Contracts, RFTs and Response Forms are all important components of a robust procurement and contract management process. But with multiple options to choose from, confusion on what to use, and when, has become rife. By Caroline Boot, NZ Procurement & Probity Services and Clever Buying.
With the benefit of trialling various forms of tender and contract documentation over hundreds of procurements, we’ve uncovered some common misconceptions among procurement staff.
And we’ve addressed them by developing a suite of aligned procurement processes and documents, which bring together the best of the available models of procurement documentation, both here and abroad.
As an aside, these tools and templates are now available to everyone who completes their NZQA Level 6 Procurement Qualification through the Clever Buying programme, which provides procurement training, qualified assessment and procurement tools and is now 100 percent government funded! Nearly 300 people have signed up with this programme in the past six months! See box.
First, let’s clarify a few important areas, and provide some recommendations for your procurement and contracts teams to streamline their documentation so it’s user-friendly, efficient and ultimately delivers the right value to your Council.
A tender document is not a contract
The most critical component of tender documentation is a Request for Tender (RFT) (or Request for Proposal, RFP; or Request for Information, RFI; Registration of Interest, ROI; or Request for Quotation, RFQ). This sets out a description of the products or services (works) you are seeking to procure, and how you will select the successful supplier to award the contract to. A Contract document is what follows that selection process – the terms of engagement between you as client and your supplier.
It’s important to recognise that because these documents serve different purposes, you can mix and match them. It’s perfectly acceptable, for example, to use a MBIE RFP template (with its own set of conditions of tendering); and refer to a NZS3910 contract. Using a NZS3910 contract does not mean you must also employ the corresponding Conditions of Tendering.
RFT, RFP, RFQ, ROI, RFI … there are differences in these formats that you need to know about.
- A Request for Tender (RFT) has price and non-price attributes, both of which are scored.
- A Request for Proposal focuses on Non-Price factors, as high levels of uncertainty mean pricing is not appropriate. It may seek rates or prices separately, just as a basis for later negotiation.
- A ROI or RFI just seeks information on who in the marketplace may be capable or interested in bidding (later). It should not be used as a selection tool, and should be simple and fast for suppliers to respond to – no lengthy explanations!
- A RFQ is used for simple, low risk contracts where quality above a pre-defined level is not important – in other words, a Lowest Price Conforming tender. Basic preconditions and price should be all that’s needed.
Note that for probity purposes, any and all RFx documents that ask for Non-Price information as well as Price information should collect that information in separate ‘envelopes’ (hard or soft copy). This is to ensure that consideration of pricing does not influence scoring or pass/fail decisions.
These take many forms, and usually a draft is referred to in the Tender documentation. You may need guidance from your legal team to selection the right one for your project. Common forms are:
- Government Model Contracts (Lite or Standard) – used typically for purchasing low risk, or low/medium risk products or services. These are not generally suitable for larger construction contracts. They incorporate many of the changes implemented in the Government Procurement Rules, 4th edition, such as Supplier Code of Conduct, Broader Outcomes, etc.
- NZS3910 – for physical works contracts – “Build only” contracts suitable for most contexts involving horizontal or vertical infrastructure where design is completed prior.
- NZS 3916 – for medium or large-scale (or complex) design and build contracts, where designers and constructors share risk.
- NZS 3917 – for fixed term contracts (involving services provided over a period of time, rather than a fixed scope of works).
- NEC Contracts – alternatives to the NZS contract suite, developed in the UK for civil engineering and construction projects and hailed as providing a more collaborative framework for managing contracts.
Whichever contract form you decide on, it is advisable to keep to standard contract forms, with as few special conditions as possible.
Don’t recycle special conditions from previous contracts which may be irrelevant or even contradictory to other legacy conditions.
Streamline where possible, and you will save hassle as well as legal review costs, and discourage tags in tender responses. Seek legal advice to support your selection of the best contract format to use.
Tender documentation available
Since 2013, MBIE has aimed to standardise its RFx (RFT, RFP, RFQ etc) documentation, to streamline procurement and contract management processes.
Despite some early bugs, (such as formatting problems, standard questions and non-separation of price and attribute information), their RFx formats have provided welcome consistency to public sector tendering – including tenders for infrastructure works such as roading.
While the format is somewhat different to the NZTA’s format (which has been largely unchanged apart from cosmetic changes for the past 10-15 years), the MBIE documentation can and has been very effectively used for many substantial roading infrastructure and passenger transport projects that are funded by NZTA.
A key benefit of the MBIE models is the inclusion of Response Templates. If well designed, these provide standardised formats for responses – which hugely improves efficiency and consistency of both responding to and evaluating tenders.
Update of the MBIE’s RFx documentation suite is well under way, following a consultation last year – and we will expect to see amended documents soon.
Some key recommendations to the consultation included the following.
- Clearly defined, objective and simple pre-conditions up-front, so suppliers can see at a glance whether they are suitable to bid or not, without time-consuming review of the RFT or incurring time and costs to respond, only to be rejected later.
- Clear separation of Price and non-Price information: In Lowest Price Conforming tenders, Price information should be reviewed first to identify the lowest price bidder and then check that one only for conformance. Other tender evaluation methods (Weighted Attributes, Price Quality Method, Target Price or Quality-Based Method/ Brooks Law) should have non-Price information reviewed and scored first, with scores agreed and set in stone, before Price Information is considered.
