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Bob Moodie NJM European, Economic & Management Consultants Limited
Selling to the Public Sector – helping Leicestershire SMEs unlock their potential
What we will look at:
1. The Context & Opportunities
2. Understanding Procurement Processes
3. Finding tender opportunities
4. Developing a strategic approach
5. Becoming ‘Bid Ready’
Context: Policies Coalition Government’s aspiration to award 25% of central
contracts to SMEs Leicestershire County Council’s Sustainable Commissioning
& Procurement Strategy (2009-13)- % expenditure with SMEs- No. of local SMEs submitting Pre-Qualification
Questionnaires to ESPO when expressing an interest in Council requirements
The Comprehensive Spending Review (2010) SME Concordat Equality of Access (SME & Third Sector) EU Procurement Directives (OJEU) UK Government strategy and statutory requirements Local authority procedures, statutory requirements
Context: Economics
Extensive public sector budget cuts and spending pressures Price & Value for Money (VfM)Most Economically Advantageous Tender (MEAT) rather than Lowest PriceCollaborative buying by authorities – purchasing consortiaRationalisation & Framework Agreements, Contract Bundling; Reduction of public sector in house management overhead and increase in outsourcing
NB Suppliers’ ability to deliver efficiency savings and effectiveness
Context: Economics
VfM is the optimum combination of cost, quality and fitness for purpose to meet the buyer’s requirements (it is not about the lowest price)
Local authorities are subject to the Best Value guidelines
Embraces the concept of the ‘price-quality’ relationship
Selection usually will be made on the most economically advantageous tender (MEAT)
Context: Society & Environment Corporate Social Responsibility Sustainability & Equality Innovation & non contractual outcomes (Added
Value) Local Government Act 2000 – Wellbeing Powers- Leicestershire County Council’s Sustainable
Commissioning & Procurement Strategy (2009-13) performance measures:- No. of contracts with a Total Value exceeding £1m that include a Social
Clause- No. of high risk contracts where environmental considerations are
included in the contract award (weighting 15% or more)
Context: Technology
E-Procurement: Transition from paper based to electronic based systems and processes:
E-Portals E-tendering E-auctions Iprocurement Purchasing Cards (pCards) Real time reporting Payment and Servicing
Opportunities: Public Sector 9 Local Authorities:
Leicestershire County Council Leicester City Council North West Leicestershire District Council Charnwood Borough Council Melton Borough Council Blaby District Council Harborough District Council Oadby & Wigston Borough Council Hinckley & Bosworth District Council
3 Universities: Leicester, Loughborough, De Montfort 7 FE colleges: Stephenson, Loughborough, Brooksby Melton, North
Warwickshire & Hinckley, South Leicestershire, Leicester, Loughborough University School of Art & Design
SchoolsOther: NHS (subject to major review Housing Associations / RSLs The Emergency Services
Opportunities UK Public procurement is estimated at over £175 billion per annum
(13% of UK GDP).
Leicestershire County Council spends over £300 million each year on goods, works and services. Over the next three to four years, to 2012-13, the Council will need to make savings of around £70m - that’s 25% of its budget.
Leicester City Council estimated procurement budget for the Authority is £260 million p.a. (2007-2008).
NHS Leicestershire & Rutland Procurement Partnership influences spend of approximately £250 million on goods and services each year.
Leicestershire County Council Procurement Expenditure (2008-09)
Opportunities Policies to encourage SME involvement and a more level
playing field Better transparency and simplified procurement
processes Equal treatment and fair competition Open markets & better access to information
NB: Procedures can be complex, time consuming and open
access creates more competition Adopt a strategic approach Willingness to be involve
Opportunities: SMEs
Brings greater competition Lower cost base Innovation Responsiveness Flexibility Quality of service Specialists Customer focus Local Knowledge
Bear this in mind when you are developing your USP for a particular contract!
Public Procurement:Demystifying the Process
Procurement Procedures: The formality of the procedures and process increases in line with the contract value and risk.
