Before or during the evaluation process, queries may arise with an individual bidder’s submission that require clarification before the evaluation process may be completed. Queries may arise where a bidder has given an ambiguous or otherwise unclear response to a question. Rather than assuming you understand what was meant, it may be safer to seek clarification of the information.
Likewise, a bidder may have responded to a question in a different way to others and you may need to make sure you understand what is being offered so that you can make a fair assessment of the response against the specification and award criteria.
Such clarifications should be conducted in writing, ideally through a messaging service within your eSender portal for the tender being evaluated.
It is important that the nature of any bid clarification does not materially change the substance of the requirement or, to that matter, the bidder’s submission. If the substance of the requirement is changed, then the competition (i.e. the quotation or tender) should be stopped and re-started using the revised specification, i.e. all the potential bidders are afforded the opportunity to compete against the new specification.
Remember, bid clarification is not about trying to improve one bidder’s submission against another. It is about ensuring that you understand what the bidder is offering and can then carry out an informed evaluation of what has been offered and at what price.
Abnormally low tenders
Tenders may be rejected if they are abnormally low but only after the tenderer has had an opportunity to explain the offer submitted. The explanations given may relate to:
The economics of the manufacturing process
The technical solutions chosen or any exceptionally favourable conditions available to the tenderer
The originality of the work, supplies or services proposed by the tenderer
The tenderer’s holding of supplies, perhaps sourced at a discount from bankrupt stock
You may only reject the tender where the evidence supplied does not satisfactorily account for the low level of price or costs proposed, considering the elements referred to above.
Post tender negotiation
Post tender negotiation (PTN) is negotiation after receipt of formal bids or tenders and before the letting of contract(s) with those companies submitting tender(s) offering the best value for money. This is with a view to obtaining an improvement in content in circumstances which do not put the other tenderers at a disadvantage, distort competition or affect adversely trust in the competitive tendering process.
PTN should not be used to conduct a ‘Dutch auction’ between the bidders or to distort competition. It should be used in moderation and only where there is an opportunity to lower prices and improve other aspects of the submissions.
PTN should only be undertaken with the one or, perhaps, two bidders offering the best submissions under the stated award criteria. PTN should involve your institution’s Head of Procurement (or nominee) and thorough preparation should be undertaken before starting.
A detailed record should be kept of the PTN process, from the reasons and decision to undertake the negotiations; the negotiations themselves and the eventual outcome. These records will form part of the audit trail and could be subject to scrutiny by Audit (internal and external). They could also be made public should there be a successful complaint from an unhappy bidder.
For above threshold contracts, subject to the Procurement Act, there is little scope for negotiation unless negotiation stages are built into a Competitive Flexible Procedure. This allows you to design a transparent tender process, which includes refinements of bids before seeking final tender submissions on which to evaluate and award the contract.
Post tender negotiations - associated risks | ||
Issues | Risks | Solutions |
Further price reductions considered possible but Post Tender Negotiation (PTN) not used | · Optimum terms (technical, quality, delivery schedule etc) are not obtained | · Seek clarification of any unclear aspects of the submissions – these may lead to opportunities to fine-tune the bid. Be careful that this does not materially change the submission and render it invalid · Seek discussions with the preferred bidder with the aim of achieving the quality defined in the specification for the most economically advantageous price · DO NOT undertake PTN on tenders above threshold unless using a competitive flexible procedure which foresees such negotiations |
Continued use of PTN on all, or most, competitions | · Bidders come to expect PTN and do not make their best offers when submitting bids · PTN is not used and the submitted bids are not as good as they could have been because the bidders expected to be asked to refine their submissions under PTN | · Use PTN where it is appropriate and can improve terms · To always use PTN will lead to inefficient procurement because suppliers will expect the process and you will need to carry it out every time to achieve value for money. Bidders will build in some ‘negotiating-room’ in their bids |
Potential for ‘Dutch Auction’ situation to develop | · Open to challenge of trying to negotiate one or more bidders terms to a level where they will win the business | · PTN should only be entered into with the preferred one or, at most, two bidders and used to fine-tune their own submissions. Only when the negotiations fail with one bidder should you start to negotiate with another one. It should not be used to set one bidder against the other |
Insufficient records kept of negotiations | · Open to challenge that PTN has taken place unfairly | · Ensure there is a precise audit trail of all discussions with the bidder(s) including the reasons for the discussions, what was agreed etc · Should a challenge arise, this audit trail will provide the evidence of your actions |
School / MAT members - the information on this page aligns with the following ISBL Professional Standards: 3.37, 3.38, 3.39, 3.40