Chapter One. Introduction To Public Sector Contract

Transcription

1 Chapter One Introduction To Public Sector Contract This guide seeks to provide businesses with clear information and useful insight into the public sector procurement process. It provides users with useful and invaluable information on how to put together winning bids and avoid chasing contracts that your business is unlikely to win as a first tier supplier. Users of this guide are also exposed to strategies that can be used to access public sector contracts following tried and proven strategies that many businesses in the UK and elsewhere are benefiting from. By the end of this guide, not only will you be able to prepare better bids for your next public sector contract opportunities, you will also know what you need to do to access information on the 2012 Olympics contracts directly from the 2012 Olympics committee. We offer you examples of policies used by some businesses which should help you begin the process of putting together your policies and save you considerable time. We expect that you will be able to review these sample policies and adapt them to fit the business of your organisation thereby saving you considerable time and adding value to your business. All the examples used are from businesses that have successfully won contracts from public sector organisations such as the London Development Agencies and Local Authorities and so to that effect, we are confident that your business will benefit from them too. To assist your business to finalise its necessary policies, we also include information on organisations you can approach for assistance in free consultation on your policies which should speed up the process of your business being ready to

2 successfully bid for contracts. We wish you all the best in your organisation s quest for development and growth through the public sector route. What is a public sector contract Public sector contract is concerned with selling products or services to government bodies, which represents an important opportunity for all businesses. Public-sector bodies range from: Central government departments Devolved authorities NHS Local authorities The armed forces They all place orders with businesses, so there may be contracts of interest to you. Public-sector organisations can make good customers. They have to be fair and honest in the way they choose suppliers and pay promptly within agreed contract terms. Before we delve into what is involved in tendering for public sector contracts, you must first understand the language of public sector procurement or tendering process. Let us move on to the next section and learn them very quickly, as frequent references will be made to them as we move on. Understanding the language of the public sector contracting process Here is a list of phrases you must understand very quickly to come to grips with the contracting process. Don t be put off by them as you will soon realize that you can grasp them. Here we go: 2

3 Expression of interest (usually abbreviated as EOI): This is the first stage of the tendering process for some public sector organisations. This is the stage when businesses are invited to express an interest using a form that is commonly known as the Pre-Qualification Questionnaire. Pre-Qualification Questionnaire (PQQ) is a list of questions designed to gather invaluable information about how fit a business is to supply a public sector organisation. The information collected will usually represent the minimum required standard for consideration to deliver the services or products. Think about this as a job application form that is designed for the purpose of shortlisting a candidate for a vacant post. Usually, an employer would like to be assured that the candidates that are being interviewed or tested are indeed suitable to perform the job. If a business succeeds in meeting the minimum standards as set out in the PQQ, it will be shortlisted and invited to bid for the contract. This takes us to the next stage which is an Invitation To Tender (ITT) Invitation To Tender (ITT) is the stage in which shortlisted businesses that have been pre-qualified are invited to bid for a contract. Prior indicative notice (PIN) is used in the Official Journal of European Union to indicate a public sector organisations intention of tendering a proposed contract in the future. Request for proposal (RFP) is more often used in the private sector and is similar to the invitation to tender. However, instead of completing forms, it will take the format of potential suppliers being requested to submit details of method statement and pricing. 3

4 Framework agreement- this is an agreement between a public sector organisation and a supplier, or pool of suppliers, for the purpose of procuring goods and services. The agreement will be formed following a tender of the contract and it is usually to cover an agreed period usually two to five years. Whilst that contract is in place, the public sector can only purchase the agreed services or goods from those suppliers (barring exceptional circumstances). A Template For A Request For Proposal 1. Your Front page should be laid out as shown below Insert Logo Here Prepared By: Mr James Brown Managing Director ABC Training Limited 52 West Bromley Road Thamesmead, London SE28 7JY 4

5 2. Your next page should include a table of contents- see below Contents Page Introduction.. 3 Objectives 3 Methodology 3 Course Contents...3 Key Results..4 Recommendations 4 Appendices

