“It’s broken so let’s fix it”
There is a growing dissatisfaction with how public international organizations manage tenders for publicly funded projects. Such concerns are not trivial; they highlight basic flaws in procurement processes that undermine competition and also stifle contracting authorities from achieving “value for money.” When lesser-qualified or able companies win tenders, it reflects deeper systemic problems that demand the urgent attention of global and regional economic development entities.
To use an analogy, if we consider Tender Management to be the courting phase in a supplier relationship, one has to wonder whether there are currently any successful marriages at all and that the divorce or counselling rate is not higher. In fact, this stage of the relationship between suppliers and contracting authorities is being neglected by both sides too often, it has become evident each partner has to understand the other better.
After all, a marriage that according to the World Bank is worth US $13 trillion a year and is built on an unfathomable quantity of trust and good faith is unquestionably worth saving.[1]
Current Challenges in Tender Management
International organizations are entrusted with the crucial task of implementing projects that positively impact communities and economies. The former relies heavily on the tender management skills and market understanding within these organizations, which must be up to requisite internationally accepted standards. The implications of flawed procurement processes are severe: the erosion of business trust; decreased competition; and ultimately, suboptimal project results and societal regression. The potential impact and volume are also far from trivial, with the UN alone spending US $24.9 billion on procurement in 2023. [2]. Procurement tendering processes are the major roads for this transfer of funds.
However, trust is a two-way street. While public sector authorities seek to ensure transparency and accountability in contracting, the private sector can sometimes act unscrupulously. This can manifest in several ways: key lead experts may be swapped out undermining the integrity of the original submitted proposal. In other instances, back door price increases or authenticity and experience of experts placed in key positions in the proposal, compromise the quality of work downstream highlighting the need for robust oversight to protect the faith of all parties involved.
Multiple Impacts of Poor Tender Management
- Erosion of Trust: When organizations fail to adhere to established procurement standards, they threaten the trust that exists between them and the private sector. This lack of trust leads to fewer bids and a noticeable decline in the quality of bids, especially as experienced firms who no longer see value in participating or providing quality proposals in what they view as a “flawed process.”
- Decreased Competition: A reduction in the number of quality bids directly impacts competition and, ultimately, project outcomes. Lesser-qualified companies are more likely to win tenders, not because they offer the best solutions, but because these more-qualified competitors are driven away by inefficiencies and lack of communication in the bidding process. There must be confidence in the “belief of winning” akin to getting top marks in an exam if you do the work. This is a titanic shower stopper.in motivation building in particular for SMEs.
- Value for Money: The ultimate goal of any tender process is to ensure value for money and achieving quality deliverables in relation. This is compromised when tenders are awarded to companies that may not be the best fit or qualified in terms of price, experience and expertise. More importantly, this results in projects that don’t meet expected outcomes and meet satisfactory standards thus resulting in inefficiencies and wastage of precious public funds.
Core Principles & Practices for Restoring Trust, Fairness and Effectiveness
Restoring trust and improving the quality of bids requires international organizations to adopt and rigorously apply specific core principles:
- Detailed and Neutral Specifications: Ensure that project specifications are comprehensive and neutral, free from personal or political biases towards any particular bidding entity. This allows all potential participants to compete fairly on a level playing field.
- Adequate Bidding Time: Provide sufficient time for companies to prepare and submit their bids, excluding holiday periods. This ensures that companies can put forward well-considered proposals and meet specified deadlines.
- Reliable Bidding Timelines: Avoid reducing the bidding periods following release of the Request for Proposals (RFP). Sudden changes in timelines appear suspicious and can deter and discourage serious, qualified bidders.
- Quality Proposals: Bidders should provide comprehensive proposals and strictly adhere to the tender instructions. They should avoid bypassing these guidelines or cutting corners to save time, effort, and resources.
- Transparent EOI/Pre-qualification Processes: Avoid issuing Expressions of Interest (EOIs) or akin when only one bidder is really being considered for the Request for Proposals (RFP) defeating the object of an EOI to make a comprehensive short list of qualified bidders. Procurement Officers can be pushed to release EOIs when there is no genuine organized front end of the process. Additionally, do not proceed with EOIs if there is no budget allocated for the competition stage or if there are no clearly defined terms of reference or scope of work. Such situations can lead to significant delays between the EOI process and the actual competition, resulting in mobilization challenges and uncertainty regarding resource availability.
