Public Sector Procurement Process

Firms often tell me that they dread public sector procurement bids. When asked why, it is the difficulty in understanding the multi-page bids, the rigidity and the detail that is required to respond. They prefer ‘easier’ situations that require less paperwork. What is often overlooked is that private industry, while requiring less paperwork, requires a greater effort to penetrate for new business.

While I have seen deliberate bias, public sector formal procedures are based on the concept of fairness. All firms should have the opportunity to bid (and win), not just the chosen few or the chosen one. To summarize using a Star Trek quote “The needs of the many outweigh the needs of the few or the one.”

The rigid and formal procedures are the same whether for goods or services. It starts with the development of the ‘Statement of Work’ or ‘Requirements Definition’. This document forms the starting point for the public process. Goods are relatively straightforward and it is easier to provide a generic definition. Services are a problem. More often than not, rather that state what is wanted, the writers also state how the service is to be provided. I remember one long discussion I had with a developer of a specification. He kept insisting that the service required computer technology of a particular make. While I agreed with him that this may be the only cost effective way, I asked, “Do you really care if they hire 50 people to do all the processing by hand as long as the end product is met?” The point I was trying to make is that the result is what counts, generally not how it is achieved. His answer was a severe case of tunnel vision and not the norm in the public sector. It had to be done his way or not at all. Achieving the result was less important than the method. 

When issuing a bid document, whether goods or services, public sector bids have many clauses, terms and conditions that form part of every bid. Included with this are instructions on how to format and submit your proposal. The evaluation criteria are defined. For goods, this is generally price. For services, it can be many different evaluation criteria customized to the need of the bid. Often, with these evaluation criteria, the relative importance of each one may be identified and the scoring provided. To a newbie, this can appear confusing.

The bids, once published, have a closing date and time. Unlike private industry which may be flexible, public sector due dates are rigid. One second late and you are too late. In other words, your bid will not be considered. This sounds harsh but it is necessary to ensure fairness. How can you allow one firm to be late and not allow another? They all need to be treated equally. 

A problem many firms have is comprehending, dealing with and writing the subsequent proposals. Unlike private industry, proposals are usually long, multipage and lengthy. They are detailed documents. While every bid is recognized as ‘unique’, much of the information that needs to be provided are similar regardless whether the procurement office is the same or different each time. These include information such as management methodology, CVs and previous projects to validate capabilities. Firms experienced with the process create and use ‘boilerplates’ with details that are valid from bid to bid.

New firms in the market are at a disadvantage. They have to ‘learn’ how to respond and create this type of information from scratch. The level of detail may appear overwhelming and, bidders are aware that whatever they provide is subject to a formal evaluation process. This discouragement of new bidders is not the aim of the public sector. Firms willing to spend the time and effort, and devote sufficient resources can ‘break into the market’ and find a niche.

I will discuss the evaluation in more detail in a later blog but, suffice it to say, that evaluation can be intimidating if you do not know the process. Evaluators look for ‘best value’ but what does that mean? Reading the RFP may be confusing at first. Statements in the bid documents such as ‘reserving the right to award to other than lowest price if a better value is received’ or ‘clarifying information in a proposal at the discretion of the procurement authority’ appears threatening. The purpose of these types of statements is not understood.

Finally, it may be intimidating to realize that a good relationship with the customer does not score points in the evaluation. This is contrary to the private industry mentality. Firms need to realize that when bidding, they need to remove their private industry hats and put on their public sector hats (or vice versa). If you can adjust your mental process, then you can have success in either venue.