Lower value contracts
Advertising not essentialOfficer discretion Approved supplier listsVerbal and Written Quotes common or tender processEasiest to compete and win – harder to find
Higher value contracts
AdvertisedFormal Tender process onlyEssential above EU ThresholdsFramework agreementsEasiest to find – harder to win
Procedures – Example
Contract Type Contract Value Procedure
Very low quote Under £5,000 No formal procedure ‘shop around’
Lower value quotes / small lots
£ 5,000 - £20,000 Two written quotes
Low - Medium £21,000 - £49,000 Three written quotes / formal tender process
Sub EC Threshold £50k - EC threshold Formal tender process
EC Threshold £156,442 (Supplies)£156,442 (Services Part ‘A’)£3,927,260 (works)
OJEU publishedFull EU procedure
Each organisation has its own published procurement policy, procedures, processes and contract value thresholds in place. For example.........
Public Sector Organisation
Threshold (goods & supplies)
Procurement Process & Source
Leicestershire County Council
<£1k£1k – £20k>£20k - £100k
>£100k - EU threshold (£156,442)
1 Verbal / Written Quote3 Written Quotes or www.sourceleicestershire.co.ukRequest for Quotation www.sourceleicestershire.co.uk
Formal Tender Process www.sourceleicestershire.co.ukOr www.espo.org
Leicester City Council < £10k£10k - £49k
£50K - EU threshold (£156,442)
Up to £250k (works only)
Verbal / Written Quotes (officer discretion)3 Written Quotes or Formal Tender Process (officer discretion)
www.sourceleicestershire.co.uk or www.espo.org
www.exorgroup.co.uk/supplier
North West Leicestershire District Council
<£10k£10k – £50k£50 - EU threshold(£156,442)
Construction works only
3 Verbal Quotes3 Written Quotes Formal Tender www.sourceleicestershire.co.uk
Invite tenders from pre qualified suppliers registered with www.constructiononline.co.uk
Local Procedures
ProceduresCommon Procurement Procedures:
OPEN - One Stage Process Each applicant submits a full priced tender
RESTRICTED – Two Stage Process i) Pre Qualification Questionnaire (PQQ) to select
shortlist of potential suppliers ii) Invitation to Tender (ITT) to shortlisted
potential suppliers –full priced tender required
Procedures FRAMEWORK – Two Stages or More
Suppliers selected through an open / restricted procedure to a ‘panel’ of suppliers for given period
Call offs or mini competitions may be held when services / goods required
Less common: NEGOTIATED - Two Stages
Very complex, high value Tender specification not clear – supplier input required
COMPETITIVE – Two Stages Tender specification requires development – dialogue with
supplier
ProceduresPre Qualification Questionnaire (PQQ): Evaluation of organisation Are you safe and appropriate choice? Compliance Past performance / track record Selection criteria
Invitation to Tender Stage (ITT): Evaluation of bids Your service / product / works offer Future performance Award criteria
Procurement Process Overview
ProcureContract Notice
EOI
Tender
EvaluateManageReview
Commission
PQQ
Award
PQQ InformationGeneral Business Information Business Details Status (Sole contractor / consortium) Ownership Business Probity Professional Conduct
Documentation required may include: Company History HR Information Administrative Information (Company Registration/VAT Number) Quality Standards Accreditation / Certificates
PQQ InformationFinancial & Insurance Information: Turnover
Accounts
Insurance
Documentation Required may include: Audited accounts, Management accounts, Parent company accounts Bankers statements & references Financial projections, including cashflow forecasts Details of previous contracts and values Capital availability Certification of Incorporation, Certificate of Name Change Insurance Certificates
PQQ InformationBusiness Activities, Track Record, References Business Activities HR Information (FTEs / Training Records / CVs) Referee Contact Details for recent contracts Relevant Contract Performance Subcontractors Capability Statements Case Studies References (norm = 3 recent referees)
PQQ InformationEssential Policies: Quality ManagementEquality & DiversityHealth & SafetyEnvironment Management & Sustainability
Others Policies:Business EthicsCorporate Social ResponsibilityBusiness Continuity Sub Contracting
PQQ may require you to supply : specific responses, outline of strategy, copy of statements, copy of certifications etc
PQQ EvaluationPQQ will be evaluated to select potential suppliers to invite to tender. Based on:
