‘How Do You Get the Most from a Tender Exercise?’ COUP 2015 ‘How Do You Get the Most from a Tender Exercise?’ Sept 9th 2015 Reg Grimes Copyright 2011 FUJITSU

Why bother with a Tender exercise? It’s my Job to do so To get best value Legal requirement Informs decision making Because it is the right thing to do Legally Required

Key Areas to Consider Requirements Market Knowledge Tender Stage / Process Timescales Communications Tender Team Evaluation criteria and model Contracting Arrangements Understanding Value for Money Negotiating Strategy

Requirements – What do we really want to buy? Be clear on what the requirements are in terms of: Products – Hardware, Software Services Converged Technology Be sure to have a clear specification(s) Test the market, is what I want available? Has it been provided before? Do understand the costs? Principle should be to buy on specification, not supplier, make or model This will ensure no bias towards individual suppliers Creates environment for creativity and flexibility Provides the opportunity to consider options. Suppliers will be willing to explore options to fulfil your requirements

Market Knowledge – do I know the market and who is capable of providing what I need. Have we done enough research The answer is always no but something is better than nothing Get to know when enough is enough Be prepared to demonstrate your knowledge An intelligent buyer is a good buyer. Will drive better inaction with suppliers Supplier research Who ? How Many? Monopoly? Market leaders? Niche players? Market research Size? Maturity? Fragmented? Customer research Who else is buying the same or similar products and services Which sectors are customers operating

Tender Stage / Process Be prepared to run multi stage tenders : PQQ RFI RFP ITP BAFO E-auction If you know what you what and the market – go to the stage that suits your timescales. Going straight to e-auction need not be a problem. Running unnecessary tender stages wastes time and resources for all parties. E-auctions should be a default stage until qualified out.

Timescales When agreed stick to them Be realistic – start from the end and work backwards. Be reasonable – try to provide suppliers with as much time as possible to provide you with a first class proposal Shortening timescales to meet an artificial deadline will create problems Allow contingency. Avoid key holiday periods if possible Allow time at the end for final contract negotiations. Ensure all key stakeholders are available and lined up.

Communications Agree communication strategy and plan. Be clear and concise in your instructions to bidders. Establish single point out contact for questions coming back in from Suppliers on tender. All responses to questions should be shared with all bidders in an open and transparent manner – state this in all tender documents. Communication plan should include internal messaging to project sponsor and key stakeholder. Effective communications means no surprises – particularly at approval stage.

Tender Team - Not just procurement Ensure you have Executive sponsorship and escalation path. Do you need a steering board Can be useful to remove obstacles This should be led and owned by Procurement we are the experts in running tenders. Be as encompassing as possible but do not overload, ensure you have representation from : Business Owner Finance Legal Technical owners Ensure every understands their role within the team – no passengers

Contracting Arrangements Be clear on what terms and conditions are to be used. Look to re-use existing agreements if possible Saves time and resources both sides. Be prepared to be flexible. Have a contingency plan in place – your standard terms may not be suitable for eventual solution – e.g. SaaS, Cloud. Do not make terms overly complex – keep them fit for purpose. Have your red line items clear and concise. Plan your exit now.

Evaluation Criteria Develop a concise and robust model. Assign roles and responsibilities. SME’s to score their own areas. Procurement to own overall scoring. Counter measures to mitigate extreme scoring by individuals Ensure all criteria are identified. Price?, Quality?, Technical? Cultural fit to your organisation. Service Delivery performance Tender response / proposal Adherence to contractual terms. Allocate weightings and priorities, caution on over reliance on one criteria e.g. price. Agree how many to take forward at each stage.

Understanding Value for Money It is not all about purchase costs. Draw out all the benefits to be delivered by the tender process. Cost reductions Process improvements Technology advancements Internal efficiencies Long term support costs. Cash flow benefits – improve payment terms / milestones. Balance Needs vs Wants vs Desires. Keep within your affordability envelop. Avoid the “Bargains” from vendors, they seldom are and are often what you do need. Shelf ware is off no value.

Negotiating Strategy / Plan Determine how many bidders you are going to take through to contract negotiations. If resources available always consider talking two bidders through to contract negotiations Ensure each team has appropriate structure. Procurement x 2, Legal Create a “War Room” use to collate information and feed negotiation teams with up to date positions. Agree internally where the red lines are. For each element of contract Price, Service, Contract, develop a negotiating position model – I use the B.M.W – Best, Median, Worst position. Be brave – understand when you have a result and be prepared to walk away. Don’t to be shy to ask for that “extra” thing Identify your tradeable items. Look to leverage your full relationships with each bidder.

Questions