The Scottish Government launched its new public procurement guidance to promote fair work practices last October. Now that we are almost three quarters of the way through 2016, are you familiar with the new guidance yet? Continue reading “The Living Wage – The New Public Procurement Guidance”
Life-cycle costing is a concept that has come to prominence in public procurement over the past few years but there seems to be a lack of understanding over exactly what it means and what areas it covers.
Regulation 68 of The Public Contracts Regulations 2015 specifically outlines that life cycle costing can now be used by buyers when cost is the award criterion.
Life-cycle costing is similar to MEAT (Most economically advantageous tender) in that it takes into account a combination of price and quality. The difference is that all aspects of the production process can be considered in the evaluation of the bid.
Research and development, production costs, maintenance costs and end of life disposal costs are all considered to be part of life-cycle cost. Environmental factors like costs of greenhouse gas emissions and climate change mitigation can also be included in the assessment if a monetary value can be assigned to them.
To break this down further, buyers may want to consider the following elements in greater detail before making the decision to purchase:
- Various transaction costs, such as taxes, foreign exchange and contracting costs.
- Finance costs (if capital has to be borrowed to pay for the purchase).
- Acquisition costs: costs of delivery, installation and commissioning.
- Operating costs, such as energy, spares, consumables, maintenance and repair over the useful life of the purchase (e.g. for equipment and machinery), operating training, supplier support.
- Costs of storage and other handling, assembly or finishing required.
- Costs of quality (inspection, re-work or rejection, lost sales, compensation of customers etc).
- End of life costs, such as decommissioning, removal and disposal (minus some negative cost if the asset has sufficient residual value for re-sale).
Some or all of these costs may be included in the price quoted by a supplier but they may not be. Buyers should assess this fully – does a lower price reflect competitive pricing or a lesser total package of benefits?
When procuring in the construction industry for example, it is recommended by The Office of Government Commerce that higher costs at the design and construction stages should be considered in the interests of achieving significant savings over a building’s lifetime. For construction projects in particular, life-cycle costs are those associated directly with the building; costs such as land, income from the building and support costs associated with the activity in the building.
Of course, suppliers will need to consider the lifecycle cost factor as a priority too. This is to ensure that best value can be gained from cost of production whilst staying competitive in the marketplace.
Regulation 68 also sets the parameters to ensure that it is fair and to make sure that it doesn’t disadvantage certain suppliers. If an authority is to use life cycle costing, the criteria that they are using must be included in the procurement documents and they must also outline what data they are expecting the supplier to provide. It also states that if a common method for calculation has been made mandatory by EU legislation that it should be used for the assessment. (The only example so far is the Clean and Efficient Vehicles Directive (2009/33/EU).
It may be common once the procurement process is in progress for lifecycle costing to slip down the list of priorities. Calculations therefore need to be incorporated at the start of the process, and not be seen as a last minute fix.
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Public sector tendering probably isn’t the first thought that springs to mind when you’re off to see the Christmas lights switch on while sipping on your mulled wine. Many of us will have finished our Christmas shopping by now…right? What a hopeful thought! Although it might not be in our second nature to be super prepared for Christmas (not to say some of us aren’t) – local authorities across the UK are already preparing for future Christmas’ with the issue of public sector notices. It may not seem logical for us to start writing our Christmas wish list for the next few years but it certainly should be the norm for local SMEs to be considering their preparation to search and respond to tender for future fulfilment in 2016, 2017, and 2018 and possibly beyond.
Our Tenders Direct team searched for the term ‘Christmas’ on our comprehensive database, and, recent figures show a rise of 28% in public sector notices supplying Christmas related services, requirements and products between October 2013 – November 2015.
We have noticed in particular that the increasingly popular Winter Wonderland Market Events have contributed to the rising volume of Christmas related tenders in the country. As these events dominate numerous cities across the UK, tenders released will range from councils in Oxford to Derbyshire, Southampton to Glasgow, Dublin and Cork seeking for services including: erection and installation of event infrastructure, outdoor event management, stewards, CCTV, crowd management, event planners, set and design, supply of funfairs, Christmas light switch on performances and festive catering. Continue reading “Christmas time…tendering time (or just mistletoe and wine!)”
Working closely with suppliers as an account manager in Tenders Direct, I continuously learn more about the ups and downs in the journey that suppliers go through in the public procurement environment. However, for this blog topic I look at issues from another perspective – the buyers. Specifically I am going to outline what the pet hates of buyers are when they come to evaluate tenders and some of the problems that buyers face while they manage the supplier after the contract award.
