Rules of the game

 

There are formal rules and informal or local interpretations so make sure you understand which rules the buyer is following.  This chapter explains the formal rules, gives references where further detail can be found and describes the types of informal or local interpretations that exist and also discusses how best to respond to them. 

The purpose of the rules is to achieve Best Value (not lowest cost) for government by having a fair and open competition between well qualified suppliers.   Suppliers are expected to compete on the basis of the outcomes they can achieve, their capability and on pricing. 

The rules fall into two broad categories, those intended to promote fair competition and those governing behaviour. 

Competition

In an attempt to minimise the effect of national boundaries on the awarding of government contracts the European Union set out rules which were then translated into national, in this case UK, law.  A full copy of the rules applicable in the UK is available on The Office of Government Commerce website[1] (published in 2006).

Where a contract is for more than the EU limit (the limit varies depending on type of contract and type of organisation, 137,000 Euros is most common) government organisations must advertise in the European Journal[2] saying what they want to buy and follow a fairly rigid and time consuming process in selecting a supplier.  There are exceptions where their requirement falls within the scope of a framework, discussed later, or an existing contract.

Although this limit is fairly low many government organisations set an even lower limit, sometimes as low as five thousand pounds, to show that they welcome open competition.  The limit may vary for different products and services as it is generally cheaper and quicker to compete for standard / commodity items than when they are specialised or customised.  It’s generally worth checking what limit applies and if the sale is close in value to the limit asking whether Best Value will be achieved by competitive procurement and whether another mechanism can be used.

Although not strictly necessary a buyer may publish a Prior Information Notice (PIN) in the European Journal.  This has the practical effect of allowing some of the time limits to be reduced and also encourages suppliers to talk to the buyer about potential solutions ahead of the formal competition (when communication is generally limited).

The most commonly used process is the restricted procedure, which has the following stages:

  1. the buyer publishes a contract notice in the European Journal,
  2. interested potential suppliers respond providing the information requested, normally on a Pre-Qualification Questionnaire (PQQ)
  3. A more detailed questionnaire, a Request for Proposal (RFP) is sent to those short listed in what is known as the Invitation to Tender (ITT) phase
  4. Potential suppliers send in tenders, the final version being known as their Best and Final Offer (BAFO)
  5. The most economically advantageous supplier is chosen

There are other alternatives, the open procedure where the contract notice has the details necessary and shortlist (and the issue of an RFP) is not used.  The negotiated procedure where there is a period of negotiation on the tenders submitted and, the most time consuming of all, the competitive dialogue. Competitive dialogues are designed for complex procurements where the buyer isn’t confident they know what solutions are possible and what benefit they may create; they therefore have a phase prior to the submission of tenders where simultaneously the short listed suppliers discuss their approaches. 

There are strict rules for timescales, for example the restricted procedure normally has a minimum of 37 days between stages 1 and 2 and 40 days between 3 and 4.  Always check the published contract notice as the timescales can vary, for example, there is a new (2009) accelerated restricted procedure where the timescales are reduced to 10 days when electronic means are used to transfer documents.

Whilst one can challenge the governments application of the rules it isn’t often a good idea. If the buyer’s interpretation of the rules appears unfair the most sensible reaction is to discuss them with the buyer and if you can’t get agreement avoid dealing with them.

Fairness

It’s OK to ask questions to get a better understanding of the requirement or constraints on the solution.  But bear in mind that normally all questions and answers will be documented and shared with your competitors.  This is done to protect the buyer from accusations that they are favouring one competitor over another.

Bribery is obviously unacceptable and to prevent it all gifts, except the most trivial, must be declared so be extremely careful about offering anything.  At best you’ll irritate the buyer and show you don’t know how government works, and at worst be disqualified from bidding.  Even buying something as innocuous as a coffee or snack when you’re naturally together is best preceded by a light comment such as “would it be OK with you if I get the coffee”.  One can relax a bit outside formal competitions (which start with the Contract notice and end with the award of contract) but it still pays to be sensitive.

Using the rules

Understanding your competitor’s capability and pricing increases your chances of winning and it’s therefore worth making every effort to find out who they are. It’s within the rules to ask the buyer who else is in the competition and how you rate against them, although they don’t have to tell you. 

Ask how responses will be scored and in particular what benefits will be valued. There is a subtle difference in the mindset between government and private sector buyers.  When selling to government suppliers are often competing to sell a solution to a requirement whereas in the private sector they will often be selling what the solution achieves, for example an increase in revenue or reduction in costs.  The more sophisticated government organisations will extend their requirements and evaluation criteria so that they can reward the achievement of policy outcomes not specifically included in their requirements.

If the number of competitors falls this may feel like a good thing but, as it reduces the feeling that the competition will reduce prices, it can mean that another mechanism gets introduced delaying the purchase.  In the worst case, where there is only one competitor, the buyer may, for example, get a value for money baseline from a specialist company or cancel the competition.  If they do decide to press ahead it makes sense to help them obtain evidence they can use with auditors to show that they have achieved best value for money.

 


[1]European Union rules are on the OGC website at http://www.opsi.gov.uk/si/si2006/uksi_20060005_en.pdf

[2] The full name is the Official Journal of the European Community (OJEC), it is also referred to as the Official Journal of the European Union (OJEU)