Bob Moodie NJM European, Economic & Management Consultants Limited

Selling to the Public Sector – helping Leicestershire SMEs unlock their potential

What we will look at:

1. The Context & Opportunities

2. Understanding Procurement Processes

3. Finding tender opportunities

4. Developing a strategic approach

5. Becoming ‘Bid Ready’

Context: Policies Coalition Government’s aspiration to award 25% of central

contracts to SMEs Leicestershire County Council’s Sustainable Commissioning

& Procurement Strategy (2009-13)- % expenditure with SMEs- No. of local SMEs submitting Pre-Qualification

Questionnaires to ESPO when expressing an interest in Council requirements

The Comprehensive Spending Review (2010) SME Concordat Equality of Access (SME & Third Sector) EU Procurement Directives (OJEU) UK Government strategy and statutory requirements Local authority procedures, statutory requirements

Context: Economics

Extensive public sector budget cuts and spending pressures Price & Value for Money (VfM)Most Economically Advantageous Tender (MEAT) rather than Lowest PriceCollaborative buying by authorities – purchasing consortiaRationalisation & Framework Agreements, Contract Bundling; Reduction of public sector in house management overhead and increase in outsourcing

NB Suppliers’ ability to deliver efficiency savings and effectiveness

Context: Economics

VfM is the optimum combination of cost, quality and fitness for purpose to meet the buyer’s requirements (it is not about the lowest price)

Local authorities are subject to the Best Value guidelines

Embraces the concept of the ‘price-quality’ relationship

Selection usually will be made on the most economically advantageous tender (MEAT)

Context: Society & Environment Corporate Social Responsibility Sustainability & Equality Innovation & non contractual outcomes (Added

Value) Local Government Act 2000 – Wellbeing Powers- Leicestershire County Council’s Sustainable

Commissioning & Procurement Strategy (2009-13) performance measures:- No. of contracts with a Total Value exceeding £1m that include a Social

Clause- No. of high risk contracts where environmental considerations are

included in the contract award (weighting 15% or more)

Context: Technology

E-Procurement: Transition from paper based to electronic based systems and processes:

E-Portals E-tendering E-auctions Iprocurement Purchasing Cards (pCards) Real time reporting Payment and Servicing

Opportunities: Public Sector 9 Local Authorities:

Leicestershire County Council Leicester City Council North West Leicestershire District Council Charnwood Borough Council Melton Borough Council Blaby District Council Harborough District Council Oadby & Wigston Borough Council Hinckley & Bosworth District Council

3 Universities: Leicester, Loughborough, De Montfort 7 FE colleges: Stephenson, Loughborough, Brooksby Melton, North

Warwickshire & Hinckley, South Leicestershire, Leicester, Loughborough University School of Art & Design

SchoolsOther: NHS (subject to major review Housing Associations / RSLs The Emergency Services

Opportunities UK Public procurement is estimated at over £175 billion per annum

(13% of UK GDP).

Leicestershire County Council spends over £300 million each year on goods, works and services. Over the next three to four years, to 2012-13, the Council will need to make savings of around £70m - that’s 25% of its budget.

Leicester City Council estimated procurement budget for the Authority is £260 million p.a. (2007-2008).

NHS Leicestershire & Rutland Procurement Partnership influences spend of approximately £250 million on goods and services each year.

Leicestershire County Council Procurement Expenditure (2008-09)

Opportunities Policies to encourage SME involvement and a more level

playing field Better transparency and simplified procurement

processes Equal treatment and fair competition Open markets & better access to information

NB: Procedures can be complex, time consuming and open

access creates more competition Adopt a strategic approach Willingness to be involve

Opportunities: SMEs

Brings greater competition Lower cost base Innovation Responsiveness Flexibility Quality of service Specialists Customer focus Local Knowledge

Bear this in mind when you are developing your USP for a particular contract!

Public Procurement:Demystifying the Process

Procurement Procedures: The formality of the procedures and process increases in line with the contract value and risk.

