Tendering For The Private Sector
8 May 2009 Harold Lewis
In an exclusive extract from his new book, Bids, Tenders & Proposals, author Harold Lewis addresses how to win contracts, research awards and government funding through competitive tenders in the private sector. He explains how to create bids that are outstanding in both technical quality and value for money.
In the awarding of public contracts, the procedures reflect the need to demonstrate even-handedness and transparency. Because contracting in the private sector is normally free from these considerations, clients have more flexibility about the way they manage procurement and let contracts.
Though only large corporate clients may choose to emulate the formalities of public sector procurement, most businesses recognise the merits of competitive bidding as a means of identifying not just the contractors with the lowest price but those who can provide the best all-round response to their needs.
Competitive bidding offers several benefits: a consistent and methodical basis for selecting contractors; access to different ideas, approaches and solutions; an opportunity to learn how well contractors understand the client’s requirements; and the chance to assess the quality of the working relationship likely to develop once the contract is awarded.
Most important of all, there is probably no more direct or reliable way to learn who represents the best value for money; in this respect the private sector’s priorities are not so far removed from the public sector concept of the most economically advantageous tender.
Private sector clients are generally less prescriptive about the format and structure of bids, giving contractors more scope to devise an individual approach tailored to the requirements of the contract. They are also more forthcoming about meeting contractors and talking to them about the context of the work.
When evaluating bids, business clients ask much the same questions as clients in the public sector. The messages that go out to public sector authorities from the Office of Government Commerce are derived essentially from best practice in the private sector. Just as public sector authorities are advised not to think in terms of lowest cost, business clients appreciate that in working with contractors they get what they pay for, and that contractors who offer services at rates cut to the bone may be offering also low quality, poor performance and minimal standards of professionalism.
Their first concern will be to identify the bid that offers the best overall value for money, displays the most businesslike approach to meeting their objectives and responds best to the bid specification. Like their counterparts in the public sector, business clients will want to see prices that are realistic in relation to the scale of the contract; they will look for quality in the inputs and resources proposed for the work; they will need to have outcomes and deliverables clearly defined; and they will seek evidence of distinctive added value and reliable performance. But there are other factors that come into play particularly in a business context, and these can influence decisively their views about the bid that is right for them:
- Authenticity and insight. Does the bidder have genuine, substantiated knowledge and experience of the sectors of activity in which the business is engaged and the factors that influence its market environment and profitability?
- Partnering and synergy. Are the corporate values and policies of the business understood and supported? Is there a sense that this bidder is the one best placed to work with the client in a productive team effort?
- Risk and professional accountability. Has the bid addressed these concepts? Does it indicate an understanding of their significance for successful contract performance?
- Innovation. New ideas, fresh thinking and solutions that competitors will find it hard to match are ingredients that can win the day, but innovation needs to be both deliverable and dependable. Has the bidder taken account of the risks associated with innovation?
- Flexibility and responsiveness. Does the bid communicate a readiness to ‘go the extra mile’ to provide maximum value in meeting the client’s requirements, and a willingness to adapt methods and procedures in response to unforeseen changes in the requirements of the contract?
- Pace and agility. Does the approach set out in the bid convey drive, energy and the ingenuity to develop purposeful solutions?
- Confidence and self-belief. Do these qualities come through in the way the bid is written?
Business clients will expect their existing contractors to be able to offer cost and efficiency savings as well as continuity of personnel, and to have the capacity to get up to speed rapidly on a new contract so as to start producing useful output without mobilization delays or steep learning curves.
To this extent clients may find that there is a comfort factor in giving work to people with whom they have reliable working relationships, provided they still offer good value for money. But existing contractors must not imagine they have security of tenure.
Clients may also want contractors to declare whether they have existing clients who are business competitors, and if so to explain how conflicts of interest would be overcome. If you have managed to develop a good professional relationship with the client – for example, as a result of your marketing efforts and previous contracts – you may be able to gain an indication of how the evaluation team will be structured.
There are three main participants:
- The manager responsible for the bidding process, for commissioning the work, running the client’s side of the contract and maintaining the day-to-day relationship with the contractor.
- A procurement manager who assists the business unit manager in dealing with contractual and commercial issues.
- A technical specialists who can advise on detailed aspects of the work such as health and safety or quality assurance.
Some business clients adopt a practice of skimming through bids quickly to gain an overall idea of their quality before subjecting them to a more thorough analysis. First impressions can be decisive – which is a further reason why contractors need to make sure that bids are seen immediately to be organised efficiently, structured logically and presented in a competent professional manner.
The length of time that a client can devote to the task of evaluation will be governed, as one would expect, by pressures of work and the specific circumstances of the contract. The process is often more intensive and concentrated than bidders may imagine: you may have taken a month to write a bid but the client may be able to spend only an hour or so evaluating it.