There are several ways of identifying/sourcing potential suppliers to obtain competitive bids for the required supplies and services. The amount of effort market research spent on identifying potential suppliers will depend on the estimated value of what is required:
Lower value. Local knowledge, previous suppliers, colleagues, trade magazines, internet search, visits from representatives, or peer group networks etc. There is now a requirement under the Procurement Act for SME engagement for lower value tendering processes.
Higher value (below threshold). As for lower value; within your institution’s financial regulations or procurement policy, there may be a requirement to advertise the requirement, using an open tender process.
High value (above thresholds). Any open tender seeking to identify suppliers able to fulfil the contract requirements must be advertised on the UK Find a Tender Service. It may also be advertised in the local press; on your institution's website; on your e-sender site. However, these advertisements must not be published before it has been published on the Find a Tender Service and must not contain any additional information than that contained in the Find a Tender Service advertisement.
A selection process can be used for determining the number of tenders to be evaluated. However, this can only be applied to above threshold value tenders in compliance with the Procurement Act. In such situations, a Procurement Specific Questionnaire (PSQ) must be included as a separate stage in the tender process.
For contracts with a below threshold value, minimum pass/fail requirements may be set with all suppliers. Each of whom must ‘pass’ the minimum requirements set out in the invitation to tender, but this cannot be a defined step in the tender process and must not use the PSQ.
Identifying/sourcing suppliers - associated risks | ||
Issues | Risks | Solutions |
Inappropriate or insufficient advertising | · Potential bidders are not identified · A complaint is received, under procurement legislation, about the lack of or the selected method of advertising | · Develop an advertising strategy that aims to create sufficient interest in the requirement · Advertise all requirements over a stated value on the institution’s own website e.g. operate a living pipeline notice / planned procurement notice · Advertise all requirements valued above the appropriate thresholds on the Find a Tender Service |
Buyer selects bidders to submit bids for requirement | · Implication the selected bidders are considered capable of meeting the requirement i.e. already meet any selection criteria · Other bidders are available but are not afforded the opportunity to compete for the business | · Only select bidders when seeking quotations or tenders for lower value requirements without a call for competition · The provision of your own pipeline of work/planned procurement activity information would enable potential suppliers to see current bid opportunities and ask to be included in the competition |
Too many bidders | · The work involved in evaluating the submissions outweighs the value of the requirement · The bidders start to lose interest in competing for work as there is little chance of winning any business | · Use the competitive flexible procedure to create a restricted tender process rather than using the open procedure for above-threshold tenders. Only issuing invitations to tender to bidders meeting the published selection criteria · For repetitive requirements where there is a large supplier base, consider setting up a framework agreement with at least 3 contractors. Alternatively, use frameworks available to you from purchasing consortia such as Crescent Purchasing Consortium |
Too few bidders | · There is insufficient competition · It may not be easy to determine if the bids received represent value for money · Could there be collusion or a cartel in operation? This should be referred your Head of Procurement | · Complete market research to determine the size of the current supplier base · If there are other suppliers available, try to find out why they are not submitting quotations and take action, for example: · Didn’t know of the requirement – look at your advertising practices · The specification is too restrictive – redraft specification and, if necessary, re-run the competition · The institution is considered too difficult to deal with – seek to attract more suppliers using a ‘Dealing with this Institution Guide’ and running seminars aimed at attracting more suppliers |
Long term relationships with some suppliers | · Relationship may become ‘too cosy’ · ‘Friendly/helpful’ sales representatives have input into drafting specifications and create a bias towards their products · May be difficult to demonstrate that the on-going arrangements represent value for money | · While partnership relationships are encouraged these should be market tested by tendering the requirement on a regular basis (at least every 4 years) · While technical discussions are permitted, care must be taken to ensure that no single supplier’s products are favoured in the final specification |
Continued use of the same suppliers | · The value of repeat orders for similar products over time may exceed the published thresholds · The relationship becomes ‘too cosy’ | · While partnership relationships are encouraged these should be market tested by tendering the requirement on a regular basis (at least every 4 years) |
School / MAT members - the information on this page aligns with the following ISBL Professional Standards: 3.17, 3.18, 3.19, 3.20