Hints & Tips

There are huge opportunities for SMEs in the Public Procurement market. At our procurement conferences held in 2012, businesses attending were surveyed and said that the three biggest challenges to taking part in public procurement were :

(a)the tendering process itself,

(b)understanding how government departments and organisations buy their goods and services followed by

(c)- unnecessarily high qualification levels.

On the back of this we have pulled together some hints and tips to help you to increase your chances of success when tendering!

Meet the Buyer Video 2012

Q & A from procurement conferences

The three year rule can often present a real barrier for SMEs particularly those supplying services. Why is this used?

Regulation 25 of Public Contracts Regulations 2006 allows, for supplies and services contracts, Contracting Authorities to take into account, at selection stage, the goods sold or services provided by the supplier in the last three years. This is one of the criteria which can be used to evaluate the technical and professional ability of the supplier and if used would normally be scored. If it is used, a question relating to it  would  be included in a Pre-Qualfication Questionnaire (PQQ), however, for the vast majority of supplies and services competitions run by CPD a PQQ is not used and instead they might ask for a minimum number of years experience as a minimum requirement. The public sector needs to be assured that applicants for public contracts are suitable in terms of their legal standing, financial status and technical capacity to deliver the contract as required. No supplier should be invited to tender (or to participate in the dialogue or negotiation stages) if assessment of the information provided establishes that they are incapable of performing the contract.

What in your experience is the single biggest reason that tenders are rejected?

Tenders and applications seeking to be invited to tender can be excluded on any of the grounds listed in Regulation 23 of the Public Contracts Regulations 2006 eg. for convictions for bribery, corruption etc, however, this is rare.  Some tenders/applications will not get through the selection stage because they did not met the minimum requirements of economic and financial standing or techncial and professional ability set by the Contracting Authority or did not get a high enough score to go through to the next stage.   A poor Health & Safety response where a minimum standard has to be met often results in rejection in construction contracts. Poor responses, lacking in detail and relevance to the contract, will result in low scores and others being shortlisted.

At the tender stage tenderers might not comply with key elements of the specification and get rejected, tenders though are seldom rejected.  It typically comes down to not fully addressing the quality issues in the tender submission - eg, citing experience on past jobs instead of setting out the proposals for the job in question; not providing enough detail in the answer; or simply not providing a good response.

What is EU threshold?

 

They are thresholds set by the EU for supplies, services and works contracts. Contracts with a value above the applicable threshold (and to which exemptions do not apply) must comply with the  EU Procurement Directives and UK Implementing Regulations. The current  threshold for supplies and services contracts is £101,323 and for works contracts it is £3,927,260.

What critera is used for evaluation?

The Procurement Board has determined that contracts should be awarded on the basis of objective criteria which ensure compliance with the Treaty on the Functioning of the European Union principles, and which guarantee that tenders are assessed in conditions of effective competition. This permits the use of one of two award criteria: “the most economically advantageous tender” (MEAT) and “the lowest price”.

 

MEAT is a combination of price and quality. The Procurement Board has also determined that contracts are to be awarded on the basis of MEAT with any exceptions being subject to formal approval by the Head of Procurement for the relevant CoPE.

Low prices does not always represent value for money.

This is a true statement. The Procurement Board has determined that contracts are to be awarded on the basis of  “the most economically advantageous tender” (MEAT), which is a combination of price and quality.

How are tender specs assessed to ensure public spend is achieving best value?

The Northern Ireland Procurement Board has determined that contracts should be awarded on the basis of objective criteria which ensure compliance with the Treaty on the Functioning of the European Union principles, and which guarantee that tenders are assessed in conditions of effective competition. This permits the use of one of two award criteria: “the most economically advantageous tender” (MEAT) and “the lowest price”.

 

MEAT is a combination of price and quality. The Northern Ireland Procurement Board has also determined that contracts are to be awarded on the basis of MEAT with any exceptions being subject to formal approval by the Head of Procurement for the relevant CoPE.

What business supports if any are available to help SMEs understand the Procurement process?

CPD does not provide in house training as it cannot favour a particular industry sector to type of business, although it  regularly sends representatives to events such as "Meet The Buyer" events being run by various organisations including the Social Economy Network to explain various aspects of the procurement process e.g etendering. InterTradeIreland's Go-2-Tender programme gives companies the confidence, knowledge and practical skills to tender successfully for public sector contracts on a cross-border basis through a series of workshops and mentoring sessions.  InvestNI also provides workshops to help businesses to submit tenders.