Lower value contracts

Advertising not essentialOfficer discretion Approved supplier listsVerbal and Written Quotes common or tender processEasiest to compete and win – harder to find

Higher value contracts

AdvertisedFormal Tender process onlyEssential above EU ThresholdsFramework agreementsEasiest to find – harder to win

Procedures – Example

Contract Type Contract Value Procedure

Very low quote Under £5,000 No formal procedure ‘shop around’

Lower value quotes / small lots

£ 5,000 - £20,000 Two written quotes

Low - Medium £21,000 - £49,000 Three written quotes / formal tender process

Sub EC Threshold £50k - EC threshold Formal tender process

EC Threshold £156,442 (Supplies)£156,442 (Services Part ‘A’)£3,927,260 (works)

OJEU publishedFull EU procedure

Each organisation has its own published procurement policy, procedures, processes and contract value thresholds in place. For example.........

Public Sector Organisation

Threshold (goods & supplies)

Procurement Process & Source

Leicestershire County Council

<£1k£1k – £20k>£20k - £100k

>£100k - EU threshold (£156,442)

1 Verbal / Written Quote3 Written Quotes or www.sourceleicestershire.co.ukRequest for Quotation www.sourceleicestershire.co.uk

Formal Tender Process www.sourceleicestershire.co.ukOr www.espo.org

Leicester City Council < £10k£10k - £49k

£50K - EU threshold (£156,442)

Up to £250k (works only)

Verbal / Written Quotes (officer discretion)3 Written Quotes or Formal Tender Process (officer discretion)

www.sourceleicestershire.co.uk or www.espo.org

www.exorgroup.co.uk/supplier

North West Leicestershire District Council

<£10k£10k – £50k£50 - EU threshold(£156,442)

Construction works only

3 Verbal Quotes3 Written Quotes Formal Tender www.sourceleicestershire.co.uk

Invite tenders from pre qualified suppliers registered with www.constructiononline.co.uk

Local Procedures

ProceduresCommon Procurement Procedures:

OPEN - One Stage Process Each applicant submits a full priced tender

RESTRICTED – Two Stage Process i) Pre Qualification Questionnaire (PQQ) to select

shortlist of potential suppliers ii) Invitation to Tender (ITT) to shortlisted

potential suppliers –full priced tender required

Procedures FRAMEWORK – Two Stages or More

Suppliers selected through an open / restricted procedure to a ‘panel’ of suppliers for given period

Call offs or mini competitions may be held when services / goods required

Less common: NEGOTIATED - Two Stages

Very complex, high value Tender specification not clear – supplier input required

COMPETITIVE – Two Stages Tender specification requires development – dialogue with

supplier

ProceduresPre Qualification Questionnaire (PQQ): Evaluation of organisation Are you safe and appropriate choice? Compliance Past performance / track record Selection criteria

Invitation to Tender Stage (ITT): Evaluation of bids Your service / product / works offer Future performance Award criteria

Procurement Process Overview

ProcureContract Notice

EOI

Tender

EvaluateManageReview

Commission

PQQ

Award

PQQ InformationGeneral Business Information Business Details Status (Sole contractor / consortium) Ownership Business Probity Professional Conduct

Documentation required may include: Company History HR Information Administrative Information (Company Registration/VAT Number) Quality Standards Accreditation / Certificates

PQQ InformationFinancial & Insurance Information: Turnover

Accounts

Insurance

Documentation Required may include: Audited accounts, Management accounts, Parent company accounts Bankers statements & references Financial projections, including cashflow forecasts Details of previous contracts and values Capital availability Certification of Incorporation, Certificate of Name Change Insurance Certificates

PQQ InformationBusiness Activities, Track Record, References Business Activities HR Information (FTEs / Training Records / CVs) Referee Contact Details for recent contracts Relevant Contract Performance Subcontractors Capability Statements Case Studies References (norm = 3 recent referees)

PQQ InformationEssential Policies: Quality ManagementEquality & DiversityHealth & SafetyEnvironment Management & Sustainability

Others Policies:Business EthicsCorporate Social ResponsibilityBusiness Continuity Sub Contracting

PQQ may require you to supply : specific responses, outline of strategy, copy of statements, copy of certifications etc

PQQ EvaluationPQQ will be evaluated to select potential suppliers to invite to tender. Based on:

Business Probity Technical Capability and Capacity Financial Information Contract Compliance Policy Conformity