6 3. The main body of your proposal should carry the following headings Introduction Introduce your business and what it does and state clearly what the document seeks to do. Include details of your proposal here. Objectives State the objectives of the proposal. Example -The proposal seeks to provide the management of XYZ with details of the scope and contents of an Equality & Diversity Course that will be designed and delivered by your business, as well as your fee quotation. Also mention what actions you would like the organisation to take. For instance, it is hoped that the management of XYZ will review our proposals and that any recommendations for revision will be provided to us for subsequent discussions accordingly. Methodology State what your business plans to do and how it will go about it. For instance: We plan to develop and deliver a comprehensive Equality & Diversity Course that will provide participants with a thorough understanding of best practices, as well as the legislations supporting equality and diversity issues. Prior to the course, XYZ will be provided with course materials to ensure they are accessible to all participants of the course, as appropriate. We will also evaluate the effectiveness of the course by obtaining feedback from participants post delivery and such feedback will inform the process of improving future services to yourself, as well as other organisations as appropriate. 6

7 Course contents Key results List details of what you will be delivering in precise details. In this case, the course contents are shown as an appendix. List details of the key outcomes of your proposed service. This should be benefits of your proposed service. Example of benefits will include: Knowledge and skills in equality and diversity will increase. Confidence to undertake responsibilities with equality and diversity challenges. Access to reference materials to support participants responsibilities at work. Improve working environment. Recommendations & Fees This is where you state your recommendations. This should be very clearly communicated. Example: We recommend that our proposals for the design and delivery of these training courses are reviewed and accepted by the management of XYZ. Our quotation for these courses are as follows: Design and delivery of a one day Equality & Diversity Course including preparation of training materials. Post consultancy support work a daily rate of 700. All prices are inclusive of VAT. 7

8 How does public sector tendering work in practice? Firstly, you need to know that tendering is a procurement process used extensively by public sector organisations to buy goods and services in a fair and transparent way. Public sector organisations are bound by the European Directives to tender all contracts of a certain value (currently approximately 144,000) in the Official Journal Of European Union. The public sector buyer will firstly identify services or goods they need and then determine their values. Thereafter, if the value of the goods and services required falls below the European threshold of approximately 144,000, their procurement policy will be applied in so far as it helps them meet their needs. Usually, the public sector buyer will tender for contracts of significant value usually of 5000, using tendering portals such as Supply2gov.uk. If the value of the contract exceeds 144,000, then the contract will be put to tender on the OJEU website as well as the public sector s own website and in any other suitable trade journals. The format that most public sector buyers use to procure goods and services is broadly similar. After determining the value of the contract, a typical public sector buyer, as part of their procurement processes, will determine the minimum criteria that suppliers should meet for them to be considered for the delivery of the contract. These criteria will be detailed in the information pack sent to the businesses that request it and will also be included in the prequalification questionnaire. As mentioned earlier, the PQQ is the document that is used to gather information that is required to satisfy the buyer that the business meets the minimum criteria necessary to deliver the contract. The public sector buyer will usually ensure that these criteria are specified 8

9 clearly and where further information is required in cases of lack of clarity, details of who to contact in the buyers organisation (usually a procurement officer), and the preferred contact method, will be specified in the information pack sent to all potential suppliers responding to the invitation to express an interest. The information pack will also include details of how the public sector buyer intends to evaluate suppliers fitness to bid for the contract. It is always important for the supplier to understand the evaluation processes very clearly and make an informed judgment on whether they possess the minimum requirements to tender. Usually, when businesses fail in their bidding, it is because they fail to understand and, or satisfy the public sector buyers that they meet the minimum requirements. In some cases, as we will cover later, businesses make silly mistakes on their forms which of course lead to a lower score and pull their overall score down. Anyway, back to the tendering process. There is always a deadline that businesses are requested to submit their PQQ by and it is important that this deadline is met. Furthermore, there is always standard format that should be used to address the returned PQQ and relevant documentation. This format should be adhered to, otherwise a business risks having its bids thrown out. When the public sector buyer receives the expressions of interests, a panel will go through each PQQ and make an informed judgment on the suitability of businesses to deliver the contract based on the evaluation of the responses. Each response will be scored using the agreed scoring method e.g. 0 = not met, 5 = fully met. The outcome of the evaluation will be compiled and communicated to the respective businesses. Successful businesses that have been shortlisted at this stage will be invited to bid for the contract and a tender pack will be sent to them requesting more information, which sometimes include similar information already collected at the first stage. Again, as with the first stage, there is always a deadline for submitting 9

