific requirements Match consortium strengths to key risk areas for project “Elevator pitch” for each contract

74 Tips for presenting a joint bid

75 Joint Methodology

76 WP1Data Collection WP LeaderIntend Business Development Task 1.1 Data Collection Plan Describe Task 1.2 Describe Task 1.3 Describe DeliverablesData Collection Plan [date] Analytical Framework [date]

77 Joint Methodology


79 MONTH 123456789101112 WP1: Title WP2: Title WP3: Title WP4: Title WP5: Project Management Contract Name Deliverables Meetings kick-off interim meetingreview meeting final meeting

80 Project & Quality Management Describe your procedures for ensuring timely and accurate delivery of contract whilst demonstrating a flexible approach Describe your quality management system Describe your experience of interfacing with other suppliers/stakeholders in the delivery of contracts Describe your approach to continuous improvement

81 Project Management Management board/Steering Group Deputy for project manager; Finance role Project management plan – Workplan with milestones and specific deliverables Progress meetings and reports Partnership approach – examples of flexibility, sharing risk

82 Quality Management Develop simple QM system relevant to the contract: Table of any certified quality management systems in the consortium and scope of these (ISO 9001, ISO 14001) QA procedures for specific tasks (what checked, how, when, by whom) Key Performance Indicators (KPIs) needed? Evidence? Continuous improvement system within partnership Customer service approach – escalation procedure Use of external evaluation/QA people? Business continuity plan

83 Presenting partner experience Can be PQQ or tender questions….. Describe the nature and scope of your business highlighting a) core functions and areas of specialism and b) how your experience is relevant to this contract Outline your organisation’s knowledge, understanding and experience of interpretation Outline the range of professional competencies your organisation has and is able to use to fulfil the requirements of this contract

84 Presenting partner experience Each tender may require a different way to structure your response  Map content to specific contract requirements (cf. partner assessment form) Emphasise strengths of partnership approach Use matrix to summarise partner skills & experience Develop lists of project references for all partners (short and expanded versions)


86 Presenting partner experience Name & Role Skill 1Skill 2Skill 3Experience 1 Experience 2 John Smith Project Manager √√ √√ Jane Brown Data Manager √ √√ Can use a matrix for partner organisations and/or individual team members

87 Presenting partner experience PartnerDesignPrintFulfilment Partner A Add 2-3 line summary for all relevant projects Link to more detailed project profiles Partner B Partner C Use a matrix to summarise key projects for each partner relevant to this contract

88 Presenting partner experience CVs of Key Staff NameRole on projectQualifications & Experience John SmithProject Manager - Client liaison - Project planning - Review meetings - Final report BSc Information Systems, HND Computing Include 5-6 Bullet points with key experience from recent projects/jobs including any specialisms Jane BrownData Manager - Data collection plan & implementation - Data analysis - etc etc Etcetc

89 QA System ProcessQuality assuranceKPIResponsible Sourcing materials Supplier approval questionnaire Meet XX% of criteria as a minimum Managing Director Sourcing subcontractors Subcontractor approval questionnaire Meet XX% of criteria as a minimum Managing Director Design creation Proofing Internal approval 100% error free Meets client brief Quality Manager Project Manager / Project team if complex design Signage production Acceptance form100% compliance Project Manager + Production Manager Installation Internal QA check Client Acceptance Form 100% compliance 100% compliance Project/Quality Manager Client Project management / client liaison Customer feedback questionnaire at end of project Xx% of ratings good or excellent Client

90 Other Quality aspects Continuous improvement Customer feedback mechanisms, complaints procedures  Business review groups, Focus groups  Staff appraisals  Management roles to ensure required improvements are implemented Other standards Company membership of trade/professional associations  No. of staff with membership of accredited bodies/professional qualifications relevant to contract  Investors in People  Any environmental standards/benchmarking used Client relationship Partnership approach is increasingly important – describe how you are able to share the project risk with the client, avoid confrontational approach, proactively offer solutions to improve the overall performance of the contract

91 Communications Who to contact for which part of the contract? – Technical contact points – Management – Contract admin/financials/invoicing Protocols – Who gets cc:d – Written not verbal for any instruction/approval/ issues raised

92 Project Risk Assessment Risk Impact (High, Med, Low) Mitigation Materials supply failure High Back-up suppliers in place Loss of key staff Medium All key roles covered by two people within consortium Bad weather affects delivery schedule HighPlans in place for business continuity – back up facilities and delivery teams in XX different regions

93 Group Exercise Plan a joint response for key scoring questions – Methodology – Company experience – Project & Quality Management – Elevator Pitch/Added Value Lead+Partner approach v Consortium


95 Legal Agreements

96 Confidentiality Agreements When to use Purpose Types: – Unilateral – Mutual – Multilateral Standard of Protection Limitations

97 Contents Parties Description Purpose of the disclosure To whom it can be disclosed Term Termination Disposal Governing Law

98 Teaming Agreements “An agreement entered into by two or more parties for a limited period of time and for a restricted and well defined purpose.”

99 Why have a Teaming Agreement? Makes parties think about all the issues Written reference for who is doing what Builds relationships Locks in team member Locks out competition Ammunition in event of bad faith Precursor to contract

100 Key Provisions Confidentiality Responsibilities Communications with the customer No independent bidding Publicity Dispute resolution Assignation Termination – when would the agreement come to an end?

101 Roles and Duties Team Member Team Leader

102 Team Members’ Duties Respond promptly to all questions/requests Provide all required certification, documentation Participate in negotiations, discussions, etc with Customer - but no direct contact unless authorised Final say in format/content of proposal; also price?

103 Team Leader’s Duties Consultation before changing tender details No commitments of others without prior consent Timely transmission of tender documents & any amendments received from Customer Keep team members fully informed Swift response to customer

104 Next...... The Consortium Company Limited by Guarantee

105 Members Agreement: Consortium Co-operative Governs member-consortium relationship Contains ‘secondary’ rules Consistent with Memorandum and Articles Plain English Facilitation

106 Members Agreement Content May Include: Who may be a member Detailed statement of purpose / aims How the consortium will be managed Things the consortium will do / not do Communication within the group Handling of funds / delegated authority How members may use the consortium Required quality standards Dealing with members default Rules for adjusting the agreement

107 Any questions? CDS support available Follow-up workshop 14 th Nov Evaluation forms please

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