It’s time to say publicly what most people who respond to Irish public sector tenders all know:
The eTenders Government procurement process as it stands is almost purpose-built to select the wrong company for the job, and guarantees cost overruns and delays.
But before I get into too much detail, let me be clear about one thing. I do understand that the process has been created with the best possible motives. It’s absolutely correct that in so far as it is possible decisions around public spending are made in a transparent and objective manner. Certainly, nobody wants to go back to the old world of handshakes in snugs and the old school tie. And I’m not just saying that because I went to St Mac Daras.
But nevertheless, I don’t feel I am revealing any state secrets when I say that many buyers are often keen to avoid getting into the eTenders process (usually by budgeting below the 25K threshold) and most agencies detest it. It might be worth asking why that is, and as I am in the fortunate position of not having too much skin in this particular game, I may as well be the one to do it.
In case anyone is unaware, here in broad brush strokes is how the current process works:
- The organisation that needs work done spends a long time itemising their requirements in as detailed a manner as possible within a tender document
- Bidders are invited to respond to this document
- After an initial time period for queries, no further questions or contacts are permitted
- Based on an agreed system, the responses are scored and a winner emerges
That sounds reasonably logical. But unfortunately in practice things go off the rails pretty quickly. Let’s look at the actual result that this process delivers.
How The eTenders Process Distorts Incentives
As I already mentioned above, the process as it stands today might feel fair, but nevertheless it consistently results in poor decision-making and perhaps more importantly for those in public sector procurement, a huge amount of value left on the table.
Here, in no particular order, are the particular issues created by the eTenders process:
- They punish creativity. In order to ensure no stone is unturned, client organisations tend to spec their requirements in detail. But by doing so, the process actively removes the opportunity for any supplier to bring creative thinking to the table. It ossifies the process into a box checking exercise that punishes forward-thinking agencies who have insight and strategic thinking to bring to the table: those decisions have already been made by the client. Perhaps worse, it means that in the delivery stage of a project there’s no flexibility to adapt the project in the light of new knowledge or understanding.
- They create misunderstanding. By removing the ability to communicate during the bid process, it actively prevents confusion being resolved and removes the opportunity for the client (ultimately the taxpayer, remember) to clarify certain points and by doing so make the right decision. It is possible to lose a contract - or more importantly reward the contract to the wrong supplier - over the most trivial detail. Which in turn leads to…
- They reward bureaucracy. The process favours organisations set up to complete complex box-checking and due diligence exercises. In other words: large, bureaucratic organisations. I may be going out on a limb here, but when I am looking for a supplier ‘the most bureaucratic’ doesn’t usually spring to mind as a requirement - but that is where processes like these end up. As a side-effect they tend to work against growing indigenous companies with a focus on creativity and problem solving, and in favour of more process-driven multinationals.
- They measure the wrong things. In far too many cases, what we might describe as ‘judgement calls’ are avoided in the pursuit of absolute objectivity. This is understandable, but a disastrous mistake. If we take our industry of web design as an example, in many cases decisions are made without the client organisation EVER looking at the prior work of an agency, because to do so would invite subjective judgement. Frankly speaking, this is insanity masquerading as objectivity.
- They come down to money. Budget is important. But the net effect of everything discussed above is to select the supplier that checks every box and does so for the lowest cost. This is effectively letting accountants make decisions about the right supplier for the job. It becomes a race to the bottom. The ‘winner’ is the company that can do the absolute minimum for the lowest price.
How To Fix The eTenders Process
It’s easy to be negative, and it’s also true that some clients manage to work within these restrictions better than others. We should also respect the noble intentions I mentioned at the start of this piece. We want to preserve a level playing field. The criteria that matter are those relating to making the right decision.
So on that basis, here are some simple recommendations that would go a long way to correcting the current situation:
Focus on objectives rather than detailed specifications. Usually there is a job to be done. Allow the supplier to interpret how to do it. Bring their creativity and problem solving to the fore - it is what you are paying for after all. Bring objectivity to the table in terms of concrete targets for performance rather than simply ‘getting the job done’.
Allow communication within a formal framework. The silence that falls over a typical tender process is entirely counter-productive. Instead have clearly specified back-and-forth communication, available to all suppliers. Ensure that the process includes the option to reach back out to suppliers to clarify specific issues.
Bring some evaluation of quality into the process. This should be as transparent as possible of course, but the choice of supplier should always take into account an appraisal of their previous work (both for the organisation and for third parties). In addition, talk to references and score their feedback.
Allow for negotiation. Or at the very least, establish a method of decision-making that doesn’t simply come down to price. Following the recommendations above will probably do that to some extent. If necessary, allow discussion of price within formal limits to take place with each supplier.
It’s probably asking a lot for all these recommendations to be adopted. But if they were the taxpayer would certainly be better served when it came to public procurement. Worth thinking on!