10 bids and it is imperative that this deadline is also met. The bids submitted will be evaluated following the criteria that is specified in the tender document and the results will be announced a couple of weeks after the submission. This may seem a very laborious and time-consuming exercise and you may want to know why public sector organisations go to these lengths to award contracts to suppliers. Public sector organisations are accountable to the public for the use of public funds, made up mainly of tax revenue which you and I contribute to. As a buyer, public sector organisations are risk averse and have to take careful steps to ensure that contracts are awarded to suppliers who can deliver valued services and goods. This means suppliers who pose significant risks, such as delays in delivering services or goods or poor standard of goods or services, will have to be eliminated from the race using a transparent and fair method that can be justified at all times. Although the process seems long-winded, it has the benefit of cultivating fairness for all. Therefore, any supplier who is serious about delivering quality goods and services within the timescale and budget, agreed with the buying public sector organisation will compete in this arena. 10

11 Detailed Review of Pre-Qualification Questionnaire (PQQ) Before providing you with detailed information about the PQQ, lets us quickly introduce you to two examples of a PQQ. The first example provided is a short PQQ of the London Development Agency (LDA) and the second is from Westminister Council. SAMPLE 1- pre-qualification questionnaire of London Development Agency Section 1 BASIC DETAILS OF YOUR ORGANISATION 1.1 Name of bidding organisation: 1.2 Contact name for enquiries about this tender: 1.3 Position of contact (job title): 1.4 Address and post code: 1.5 Telephone number: 1.6 Fax number: 1.7 address of contact: 11

12 Section 1 BASIC DETAILS OF YOUR ORGANISATION 1.8 Website address (if any): 1.11 Legal status (e.g. company limited by shares; company limited by guarantee; community interest company; industrial provident society; charitable incorporated organisation, etc.) 1.10 Registration number(s) and name of registration bodies Registered address and post code if different from the above (1.4): 1.12 VAT registration number: (if applicable): 1.13 Is your organisation: (Please tick one) i) a public limited company? ii) a limited company? iii) a partnership? iv) a sole trader? v) an industrial provident society? vi) a friendly society? vii) other (please specify) 1.14 Name of (ultimate) parent company (if this applies): 1.15 Companies House registration number of parent company (if this applies): 12

13 Section 1 BASIC DETAILS OF YOUR ORGANISATION 1.16 Construction and related businesses only: Are you registered with Construction line? If Yes, then what is your registration number? Yes / No Section 2 FINANCIAL INFORMATION 2.1 Has your organisation met the terms of its banking facilities and loan agreements (if any) during the past year? Yes / No 2.2 If No what were the reasons, and what has been done to put things right? 2.3 Has your organisation met all its obligations to pay its creditors and staff during the past year? Yes / No 2.4 If No please explain why not: 2.5 What is the name and branch of your bankers (who we may ask for a reference)? Name: Branch: Contact details: 2.6 If asked would you be able to provide the latest set of management accounts these must not be more than four months old. Yes/No 13

14 Section 3 BUSINESS ACTIVITIES 3.1 What are the main business activities of your organisation? 3.2 How many people does your organisation employ and/or call on for work? Section 4 REFERENCES Please provide details of two projects or funding agreements that are relevant to this procurement opportunity and the LDA s stated requirements. Where possible at least one should be from the public sector. If you cannot provide two references, please explain why. 4.1 Customer organisation (name): 4.2 Contact name and phone number: 4.3 Date contract awarded: 4.4 Contract reference and brief description: Reference 1 Reference Value: 4.6 Date contract was completed: 14

15 4.7 Have you had any contracts terminated for poor performance in the last three years, or any contracts where damages have been claimed by the client? Yes / No 4.8 If Yes, please give details: Section 5 INSURANCE Please provide details of your current insurance cover Value 5.1 Employer s liability:(where applicable) 5.2 Public liability: 5.3 Professional liability (where applicable): Other (please provide details): Section QUALITY ASSURANCE How does your organisation manage the quality of the goods and services it produces? Comments 1 Information on professional liability insurance, where applicable, is only required for services related to: Design building and property matters Financial advice Legal advice Business advice Where professional liability is applicable then new start-up organisations must have a minimum 1m of professional indemnity insurance cover in place by the start of this contract. 15

