The procurement process within the public sector is necessarily demanding to ensure clarity, fairness and consistency. Many procuring authorities may feel relieved once they ‘finish’ the procurement process, but sometimes this marks the beginning of an even more challenging phase that could delay the start of the delivery of services or projects. If an unsuccessful bidder disputes the outcome of the procurement process, all progress may stop and a legal formal challenge process may begin that could take quite some time to resolve.
To avoid finding yourself in this situation, it’s important to have key insights into what drives a bidder to formally dispute a procurement decision and how to lessen the chance of this happening. This article intends to shed light on these factors and outlines eight key steps to minimise the risk of this eventuality.
An overview of the whys and wherefores of a formal procurement challenge
|Understanding a Bidder’s Internal Pressures||The Role of Empathy in Communication|
|BEYOND FINANCIAL LOSSES. In the competitive world of tendering, losing a bid can profoundly affect an organisation’s finances, morale and reputation. When a bidder fails to secure a contract, the consequences can extend beyond their immediate financial losses, impacting employee motivation and market perception. |
MAGNITUDE OF IMPACT. It is important for procurement professionals to recognise this impact to make informed decisions and effectively communicate the outcome to losing bidders. Essentially, the true magnitude (from the bidder’s perspective) of the news you will be breaking should ideally be recognised to inform the language, tone and means you use.
|BIDDER INTERNAL PRESSURES. While the internal pressures faced by bidders aren’t your direct responsibility, understanding these pressures can enhance communication, market engagement and collaboration within procurement departments. By acknowledging the emotional responses and pressures within a losing bidder’s organisation, procurement professionals can better anticipate the bidder’s next steps and communicate with empathy and insight.|
|Navigating Legal Challenges||Maintaining Positive Relationships|
|THOUGHTFUL COMMUNICATION. Losing bidders may consider legal challenges if (a) they suspect an inappropriate scoring process has been undertaken and (b) the outcome adversely impacts their organisation. Procurement professionals must be prepared to navigate such challenges, employing thoughtful communication strategies to address concerns and provide appropriate transparency to all parties involved.||FUTURE COLLABORATION. Despite the challenging nature of the procurement process, fostering positive relationships with losing bidders is essential for long-term success. By taking the right approach to communicating the news to a losing bidder you can pave the way for future collaborations in a healthier competitive environment.|
|Bidder Accountability||Minimising Formal Legal Challenges|
|INTERNAL 'WITCH HUNT’. In some cases, losing bidders might consider mounting a legal challenge if the bid holds strategic or financial importance to them. If a bidder organisation is already under pressure from shareholders, financiers or its group holding organisation to significantly increase its revenues, such situations often trigger an internal ‘witch hunt’ to identify those team members the executive team considers responsible for the loss. Effective communication of the bid outcome becomes, therefore, critical to prevent, or at least minimise, the chances of the losing bidder pursuing any formal escalation.||FOSTER COLLABORATION. To minimise legal challenges, procurement professionals should maintain a balance of transparency, professionalism and empathy. A clear and thoughtful approach to communication often reduces the likelihood of legal disputes and maintains positive relationships with losing bidders, fostering a collaborative and competitive procurement environment. After all, you never know when you will come across those organisations or individuals again and under what circumstances.|
Exploring Procurement Challenges: Insights and Best Practices
This article delves deeper into these six themes, equipping procurement professionals with the knowledge and tools necessary for informed decision-making and effective communication of bid outcomes. By understanding the emotions and internal pressures faced by losing bidders, procurement professionals can manage the process more effectively, minimising legal challenges, and promoting positive relationships with all bidders.
Losing bidder internal pressures
The points in this article apply to any complex project, such as the procurement of hard FM services, the construction of a leisure centre, a large infrastructure project such as highways development or even a large-scale ERP solution that needs to be integrated into many legacy IT solutions, to name just a few.
Although a losing bidder’s internal organisational pressures are ‘not your problem’, having insights into the impact on a bidder helps inform how to approach your communications. When a bidder loses a public sector bid for a complex and high-value project, it can create a significant impact on their organisation, leading to various internal pressures and challenges. It helps to have these factors on your radar in terms of considering next steps and also when you put together future tenders.
Different roles within a losing bidder organisation will face different issues and pressures:
- Executive Management:
- Justification for the loss: The executives will need to provide explanations to the board and shareholders regarding the reasons for losing the bid.
- Financial impact: A lost bid means a loss of potential revenue, which may affect future growth and investment plans.
- Reputation: The company’s reputation could be impacted, making it more difficult to secure future bids and maintain a strong market position.
- Sales and Business Development Team:
- Missed targets: Losing the bid may result in missed sales targets, which can impact the team’s performance metrics, bonuses and overall morale.
- Relationship management: The team may feel the need to address concerns with you and reassure you of their capabilities.
- Pipeline management: The loss may prompt the need to refocus efforts on other opportunities or seek new ones to fill the gap.
- Bid and Proposal Team:
- Root cause analysis: The team will need to determine whether the bid was non-compliant, why it scored low and to identify areas for improvement.
- Process improvement: They will have to assess and update their bid management processes to ensure better performance in future bids.
- Resource allocation: The team may have invested significant time and effort into the bid, which will need to be redistributed to other projects.
