The Public and Private Sector
There are many different types of tendering procedures across the UK procurement landscape. In the public sector, within the UK, the most commonly used procedure is the two-stage tendering process. The public sector is heavily regulated and must comply with The Public Contracts Regulations 2015.
The private sector, although it has several similarities with the two-stage tendering process, has some key differences in their procedures. In the private sector there are fewer regulations to govern the tendering process, which means there are less restrictions on what can be asked by the buyers.
However to successfully win a bid, for either a private or a public sector tender, a bidder must understand the two-stage tendering process.
Stage 1 is known as the pre-qualification questionnaire (PQQ) or selection questionnaire (SQ), which is the initial evaluation. This allows the buyer to filter through applications and select the bidders who are most suited to fulfill the requirements and needs. Once the buyer has shortlisted suppliers, the bidders will be invited to stage 2 of the procurement process.
Stage 2 is the invitation to tender stage (ITT). During this stage there will be a strong set of candidates for the buyer to consider, although the number of bidders may vary. This stage is usually focused on the most economically advantageous tender (MEAT) through a split of quality and cost. This is the opportunity for the bidder to show how they plan to deliver the works.
The process for a private sector tender can be difficult to navigate.There are key trends that have influenced the procurement process.
Although there are many similarities between public and private procurement, there are several key differences. For example, there is no legal requirement to publish a private sector tenders on a central noticeboard or make the opportunity open to the public. This is unlike public sector tenders in which the tenders are open to public scrutiny.
What is selection criteria and award criteria?
When handling a public sector contract, the bidders must be aware of the difference between selection criteria and award criteria.
When preparing the selection criteria, buyers will abide by the The Public Contracts Regulations 2015, which sets out the list of things that can be taken into account during the selection criteria. These fall into three broad categories: suitability to pursue a professional activity; economic and financial standing; technical and professional ability. Buyers will avoid using open ended questions; instead they provide a statement about what is required and they will look for the supplier’s confirmation that they can meet the demands.
The selection criteria are essentially the minimum requirements or standards that the suppliers have to meet before progressing further in the procurement process. The bidders must be able to demonstrate that they can meet the baseline for the selection criteria, or they will be prevented from moving further in the competition. The buyers must ensure that the selection criteria are relevant and proportionate to the procurement procedure being carried out. This means the buyer should not set criteria that are unnecessary or excessive in comparison to the value and risk of the contract.
Different buyers have varying priorities when building both technical and selection questionnaires (e.g. customer care, delivery methods, social value, etc.). The bidder must ensure that they clearly address the central areas effectively and extensively in a compact manner.
The award criteria are focused on the assessment of merit of the bid.
The intention of the award criteria is to examine which of the eligible bidders will deliver the best value for money for the company, based on the most economically advantageous tender (MEAT). The buyer has the choice to determine what award criteria to apply in relation to their specific procurement exercise.
As per section 76 of The Public Contracts Regulations, the contracts must be awarded on the reasoning of both quality and price. The buyer will not use price only or cost only as the sole award criteria. The identified criteria must correlate directly to the goods or services which are to be provided and not focus on the characteristics of the individual suppliers. Each award criteria should be clearly defined, so that there is a common understanding of what it means.
Good criteria will ensure that responses from suppliers clearly discuss the most vital aspects of the specification. This will allow the evaluation panel to make a fair and equal comparison of the tenders received. Award criteria must make certain of the possibility of effective competition. This should be followed by the requirements that allow the details provided by bidders to be verified during their award criteria examination.
Meanwhile private companies have developed their own internal set of unregulated questions. Private tenders may ask about the bidders mission statement and company ethos or even ask who their biggest clients are.
There are key areas which have influenced the procedures of the private sector. Budgets are one of the key aspects that private sector buyers will look for in suppliers. They look to see who can provide the most competitive price, which can cause problems for tender writers as pricing may outweigh the quality side of submissions.
Relationships are another important factor. Strong working relationships can heavily influence the tender process. The buyer may already have a list of suppliers it will go to for a quote, and there is no obligation for private sector buyers to offer all bidders an equal opportunity. It is important for the supplier to determine if the tender is genuine or if the buyer is using the tender to put pressure on the already existing supplier to lower prices. In such cases, the buyer has no intention to change suppliers due to the repercussions of doing so.