Procurement Processes - Part 2
13 September 2017
Accountability and transparency is fundamental to good governance, and it is important for members and other stakeholders to be confident that their club's money is wisely and appropriately expended.
Probity means integrity, uprightness and honesty. Maintaining probity in procurement involves more than avoiding corrupt or dishonest conduct, but rather extends to policies and procedures that ensure impartiality, accountability and transparency. Transparency and accountability in procurement gives club's ongoing needs and in turn providing the best terms and conditions in your club.
Structure of the Tender Document
Documentation can be a basic set of terms and conditions forming part of a purchase order through to a comprehensive set of documents including terms and conditions, plans and drawings etc.
The composition of more comprehensive documentation will vary between clubs but there are a number of primary components:
- Introduction/overview/background of club.
- Invitation to tender.
- Conditions of tendering.
- Form of tender and pricing schedules or tables.
- Key selection criteria (KSC), clearly outlining pre-determined selection criteria and the weightings assigned to each.
- Proposed contract.
- Tenders response porformas (including schedules).
- Conditions of the contract (and sometimes special conditions).
- Specifications for the goods, services or work sought which may or may not include drawings and technical definitions of need.
- Details of tender submission and opening. This should outline the formal documentation procedure to be adopted with details of where, when and names of persons responsible for opening and recording tenders received.
Tender documentation is most important. Poor, faulty, inadequate documents will increase the risk to the success of the procurement and discourage bidders.
One component of the tender documentation are the schedules that enable the bidder to respond to the tender and provide the club with the information it requires in a preferred form. This information will be used for the comprehensive evaluation of tenders.
A list of schedules would cover, but is not limited to: tenderers legal structures; statement of conformance; collusive tendering - statutory declaration; conflict of interest declaration; compliance with the health and safety at work act; work cover; public liability and motor vehicle insurances; quality assurance system; financial assessment or capacity; resources to be employed in the performance of the contract; register of sub-contractors and suppliers; past and current contract commitments; business references, including others in the club industry; and other information.
The content of these schedules will also vary according to the type of procurement. For example, an insurance requirement in regard to professional indemnity and motor vehicles does not apply to all contracts. The rule is to tailor the tender document to suit individual needs of the club.
Assembling and checking of contract documentation
Once all tender documentation is prepared it should be assembled (in hardcopy or online) in a sequence that facilitates bidder's responses.
The club should conduct a thorough review of all tender documentation before issuing it to the marketplace. Issued documents should be fit for purpose. The goal should be to avoid the need to issue addenda to the tender documentation for missing or erroneous matters that reflect poorly on the club and discourages bidders. It is often valuable to have all the documentation independently checked.
Clubs should be alert to the problem of "boilerplate" documentation and forming contracts with a "cut and paste" approach. Many contracts require individual approaches to different aspects of the contract documentation, especially where standard template documentation is used and data has to be populated to the template. The checking process is vital to ensuring that documentation is fit for purpose.
Tender documents sign-off
Tender documentation should be subject to approval at a senior level (CEO or board). The sign-off should confirm that the tender documentation reflects the club's needs and authorises the placement of a public notice (if applicable) to invite tenders.
Prequalification of tenderers for selective tenders
One means of reducing the cost of tendering to a club (and their suppliers) where there are high volumes of tenders and/or expressions of interest is to per-qualify potential tenderers.
Under a prequalification arrangement, potential tenders can satisfy the basic tender conformance and mandatory requirements on an annual or periodical basis. Savings are gained by a club from not having to repeatedly assess the compliance of tenderers in areas of health and safety, insurance (for example, public liability, professional indemnity, employee compensation, quality management, environmental management etc.)
Similarly, savings can accrue to businesses in not having to demonstrate compliance for every tender to which they respond.
The pre-qualification process should cover the following types of criteria: company profile, including the financial stability of the organisation; insurance policies and level of cover held; compliance with health and safety requirements; financial capacity of the contractor to fulfil its obligations under a contract; management, quality and environmental management systems; company experience including past and current contracts.