- Responsive Communication: Ensure that all clarifications and questions from bidders are promptly and adequately answered by responsible managers. This fosters mutual respect and genuine client engagement. The unacceptable practice of not answering emails related to procurements is a key factor in creating disengaged and dissatisfied suppliers.
- Respect for Bidders: Recognize that bidding entities are experienced professionals, not merely sources of ideas or placeholders. Responding to bidders with courtesy and respect encourages more meaningful participation.
- Accept Feedback: Bidders should play their part by graciously accepting constructive feedback from contracting authorities. It’s important for bidders to view feedback as an opportunity for growth and improvement rather than a challenge to their competence. This means not questioning or disputing the feedback in a confrontational manner or retaliating against the authority. Constructive criticism should be welcomed as a valuable insight that can enhance future proposals.
- Authentic Bids –: Bidders should honor the agreed-upon price and refrain from repeatedly requesting price increases or finding creative excuses to raise costs after the proposal is submitted and accepted. Attempting back door tactics to renegotiate prices after the contract has been awarded is unprofessional and can damage relations. Instead, bidders should ensure that their initial proposals are thorough and accurately reflect all anticipated costs.
- Adherence to Schedules: Stick to the published procurement schedules. Keeping bidders informed about timelines and decisions helps maintain confidence in the process.
- Clear Evaluation Criteria: Publish the evaluation criteria and ensure that evaluations are conducted based on these same criteria. Transparency in evaluation builds trust and confidence in the overall process.
- Go the extra mile: Contracting authorities and international organizations can sometimes be uncertain and vague about their exact needs and wants in tenders. To counter this and absorb this risk Suppliers need to be flexible, roll up their sleeves and be willing to put in extra effort to achieve high-quality outcomes, deliverables and provide clear guidance to ensure the service levels needed this can be reflected in submitted proposals.
- Timely Notification: Inform bidders promptly when decisions are made and disclose in good time the winning bidder. Transparency is crucial for maintaining credibility and confidence in the fairness of the selection process.
- Feedback to Bidders: Provide constructive feedback to bidders who submitted proposals, explaining why they were not successful. Before the bidding process begins, inform bidders about the level of detail they can expect in the feedback. This transparency should be guided by clear guidelines, ensuring that the contracting side does not fear unnecessary appeals or complaints. This helps improve future submissions and maintain positive working relationships. A 2023 report by the National Audit Office in the United Kingdom for example highlighted that lack of feedback on unsuccessful bids was one of the key factors deterring suppliers from bidding for public tenders.[3]
- Timely Decision-Making: Avoid letting deadlines slip for months and months without making decisions or informing bidders. Inappropriate zero responsivity and needless delays signal internal inefficiencies and suggest disrespect for the bidders’ time and efforts.
- Serious Intentions: Do not offer RFPs without a budget or genuine intention to implement the respective project. Employing RFPs merely to gather ideas without intention to proceed is disingenuous and discouraging for serious, capable bidders.
A Call for Awareness & Meaningful Adjustment
The current tender management practices of many public authorities, government departments, international organizations, iNGOs and NGOs urgently require significant reforms and overhauls to restore public and private trust. By adhering to best practices and ensuring transparency, responsivity and efficiencies these organizations can attain numerous laudable objectives: rebuild positive relationships with the private sector; encourage healthy, vigorous competition; and ultimately execute more effective and impactful projects. The time for change is now, and it is crucial to the ongoing successes of publicly funded initiatives. The stakes are too high to simply sustain an unsatisfactory status quo. Implementing these “core principles” will pave the way for a more efficient, fair, and trustworthy procurement process among all stakeholders.
Want to improve the tender management performance of your organization? Contact GBPG for expert training.
References
[1] World Bank (2022). The hidden $1 trillion: Halting waste in public procurement [Available] https://blogs.worldbank.org/en/voices/hidden-1-trillion-halting-waste-public-procurement#:~:text=Governments%20today%20spend%20an%20estimated,inefficient%20or%20shortsighted%20procurement%20practices.
[2] United Nations (2023). 2022 Statistical Report on Public Procurement [Available] https://unsceb.org/sites/default/files/2023-07/2022-ASR.pdf
[3] National Audit Office (2023). Lessons learned – competition in public procurement. [Available] https://www.nao.org.uk/wp-content/uploads/2023/07/lessons-learned-competition-in-public-procurement.pdf