16 Section HEALTH AND SAFETY Does your organisation have a written health and safety at work policy (see notes at end of questionnaire)? 7.2 Does your organisation have a health and safety at work system? 2 Yes / No Yes / No 7.3 If No to either of the above please explain why: Section 8 EQUAL OPPORTUNITIES Does your organisation have a written equal opportunities policy to avoid discrimination as an employer and in its customer-facing activities? Yes/No Section 9 ENVIRONMENTAL MANAGEMENT Does your organisation have a written environmental management policy? 3 Yes/No 2 System here means processes and procedures to ensure that the proper health and safety management. This includes making sure that legal requirements are met. 3 This is your organisation s policy on environmental management covering its vision, principles, strategic goals and objectives, and responses to overnment regulations. G The purpose of policy is two fold: to inform stakeholders of the environmental objectives of your enterprise to inform stakeholders about what your enterprise is doing to achieve those objectives. 16

17 Section 10 PROFESSIONAL AND BUSINESS STANDING Do any of the following apply to your organisation, or to any of the director(s) / partners / proprietor(s)? 10.1 Is in a state of bankruptcy, insolvency, compulsory winding up, receivership, composition with creditors, or subject to relevant proceedings 10.2 Has been convicted of a criminal offence related to business or professional conduct 10.3 Has committed an act of grave misconduct in the course of business 10.4 Has not fulfilled obligations related to payment of social security contributions Yes / No Yes / No Yes / No Yes / No 10.5 Has not fulfilled obligations related to payment of taxes Yes / No 10.6 Is guilty of serious misrepresentation in supplying information 10.7 Is not in possession of relevant licences or membership of an appropriate organisation where required by law Yes / No Yes / No 10.8 If the answer to any of these is Yes, please give brief details below, including what has been done to put things right. Response: 10.9 Has been subject to, or is currently subject to, an investigation by a consultative committee of accounting bodies in relation to accountancy standards or professional conduct Yes / No If the answer is Yes, please give brief details below, including what has been done to put things right. Response: 17

18 Section REQUIREMENT SPECIFIC QUESTIONS Please attach CVs of personnel who will be working on this project and explain why they are best suited to execute this assignment Please explain why your firm is best suited to carry out this assignment. Section 12 I declare that, to the best of my knowledge, the answers submitted in this PQQ (supporting documents) are correct. I understand that this information will be used to assess my organisation s suitability to be invited to tender for the LDA s requirement. FORM COMPLETED BY 12.1 Name: 12.2 Position (job title): 12.3 Date: 12.4 Telephone number: 12.5 Signature: 18

19 SAMPLE 2- pre-qualification questionnaire of WESTMINSTER COUNCIL 1 APPLICANT DETAILS 1.1 Trading name and address: Please note that this must be the name and address of the organisation that will be the contracting party with Westminster City Council. 1.2 Address for correspondence relating to this application: 1.3 Details of the person who completed the form 2 STATUS OF APPLICANT (NON-CONSORTIA BIDS) 2.1 Is the applicant: (a) (b) (c) (d) (e) (f) (g) A sole trader? A partnership? A limited company? A public limited company? A local authority DSO? A charity? Trading as a company? Or Number of trustees if not a company? Other please specify 19

20 2.2 Date of formation or registration: 2.3 Registration number (if any) and registered address: 2.4 Are you applying to be considered for inclusion under a different name? 2.5 If yes, please list the name(s) of the other trading company(ies) 2.6 Please provide confirmation supported by any related evidence (a statutory declaration by an officer of the applicant will suffice) that none of the exclusionary conditions in the Public Contracts Regulations 2006 applies. Reg.23 (1) of the above states: A contracting authority shall treat an economic operator as ineligible and shall not select if the contracting authority has actual knowledge that the economic operator or its directors or any other person who has powers of representation, decision or control of the economic operator has been convicted of any of the following offences:- (a) conspiracy within the meaning of section 1 of the Criminal Law Act 1977 where that conspiracy relates to participation in a criminal organisation as defined in Article 2(1) of City Council Joint Action 98/733/JHA; (b) corruption within the meaning of section 1 of the Public Bodies Corrupt Practices Act 1889 or section 1 of the Prevention of Corruption Act 1906; (c) the offence of bribery; (d) fraud, where the offence relates to fraud affecting the financial interest of the European Communities as defined by Article 1 of the Convention relating to the protection of the financial interests of the European Union, within the meaning of:- (i) (ii) (iii) (iv) (v) the offence of cheating the Revenue; the offence of conspiracy to defraud; fraud or theft within the meaning of the Theft Act 1968 and the Theft Act 1978; fraudulent trading within the meaning of section 458 of the Companies Act 1985; defrauding the Customs within the meaning of the Customs and Excise Management Act1979 and the Value Added Tax Act 1994; 20