I have collated responses from first-hand communications with buyers in the public sector who we come into contact with daily through our mytenders service and support team.
Supplier responses to the tender
Common pet hates for buyers in this area include the following.
When suppliers: –
- Don’t follow the set format e.g. submitting in only PDF format / use of inconsistent fonts throughout the document.
- Don’t read the question and subsequently submitting irrelevant responses.
- Don’t provide enough detail when asked in the document e.g. writing one line responses / not directly answering the question.
- Change the order of the documents and submit documents in an illogical sequence – remember buyers will not appreciate hunting for relevant information amongst multiple attachments especially if it’s not been referenced correctly.
- Take the ‘once size fits all’ approach i.e. not tailoring the response to the authorities’ requirements.
- Try to bypass the process or get extra information outside the structure of the tender process.
- Don’t put their points across directly during presentations.
The points listed above are but a few of the many amongst the responses from the buyers but they are the most common complaints. Suppliers should take these points into consideration as this could help with them to improve future performance in bid responses. The buyers we spoke to strongly recommended that suppliers always ask questions – buyers would rather suppliers ask so they can respond with accurate information rather than make their own assumptions at what has been asked. Just make sure you always use the official Q&A log to communicate with the buyer once the tender has been released.
Supplier management after contract award
Winning a contract is always great news, however, what suppliers must not forget is that this is only the first step – the contract must be fulfilled to the best of your abilities and suppliers should take all actions necessary to ensure that they are complying with the terms and conditions they have agreed to. Many buyers have indicated that there is often a trend of suppliers changing their attitude after the contract has been awarded – at this stage suppliers know for sure that they have secured the business and then become complacent by taking a laid back attitude in getting work started. Suppliers must note that approaching the contract with confidence and being overly complacent are two separate attitudes and quite frankly buyers do not appreciate the latter.
Developing and maintaining a relationship with the buyer is just as important as putting all the effort into securing the contract in the first instance, otherwise it may be deemed a waste of time for both parties. Plus, public sector contracts only last for a defined period of time and you want to be in the strongest position possible when the contract goes up for retender.
The list below highlights some of the common problems buyers face after contract award.
When suppliers: –
- Under deliver due to overpromising in the tender.
- Don’t follow the invoicing process agreed causing unnecessary transactional issues.
- Show lack of accountability when problems arise.
- Deliver the bare minimum and not working in partnership with the buyer and accommodating to any changing needs.
- Lack of honesty e.g. covering up errors or not reporting back on KPIs effectively.
- Poor presentation by the supplier when they attend meetings.
Teething problems are inevitable in the early stages of a contract, what buyers and suppliers should ensure is that there is a plan and process in place to help resolve general or operational issues should they occur. If a situation arises where the supplier is at fault, responsibility should be accepted and solutions developed as quickly as possible – buyers would rather suppliers rise to the occasion and solve the issues proactively rather than wasting their time on trying to find the evidence to apportion blame elsewhere.
As a supplier to the public sector how many of these mistakes would you honestly say you are guilty of making? Do you feel you need more support to develop your organisation’s capabilities?
Millstream Associates offers training and consultancy services for buyers and suppliers.
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Bidding can be both pressurised and also rewarding for suppliers to the public sector. There are many concerns for suppliers during this time such as completing all the relevant documents to meet the deadline, getting adequate responses from the buyers on the Q&A or that the process is being run fairly. Poor procurement practice by the buyers may go unnoticed under these circumstances and many suppliers are reticent to raise a challenge and risk future contract opportunities. So what happens when you realise there are potential issues? The Mystery Shopper Service offers a solution to this problem.
A Brief Overview
The Mystery Shopper Service aims to tackle any concerns suppliers (particularly SMEs) may have regarding poorly conducted procurement processes which they have been part of on behalf of the suppliers. The service welcomes questions at any stage of the Continue reading “The Mystery Shopper Service”
The recent changes in the public procurement regulations have resulted in greater clarity concerning the rules on social and environmental aspects.
Social aspects can now also be taken into account in certain circumstances (in addition to environmental aspects which have previously been allowed)
In practice this could mean including specifications for design work to contain accessibility for people with disabilities, compliance with applicable social legislation such as current employment law and adherence to labour law obligations. (Regulation 42).
Environmental aspects are already considered in the majority of tenders and usually focus on expected environmental performance levels, sustainability issues and any applicable environmental legislation
Buyers will now be able to reserve procurement procedures to encourage social inclusion Continue reading “Social and environmental factors in the new regulations – How will they impact buyers?”