How does a new company produce financial records for 3 years as is often a requirement?

For Supplies and Services contracts where Economic and Financial Standing is being assessed CPD currently ask for two years audited accounts.  Where a company has been trading for less than 2 years they are asked to supply information for the period of trading. If  there are no audited accounts, management accounts are asked for.

Why do Health Estates Ni use rota based prequalification?

Health Estates Investment Group (HEIG) has maintained a Register of Contractors with an associated rotation system for the production of select lists for works below the EU Threshold for more than 20 years. This has proved to be a very efficient methodology for producing a list of suitable contractors and sub-contractors with the required technical ability to carry out works in the heath sector. Over the years, this system has received positive feedback from the NI Construction Industry.

Are there opportunities for Precision Engineering to supply to the public sector?

All tendering opportunities above £30k being run by CoPEs can be found on eSourcingNI.

Where do you find subcontracting opportunities?

CPD lists all contracts it awards on its website at: http://www.dfpni.gov.uk/cpd.  On the Investment Strategy Northern Ireland (ISNI) information website: http://www.isni.gov.uk/ you can find information on planned ISNI projects and contracts.

Will CPD follow the rest of the UK and start to introduce community benefit requirements for public contracts?

CPD already includes community benefits or social clauses in its contracts. Last year 53 apprentices and 22 unemployed people were employed on contracts awarded by CPD.  CPD is also producing a guidance note on model sustainability clauses (including social clauses) to be included in contracts.

Given the proposition that there is a 19bn opportunity how much of that is currently being awarded off the island?

The figure is £1.908bn not £19bn. This is the amount of procurement spend put through CoPEs in Northern Ireland.  Only 5% or £0.0954bn is awarded to suppliers outside the island of Ireland.

At what level are full blown tenders required ?

For bodies which are subject to NI Public Procurement Policy, Procurement Guidance Note 03/10 requires tenders to be sought for procurements over £1,500. Centres of Procurement Expertise (CoPEs) may choose to make slight variations this to suit the particular circumstances of their business.

Why are local government not subject to NI Public Procurement Policy?

As regards District Councils, the Executive accepts that their different and separate framework of accountability must be recognised and, under existing legislation, compliance with this policy can only be on a voluntary basis. However as is the case for all NI public sector bodies, District Councils are subject to UK and EU Procurement Legislation.

Why is the figure of 30k used? Surely it should be much lower.

Procurement Control Limits are recommended as the optimum level required to ensure that the transaction cost of procurement procedures is efficient, whilst maintaining a sufficient level of supplier sourcing to achieve best value for money through competition.The Review of Public Procurement,  recommended that the Procurement Control Limits used by Northern Ireland Departments, their Agencies and Non-Departmental public bodies, for the procurement of general goods, services and works should be reviewed regularly.They were last reviewed in 2009 and the review took into consideration case law, Interpretative Communications emerging from the European Commission and the adoption of electronic sourcing and tendering systems. They are due to be revised again shortly and as a result of the decision by the Procurement Board to reduce  the threshold for advertising tenders to £20k.

What list must I be on to tender?

There are no lists you must be on to tender with the exception of Framework Agreements. After a Framework Agreements is awarded only those suppliers listed on the framework can bid for any competitions being run from it. A competition is run to appoint suppliers to the framework in the first place. We would recommend you register on eSourcingNI which is the etendering platform used by CoPEs  and on which contracts over £30k are advertised.  Buyers can use it to identify potential bidders for procurements under £30k.  More recently a number of councils have started using eSourcingNI as their etender portal.

What percentage of micro-businesses win tenders?

We do not currently hold information regarding the percentage of contracts awarded to micro businesses, however, during 2009 - 2010, 64% of the contracts awarded by CoPEs  were for contracts with an estimated value of less than £30k and 39% were for contracts under £10k.

Why is tender assessment criteria 90% price driven and not previous performance?

It is a matter for Contracting Authorities to determine the weightings to assign to supplier selection and tender evaluation criteria for specific contracts on a case by case basis. For regulated contracts (usually those above EU thresholds) previous experience (not performance) can be used as a selection criteria to select suppliers to invite to tender. Price is an award criteria used to evaluate tenders.This is the second stage of the process.