21 (vi) (vii) (e) (f) (2) of the above states:- an offence in connection with taxation in the European Community within the meaning of section 71 of the Criminal Justice Act 1993; or destroying, defacing or concealing of documents or procuring the extension of a valuable security within the meaning of section 20 of the Theft Act 1968; money laundering within the meaning of the Money Laundering Regulations 2003; or any other offence within the meaning of Article 45(1) of the Public Sector Directive. In any case where an economic operator or its directors or any other person who has powers of representation, decision or control has been convicted of an offence described in paragraph (1), a contracting authority may disregard the prohibition described there if it is satisfied that there are overriding requirements in the general interest which justify doing so in relation to that economic operator. (4) of the above states:- A contracting authority may treat an economic operator as ineligible or decide not to select an economic operator in accordance with these Regulations on one or more of the following grounds, namely that the economic operator:- (a) (b) (c) being an individual is bankrupt or has had a receiving order or administration order or bankruptcy restrictions order made against him or has made any composition or arrangement with or for the benefit of his creditors or has made any conveyance or assignment for the benefit of his creditors or appears unable to pay, or to have no reasonable prospect of being able to pay, a debt within the meaning of section 268 of the Insolvency Act 1986, or article 242 of the Insolvency (Northern Ireland) Order 1989, or in Scotland has granted a trust deed for creditors or become otherwise apparently insolvent, or is the subject of a petition presented for sequestration of his estate, or is the subject of any similar procedure under the law of any other state; being a partnership constituted under Scots law has granted a trust deed or become otherwise apparently insolvent, or is the subject of a petition presented for sequestration of its estate; being a company or any other entity within the meaning of section 255 of the Enterprise Act 2002 has passed a resolution or is the subject of an order by the court of the company s winding up otherwise than for the purpose of bona fide reconstruction or amalgamation, or has had a receiver, manager or administrator on behalf of a creditor appointed in respect of the company s 21

22 business or any part thereof or is the subject of the appointed in respect of the company s business or any part thereof or is the subject of the above procedures or is the subject of similar procedures under the law of any other state; (d) (e) (f) (g) (h) (i) (j) has been convicted of a criminal offence relating to the conduct of his business or profession; has committed an act of grave misconduct in the course of his business or profession; has not fulfilled obligations relating to the payment of social security contributions under the law of any part of the United Kingdom or of the relevant State in which the economic operator is established; has not fulfilled obligations relating to the payment of taxes under the law of any part of the United Kingdom or of the relevant State in which the economic operator is established; is guilty of serious misrepresentation in providing any information required of him under this regulation; in relation to procedures for the award of a public service contract, is not licensed in the relevant State in which he is established or is not a member of an organisation in that relevant State when the law of that relevant State prohibits the provision of the services to be provided under the contract by a person who is not so licensed or who is not such a member; or is not registered on the professional or trade register of the relevant State in which he is established under conditions laid down by that State. 22

23 (k) 4 DETAILS OF HOLDING/PARENT COMPANY 4.1 Is the applicant a subsidiary of another company as defined by Section 736 (1) of the Companies Act 1985? 4.2 If 'yes' give the following details in respect of the Ultimate Holding Parent company: Name: Registered Office Address: Registration Number: Note: the City Council may require the Ultimate Holding Parent Company to enter into a Deed of Guarantee, where a contract is proposed with a subsidiary, to indemnify the City Council against all losses, damages or costs which may be incurred by the City Council by reason of any default on the part of the applicant. INFORMATION AS TO ABILITY AND TECHNICAL CAPACITY 6 RELEVANT EXPERIENCE 6.1 Please give brief biographical details, including skills base and relevant experience: 23

