Anne Petterd - Baker & McKenzie - Protecting against Hiccups to the Procurement Process

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© 2014 Baker & McKenzie

Protecting against hiccups to the

procurement process

Anne Petterd, Partner

Baker & McKenzie, Sydney

[email protected]

2014 National Hospital Procurement Conference

mailto:[email protected]

© 2014 Baker & McKenzie 2

Key message

‒ Procurement problems are a customer and supplier

issue

‒ Each can

Cause problems for the other

Prevent problems arising


What do people complain about?

‒ Not a genuine procurement opportunity

‒ Took too long to decide and reduced scope

‒ The tender terms didn’t say that item was in scope

‒ Tender instructions unclear

‒ Bidder ignored instructions

‒ Incumbent / other bidder unfair advantage

‒ Improper contact with / acceptance of entertainment by

procurement team

‒ We were excluded for a minor non-compliance


Disruption to procurement

‒ Delay in releasing awaiting authority to proceed

‒ Pause during to clarify scope / address scope removal

‒ Hold up evaluation due to tender response problem /

probity issue

‒ Hold up contract award

Tender response problem / probity issue

Awaiting authority to commit

‒ Legal challenge to undo contract award

Legal options can differ for government and non-

government conducted procurements


Is hospital procurement special?

‒ Funding uncertainties

Can hamper ability to commit funding and projects

‒ Whole-of-government projects

Extra layer of bureaucracy and planning to rollout

‒ Utilisation of mandatory panels

Stakes of missing out are higher

‒ Highly specialised supplies

Characteristics might not be appreciated by

procurement officer

Limited pool of subject-matter experts

‒ Use of practices not contemplated by tender terms


1. Well drafted tender terms

‒ Do give Customer appropriate flexibility

To exercise discretion on non-compliances

To make judgement calls without abandoning tender

‒ Do set expectations for bidder behaviour

Conflicts of interest, improper assistance

‒ Do clearly stipulate response format to enable

comparison of “apples with apples”

‒ Don’t make excessive use of mandatory

requirements

‒ Don’t contain unnecessary legalese or unrelated

terms


2. Clarification questions

When to ask

• Could answer affect an important aspect of technical solution?

• When question has been answered informally and you need to rely on it

• When complaining about the issue later is not an option

When not to ask

• Risk of educating other bidders

• Unfavourable answer

• Unhelpful answer

• Don’t really need answer – will it change what you do?


3. Be alive to probity issues

‒ Customers and bidders both need to be trained

Need strategies to spot and manage probity issues

‒ Actual and apparent conflicts of interest both carry risk

It’s not just corrupt conduct that’s problematic

‒ Examples

A helping hand – improper assistance?

A ticket to the footy – conflict?

Using the customer’s former employee on the bid

Tip: Sanity check approach to an issue with someone

not intricately involved


4. Dealing with mistakes

Bidder

Late tender

Missing tender document

Incorrect submission

Assess options quickly

Potential disadvantage

Significance

Customer Disclosure of bidder

confidential information

Ambiguous tender requirement

Assess options quickly

Potential disadvantage

Significance

A


5. Completing responses

‒ Tender terms must be clear on form of response

customer wants

Eg is a full response wanted on contract terms or just

main issues?

Consider explaining to bidders why want responses in

that format (eg to compare “apples with apples”)

‒ Beware clarification responses that unintentionally

allow changes to format of response

‒ Bidders must understand instructions … including what

silence means

Eg “You will be deemed to accept a term unless you

state a non-compliance against it”


6. Be upfront on project uncertainties

Customers

‒ Appreciate bidder effort in preparing responses

‒ Not being upfront can mean

Loss of goodwill

Claims for additional costs because bidders have not

had a chance to factor in changes

Suppliers

‒ Be realistic about the nature of the customer

Budget pressures

Whole of government rollout risks

‒ Be clear to customer on change of schedule impact


Final example

‒ Customer conducted a tender process

‒ After tenders received customer realised tender terms

hadn’t addressed identifying GST component in pricing

‒ Customer asked tenderers to clarify

‒ One bidder added 10% + $380K to its price

‒ Customer did not pick this up and awarded tender to

that bidder

‒ Unsuccessful bidder successfully challenged

‒ Awarded contract was void

… Customer and bidder each caused the problems

Thank you

Anne Petterd - Baker & McKenzie - Protecting against Hiccups to the Procurement Process

Leadership & Management

Transcript of Anne Petterd - Baker & McKenzie - Protecting against Hiccups to the Procurement Process