Features: October 4th, 2013

Stuart Derbyshire, head of public sector at Office Depot, looks at the increasing popularity of e-tendering among public organisations, and how to get the most out of the process to ensure that tender bids not only respond to specific procurement needs that have been set out, but are also based purely on realistic, deliverable promises.

With financial pressures continuing to impact upon the public sector, there is a keener awareness than ever among public organisations and their leaders of the need to balance operational needs with cost-effective strategies that are sustainable with smaller budgets. As a result, cost-saving in procurement continues to be a great influencer in tendering and purchasing decisions.

Consequently, e-tendering has become an increasingly popular alternative to traditional tendering processes, due in part to the fact that it can encourage bidders to drive their costs down. Yet, while it has certainly increased competitive pricing in the tendering process, viewing e-tendering as a purely cost-based decision process can lead to seemingly attractive tenders being put forward, but which prove to be undeliverable in practice. By making the e-tendering process more flexible, and taking inspiration from some of the practices more common in traditional tendering, such as the use of face-to-face meetings, the public sector can ensure that e-tendering produces competitively-priced contracts that deliver exactly what they promise.

In general, e-tendering tools do recognise that cost is not the only way of differentiating and choosing between suppliers, as well as other distinct advantages. From a purchasing point of view, the e-tendering model provides a set of common responses from all bidders, making it simple to measure all suppliers against the same procurement priorities; if two or more suppliers are offering similarly priced contracts, but with notably different responses on product quality or sustainability, for example, these factors may in fact become crucial in decision-making.

A dynamic approach

However, although e-tendering does encourage consideration of other priorities aside from just cost, the general model often used can pose certain restrictions on the public sector, and open organisations up to the risk of unwittingly encouraging undeliverable contracts. These restrictions can all be mitigated by taking a more dynamic approach to e-tendering, and tweaking how it is utilised in order to make contract bids work for the organisations putting them out.

Often the most effective way of compiling an e-tender is to allow for transparency in how the tender is weighted. Sharing this information means that suppliers have a clear idea of where procurement priorities lie, allowing them to respond accordingly in the bid they put forward. This can be fundamental to receiving deliverable bids that don’t promise unrealistic prices – the weighting system means there is no single driver in decision-making, reducing the chance of a supplier cost-cutting competitors in order to gain a contract, while being at the detriment of service viability for the end user.

An often under-utilised aspect of e-tendering is the potential it offers for supplier initiative. While bids spell out what organisations are looking to achieve going forward, they may neglect to offer a platform for bidders to include their own thoughts on potential alternatives that could lead to lower costs and better product quality over time. Contracts drawing to a close are the perfect time to reassess procurement systems and consider whether there may be value in evolving them. In this spirit, the public sector should look for potential consolidation or innovation, and suppliers at the forefront of identifying market trends and developments are often best placed to make such recommendations. Giving suppliers an outlet to talk about added value they can offer in addition to the tender brief brings these developments and industry expertise straight to organisations. Without such a platform for extending solutions, all bids will invariably spell out a list of what has been asked for, meaning organisations may simply repeat past practices at the expense of valuable change.

Bui8lding relationships

Today, most tenders have an electronic aspect to them, be it due to initial bids being submitted online, or via the use of dedicated e-tendering tools. Yet, public sector e-tendering distinguishes itself from traditional tendering due to the fact that it often precludes any face-to-face meetings. Of course, one of e-tendering’s strengths is its ability to reduce the time investment involved in tenders, which can become a drain on resources. On the other hand, this overlooks a hugely valuable part of the tendering process: that of relationship-building and trouble-shooting. The chance for such conversations can help guide recommended solutions, as well as inform the opportunities for initiative and better quality that a supplier can end up submitting, as discussed earlier.

The key benefit for organisations is that a meeting will reduce as acutely as possible the potential for misinformed or untenable tenders. In turn, this effectively rules out the risk of a contract requiring significant revisions after pen has been put to paper when the decision can’t be changed. Especially with current public sector cutbacks, there is simply no contingency to rethink procurement should such occurrences happen. Protecting from this in the first place makes deliverable contracts more attainable, and meetings can play a crucial role in this respect.

Facilitating such meetings gives them the chance to quality check a bid, and address any questions raised in the data being submitted by a supplier. E-tendering can foster the potential for tenders to simply be taken at their word, and meeting with bidding suppliers can identify potentially undeliverable tenders driven by unrealistic price commitments. Of course, figures in a tender may simply not add up due to misinterpretation of information, and a meeting can assuage the potential for such mistakes. In addition, meeting on-site will help ascertain whether suppliers have the facilities in place to deal with the contract for which they are bidding.

As a raw tool for renewing contracts, the value of e-tendering is being widely recognised by the public sector. However, the convenience of hosting bids online should not discourage the sector from also incorporating tried-and-tested methods into the process which help reinforce the priorities an organisation sets out. Evolving this tool so that it safeguards the tendering process will not only ensure that the public sector receives reliable, deliverable bids; it means that the tendering process will become a part of how the public sector identifies ways to streamline and grow its procurement systems.

Office Depot is a leading global provider of office supplies and solutions. Within the UK and Ireland the company operates under two brands: Office Depot and Viking.