The (Dark) Art of Procurement

by Nigel Hurst on February 13, 2015

Cost-effort-riskProcurement is a necessary process that involves an organisation acquiring services from an external source, in a structured and accountable way. Limited or open procurement is a common method for obtaining consultancy or other services throughout the world. When a tendering process is initiated it should allow a fair and confidential opportunity for bidders to submit a proposal and price at their own risk, in a process which should allow the client to seek the most appropriate priced solution for their problem.

For projects over a certain value, open procurement is a mandatory process here in Europe for any public sector projects, be it construction, material supply, service supply or consultancy services.

The European Union have worked hard to ensure equal opportunities for organisations to bid for projects outside of their own specific geographical area, in order to try and prevent corruption in awarding contracts through bribery or nepotism.

Procurement of any services should lead to a value-for-money solution for the client, as they are able to market test prices and skills, and find organisations who innovate, bring new solutions to existing problems and also have the experience which may be outside of the Client’s sphere of knowledge and influence.

full_trolleyAs a consultant I’ve worked for many years on both sides of the fence, and have submitted countless tender responses for prospective clients, both public and private. I’ve also issued many tender packages for organisations to respond to me.  Over the years I’ve experienced many positive and sadly many negative procurement situations and so over this two part blog I will share my experiences on what I consider the "dark" art of procurement, and the realities of what often happens.

Like any consultant, a small proportion of our work comes from finding, carefully screening and submitting tender responses in order to win work. However, there is price to pay here. Writing tenders takes time – a lot of time, in fact, to write a high quality tender. The hours spent writing tenders are unpaid and are taken away from the hours we earn from projects with fee paying clients.  It is balance of cost, effort and risk.  We often screen a number of tenders but reject many of them as no organisation can “scatter gun” tender responses for everything. We must focus on our target markets and identify opportunities where we have a high chance of being successful every time we agree to write a tender response.

There is also a darker side to procurement which I’ve experienced on many occasions. All procurement is meant to be open and every tenderer should have an equal chance of winning the tender, should they satisfy the openly available evaluation criteria.

For many Client organisations issuing tender packages this is often not the case, as they will go through the procurement process in order to satisfy either EU or internal procurement policy but with a winning team already “pre-selected” in their minds.

The winning team is often an incumbent organisation already working with the client, or there has been a strong relationship already formed with the client, meaning that the entire process may satisfy procurement requirements, however for the unsuccessful bidders there would never be any chance of success, regardless of the strength of their tender proposal. The Client is able to demonstrate they have satisfied the procurement process and can be fully audited internally. More importantly the client will then be able to either start to work or continue to work with the organisation they wanted from the start. By market testing the price and service they also have the opportunity to tighten the price on an incumbent organisation, meaning the Client can force the existing /winning organisation to provide greater value for money. This happens frequently, especially in the private sector.

When looking at a prospective tender for a project, part of my screening process means I’m always looking out for evaluation criteria which is so specific to one organisation that there is no chance of any other tenderer being able to submit a winning bid. I always try to establish who the client has an existing relationship with, in order to evaluate my chances of winning.  Often it is best to decline such a tender and find the next one rather than spend time on trying to write a good bid. No matter how detailed my tender is, the client can easily manipulate the scoring criteria meaning they are free to choose whoever they want. If I’m that preferred tenderer, then clearly it is advantageous for me, yet it always leaves a hollow feeling that there are teams doing their best to win with no chance of success in what should be an completely fair process.

I recently declined to tender for a open procurement where I knew I had a good chance of winning, however I felt the tender was too specific for one particular local organisation. My hunch was correct, as a local team won, with only one other national bidder submitting a tender, which was deemed to be "non-compliant." Non-compliant meaning the losing tenderer had failed to provide a company stamp on their tender and included electronic, not original signatures.

I also recall one major project PPP project where the Client’s Project Director had recently transferred from another successful PPP project. Once my team established that the winning consortium from the first project were to also bid for this new project, my team declined to tender, realising our chances of success was likely to be very low with such a strong existing relationship in place. So much for open tendering.

Relationships with organisation’s is also important in an industry where on one project a consultant may be working on behalf of a client to procure a service from the private sector, and then later on working directly as a consultant for that very same private sector. Every organisation is looking for their next project, and professional relationships and future project opportunities all, to a large extent, influence procurement outcomes when they should not. This is the reality which we deal with everyday when receiving and dealing with procurement opportunities.

Part 2 of this blog will focus more on the dark art of awarding contracts, or not….

About Nigel Hurst :

Nigel Hurst is a Director at Bearing Consulting and a Programme & Project Management Consultant. He has a background as an Architect and has international experience from working on three continents for both public and private sector clients. With over 15 years of professional experience he has delivered a large number of successful projects in the place management and urban development sectors. He also has worked extensively on PPP/PFI projects within the UK market. He was educated in England, Canada and studied architecture at Cardiff University in Wales. He is now delivering a number of projects across Bearings markets in Europe and Africa, where he brings a wealth of stakeholder experience and project skills.

{ 2 comments… read them below or add one }

Julie Shaw February 15, 2015 at 11:38

As a commissioner of services for the public sector, it is interesting to read the views of someone with experience on both sides of the procurement process.

Nigel Hurst Nigel Hurst February 16, 2015 at 07:26

Thank you for your feedback. You’ll find part 2 equally as interesting.

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