NB: Evaluation includes: Pass / Fail criteria Financial risk based assessment Criteria have different scores with weightings

Example Scoring FrameworkSection Score Weighting

1 Organisation Details N/A

2 Financial Information N/A or Risk Based Assessment Pass/Fail

3 Insurance Pass/Fail

4 Business Activities 15%

5 Business Practices 30% (Total)

Health & Safety 5-10%

Quality Assurance 5-10%

Environmental Management 5-10%

Equality 5-10%

6 Requirement - specific 40%

7 Experience & References 15%

8 Professional & Business Standing Pass/Fail

ITT Information If you are shortlisted from the PQQ or for the Open Tender

procedure Invitation to Tender documents will normally identify the

information required and how to structure your response. The areas covered are usually as follows:

What are you going to do How are you going to do it How much will it cost Who is going to do it What is your track record / prior experience Compliance References

ITT Information

Invitation to Tender (ITT) pack will include:

Instructions to Tenderers The Specification Form of Tender Draft Contract Terms and Conditions Declarations / Bona Fide Pricing Schedule

Costing the Proposal

Personnel & Tasks Charging Rate(s) (Daily/Hourly) & Time Fixed Cost / Variable Cost Expenses & Disbursements Contingency VAT Innovative Cost Proposals

Discounted Cost e.g. 5% early payment, economies of scale and efficiency savings linked to contract term and/or number of contracts (Lots) awarded

Buyer comfort: Offer 10% Contract Price Withheld until completion

Adopt a Strategic Approach: Tactics Before you start: is the tender opportunity right for your

organisation? (To Bid or Not To Bid?) Download / print off ALL PQQ / tender documents and read

them carefully: Is the specification relevant to your business activities? Do you have a track record in the area? What % of turnover does the contract represent – 20% rule? What are the risks, who are your competitors and what is the % chance of

success? Is there an incumbent? Can you answer each question with the information required? Do you have the supporting documentation in place for compliance? Can you make commercial sense of the contract price? Do you have the in-house resources to deliver – do you need partners /

subcontractors? Do you have the time / resources to prepare the bid by the deadline?

Adopt a Strategic Approach: Key Points Address each element of the tender specification and structure your

response accordingly

Do not cut and paste from previous bids

Be specific in your response – do not provide generic information

Understand what the buyer requires – show how your solution goes the ‘extra mile’

Respond to the questions with relevant evidence and / or provide appropriate examples e.g. Case studies

Use diagrams, illustrations, graphics

Realistically price your offer and use any financial model provided

Review the drafts against the criteria, scores , weightings and revise

Proof read and check any figures / costings

Aim for clarity, brevity, readability and persuasion

Adopt a Strategic Approach: Key Points Review the evaluation criteria, scores and

weighting (this should influence time / effort spent on each criterion response)

Beware of yes / no, pass / fail criteria References – recent and relevant Use tender envelope / label if provided Ensure the submission is complete AND signed Include copies of requested documentation e.g.

Insurance certificates, accounts, policies etc Respond by the correct format, date + time

(electronic, electronic + post, post?)

Tender Preparation: Key Steps Appoint a bid manager / individual and team of key people

Meeting(s) with tender team for detailed review and interpretation of tender requirements & criteria (including scores & weightings).

Prepare work plan & allocation of roles/tasks/milestones with reference to tender & submission deadline. o NB: Build in time to review, refine and style bid

Determine whether you require clarification of any aspect of the tender and ask the question(s) allowing enough time for a response. Check regularly to see if any questions/answers have been submitted by competitors.

Conduct regular reviews of the draft tender

Conduct a mock assessment against the scoring matrix

Ensure you have enough time for signing and submission

Post submission ask for feedback

Finding Opportunities Where should you look / who should you know?

