Tender evaluation – do your procurement processes have unintended consequences?

We’re getting close to our next Real World Sourcing series briefing, next week in fact on April 2nd, and I’m going to be talking about Evaluating Bids and Tenders.

I firmly believe this is one of the most neglected topics in procurement. I’ve looked at textbooks and training courses and even when they are strong on general sourcing process, they often tend to say “and then you evaluate the bids and choose the winners.”

But choosing the right suppliers, and understanding the inevitable trade-offs that we make between different aspects of each bidders’ offering, and between cost and non cost factors, is something that should be seen as vital and central for procurement. So in this session we’re going to highlight that this is a complex and fascinating area.

Here’s an example. I was talking to Peter Marshall of Qinetiq Commerce Decisions recently (another evaluation geek, and I hope he is going to be at our session too), and he told me this story. Working with one of their clients, he was asked to look at a tender evaluation methodology that was about to be communicated to the bidders.  After a quick bit of analysis he asked them a question.

‘Are you happy to pay something like 20 percent more for a very good bid rather than a good bid”?  (Note that this 20 percent would have equated to a substantial number of additional millions of pounds on the cost line).

‘Errr... probably not’, was the answer.

Well, said Peter, that’s what your evaluation methodology implies. Your weighting and scoring mechanisms and the relationship between price and non-price factors could generate that result – you are implicitly agreeing to pay x million pounds more for that very good bid. Now that’s fine if you understand that and are really prepared to do so, but it should not happen accidentally.

On another occasion, I warned a consulting client of mine that their chosen cost evaluation methodology could lead to one ‘low ball’ bid horribly distorting the whole process. That’s OK, they said. We don’t think that’s likely to happen. Well, guess what – it did. A low bid of very poor quality didn’t win, but made comparing the decent bids that much harder because of the way cost was being evaluated. And by the way, that is the method that most public sector bodies in the UK seem to use these days.  We think it is also arguably illegal, but that’s another issue...

But do note, the session on April 2nd is aimed at private and public sector practitioners. These issues apply to anyone who wants to evaluate properly.  At my last check, there were three places left, so if you are interested, do book now. We guarantee thought-provoking material, good networking opportunities, a very decent lunch, all for a pretty nominal fee... what more could you want?

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