- Guidance to suppliers on what general content will be scored highly, in each attribute. This serves the dual purpose of aligning the evaluation team (which makes evaluation far more efficient and defensible); and providing suppliers with direction so they include content that is most important for evaluation.
- Providing space for responses, outside a table (improves functionality of formatting).
- Providing guidance on the length of response expected for each question, rather than a strict page limit for the full response.
- Critical review to ensure that the evaluation criteria, attributes, weightings and questions are all 100 percent aligned. No irrelevant questions, and no evaluation criteria that are not reflected in the questions.
The revised MBIE templates are eagerly anticipated and due to be released soon. We hope these recommendations have been incorporated into them.
Other processes and documentation you should use
There are several critical additional documents and processes that need to be prepared to support a fair, robust and defensible procurement process, and provide a segue to effective contract management post award of the contract. These include the following.
- A robust Procurement Plan. Development of the Procurement Plan should be jointly undertaken by the project team and evaluators, so that the priorities for driving value on the project are properly captured and employed in the procurement process.
The Procurement Plan should not only cover the project description and analysis of the supplier market, but should be firmly based on a detailed and quantified analysis of the risks and opportunities that are under suppliers’ control (such as their methodology or the experience of their proposed team members).
While MBIE’s Procurement Plan templates are useful, this risk and opportunity analysis is not emphasised – which often has the domino effect of mis-alignment of the procurement tools (questions and non-price attributes) to the project priorities or drivers of success. This is a valuable and central addition to consider.
- An Evaluation Plan. Critically, this must include fact-based, tangible benchmarks for each band within the scoring scale for each non-price attribute (and, where applicable, sub-attribute). This is important for several reasons:
- Evaluators need to be aligned BEFORE they review responses, so they have clear and specific benchmarks to describe what ‘good’ looks like in each attribute, and consequently, a firm, unambiguous and objective basis on which to score it. Making it up as you go along and using subjective descriptions (very good/ good, poor, etc.) can introduce potential for bias and jeopardises scoring consistency and integrity.
- The level of stretch in the non-price attribute scores needs to be calibrated – it can make a profound difference to the numerical analysis which results in the recommendation of the preferred supplier.
- Input of evaluators into the scoring scale should be discussed, agreed and confirmed before they look at the responses, to minimise subjectivity or risks of conflicts of interest biassing the scoring.
- In contrast to a generic (“excellent – good – fair- poor”) scale that is traditionally used, pre-determined fact-based examples significantly facilitate and accelerate both individual scoring and moderation of the scores by reducing uncertainty, controversy, and debate during the moderation process.
- Anchored, fact-based scales minimise the risks of introduction of new evaluation criteria after the bids have closed – a prime area for probity challenges in tender evaluations.
- An evaluator briefing session. Held just prior to the start of evaluation, this should cover conflict of interest forms, explanation of the tender process, expectations for consistency, confidentiality and communications during the evaluation period. Many of the greatest frustrations to the efficiency, consistency and integrity of tender evaluation processes arise from late inputs from senior managers or tender evaluators who have not been involved in the planning processes or translated their expertise into providing guidance on the scoring benchmarks.
This can result in divergent, tangential scoring from those late entrants to the procurement process, potentially diverting the outcome from the factors that were originally critical in driving value for money.
- A Promises Register. This is the vital link between what’s promised in the winning tender, and what is actually delivered on the contract. It’s developed once the preferred tender is identified, through extracting from the tender response every undertaking of value that contributed to the evaluation result. Those ‘promises’ are then translated into a set of KPIs that are monitored, measured and reported on through the life of the contract.
The promises register is your insurance that the basis on which the tender was won, is realised through the life of the contract once awarded. It effectively closes the loop between the procurement process and the contract management tools to ensure that value is delivered.
In summary, the right procurement and contract management documentation and processes can significantly streamline your paperwork, as well as protecting you from probity challenges.
For further information on fit-for-purpose, efficient procurement and contract management documentation; or to ask about fully funded training and NZQA qualification in these areas, please see www.cleverbuying.com or contact Caroline Boot – email firstname.lastname@example.org or 021 722 005.
NZQA procurement training at no cost
A reminder to readers that the NZQA Procurement training, ongoing mentoring and assessment for NZQA Qualified Tender Evaluators is now fully government funded
The programme consists of the well-known, two-day Clever Buying course, followed by one-on-one mentoring, coaching and assessment from a NZQA-Qualified very experience procurement professional.
All the assessments are based on workplace procurement activity – developing procurement plans, RFT documents, processing and evaluating tenders, and applying ethical procurement and government procurement rules.
Typically, candidates enjoy qualified expert procurement advice for a period of 6-18 months as they work through their on-job assignments.
The qualification is ideal for full-time procurement staff, who will graduate as NZQA Level 6 Qualified Tender Evaluators. Nearly 300 people have signed up for the qualification in the past six months – taking advantage of the government funding which is available until (at least December 2022.
There are upcoming courses at www.cleverbuying.com, or you can organise a course at your location.