PUBLISHED UNPUBLISHED SOURCES

Tender websites & Supplier portals

Networking / relationship building

Organisational / Sector websites Procurement Teams / Category Managers

Tenders Electronic Daily (TED) Operational departments and units

Local / National press / Press releases

Market analysis / competitor intelligence

Trade Press Partners / sub contractors

Meet the buyer events / briefings

Second / Third Tier Contractors / Supply chains

Contract NoticesKEY TENDER WEBSITES

Name: Source: Used by:

Eastern Shires Purchasing Organisation

www.espo.org LAs, NHS in Leicestershire, OJEU tenders

Source Leicestershire www.sourceleicestershire.co.uk LAs, NHS in Leicestershire

Leicestershire County & Rutland NHS

http://www.lcr.nhs.uk NHS

In-Tend www.in-tend.co.uk Universities, Colleges, Schools, LAs (some in Leicestershire and nationally)

Blue Light www.blpd.gov.uk Police, Fire & Rescue Services (including Leicestershire Constabulary & across UK)

Supply to Government www.supply2.gov.ukwww.supply2health.nhs.uk

Lower value government tenders (*website will be replaced by ‘Contracts Finder’ March 2011)

OJEU www.ted.europa.eu Any public sector contract above EU Threshold

Finding Opportunities: e-portals Identify a number of key tender websites Familiarise yourself with the website format and

content Register and or publish company details Set up for Alerts service, newsletters etc Appoint key individual(s) to monitor regularly for

new contract opportunities Apply filters to your search words (decide which

opportunities to focus on)

Buyer Requirements

Main evaluation criterion: ‘Most Economically Advantageous Tender

Understanding buyer’s needs Combining price with quality and other relevant factors Value for money Acceptable level of risk Efficiency Improvement in performance or cost savings Meeting department and organisation’s objectives Reliability, consistency Contract management Inspection and audit

Buyer Preferences

LIKE Don’t like

Concise and precise language Wordy tenders, Inconsistencies and errors, poor use of grammar

Clear structure (esp. Methodology) Poor methodology (failure to define who does what, where, when, why and how)

Challenges have been understood and properly addressed

Deviation from defined requirements, lack of understanding of client requirements and failure to answer questions

Relevant background information Lack of detail/explanation or ‘data dump’

Properly defined & appropriate resources Unclear who will be involved in delivery

Systems & procedures Exaggerated and unsubstantiated claims

Innovation – or the opposite (tradition) Poor evidence of reliability

Risk assessment (mitigations) No risk assessment

Case studies & references Irrelevant case studies

Buyer Preferences

LIKE Don’t like

Concise and precise language Wordy tenders, Inconsistencies and errors, poor use of grammar

Clear structure (esp. Methodology) Poor methodology (failure to define who does what, where, when, why and how)

Challenges have been understood and properly addressed

Deviation from defined requirements, lack of understanding of client requirements and failure to answer questions

Relevant background information Lack of detail/explanation or ‘data dump’

Properly defined & appropriate resources Unclear who will be involved in delivery

Systems & procedures Exaggerated and unsubstantiated claims

Innovation – or the opposite (tradition) Poor evidence of reliability

Risk assessment (mitigations) No risk assessment

Case studies & references Irrelevant case studies

Get Bid Ready: Preparing the Documents Make note of instructions, word limits and submission format Try to understand what each question is asking and why they

are being asked. Be compliant! Note the scoring / weighting of criteria and spend time / effort on

your response accordingly Make careful note of the deadline and make sure you submit

well in advance of the deadline (avoid last minute submissions) Anything you are not sure of, contact the buyer (but be aware

that any question you ask will be notified to other suppliers) Answer all questions honestly and be keen and positive in your

responses (emphasise your USP). Double check your response / second pair of eyes Ensure you complete and submit all the documents required If unsuccessful (or successful) ask for a debrief

Get Bid Ready: Action Plan Register AND publish on e-portals

Set up internal processes and identify individual(s) to monitor tender portals, sources, alerts

Identify and network with your local public sector buyer targets (at departmental / procurement level)

Attend meet the buyer events / tender briefings

Develop a Tender Resource Pack (e.g. Company & financial information, case studies, references etc)

Establish a working group for tender preparation

Search for potential partners / subcontractors

Strengthen your technical capacity, infrastructure, bid skills

Develop, improve your policies

Consider accreditation (e.g. CHAS, ISO, IiP etc)

Review unsuccessful bids

Act strategically – know when to bid and when not to bid!

Be...

Further one to one support:

bob@njm.co.uk vicky@njm.co.uk

0191 284 4949