Jean Roberts

What’s the relationship between tendering and outsourcing?

 This relationship begins when an entity (eg business, organisation, government department) makes a calculated decision to invite tenders to create and/or supply specific goods or services:

• successfully inviting tenders begins with a careful analysis of the specific items or services that need to be purchased – and  preparation of appropriate and detailed briefs
• an effective tender brief or ‘invitation to tender/quote’ will provide sufficient, accurate and up-to-date detail on eligibility, specifications, quality, timelines, assessment/evaluation criteria, selection procedure, probity, confidentiality, negotiation procedures and contractual obligations.

The relationship continues when one or more entities make a calculated decision to submit a response to the tender brief, guidelines or invitation to tender/quote:

•  their response document will be assessed against specified criteria – it can be referred to as a tender, bid, estimate, quote, proposal, submission
• a successful response document must comply or conform with the mandatory requirements set out in the brief – as well as presenting a positive, powerful and persuasive business case
• an effective response document will include validated and sufficient detail on cost, quality, delivery and timeliness to convince the tender caller of the tenderer’s credibility, capability and commitment to a consistent and superior quality of product or service throughout the contract period

What is a successful relationship?

One that not only wins the contract, but also ensures that the work offered in the tender document is followed through to a successful conclusion – within budget, according to schedule, and meeting the terms and conditions of the negotiated tender contract.  This means ensuring that the work can be carried out effectively and efficiently in the interests of both the outsourcer and the tenderer.

Jean’s Checklist:  Exposing the traps in tendering and outsourcing

Part 1:             Contents of a successful tender brief from the outsourcer

1. background and business case of the outsourcer
2. background and environment of the work required
3. aim, requirements, specifications and required outputs of the work required
4. eligibility to tender
5. technical details
6. assessment or selection criteria and procedure
7. mandatory requirements and specifications
8. timeframe, logistics, milestones relating to the work required         
9. constraints, restrictions, limitations – including financial
10. standards and quality of the work required
11. legislative or statutory requirements through the contract period
12. probity procedure
13. confidentiality requirements
14. negotiation procedures
15. contractual obligations and arrangements, including payment schedule
16. project management details, including reporting requirements through the contract period
17. response document pro-forma or guidance for headings or sections in a free-form response document
18. deadline and procedure for lodging the response document
19. commencement date and procedure for commencement of the work required
20. draft contract and schedule

Part 2:            Successful tender response document

1.  carefully read the brief: examine the terminology, specifications, assessment criteria, conditions, timelines and any directions to structure your response
2. address all requirements listed in the brief
3. provide sufficient up-to-date, accurate and validated detail to convince the assessors of your capacity, capability and reliability
4. avoid a confusing or nonconforming response document put together in a hurry using bits and pieces from previous tenders:  thorough editing is essential if you have ‘cut and pasted’
5. validate your unit costings as well as your final figure
6. avoid quoting ‘under cost’ in order to win the contract, as there may be no chance to increase price within the contract period
7. do your best to ensure that your own suppliers or sub-contractors will prove to be reliable
8. offer a value over and above what is being asked for – but make sure you can ensure this value through the contract period
9. build on what the outsourcer already knows about you, but don’t rely on this to win the contract: make sure the response can ‘stand alone’
10. understand that if your reputation is in a different market, your response may have difficulty in being short-listed
11. your reputation goes ahead – whether true or not
12. avoid irrelevant, inappropriate language – be very specific in what you way and how you say it
13. you may be one of many who could do the job equally well, so it can come down to which tenderer is seen to have more ‘runs on the board’

Part 3:            Successful negotiations for outsourcer and tenderer

1. carefully and confidently assert your experience and knowledge in any negotiations, and be positive and friendly in your approach
2. look for ways to impress, especially on points you know to be significant to the other party
3. communicate your ideas and commitment in a practical way, and make valid comments
4. carefully analyse the reactions and responses of the other party
5. know your fall-back position, including strategies, finances, priorities, deadlines – and look for the other party’s fall-back position
6. unless it is tactical, try to minimise the number of qualifications
7. respond to any and every criticism and query with facts, solutions, verification, imagination and excitement – never with emotion
8. use your influence, and speak with authority and surety
9. protect your integrity and reputation at all times
10. don’t assume that the purpose of an interview is simply to arrange the starting dates: it is a negotiation process
11. prepare for a range of possibilities during the negotiation process: this will help in retaining confidence and focus
12. avoid being disadvantaged through lack of preparation
13. allow sufficient time
14. as outsourcer, ensure your negotiation panel is well prepared: don’t do this ‘on the run’
15. as tenderer, prepare a presentation that is based on your response document
16. as outsourcer and tenderer – be prepared to bargain, and provide a basis for further negotiation in case the other party changes the rules of the game

Part 4:            Successful project/contract management

1. anticipated cost savings eventuate for the outsourcer
2. the successful tenderer proves to have the technology and the knowledge and the experience
3. scheduled meetings of the successful tenderer’s project manager and the outsourcer’s contract manager are held – at least at each critical point or milestone through the contract period
4. unanticipated and excessive requirements in time and money through the contract period are negotiated before they present as a problem
5. key persons identified in the brief, response document or through negotiations prove to be as effective and efficient as claimed: if they become unavailable for any reason, they should be replaced by a person of equal or greater skill, knowledge and experience
6. a major risk to both parties is survival of both parties – and of suppliers or sub-contractors to the successful tenderer
7. the challenge of keeping up with technological advances may need to be negotiated and managed collaboratively
8. clear job descriptions for – and expectations of – the successful tenderer’s project manager and outsourcer’s contract manager

 In summary, don’t assume anything!