Pre-tender briefing and site inspections
The decision whether to hold a pre-tender briefing is a matter of judgement as to the value of holding such a gathering and the timing thereof. For complex, unusual or sensitive tenders, the opportunity to attend briefings prior to tender can promote an effective tender exercise. Pre-tender briefings can be either mandatory or optional. While a standard condition of tendering requires tenderers to familiarise themselves with sites and circumstances of providing a service and works, sometimes a formal site inspection is valuable.
Calling for submission/tender responses
The way the club can release tenders are; advertising in newspapers, club websites etc; using lists of pre-qualified suppliers; approaching suppliers directly; ensuring the tender document can be downloaded from the club's website (you must be able to get respondents details). RFT's should be released in accordance with the club's procurement policies and procedures.
You may find that the club is required to provide information during the tender period which was not included in the original tender documentation. Addenda must be issued consistently to all bidders who have recieved/downloaded or registered to receive tender documentation.
The same approach of consistency should be adopted with all communications with tenderers where matters are clarified or components explained. Tenderers should be provided with copies of all questions and answers and have adequate time to respond in their proposal. This alleviates any suggestion that one respondent had information not equally known to all others.
Is the club committed to proceed?
It is recommended that clubs not issue tenders without a firm intention to proceed, particularly given the time and cost of issuing the tender by the club, and similarly the time and cost for suppliers to respond.
However clubs need to be prepared for if things change. The tender instructions should clearly note: "The club reserves its right to not proceed with this procurement for any reason and the respondent acknowledges that this tender may not proceed. All costs of responding to this tender are at the cost of the respondent and are not in any way the responsibility of the club."
Assessment of tender
Tenders will be assessed in accordance with the pre-determined selection criteria, noted subsequently in their tender document. The club should have listed its weighted selection criteria in this document. This information is provided to assist suppliers with their tender submissions and will form the underlying basis of clubs tender assessment process.
The club's decision regarding successful supplier(s) will not necessarily reflect the cheapest price or the highest weighting, but rather the assessment of the best value combination of weighting and price. Results of scoring remain the confidential property of the club and should not be made available to tender respondents.
The club is not obligated to accept one or any tender and it may decide to use the state government contract if it provides a more competitive option for clubs. A club may also decide not to progress its process/project.
Once the deadline for submissions passed, the next step is to evaluate each submission.
Lodgement and close of tenders
There will be situations where an intended procurement may require the submission of hard copy materials and a physical tender box. The process of receiving and recording tender submissions must be conducted in a manner that ensures the integrity of the tendering process. The tender lodgement instructions in the tender documentation must be clear to all prospective tenderers and the tender receipt arrangements are to be made as failsafe as possible.
As a general rule, a club should not accept late tenders. This rule is well founded in the principal of equity and fairness in the management of tender processes.
The integrity of the tender process may be compromised if a tenderer is given extra time to submit a tender as this will give the late submission an unacceptable advantage over compliant tenders, Similarly, if tender submissions have been distributed to the evaluation panel the confidentiality of compliant tender submissions may be compromised. The perception of other tenderers will also be unfavourable.
The condition that late tenders will not be accepted should be included in the request for tenders, expression of interest or request for information document.
Once tenders have closed, late tenders should be kept unopened in a secure location pending a decision on their acceptance. Late tenders that are rejected should be returned to the tenderer unopened with appropriate accompanying advice.
There may be circumstances where a club wishes to accept late tenders or expressions of interest. A late tender should only be accepted in exceptional circumstances and if it can be clearly documented that: there was a system failure/interruptions in case of the electronic tender system; access was denied or hindered in relation to the physical tender box; or other feasible reasons.
A club policy on late tenders should be included in the club's procurement policy.
(SOURCE: Debbie Organ, ClubsNSW Learning and Development Executive, ClubLIFE, August 2017)