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Avoiding the tender traps

Stewart James | Nov. 12, 2008
The biggest issue for an ICT re-tendering exercise is the availability of time or, more frequently, the lack of it.

For the public sector, or in the private sector where a contract extension cannot be agreed or where it is not strategically appropriate, an immovable expiry date creates a hard stop to the re-tendering exercise.

Bidders may seek to use this as part of a negotiating strategy, making it important for customers to retain control over the bid process. Public-sector customers are assisted in this respect by the procedural steps required under the Regulations; the private sector would need to utilise a process that retains competitive tension for as long as possible.

The transfer of an outsourced ICT service will require the legacy supplier to provide its replacement with a wealth of detail on the operation and management of the services. A service transfer is also likely to operate as a relevant transfer for the purposes of the Transfer of Undertakings (TUPE) regulations. These regulations have their own specific timelines which do not sit comfortably with those of a re-tendering exercise.

Much of this information is also required for a bidder to prepare its pitch. A good exit plan will ensure that the legacy supplier provides all of the information that is reasonably necessary for bidders to understand the service requirements as part of the related due-diligence process. In the absence of a plan, the customer will need to manage the re-tendering exercise carefully to ensure that it achieves the same output.

This highlights another timing issue: the re-tendering exercise may start a year or more before the exit plan obliges the legacy supplier to provide this information to the customer. Except in cases of termination (where a different set of rules applies) it is likely that the legacy supplier will also be invited, or eligible, to bid for the replacement contract, which can be used to ensure that relevant service information is provided in time to support the re-tendering exercise.

Positive neutrality

The timely supply of bid information is important to both public and private-sector customers. There is a general procurement obligation in the public sector to treat all bidders equally. Without access to this information it would not be possible to create positive neutrality; the incumbent would always have the advantage of greater knowledge about the customer's needs and requirements. It is equally important for a private-sector customer to create equality between its bidders and the present incumbent if the customer is to receive realistic price estimates from the competing bidders.

Additionally, in the current economic climate, potential suppliers are measuring the cost of bidding against the likelihood of success in deciding whether or not to bid for an opportunity. Ensuring access to full information on the legacy services is one of the activities that will provide assurance to all bidders.


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