Ensuring a Transparent Procurement Process

1. Ensuring a Transparent Procurement Process Owain Ellis UNCLASSIFIED

2. Agenda Procurement Process Principles The Staged Process Lessons UNCLASSIFIED

3. Principles Procurement only starts after key project decisions have been made: Project scope, affordability, authority, permissions Best delivery strategy Best procurement strategy The three objectives of any procurement: A good contract – risk transfer, price etc Identify the best contractor Audit trail Constraints/ Dependencies Cost (Bidders and Authority) Time UNCLASSIFIED

4. The Procurement Steps – the basic steps Extent of exposure to competitive tension Procurement Decision Stage Commercial and financial close Expressions of Interest/ Outline Sol. Evaluation of Tenders Short list/ Detailed Sol. Competitive Phase • Point of formal engagement with market • Rules and Regulations • Sophistication UNCLASSIFIED

5. Progressing through the process Advertise Generate interest in the opportunity Scope and requirements (can be n a descriptive document) Explain procurement process that will be used Use a Pre-qualification questionnaire (PQQ) to create a long list Expressions of Interest/ Outline Solutions Initial responses from long list based on this project/ requirement Evaluate to identify a short list of potential winners (minimum of 3) UNCLASSIFIED

6. Progressing through the process Detailed Solutions/ Dialogue Phase Process can vary in complexity (compromise between the 3 objectives) Refine the best means to satisfy the Authority’s needs Phase should continue until the contracting authority is satisfied that it has identified and defined its requirements with sufficient precision to enable Final Tenders to be submitted May be conducted in “successive stages” – but need to control time and cost, and ensure there are sufficient bidders to allow for a genuine competition (usually a minimum of two) UNCLASSIFIED

7. Progressing through the process Call for final tenders/ Best and Final Offers Invitation to submit final tenders. Documents all updated to include anyl changes (specification, contract or other documents) Remaining bidders to submit their tenders UNCLASSIFIED

8. Progressing through the process Submission and evaluation of Final Tenders Final tenders must contain “all the elements required and necessary for the performance of the project” Very limited scope for change once submitted (some procedures allow final tenders to be clarified, and fine tuned. But vital that this does not involve changes to the basic features of the tender, or any variations which could distort competition or have a discriminatory effect). Aim is that all issues are resolved before Preferred Bidder stage UNCLASSIFIED

9. Progressing through the process Appointment of Preferred Bidder Bidder offering best bid (the economically most advantageous tender) Evaluation Criteria: Technical, Financial, Legal, other e.g. deliverability Evaluation - Key issues Methodology Informing Bidders before they prepare their tenders Some flexibility can be useful, but affects audit trail UNCLASSIFIED

10. - Lowest Cost - Better Value for money - No dialogue - Dialogue /negotiation - Simple, objective evaluation - More complex, subjective - Tight central approval - Delegated approvals - Strict standard contract - Varied contracts - Clear Audit Trail - Needs trust The compromise between Simple and Sophisticated Procedures:Simple/ LOW RISKCOMPLEX/ HIGHER RISK UNCLASSIFIED

11. Lessons: Gateway Review Process OGC Gateway Review 0 Strategic assessment Business justification Procurement strategy OGC Gateway Review 0 Investment decision Readiness for service OGC Gateway Review 0 Benefits realisation Lessons learned Policy Design Policy Implementation Policy Maintenance Policy Review Procurement projects Define Programme Develop Business Case OGC Gateway Review 1 Develop Procurement Strategy * OGC Gateway Review 2 Execute Programme Competitive Procurement * OGC Gateway Review 3 Award and Implement contract Repeat as necessary OGC Gateway Review 4 Close Programme Manage contract OGC Gateway Review 5 Closure UNCLASSIFIED Contributes

12. Lessons : Gateway Reviews Effective stakeholder communication (approvals) Sound financial controls (affordability) Good Market knowledge and procurement advice Adequate skills and resources Clearly defined roles and responsibilities Robust business case Benefits realisation process Pre-agreed Critical Success Factors Ongoing risk management process UNCLASSIFIED

13. Lessons : The Project Manager’s View Plan ahead but be flexible – things inevitably change Set a prudent budget – investing at this stage can yield long term savings Advisers – name key personnel Advisers – fixed price for clearly defined work packages Things will change – look at potential for variations when assessing advisers fees and resources. Project Governance and approvals – communicate and manage expectations – shocks don’t go down well. Link back to the core business – good communication links Transition plan – knowledge transfer to contract management team Financial Close – it is not the end – it has only just begun! UNCLASSIFIED

14. Lessons : The Advisers’ View An experienced project manager and a clear remit give confidence Too many advisers and advisers managing advisers leads to confusion on roles, increases costs, leads to delays Clients who are willing to listen often achieve best results Unrealistic timescales affect quality of service Suitable resources are not always readily available Best projects have experienced client fronting all bidder meetings Financials – advisers are there to make money Partnership ethos – advisers will often go the extra mile Reputation issues – future work UNCLASSIFIED

15. Lessons : The Bidders’ View What does the client really want? Who are the key decision makers and influencers? Does the project have a deliverable solution? Is there a level playing field in terms of competitors? Can I offer a USP that differentiates my consortium? What are the external stakeholder issues (planning)? Level of approval to date (affordability, vires, etc) Extent of risk transfer Are the timescales realistic? Forecast Bid Costs Supply chain, local resource and inflationary pressures New v mature market with standard procedures Other projects in the market – which has best chance of success? UNCLASSIFIED

16. Questions and Discussion UNCLASSIFIED

17. Additional Slides UNCLASSIFIED

18. Procurement Procedure Steps Concept / Scope work Advertise Outline Return of expressions of interest / PQQs Business Evaluation of PQQs and selection of long list Case Invitation to Participate in dialogue The dialogue process Call for final tenders Submission and evaluation of final tenders Appointment of Preferred Bidder Full Bus Case “Fine tune” Contract Award UNCLASSIFIED

19. Scrutiny and Approvals Staged Approach Contract Notice Start of Dialogue Selection of preferred bidder or contract award Matters to consider Requirement (time, cost, performance) Affordability VfM UNCLASSIFIED