General Procurement

Avoiding Risky Business

I recently attended our latest training courses on completing PQQs and Bid Writing. One of the messages I picked up was that the public sectors’ evaluation of suppliers is a lot like a risk assessment exercise.  Public sector authorities have to be scrupulous when spending tax-payers’ money.  They have to balance various priorities, including quality, budget, delivery, timescales, policies on equality, sustainability, supporting SMES and local businesses, and abiding by the relevant regulations, while also avoiding the risk of anything going wrong during the course of the contract.

So, as a supplier going through the tendering process, your task is not only to demonstrate to the purchasing authority that you can provide the requirement (and more if possible), but also that you can mitigate any risks that might be involved.

One of the first things a purchasing authority will want to check is that you are financially stable.  For bigger contracts they are likely to request 2-3 years audited accounts, for smaller contracts a bankers statement or management accounts might be enough.  The key is they want to see demonstrable evidence that you are financially sound.

The authority also has to ensure that your company, or anyone holding a senior position within it, has not been involved in certain offences such as corruption, fraud, or money laundering.  They could also choose to disqualify you based on other convictions, bankruptcy, and non-payment of taxes.

You will need to demonstrate that you operate at the highest professional standards.  The purchasing authority will want to see that you have a good quality management system in place, to ensure you are able to maintain a consistently high standard.  Accreditations are not essential, however, they are a clear indicator to the authority that you are working to a recognised level.

Health and Safety is also important, particularly in certain industries.  You will need to demonstrate how you create a safe working environment for your employees and for members of the public.

Having a track-record with the purchasing body, within the public sector more generally, or at least with contracts of similar scope and value provides reassurance that you can fulfil the requirement.  So choose your case studies and references carefully, match them to the project and the purchaser.

Demonstrating you are aware of and can mitigate the risks involved is half the battle of qualifying for public sector contracts.

2 replies »

  1. Jeff Y makes two very good points in his response.

    Firstly, do contracting authorities really understand the accounts that they ask bidders to supply? As always, some authorities will have and/or apply greater expertise than others in evaluating this information. In some cases it will certainly be the case that they are only given a cursory examination with a substantial weighting being given to the level of turnover. This superficial type of analysis works to the advantage of the larger firms, when in fact as we can see with Connaught, they are in reality much less stable than many of their small and medium sized competitors. We can only hope that the Connaught example encourages authorities to take a more in-depth view of the true financial position.

    I have a great deal of sympathy with Jeff’s point about the companies named as part of the Office of Fair Trading’s investigation into bid rigging. See my earlier blog(http://bit.ly/AXIK9). The Office of Government Commerce (OGC) took the unusual step of issuing guidance to the effect that the companies fined by the OFT should not be excluded, seemingly following intervention by Lord Mandelson. I believe that one or two authorities disregarded the advice and barred these companies, but they are the exception rather than the rule.

    It’s a similar situation with BAE Systems. If they had been convicted of bribery in relation to the Tanzanian radar contract then they would automatically be disbarred from being awarded any public sector contracts in Europe. By reaching an agreement with the Serious Fraud Office to conclude their investigation on condition that they would plead guilty to a breach of duty to keep accounting records, BAE ensured that they wouldn’t be disbarred from their major market.

  2. They may ask for the accounts but do they really understand them. Taking Connaught as an example their accounts appeared to be good but appear to have large black holes. Also what about the case of those contractors fined under the OFT investigation into big rigging they have to answer yes when asked about any circumstances under section 23 or 26 of public procurement. I have yet to see one them specifically bumped off a tender list. All the comments you make are valid but deep down we all know that if you are not wanted on a tender list they will find a reason not to put you on it.

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