Want to predict whether your contract award will be challenged?
Blurb (1). Tenuously linking Isaac Asimov to public procurement, via some maths.
Blurb (2). This short article may be of interest to procurement professionals working in the UK public sector, members of CIPS - The Chartered Institute of Procurement & Supply , my UK Ministry of Defence clients and my Sourcing colleagues at PA Consulting . Please feel free to comment on the approach and I'll attempt to incorporate comments then republish.
Formula explainer and rudimentary scoring approach upfront:
Why write this post now? After recently reading about Lockheed Martin's protest of the US Army's selection decision I was reminded of my own experiences of challenges to government contract awards in the UK. For some time now I have been helping my public sector clients assess and mitigate the commercial risk of legal challenge. As with all risk assessment a key part is estimating the probability that a given event will occur. I have always found those sessions materially important, far from conceptual and often tested/proven by real outcomes. The Forbes inclusion of 'anticipated' in its headline (article below) had me reaching for my pen / keyboard, hence now.
I suggest enough can be inferred from the Lockheed Martin protest/challenge to use it as a case study and test the formula. What score do you get to?
Here (below) is a rough conversion between possible scores and probabilities as percentages. Again it is rudimentary but I felt the need to use percentages rather than a less accessible non-linear scoring scale. Competent mathematicians, please chime in! I have settled on the conversions narrative after running several known case studies through the formula and deciding it seemed about right.
Here is the rub. After playing with formula and running a few case studies or examples through you are likely to conclude that the most easily affected part of the equation, from the perspective of the home procurement team, is 'CiC'. Yes sure, you could break your requirement into smaller requirements and run them as separate contracts thus reducing CV, but the decision to do this will be subject to many other factors and it may just increase 'AV', which is dependant upon wider context, often. 'SA' cannot be meaningfully reduced by the buyer in my experience. So, the obvious next question is, 'how does a buyer get to a point, before awarding the contract, where they know that their bidders are highly confident about the fairness and effectiveness of the competition?'
And, "that is the right question" (Isaac Asimov, I Robot).
Brill. Very true. Make the CiC go infinite, the challenge risk disappears and so will the legal fees! The easiest way to increase the CiC = put the best team and treat bidders with respect. It's surprising so many contracting authorities neglect this simple trick, like DfT not bothering to respond to a query from a bidder's CEO and not wanting to fund ￡1.2m for a good team during that doomed West Coast Main Line competition 10 years ago. I still see the same trend these days.
Principal Consultant at Commerce Decisions | Systems Thinker | Strategic Procurement Strategist | Helping understand Complexity
2 年Excellent post Matthew Swannell and no surprise you propose a mathematical formula. One purpose of an unsuccessful bidder debrief is to mitigate the risk of a challenge, but if the challenge is “anticipated” it’s no longer a risk but a material issue. Focus shifts from reducing the likelihood of a challenge to preparing to robustly defend that challenge. The best way to do that is to clearly explain your evaluation strategy. If there is no challenge to the published evaluation strategy, the next step is to follow that evaluation strategy to the letter. At the conclusion of the evaluation you must be able to demonstrably show you did what you said you were going to do. Happy New Year ??
Procurement Simplified | Public Procurement Value Creation and Delivery | Tender Process Design
2 年This is a really interesting perspective, Matthew. I often wonder how unsuccessful tenderers feel when they receive the dreaded regret letter. With respect to transparency, and CiC generally, there is always going to be some element of subjectivity where qualitative criteria has been scored. From my experience, one of the main drivers for procurement challenges comes from how close the competition was (i.e. any process where there is a low single digit differential between the successful submission and an unsuccessful submission), and the complexity/subjectivity of the award criteria. It has always been my take that (within Ireland anyway), the lack of an easy to access independent review process for unhappy tenderers (e.g. a procurement ombudsman, etc.) acts as the only real impediment to a meaningful volume of challenges being brought (i.e. nobody likes having to seek an expensive remedy via the High Court). Until such time as one is brought in, poor procurement processes will be protected from challenges being brought (which is bad for the profession, and bad for the perceptions that unsuccessful tenderers will have in relation to CiC). Thanks for sharing this, very interesting. Gary.
VP & Director Professional Services Director -- Evaluation Design -- Leading Teams -- Passionate cross-country skier and paddler
2 年Matthew Swannell , the formula I have always used is “if contract value >$1b; a bid challenge is an absolute certainty”! But I like yours better in that it shows what buyers can do to reduce their risk exposure.
Procurement & Commercial specialist | Cares about people | Thinks and speaks differently
2 年Matt, this is great. Particularly the Asimov reference - it’s all about asking the right questions… in fact, asking the right questions as part of the procurement process is absolutely fundamental to ensuring suppliers’ confidence in the competition. It is pretty tricky to make an objective assessment of a competition when so many subjective factors are in play but this is a pretty good stab at it. I talk about empathy a lot, but putting one’s self in the shoes of the competitors to see things from their perspective will almost certainly help to understand what will impact their perception of fairness. Explaining clearly the process and demonstrating that it has been adhered to is another. Thanks for this morning’s mental workout!