24 7 RESOURCES 7.1 Which elements of the services detailed in this Questionnaire does your organisation anticipate may be sub-contracted? Which organisations would you anticipate at this stage acting as your sub-contractors, should your bid be successful (please provide full names and addresses) Will these proposed sub-contractors be vetted by you for financial and any other forms of security? Please provide details of the checks that you propose to make against them. 7.2 How do you ensure that sub-contractors used by you will deliver to both the quality and time constraints of the project? How does your organisation ensure good working relationships with your subcontractors?. 24

25 7.3 The City Council will require the successful tenderer to co-ordinate its services and to co-operate with those of the City Council s other contractors. How does your organisation ensure good working relationships with others? 8 QUOTATION DETAILS Training course title (add rows if necessary) Understanding the Competency Framework Managers Understanding the Competency Framework Staff Developing the Potential in Your Staff Leading and Supporting Staff through Change Recruitment & Selection Delivery cost inclusive of all expenses (please indicate both half- and full-day rates if applicable) Course design cost (if applicable) 25

26 Managing the Disciplinary Process Managers Refreshers on HR Issues Managing Sickness Absence Dealing with Grievance & Harassment Managing Stress Within your Team Reducing Your Levels of Stress 9 QUALITY ASSURANCE Evidence should be supplied of satisfactory processes and procedures to enable the City Council to be assured that supplies and services can be delivered to the required frequency, timeliness and quality. This evidence will form a key element in determining the suitability of applicants. 9.1 Please provide details of any quality assurance procedures and processes you have implemented that are relevant to this type of activity and any certificates obtained. 9.2 How would you demonstrate successful contract delivery to the Council, if you are successful? 9.3 How does your company ensure that your staff are competent (if applicable)? 26

27 10 EQUALITY & DIVERSITY 10.1 The City Council has adopted a positive stance with regard to the equality & diversity. Does your company have an equality & diversity policy? 10.2 Do your quality procedures take into account equality and diversity matters? Please list below any areas which you consider relevant to equality and diversity in relation to provision of classroom based training. Attached 11 INSURANCE 11.1 Please provide details of all insurance cover currently in force. If your company is successful, adequate insurance cover will be required. Please complete details and indicate the level of cover you have including details of the issuing company, policy number, cover provided and renewal date (and provide confirmation from your broker). Company Insurer Policy No. Cover Renewal Date Professional Indemnity Public liability 27

28 12 REFERENCES AND EXPERIENCE OF COMPARABLE CONTRACTS 12.1 Has your company or business had a contract terminated and/or a warning or termination notice issued in the last three years in respect of a comparable contract? If yes please list brief details: 13.2 To enable the City Council to assess your organisation s experience in the fields the provision of programme management based consultancy and coaching support please give examples of relevant contracts held by your organisation in the last three years. In respect of each please indicate the scale, start date, nature of customer, value and expected duration of each contract and indicate the range of services provided The City Council will wish to obtain references, where possible, from customers of the applicant who have been provided with a comparable or similar supplies and services. Please include the name, job title, address and telephone number of three representatives from the contracts referred to in paragraph 13.2 from whom such references may be sought. 14 DECLARATION 14.1 I can confirm that the following information has been included: - details of insurance cover - any other procedures, examples and logs requested - details of quality assurance procedures - brief details of all relevant contracts and referees. 28

29 14 DECLARATION 14.2 I declare that the details submitted in this Pre-Qualification Questionnaire are correct. I/we understand that the information disclosed in this Questionnaire will be used in the evaluation process to assess our organisation s financial stability and competence to conduct the service for the City Council. Signed: Name: Position: Date: Note: This form must be signed by a director or other senior representative of the company or organisation. Now that you have seen examples of a PQQ, let s now turn our attention to describing the information requested in the form and its purposes. Broadly speaking, the PQQ will seek to collect basic information about a business such as their name, address, telephone numbers and a description of the business. Over and above this basic information, businesses are asked for details of their: VAT and incorporation registration number Insurance cover References Financial standing Technical expertise Resource capacity Approach to quality Health and safety record and policy Environmental management policy Electronic trading capabilities. 29

