October 16, 2012

Procurement Perspectives | Stephen Bauld

The concerns over tender closings

My conversations with contractors over the past several months suggest growing concerns over tender closings.

The process related to government procurement, and the closing of construction tenders can be very complicated. The period between the publication of the tender or RFP Notice (i.e. the time when the deal is taken to market) and the closing of the tender or RFP is known as the bid period.

Since the intent of a tender is for the suppliers, or contractors, to bring forward bids or proposals, the extent of the contract between the customer and the supplier is relatively limited, compared to what takes place in a negotiated contract.

The bidding process has its own unique risks, completely distinct from those associated with the overall contracting process, which must be understood and provided for just as in the case of any other contract related risk.

The bid period should be sufficiently long to allow bidders a reasonable time to prepare and submit their bids. For most municipalities, the time allowed will range from 15 to 30 calendar days. However, the specific time allowed will reflect a range of considerations in relation to the proposed procurement, such as:

— the degree of urgency;

— the complexity of transaction and supply to be made;

— whether it is necessary to allow for discussions with prospective subcontractors or any other suppliers;

— the geographic distribution of prospective bidders; and whether any testing is required before the bids are made.

The provision of samples is atypical, and usually is required only when the characteristics of the product cannot be described adequately in the specification or purchase description. For instance, the use of bid samples would be appropriate for products that must be suitable from the standpoint of balance, facility of use, general “feel” colour, pattern, or other characteristics that cannot be described in the specifications.

In some cases it may be considered advantageous to hold a pre-bid meeting with prospective bidders. Such meetings are often used in a complex acquisition, as a means of briefing prospective bidders and explaining complicated specifications and requirements to them as early as possible after the invitation has been issued and before the bids are opened. Care must be taken in relation to such meetings, to protect all parties concerned.

The municipality should have a designated speaker who will handle most of the discussion. The individual concerned must have a commanding knowledge of the purchasing project: if a project management system is in place, the ideal speaker would the project sponsor. Other members of the internal team should speak with respect to issues only within their respective areas of expertise. Even so, the purpose of any such meeting is constructive dialogue.

Consequently artificial constraints should not be imposed. So far as possible, a record should be taken of all questions raised. After the meeting, a formal reply should be sent to all prospective bidders. In government procurement contracts all bidders must receive the same information.

Any additional information related to the original contract should be issued in the form of a proper Addendum to the RFP or tender. A meeting alone should not be used as a substitute for an Addendum, in view of the risk of unrecorded remarks and ambiguous comments.

Generally, addenda are issued where it becomes necessary to make changes in quantity, specifications, delivery schedules, opening dates, or to correct a defective or ambiguous invitation.

The effect of any such addendum is to amend the terms and conditions of the tender or RFP, including the specifications, to the extent provided. The fact that a prospective change was mentioned at a pre-bid meeting does not relieve the necessity for issuing an amendment.

Stephen Bauld, Canada’s leading expert on government procurement, is a member of the Daily Commercial News editorial advisory board. He can be reached at stephenbauld@bell.blackberry.net.

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