What direction is being given to CoPEs for dealing with very low prices?

This is covered in The Public Contracts Regulations 2006. If an offer for a public contract is abnormally low the contracting authority may reject that offer but only if it has—

(a) requested in writing an explanation of the offer or of those parts which it considers contribute to the offer being abnormally low;

(b) taken account of the evidence provided in response to a request in writing; and

(c) subsequently verified the offer or parts of the offer being abnormally low with the economic operator

This is covered in The Public Contracts Regulations 2006. If an offer for a public contract is abnormally low the contracting authority may reject that offer but only if it has—

(a) requested in writing an explanation of the offer or of those parts which it considers contribute to the offer being abnormally low;

(b) taken account of the evidence provided in response to a request in writing; and

(c) subsequently verified the offer or parts of the offer being abnormally low with the economic operator

At lowest price should specialist work not be given to the companies that can and actually do the work?

The Procurement Board has determined that contracts are to be awarded on the basis of  “the most economically advantageous tender” (MEAT), which is a combination of price and quality.

ROI and NI public contracts are regularly advertised - which we have taken time to respond to - that never materialise.

It is unusual for a contract never to materialise if advertised on eSourcingNI but a Contracting Authority is not obliged to accept any tender.If this occurs the contracting authority should inform tenderers.

Please tell us more about how consortia cover insurance requirements

For works contracts CPD ask for the consortium as an legal entity to have the required insurance for the project. It does the same for Supplies and Services contracts  if the consortium has come together to form an legal entity. If it isn't a legal entity the prime contractor must have the required level of insurance.

Price always seems to be the driver, quality is way down the list - it therefore means companies can not compete

The Procurement Board has determined that contracts are to be awarded on the basis of  “the most economically advantageous tender” (MEAT), which is a combination of price and quality. The weighting attached to price is a matter for the Contracting Authority and is dealt with on a case for case bases.

Tenders are usually for standard items or services how do you advise introducing an innovation not on a tender list?

We assume you are asking how do we encourage innovation in procurement competitions? This can be done by expressing specifications in terms of output and performance. It can also be done by allowing variant bids.

Why were the advertising thresholds established at those specific levels?

For contracts below the EU thresholds Procurement Control Limits are recommended as the optimum level required to ensure that the transaction cost of procurement procedures is efficient, whilst maintaining a sufficient level of supplier sourcing to achieve best value for money through competition.The Review of Public Procurement,  recommended that the Procurement Control Limits should be reviewed regularly.They were last reviewed in 2009 and the review took into consideration case law, Interpretative Communications emerging from the European Commission and the adoption of electronic sourcing and tendering systems. They are due to be revised again shortly and the Procurement Board will be reducing to £20k the threshold for advertising tenders.

Why are tenders not spread over many companies to ensure public spend is spread through out the island?

Procurement Regulations require that contracts are awarded to the most economically advantageous tender (MEAT). MEAT is a combination of price and quality.

If the same regulations apply, why are the spend levels different across the procurement organisations?

The procurement organisations and the bodies they are procuring for are very diverse and have different requirements and budgets, therefore their spend levels are different.

When will all public sector bodies be on esourcing. e.g. councils?

NI Procurement policy requires that Centres of Procurement Expertise to use eSourcingNI. Councils are not covered by the policy and are therefore free to choose their own etendering system, however, 9 councils currently use eSourcingNI.

Is the encouragement of subcontracting consortia an attempt to spread less opportunity across more but smaller companies?

The purpose is to try and increase opportunities for SMEs

If you are applying for a contract of less than 125k, why do you need a turnover of over 1m? How do we increase our turnover?

This is not always the case.  Turnover can be a useful and simple measure of capacity to deliver but not the only measure. Different annual contract value to turnover ratios can apply. We cannot advise on how you can increase your turnover.

What systems are in place to evaluate supplier performance during the contract?

CPD has produced a Procurement Guidance Note setting out the procedures and principles for contract management. It is available in the CPD website.The level of contract management depends on the nature, complexity and value of the contract.

Has the use of framework agreements changed? If so, how and when will these be used?

Framework Agreements continue to be used where appropriate.