30 The main purpose of this information is to reduce the number of potential suppliers that are invited to a manageable number through a fair and transparent system. It is a process that is similar to a typical employer recruiting into a vacant post. Let us quickly review the kind of information that will be requested in some of the areas just mentioned. The registration numbers for VAT and the date of incorporation is selfexplanatory. Insurance details will have to include the types of insurance cover, the value of each cover, as well as details of the insurer. The purpose of this information is to ensure that the business is adequately insured against business risks. Details of references will be the names and addresses of business contacts that can provide information about the track record of the business delivering the services or products. When it comes to financial information, it is important to note that the information requested will vary depending on the value of the contract. In most cases the information requested will be a copy of the last three year s audited accounts. Otherwise, a copy of the current year s management accounts, as well as a copy of the twelve months cash flow forecast of the business, will be requested. The buyer needs to be assured about the financial stability of the business so that it does not expose itself to the risk of a business going bankrupt and failing to deliver the contracted services on time, or of the agreed standard. This is where the proportionality rule applies. You need to understand the 30

31 concept of the proportionality rule in the tendering arena, so let s spend some time to explain it to you. When bidding for contracts the value of the contract should be no more than 20-25% of the business current turnover. The purpose of the rule is to help the buyer to minimize their risks and responsibilities by awarding contracts to businesses that are known to have the size, capability, resources and stability to be able to meet the contracts specified terms. This makes good business sense for the bidding company as it allows for gradual growth over time as opposed to enforced expansion, which can sometimes de-stabilise even a strong company. The technical expertise section will be information about the track record of the business in delivering the services and products the buyer has tendered for. This section is so important and in many cases should be used to demonstrate that the business has the competencies (eg experience, knowledge and skills) to deliver the services and products and has done so in the past successfully. The fact that a business has experience and skills to deliver a contract does not mean it has the capacity to deliver this particular contract. This is why information on resource capacity is required. Resource capacity is concerned with whether the business has the right mix of skills at the required number for the purpose of delivering the contract put out for tender. The main concern that is being explored in this section is whether the business has enough reliable staff to deliver the contract, as well as backup staff in the event of unexpected events such as sickness or accident. The company s approach to quality is concerned with information on the processes and systems in place to facilitate the delivery of quality services and products. This will include things like customer care policy, recruitment and 31

32 management of staff performance, quality control checks on reports produced for clients, prompt response to customers enquiries, prompt and appropriate response to customer s complaints and so forth. Information on the business policies on equality and diversity, health and safety and environment is concerned with ensuring that the business practices and processes are reasonable and in line with best practice. Almost certainly, some of the information will carry higher ratings than others in the evaluation criteria. Some of the questions asked will be designed specifically for a business to sell its products or services to the buyer. It is therefore important for the bidder (i.e. your business) to use every opportunity presented to pitch its services and products as the best using relevant evidence to support the information. Guidance For Evaluation Of Pre-Qualification Questionnaire Public sector organisations will have a scoring system that will be used to evaluate a PQQ and in many cases the scoring and the weight of each score will be provided in the document sent to potential suppliers who express an interest to bid for the contract. The table below provides information on paragraph 9 in an Invitation To Tender Document issued by the London Development Agency for a consultancy framework agreement. 32

33 9.1 AWARD OF CONTRACT The Contract will be awarded on the basis of the tender that is the most advantageous to the LDA. Evaluation criteria are as follows: Technical ability (80%). Assessed against (in descending order of importance) the following: o Depth of expertise o Relevance of expertise Pricing (20%). Price will be assessed based on the price quoted in fees schedule) which must be inclusive of all associated costs and disbursements. You will see from the above that technical expertise is weighted higher than price in this particular tender. In other cases, price will be given a higher weight or equal weighting. Consequently, you need to pay close attention to the weighting so that you give more information against areas of higher weight. 33

34 An example scoring matrix might look like this: 0 No information given 1 Poor quality or insufficient information given 2 Insufficient information given, but there is a likelihood of more being available 3 Sufficient information provided to meet the required standard 4 The required standard has been met and exceeded by additional benefits which will enhance the contract In this example a score of three would be an indication that the supplier is suitable for the purpose, and a score of four indicates that the supplier is better than average and can really add some value maybe through innovative processes or better quality. It goes without saying that you should always attempt to achieve these higher scores when submitting a PQQ or tender. On completion of the evaluation exercise, many questionnaires are completely discounted. Tender bids and PQQs of many companies fail to score highly because insufficient information is supplied with the bid. A classic example is to give a straightforward YES/NO answer to a question without providing any supporting evidence. Another common failure is to answer a question by referring the reader to another document or a website. In chapter three, you are provided with detailed information on how to write and present your bids. You will learn about the common mistakes that so often cause businesses to be unsuccessful as well as best practices that you should cultivate to help you use your resources effectively and efficiently. 34

