3 Flaws associated with the RFT/P Process, and How to Exploit Them

What is the Purpose Behind Issuing an RFT/RFP?

Indeed. Tendering for goods/services is a time-consuming, tedious business, and an entire eco-system of consultants has sprung up to support it.

When I was a Buyer on behalf of the whole-of-State Government, the State Manager of a blue-chip multi-national company once told me "Everybody knows, Sue, that unless you wrote the tender document, you aren't going to win it".

Offended, I protested strongly. Not so, no way, I said. It just appears that way.

But on one level, he was right. Those with a more intimate relationship with the Buyer usually won.

Unless they didn't. Which sometimes happened.

What we, as Buyers, were trying to achieve was the best price for the lowest risk and highest return. This should be a simple task, and the common wisdom is that it is possible to achieve this objective by leveraging the power of a competitive environment. But unfortunately the playing field is rarely level (see my blog about that here), and so it can sometimes appear that the result has been predetermined, or even worse, fixed.

Let's face it, no process is perfect, and the tendering process is no exception. So, how can we leverage a process that sometimes appears to work against us?

Flaw #1:  Procurement is all about the process, not the outcome.

Unfortunately, some suppliers can behave very badly. Over the years as a procurement specialist, that I have personally witnessed the following examples:

• lobbying the board, CEO, Executives, Minister  etc to influence the tender outcome
• offering bribes and inducements to the internal client (the most influential internal users of the product/services) to influence the evaluation process
• colluding with other suppliers to influence the tender outcome (in one example, fines were issued by the ACCC)
• submitting a complaint afterwards to try to circumvent the outcome or cast doubt on the process
• exploiting errors in the tender specification and knowingly offering deceptive pricing so as to win the contract and recover lost profits later
• doing (saying) what it takes to win the tender, and figuring out how to really deliver the requirements once they've won the contract
• misrepresenting or obfuscating the truth, or flat out lying about their capability

All that these shenanigans have achieved is to cause the procurement specialists to progressively tighten up the process so as to make it extremely rigid, inflexible and increasingly onerous. Procurement Specialists are asking more and more intrusive questions, because they have been caught out in the past by less than ethical suppliers (or their sales people). 

However, all too often the process is rigidly adhered to at the expense of the outcome.

How can you use this tendering flaw to your benefit?

Firstly, don't behave like this. Your company's reputation will become damaged within a very small circle of professionals. This sounds a bit like motherhood advice, but it needs to be said because the behaviour hasn't stopped just because I think it's bad.  

Understand the process, and position your company as easy to deal with, honest, and ethical. Demonstrate this by including a photograph of your company values in your tender document and other examples highlighting/demonstrating your integrity. 

In addition, in your methodology, highlight unethical behaviour known in your industry, and distance yourself from them. State, for example, "we do not ........eg fit reconditioned components and charge for new components to appear as low cost whilst inflating our profits. We are happy to show you the packaging and the delivery receipt of all new parts we fit".

Flaw #2:  People issuing tender requests are often too busy to get the documents perfect.

Most issued tenders that I write responses to have problems. For example, some common flaws are:

• The pricing table is non-commercial
• The technical requirements are outdated
• The supplier is required to absorb all the risks without being allowed to price accordingly
• There is insufficient detail or no guarantees about the scope/volume of work however suppliers are required to supply a fixed price or win on the lowest unit rate.

It therefore becomes self-evident that even though every body "knows" that you get what you pay for, the lowest price will win, and the Buyer will pay dearly  in the long run. If you play that game, you will lose. You will either lose the tender, or you will lose out later when you are stuck with low rates and you aren't able to increase them, or you lose trust with the Buyer.

How can you use this tendering flaw to your benefit?

This presents a fabulous opportunity to educate the Buyer, thereby building trust.

If the pricing is flawed, exposing the pricing flaw and offering extremely detailed pricing is always a good strategy. When the evaluation team performs a price evaluation, the normal method is to attempt to calculate the whole-of-contract price. The more detailed, yet transparent your pricing is, the more "hidden costs" you reveal, and the more doubt you cast over your competitors' offerings. In doing so, you build up trust with the Pricing Evaluation Team.

If the technical requirements are outdated, use this as an opportunity to educate the Buyer, however ensure you stick to the specification unless you seek and obtain written approval to offer something else. Do not offer and price a solution that wasn't specified, unless you do so by submitting an alternate tender or obtain approval.

Flaw #3:  Large organisations MUST procure goods and services by a competitive process 

This occurs in organisations who have a procurement policy, and is true of publicly listed organisations, not-for-profits, and government authorities.

Sometimes, let's face it, sometimes there is a better way to procuring items. Research, designs and large, strategic complex outsourced agreements for example, are best procured from specialist or trusted suppliers. So, the process often becomes just that: a means to an end.

The opportunity may therefore be presented to the market in such a way to favour a particular supplier or outcome, by:

• limiting the specification
• seriously limiting the time available to prepare your response
• including onerous conditions on bidders (eg must have a particular license that isn't really necessary)

This is a flaw in the process because companies use a "one size fits all" approach to procurement. In the case of government, this is seen as "open and fair competition".

How can you use this tendering flaw to your benefit

Preparing a large tender response is a costly and time-consuming process. If you see that the opportunity is presented in a way that is exclusive of your company, rather than inclusive, reconsider committing the resources and save your time/money.

If you have a solid relationship with the Buyer, however, I suggest that you seek clarification on the restrictions, asking for more time or a waiver of the onerous conditions. If you have any chance of winning at all, the Buyer will consider your request favourably.

Otherwise, be positioned to exploit the need to regularly test the market. See my blog on What Successful People Do To Win Tenders for more information here.