Business Probity Technical Capability and Capacity Financial Information Contract Compliance Policy Conformity
NB: Evaluation includes: Pass / Fail criteria Financial risk based assessment Criteria have different scores with weightings
Example Scoring FrameworkSection Score Weighting
1 Organisation Details N/A
2 Financial Information N/A or Risk Based Assessment Pass/Fail
3 Insurance Pass/Fail
4 Business Activities 15%
5 Business Practices 30% (Total)
Health & Safety 5-10%
Quality Assurance 5-10%
Environmental Management 5-10%
Equality 5-10%
6 Requirement - specific 40%
7 Experience & References 15%
8 Professional & Business Standing Pass/Fail
ITT Information If you are shortlisted from the PQQ or for the Open Tender
procedure Invitation to Tender documents will normally identify the
information required and how to structure your response. The areas covered are usually as follows:
What are you going to do How are you going to do it How much will it cost Who is going to do it What is your track record / prior experience Compliance References
ITT Information
Invitation to Tender (ITT) pack will include:
Instructions to Tenderers The Specification Form of Tender Draft Contract Terms and Conditions Declarations / Bona Fide Pricing Schedule
Costing the Proposal
Personnel & Tasks Charging Rate(s) (Daily/Hourly) & Time Fixed Cost / Variable Cost Expenses & Disbursements Contingency VAT Innovative Cost Proposals
Discounted Cost e.g. 5% early payment, economies of scale and efficiency savings linked to contract term and/or number of contracts (Lots) awarded
Buyer comfort: Offer 10% Contract Price Withheld until completion
Adopt a Strategic Approach: Tactics Before you start: is the tender opportunity right for your
organisation? (To Bid or Not To Bid?) Download / print off ALL PQQ / tender documents and read
them carefully: Is the specification relevant to your business activities? Do you have a track record in the area? What % of turnover does the contract represent – 20% rule? What are the risks, who are your competitors and what is the % chance of
success? Is there an incumbent? Can you answer each question with the information required? Do you have the supporting documentation in place for compliance? Can you make commercial sense of the contract price? Do you have the in-house resources to deliver – do you need partners /
subcontractors? Do you have the time / resources to prepare the bid by the deadline?
Adopt a Strategic Approach: Key Points Address each element of the tender specification and structure your
response accordingly
Do not cut and paste from previous bids
Be specific in your response – do not provide generic information
Understand what the buyer requires – show how your solution goes the ‘extra mile’
Respond to the questions with relevant evidence and / or provide appropriate examples e.g. Case studies
Use diagrams, illustrations, graphics
Realistically price your offer and use any financial model provided
Review the drafts against the criteria, scores , weightings and revise
Proof read and check any figures / costings
Aim for clarity, brevity, readability and persuasion
Adopt a Strategic Approach: Key Points Review the evaluation criteria, scores and
weighting (this should influence time / effort spent on each criterion response)
Beware of yes / no, pass / fail criteria References – recent and relevant Use tender envelope / label if provided Ensure the submission is complete AND signed Include copies of requested documentation e.g.
Insurance certificates, accounts, policies etc Respond by the correct format, date + time
(electronic, electronic + post, post?)
Tender Preparation: Key Steps Appoint a bid manager / individual and team of key people
Meeting(s) with tender team for detailed review and interpretation of tender requirements & criteria (including scores & weightings).
Prepare work plan & allocation of roles/tasks/milestones with reference to tender & submission deadline. o NB: Build in time to review, refine and style bid
Determine whether you require clarification of any aspect of the tender and ask the question(s) allowing enough time for a response. Check regularly to see if any questions/answers have been submitted by competitors.
Conduct regular reviews of the draft tender
Conduct a mock assessment against the scoring matrix
Ensure you have enough time for signing and submission
Post submission ask for feedback
Finding Opportunities Where should you look / who should you know?