35 If you decide to apply for a tendered contract, use your time wisely and make an effort to provide good informative answers. You will waste your own time and resources by giving poor answers when with a little extra care and attention to detail you can supply more information and therefore score higher. The Next Stage (if you get through the PQQ stage) is the tender itself. The PQQ will not be referred to again and a whole new set of questions will come your way. Sometimes the same information will be required but don t assume that you don t need to provide it again. Always do exactly as the tender document requests. A successful contract has the potential to transform your business and become the start of real growth. It s worth the effort! Let s us quickly look at some of the nitty gritty that forms part of the evaluation process of the PQQ, taking each section in turn. Section 1- Organisation Details This section of the PQQ allows the buyer to gather some basic contact details about each supplier and to establish the legal entity with which any resultant contract would be agreed. All sections should be completed. For registered companies, the buyer may wish to confirm the identity and basic details with Companies House. Basic company details can be obtained online and without charge. The same applies to not-for-profit organisations including charities and housing associations. It is uncommon to allocate weight against this part of the form. 35

36 Section 2- Financial Information These questions are intended to gain a basic indication that the supplier is not in financial trouble. For many low value or short term contracts, the financial health of the supplier may not be critical to the buyer but nevertheless a financially troubled supplier could still represent a risk to satisfactory contract submission. Turnover will be checked to ensure there isn t a drastic reduction over the last two to three years. If a bidder has No against questions pertaining to bank requirements and payment of creditors it could be an indication of poor financial controls, cash flow problems and problems with servicing debts. In such a case, the buyer will have to exercise considerable caution because of the risks associated with dealing with such a business. Section 3- Business Activities A prospective buyer has to satisfy itself that the bidder (i.e. your business) has the experience and expertise in the field that is the subject of the proposed contract and that the work would not be a departure from the core activities and operations, or for that matter, a subcontracting opportunity. This section also allows the bidder to provide information concerning the number of staff they employ so that this can be assessed against the level of resources the buyer feels would be necessary to ensure satisfactory performance of the required contract. Section 4 References The rationale for this section is to enable the buyer to assess the level of relevant expertise and experience possessed by a bidding organisation. The buyer should check that the organisation has provided references that are relevant to the buyer s requirements and that the values of these are consistent with the likely size and 36

37 value of the requirement. A new supplier may be unable to supply three referees, but one or two will be just as acceptable in some cases. Section 5- Insurance Employer s liability is a legal requirement (except for sole traders), this should be at least 5million. Public liability insurance is also essential for any well-run business. The level of cover appropriate will be commensurate with the value of the contract and its significance and should therefore vary from one procurement to another. Section 6- Quality Assurance We will cover quality assurance policy in greater depth later. For now, you need to know that if a bidder (your business) has neither accreditation nor quality control systems in place, this may give rise to doubts about its ability to provide goods and services of consistent quality. As a minimum, one would expect a bidding business to provide information that it has considered the implementation of appropriate controls to achieve and ensure consistent performance and intends to adopt such processes where appropriate. Section 7 Health and Safety A bidding organisation that employs five or more staff is legally required to have a written health and safety policy. If the supplier does not have a health and safety system, there may be doubts about its commitment and ability to meet H&S requirements. 37

38 Section 8- Equal Opportunities Again, more information will be provided in the next chapter on this, however for now you need to know that a bidding organisation must demonstrate that equal opportunities are provided to all staff and discrimination is combated within their organisation. If an organisation does not have an equal opportunity policy there may be doubts about its commitment and ability to fairly and equally manage its workforce. Section 9- Environment Management Government policy is that environmental issues should be carefully considered in procurement of goods and services by public sector organisations. If a supplier lacks an environmental policy, it may be difficult to establish whether it can provide the solution whilst minimizing the effect on the environment, or whether it can meet the requirements of environmental protection legislation. Section 10- Professional and business standing If the bidding organisation has Yes in response to any questions asked under this section, there will be doubt about the propriety of the organisation unless additional information is provided to demonstrate that the problem has been resolved and that steps have been taken to prevent its recurrence. 38

39 Conclusion You have now completed the first part of the course. You will now proceed to the second part of the course which is Writing your policies and procedures including samples. 39