Public Procurement in Ireland needs reform

The public procurement process in Ireland is in need of reform, writes Wayne Dignam.

Defeated England World Cup bid leader Andy Anson recently admitted that there is no point in the country bidding again until FIFA reforms its structure, and said:

‘When you have the best technical bid, fantastic inspection visits, the best economic report, and, from what people told us, the best presentation, it’s quite hard to stomach that all that seemed to count for absolutely nothing.’

England winning the bid would have been great for Ireland too, so we should also be disappointed for the English bid team. This comment from the bid leader is very similar to comments I hear from some companies in the public procurement market. ‘The process of procurement is flawed and badly needs improvement!’ This applies to both buyers and suppliers and the culture in Ireland does need improvement.

Tender Team assists in the preparation of tenders for the suppliers of goods and services to the public sector market in Ireland and abroad. We also help buyers prepare a proper request for tender (RFT) in defining exactly what they are looking for and what type of criteria are important in evaluating suppliers. This covers a tender submission for the provision of legal services, to public relations services, to the construction of a school, to the provision of care services for the HSE. We live and breathe tenders! So what is our experience of the public sector procurement process? There are some companies that produce excellent tenders and have very high win rates. There are some suppliers that have low competency in producing tenders and look at every excuse as to why they are unsuccessful, forgetting about their own tender management capabilities. Likewise, there are some buyers who devise concise Requests for Tenders (RFT) with very clear marking schemes and evaluation criteria and who have a very clear sense of what they are buying and what type of company they want. There are also some buyers who haven’t a clue as to what they want and how to ask for it in the RFT.

In 2010 I witnessed some bad practices from both suppliers and buyers, for buyers these include:

Issuing tenders as a beauty parade to appear as if there is an open competition, when in fact there is a supplier already lined up to win the work
Devising RFT’s that favour a particular company over others
Allowing political interference in the decision of award of contracts
Splitting contracts into certain values so they do not need to be advertised on www.etenders.gov.ie and hence comply with public procurement rules
Not advertising contract award notices on www.etenders.gov.ie with the winning contract award value, as they are obliged to do
Not providing enough information in the letter to unsuccessful candidates. Each letter needs to state the reasons as to why the candidate was unsuccessful. As further clarity, it is recommended to show the score of the candidate against the score of the lowest scoring candidate invited to tender.
Not providing enough information in the letter to unsuccessful tenderers. This letter needs to provide the comparison in scoring between the unsuccessful tenderer against the successful tenderer. The name of the successful tenderer also needs to be stated.
Not providing information on the standstill period for conclusion of the contract.
Making erroneous decisions in disqualifying candidates.
Setting unnecessarily high levels of Professional Indemnity Insurance cover for the provision of certain services that should be set with reference to the requirements of the contract.
Not properly setting out the requirements in the tender document. This makes is difficult for suppliers to understand the requirements and giving them a fair chance of winning the contracts.
Little explanation given as to how the award criteria is applied. How are the weightings attributed to sub-criteria, pass/fail criteria, etc?

Here’s a horror story a construction company came to me with recently:

In a request for tender for the construction of a school, the contractor was asked to provide CVs of personnel proposed, upon being awarded the contract. The question stated that this information was required ‘on request’. Nowhere in the tender document did it state that the contractor had to respond to this particular piece of information or provide any CVs of personnel – only if he was asked on request. However, the contractor was disqualified because he did not state that he could provide this information upon being requested.

Is the contracting authority (buyer) right or is the supplier (contractor) right? Public procurement is highly regulated, so refer to SI 329, SI 130, EU Directive 2004/18/EC, Circular 10/10…etc, etc. Did you find the answer? The answer is that the public procurement process should be fair, transparent, treat companies equally and be proportionate to the requirements of the contract, but often times situations like this arise. The contractor is afraid to burn bridges and the buyer awards a contract ineffectively so how does the public sector process improve? How is the public assured that the best value for money was gained by the buyer who is spending our hard earned taxes? Indeed, where is the accountability for the procurement of goods and services? The short answer is that there is none at present. We need a procurement Ombudsman who can audit buyers, contract awards, and hear from disgruntled suppliers to make recommendations for improvement.
However, it’s not just the buyers that are prone to making mistakes, I have seen suppliers making many mistakes in the procurement process:

Including ‘unsolicited information’ like company brochures which could lead to disqualification
Not following the format of the Request for Tender, thus making it very difficult for the assessor to make a reasoned decision
Becoming overly aggressive with Contracting Authorities and not sticking to the public procurement rules and best practice for requests for information
Submitting poor tender answers that do not answer the questions asked
Not submitting tenders on time and expecting a contracting authority to evaluate their tender
Not being very clear as to what the price proposed includes, and on what basis the proposed price was made

Public Procurement has become a hot topic in many industry sectors in Ireland in the past two years. Due to the difficult economic climate, companies are investing more time and money in their tender documentation to win business to survive. Public sector work appears very attractive as a way to retain staff, gain public sector experience, maintain turnover levels, maintain cash flow, to survive. There is guaranteed payment, now that we know that the State’s expenditure is funded for the next three years!

The State has to look for cost savings across all departments, and The Department of Finance is encouraging Contracting Authorities to look for better value for money in the marketplace. In August 2010 it issued a Circular to all buyers with a list of instructions to facilitate Small to Medium Enterprise (SME) participation in public procurement. With tighter budgets, Contracting Authorities are tendering more projects to more companies to save money and get a better service for their requirements. Whereas in the past a legal contract would have been awarded to one company for a five year period, now legal contracts may be divided into lots and awarded to a panel of legal companies over a two year period. So there is more opportunity for suppliers to win contracts in the public sector.

Back to our unfortunate English colleagues, perhaps in their next bid they’ll make sure to keep the tabloid newspapers from investigating bribery in FIFA and then they may have a better chance of winning. By that stage, Prince William will then be King William, and could FIFA possibly refuse a King? Now that’s a winning tender strategy!

Wayne Dignam BA BAI MEngSc MBS MIEI is a Bid Director with Tender Team, Ireland’s leading bids and business development consultancy. Contact Wayne at 01-6797170