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Six practical tips to help you manage complex procurements

Many universities are investing in high-value capital projects, a process that takes time, preparation and a clear understanding of what you want

Posted by Julian Owen | November 18, 2017 | Finance, legal, HR

Veale Wasbrough Vizards (VWV) set out some practical tips on how you can you run an effective and efficient process, while minimising the risk of challenge under the procurement rules. Even if you are a university who has elected not to apply the procurement rules, by reason of no longer falling within the definition of a contracting authority, much of the following guidance may still be useful.

1. Know what you want and your available budget

The procurement will be framed by your requirements, so it is important you are clear up front about what you want.

At the minimum, the Public Contracts Regulations 2015 (PCR) require the technical specifications or outcomes and the characteristics of the works, services or supplies to be described in the procurement documents. 

Minimum standards, as opposed to ‘nice to haves’ should also be identified. This can help with shortlisting suppliers. For example, for IT projects, suppliers will need to demonstrate their systems have been built to comply with the increased data protection requirements that will come into force from May next year. 

In practice, it is also advisable to engage in market testing to inform your requirements and your budget, and to ensure they are achievable with what is available in the marketplace. Please see paragraph 2 below. 

These steps will help minimise the risk of contract changes during or after the procurement process. Where you can, draft some flexibility in the contract notice to future-proof the contract, for example, by including the right to extend the contract or to include ancillary works or services at a later stage.

2. Carry out market engagement

Market engagement can be a really useful tool to find out from suppliers:

 - whether there is an available solution on the market

 - the likely level of interest from suppliers in bidding for a project

 - their willingness to contract on certain terms and conditions

 - their willingness to engage in dialogue or negotiation

There may be a tendency to carry out market engagement with a few regular suppliers. For larger complex projects, consider issuing a Prior Information Notice and questionnaire so that any interested supplier can provide feedback and is aware of the opportunity. 

Stephanie Rickard 

3. Prepare your documents in advance

Often there is pressure on the procurement team to start the procurement process as soon as possible. The risk with this approach is that it may not allow for proper engagement, either internally with the project sponsors or externally with potential suppliers, or for development of the procurement strategy and procurement documents. It is difficult to change your mind about your requirements or the conduct of the procurement process, for example, whether you wish to retain the right to down-select bidders, once the process has started.

One of our frequently asked questions is whether all of the procurement documents, including the Invitation to Negotiate or the Invitation to Participate in Dialogue and the evaluation methodology, need to be available when the Contract Notice is published. Whilst regulation 53 of the PCR requires the procurement documents to be available to bidders electronically, the definition of procurement documents is not specific. However, it is good practice to have all the documents available, at least in outline, although you may decide not to publish all the documents. Bidders will need to know at least the headline award criteria and weightings. Thinking about the approach to evaluation early on will help the project team focus on what is most important in the delivery of the project. 

4. Choose the best procurement route 

Whilst it may be tempting to follow the restricted or open procedures on the basis they will allow for the quickest procurement route, they have significant limitations for complex projects and may end up increasing the timeframe for procurement if the process has to be re-started. These routes do not have any in-built flexibility so there is no scope to discuss alternative solutions or amendments to terms and conditions. We are frequently asked to advise on procurements where a bidder has indicated that they cannot accept the university’s position on liability or insurance, but the university does not want to exclude them from the procurement process and to assess the level of risk.

The competitive dialogue process or competitive procedure for negotiation have been specially designed for situations where:

 - the needs of the contracting authority cannot be met without adaption of a readily available solution

 - the requirements include design or innovative solutions

 - the requirements require discussions regarding the legal or financial structure of the project or allocation of risk

Whilst there have been negative perceptions, particularly in relation to competitive dialogue, as a result of the costs, resources and time it has taken to procure a contract using these routes, they can be efficient and effective if properly managed. 

The key to this is having a focused and structured dialogue or negotiation phase. In practice this means only taking forward a manageable number of bidders, choosing specific areas for discussion such as terms and conditions, how the project will be delivered and options for financing, and publishing a timeline for discussions. Project planning is important to ensure that the right members of the project team are available for meetings and are clear about the contracting authority’s own position. Bidders should be clear about the process and how it will be conducted, what is expected of them and the safeguards in place to ensure fairness, transparency and non-discrimination. 

"With careful planning, complex projects need not mean complex procurements." 

5. Have the right evaluation process in place 

The evaluation of a complex project will always be subject to scrutiny, particularly where the project is high value, politically sensitive or important for your reputation. 

You can avoid the common pitfalls by: 

 - testing your evaluation criteria as much as possible to ensure that the chosen award criteria and weightings will result in the most economically advantageous tender. It sounds obvious but if, for example, testing and demonstration of high-value equipment or IT systems is an overriding factor, make sure the evaluation weightings reflect this! 

 - ensuring you can evaluate bids on a like-by-like basis. The PCR permits life cycle costing which is one way of measuring price for different solutions. You should provide as much transparency as possible regarding the evaluation methodology for price, so that bidders are able to work out what score they will get if they bid a certain price.

 - where possible, drafting the evaluation methodology so that is objective

 - ensuring the evaluators have the relevant technical expertise and know how to apply the scoring methodology

 - doing what you say you are going to do!

 6. Keep an audit trail 

As part of a contracting authority’s duty of transparency, it is required to keep a detailed record of all its processes and decisions. Clearly this duty will cover decisions to shortlist bidders and decisions in relation to evaluation, but it also extends to discussions during a dialogue or negotiation phase. 

This duty is quite onerous and you will need to consider how it can be achieved, for example, by recording all dialogue sessions or preparing minutes of each session. 

Conclusions

We are seeing a growing trend towards the use of the new procurement routes, particularly the competitive procedure with negotiation, which offer the potential for much-needed greater flexibility for both universities and suppliers and better outcomes. 

The challenge is for procurement teams to have the confidence to move away from the traditional procurement routes. With careful planning, complex projects need not mean complex procurements.  

VWV has recently appointed Stephanie Rickard as a Partner to lead its procurement and State aid team from its Bristol office. Stephanie has a particular interest and focus in the HE sector. She has over 20 years’ experience advising on and managing complex and high value procurements and projects, including one of the highest value procurements undertaken in the UK.

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