Tendering trends

A review of the key influences on tendering in 2017, and a look ahead to what the bidding landscape might look like in 2018. Caroline Boot of Clever Buying and Kerrie McEwen of Plan A Tender Specialists.

WHAT A YEAR! A change in government; over 1000 opportunities released on GETS across all sectors; the rise of prequalification; and a move away from the traditional physical ‘tender box’.

2017 in review

Increasing call for government procurement practitioners to be trained and qualified

The launch in 2016 of a revitalised and broadened NZQA Procurement Qualification has been welcomed by both suppliers and clients.

The combination of best practices from NZTA and NZ Government Procurement within that qualification, together with its accessibility for full-time procurement staff, means there is now a practical solution to address the skills gap across all government procurement agencies.

Traditionally, this NZQA Level 6 qualification has applied only to transport projects – but its extension into other contexts is welcomed by suppliers who have been frustrated by poor procurement practices in other sectors.

As awareness of the usefulness of this qualification to ministries, departments, DHBs and other organisations grows, suppliers will be heartened to see practical improvements to tendering practices that will drive better value for money.

The continued rise of (multiple) H&S prequalification systems

A major impact on many contractors over the past year is that an increasing number of clients now require suppliers’ health & safety systems and practices to be assessed by external parties.

There’s no denying the importance of robust H&S practice to keep everyone safe, but with a number of different prequalification providers available – domestic and international – this can mean extra costs for suppliers to keep up with multiple assessment requirements.

For example, Auckland Transport uses ISNetworld (ISN) as the provider of its Health and Safety Prequalification system. On the other hand, all Housing NZ tenders now listed on GETS include a pre-condition which requires respondents to have registered and completed an Impac PREQUAL health and safety assessment.

Contractors may do well to factor in budget/resource to account for these increased requirements.

Prequalification and Supplier Panels

The release of prequalification panel RFPs has been a definite trend which has continued into this year. Auckland Transport, the Ministry of Education, Housing NZ, and Wellington City Council amongst others have been active in this space. Some panels remain ‘open’ for evaluation over the course of the coming year or longer, but others had strict submission deadlines.

Suppliers need to be nimble and quickly understand submission requirements and respond accordingly, or face missing out on future opportunities.

Increasing focus on social outcomes and sustainability

Thankfully, price is becoming less and less important as the key factor in winning a tender. There’s a sensible shift towards quality-based attributes and balancing risk and opportunity to deliver true value for money.

While some suppliers have been unprepared and inadequately resourced for the tasks involved in researching and preparing high-quality attributes, others are relishing the greater opportunities they have to win contracts based on clever, well-planned responses. Cutting prices to unsustainable levels is no longer the only way to win work. That’s cause for smart companies to celebrate.

Local and central government clients are also increasingly aware of the need to meet their social obligations. The recent Auckland Transport Physical Works Supplier Panel ROI is a case in point: respondents were asked how they would support AT’s sustainability objectives in future physical works projects.

Areas for respondents to address included reducing greenhouse gas emissions, improving water quality outcomes during construction, valuing Maori, supporting Pasifika development, and supporting local business.

With social outcomes likely to remain important in the future, contractors might be well-advised to seriously consider their policy in these areas and capture relevant case studies as part of their attributes library.

Sharper procurement and increasing use of GM–RFx templates

RFT documents continue to improve – the era of recycled RFT documents with generic questions is definitely on the wane. But, unfortunately, many RFTs still ask irrelevant questions, allocate weightings and risk without proper planning, and bear little or no regard for value for money or sustainability. So there’s a continued need for a tighter focus by buyers on questions that reflect the differentiators for suppliers, based on the risks and opportunities of each specific project.

That said, MBIE’s suite of Government Model RFx Templates has seen plenty of use during 2017 by government agencies since their introduction in 2016 (and even some local councils have adopted them). They’re identified easily enough by the heading ‘This opportunity in a nutshell’ near the start, and the templates aim to provide practical, easy-to-navigate, plain English templates for routine types of procurement.

The best examples focus on questions which are targeted and specific, so suppliers can be evaluated and differentiated according to quality, risk and value-for-money. Even better, some RFTs are providing clear information for respondents on the specific elements of each attribute that will be scored highly, as well as the minimum conformance standard.

These innovations have been introduced by Plan A’s sister company Clever Buying, and they are rapidly being adopted by many local authorities around New Zealand. The pleasing effect is that unsuitable suppliers are unlikely to bid; and those suppliers that are well suited have the transparency and understanding they need to put forward as compelling a case as they can, to win the contract.

On the flipside, we’ve seen some organisations releasing RFx documents to market using these templates with almost no customisation. The worst offenders have released a mish-mash of confused instructions and irrelevant questions – needing effort on both sides of the procurement table to deal with extra Notices to Tenderers and Clarifications, which adds unnecessary time and cost to bidding.

Litigation and court cases

In February 2017 we saw the country’s largest bribery case conclude and two prison terms handed down; and several months later a supplier won a legal challenge to a council’s tendering processes. Both are sobering lessons for local authorities to get their processes and their paperwork right – and for tenderers to make sure they’re also playing by the rules.

Continued use of online response platforms

More and more government agencies are now using online ‘portals’ to manage their tenders. Their advantages include that they provide a convenient audit trail for recording the submissions received; reduce the chances of a tender getting ‘lost’; eliminate geographic barriers that impact on tender delivery timeframes and costs; and enable streamlined communications with suppliers.

While online submissions reduce costs associated with graphic design and printing of bids, there’s a catch for tenderers if they haven’t taken the time to prepare properly and understand what’s required before uploading their response.

Many tenderers will be familiar with RFTs which limit the number of pages in the Non-Price Attributes section of a bid. In some online portals this goes a step further with very tight restrictions on character count. At its strictest, we’ve seen a 2000-character limit per question. In this situation, every word counts.

For bid managers, the time required to distill responses down to essential but compelling content can often be underestimated. It’s no easy task, and for those that are facing a tight deadline and trying to get on with their day jobs, it’s another hurdle to overcome.

A look ahead to 2018: in a word, politics

The key question on everyone’s lips is what will the new Labour government mean for tendering in infrastructure (and other sectors)? A shift away from Roads of National Significance projects in favour of public transport links and housing, via KiwiBuild for example?

At the time of writing, there is still much discussion about various infrastructure projects – but the new government has indicated a preference for diverting funds into light rail (with the $1.85 billion East-West Link being a casualty of that decision). Rail to Auckland airport appears to be a priority; and rail to Northland and/or moving Auckland’s port are also currently being debated.

Although those all may well be worthy projects, a re-prioritisation on infrastructure projects would be a case of ‘back to the drawing board’. There is likely to be a hiatus in infrastructure construction while the new government assesses priorities and goes through the extensive detailed feasibility and planning processes that are needed in the lead-up to breaking ground.

In the interim, the announcement of increased investment in our regions will be welcomed by many. This brings consideration, though, of how the substantial funds to be invested regionally will be prioritised; and what will be done to ensure those funds are spent wisely.

Many smaller provincial towns and regions struggle to attract and retain procurement professionals; so we hope our new government will underpin their regional investment initiative by supporting development of procurement skills in those areas.