PUBLISHED UNPUBLISHED SOURCES
Tender websites & Supplier portals
Networking / relationship building
Organisational / Sector websites Procurement Teams / Category Managers
Tenders Electronic Daily (TED) Operational departments and units
Local / National press / Press releases
Market analysis / competitor intelligence
Trade Press Partners / sub contractors
Meet the buyer events / briefings
Second / Third Tier Contractors / Supply chains
Contract NoticesKEY TENDER WEBSITES
Name: Source: Used by:
Eastern Shires Purchasing Organisation
www.espo.org LAs, NHS in Leicestershire, OJEU tenders
Source Leicestershire www.sourceleicestershire.co.uk LAs, NHS in Leicestershire
Leicestershire County & Rutland NHS
http://www.lcr.nhs.uk NHS
In-Tend www.in-tend.co.uk Universities, Colleges, Schools, LAs (some in Leicestershire and nationally)
Blue Light www.blpd.gov.uk Police, Fire & Rescue Services (including Leicestershire Constabulary & across UK)
Supply to Government www.supply2.gov.ukwww.supply2health.nhs.uk
Lower value government tenders (*website will be replaced by ‘Contracts Finder’ March 2011)
OJEU www.ted.europa.eu Any public sector contract above EU Threshold
Finding Opportunities: e-portals Identify a number of key tender websites Familiarise yourself with the website format and
content Register and or publish company details Set up for Alerts service, newsletters etc Appoint key individual(s) to monitor regularly for
new contract opportunities Apply filters to your search words (decide which
opportunities to focus on)
Buyer Requirements
Main evaluation criterion: ‘Most Economically Advantageous Tender
Understanding buyer’s needs Combining price with quality and other relevant factors Value for money Acceptable level of risk Efficiency Improvement in performance or cost savings Meeting department and organisation’s objectives Reliability, consistency Contract management Inspection and audit
Buyer Preferences
LIKE Don’t like
Concise and precise language Wordy tenders, Inconsistencies and errors, poor use of grammar
Clear structure (esp. Methodology) Poor methodology (failure to define who does what, where, when, why and how)
Challenges have been understood and properly addressed
Deviation from defined requirements, lack of understanding of client requirements and failure to answer questions
Relevant background information Lack of detail/explanation or ‘data dump’
Properly defined & appropriate resources Unclear who will be involved in delivery
Systems & procedures Exaggerated and unsubstantiated claims
Innovation – or the opposite (tradition) Poor evidence of reliability
Risk assessment (mitigations) No risk assessment
Case studies & references Irrelevant case studies
Buyer Preferences
LIKE Don’t like
Concise and precise language Wordy tenders, Inconsistencies and errors, poor use of grammar
Clear structure (esp. Methodology) Poor methodology (failure to define who does what, where, when, why and how)
Challenges have been understood and properly addressed
Deviation from defined requirements, lack of understanding of client requirements and failure to answer questions
Relevant background information Lack of detail/explanation or ‘data dump’
Properly defined & appropriate resources Unclear who will be involved in delivery
Systems & procedures Exaggerated and unsubstantiated claims
Innovation – or the opposite (tradition) Poor evidence of reliability
Risk assessment (mitigations) No risk assessment
Case studies & references Irrelevant case studies
Get Bid Ready: Preparing the Documents Make note of instructions, word limits and submission format Try to understand what each question is asking and why they
are being asked. Be compliant! Note the scoring / weighting of criteria and spend time / effort on
your response accordingly Make careful note of the deadline and make sure you submit
well in advance of the deadline (avoid last minute submissions) Anything you are not sure of, contact the buyer (but be aware
that any question you ask will be notified to other suppliers) Answer all questions honestly and be keen and positive in your
responses (emphasise your USP). Double check your response / second pair of eyes Ensure you complete and submit all the documents required If unsuccessful (or successful) ask for a debrief
Get Bid Ready: Action Plan Register AND publish on e-portals
Set up internal processes and identify individual(s) to monitor tender portals, sources, alerts
Identify and network with your local public sector buyer targets (at departmental / procurement level)
Attend meet the buyer events / tender briefings
Develop a Tender Resource Pack (e.g. Company & financial information, case studies, references etc)
Establish a working group for tender preparation
Search for potential partners / subcontractors
Strengthen your technical capacity, infrastructure, bid skills
Develop, improve your policies
Consider accreditation (e.g. CHAS, ISO, IiP etc)
Review unsuccessful bids
Act strategically – know when to bid and when not to bid!
Be...