- Project Managers and Technical Teams:
- Resource management: The loss of the bid could lead to underutilised resources or the need to reassign team members to other projects.
- Skill development: Technical teams may need to improve their skills and expertise to better align with public sector requirements and expectations.
- Collaboration and communication: Cross-functional collaboration and communication will be essential to address the issues that led to the loss of the bid.
- Human Resources:
- Talent retention: HR may face challenges in retaining top talent if employees perceive the organisation as unsuccessful or unstable as a result of a failed bid.
- Employee morale: The loss of the bid can lower overall employee morale, which HR will need to address through targeted initiatives and communication.
- Workforce planning: HR may need to reassess workforce plans, including hiring, training, and development, to ensure the company can compete better in future bids.
- Finance and Operations:
- Budget adjustments: The finance team may need to re-evaluate budgets and financial forecasts, considering the lost revenue.
- Cost management: The operations team will need to find ways to optimise costs in light of the lost bid to maintain profitability; i.e. potential redundancies.
These are just a few examples of the internal pressures and challenges that different roles within the losing bidder organisation often face.
Bidder’s internal post-procurement debrief to determine viability of a legal challenge
The executive management team of a losing bidder organisation may decide to investigate the viability of mounting a legal challenge if they sense something is ‘off’ about the tender evaluation process.
In order to do so, they will need to gather detailed information from each team involved in the bid to gain a better understanding of the reasons behind their bid’s low scores and to identify whether grounds exist for a challenge.
- Sales and Business Development Team:
- Communications: Records of all interactions with you, including meetings, calls and emails, to identify any discrepancies or miscommunications.
- Client feedback: Any feedback received from you during the bid process that may help pinpoint areas of concern or disagreement.
- Competitor analysis: Information about the winning bidder, including their strengths and weaknesses, and how their proposal compared to their own.
- Bid and Proposal Team:
- Compliance issues: A detailed breakdown of any potential non-compliant aspects of the bid, including any discrepancies between the losing bidder’s understanding of the requirements and your own interpretation.
- Evaluation criteria: An analysis of how the losing bidder’s proposal was scored against the evaluation criteria, identifying any areas where the scores seem unjustified or inconsistent.
- Documentation: All submitted bid documents, including drafts and revisions, to review for potential errors or omissions that may have contributed to the low scores.
- Project Managers and Technical Teams:
- Technical solution: A thorough assessment of the proposed technical solution, including any perceived shortcomings or areas where you may have misunderstood the losing bidder’s capabilities.
- Quality assurance: Information on how the technical team ensured that the proposal met quality standards and addressed your requirements.
- Expert opinion: Insights from internal technical experts on whether the low scores were justified or if there is a basis for challenging your evaluation.
- Human Resources:
- Team qualifications: Information on the qualifications and experience of the team members involved in the bid, to establish the losing bidder’s expertise and credibility.
- Training and development: Records of any relevant training or certifications undertaken by the team to demonstrate their competency in the required domain.
- Finance and Operations:
- Pricing strategy: An analysis of the losing bidder’s pricing strategy for the bid, including any deviations from industry norms or your expectations.
- Cost breakdown: A detailed cost breakdown of the proposal, highlighting any potential areas of concern or discrepancy.
- Legal and Compliance:
- Contractual terms: A review of the contractual terms and conditions in the bid, including any clauses that may have been problematic or unfavourable to you.
- Legal advice: Expert legal opinion on potential grounds for challenging the bid evaluation, as well as any risks or consequences associated with pursuing a legal challenge.
If a potential contract award was of significant value or impact to a bidding organisation, losing bidders will often perform a ‘lessons learned’ analysis. This will likely centre around two aspects: 1) what could the bidding organisation have done better, and 2) is there any reason to believe (and is there evidence) that a client organisation was unfair in its evaluation and decision? This highlights the need for your procurement process to not only be indisputably compliant, transparent and fair, but also to be seen to be all of these as well.
Minimising the likelihood of a formal challenge; How to communicate the result to a losing bidder
Transparency, fairness and equity, along with an irrefutably good audit trail of the decision-making process, are critical so that you can provide objective evidence to losing bidders of your process of evaluation against the published scoring criteria.
For any potentially large project, the process that we would usually adopt for communicating to losing bidders is as follows:
- Clear and detailed feedback: Provide losing bidders with comprehensive and transparent evaluation points that outline the reasons for their low scores and/or non-compliance. These points should clearly explain how their proposal was evaluated against the criteria and where it fell short. Clarity and detail here provide less room for subjectivity.
- Demonstrate fairness and objectivity: Evidence that the evaluation process was fair, unbiased, and followed established procurement procedures. You would usually emphasise that your decision was based solely on the merits of the proposal and in accordance with the evaluation criteria.
- Debriefing session: Offer to arrange a debriefing session with the losing bidders to discuss the results of the evaluation and answer any questions they may have. This session will allow them to gain a better understanding of the reasons behind the decision and help address any concerns or misunderstandings. It can also provide the bidder with a valuable opportunity to reset their relationship with you in order to put them in a good position to bid on the next appropriate contract.
- Highlight strengths and areas for improvement: In the feedback and debriefing session, acknowledge the strengths of their proposal while also discussing areas for improvement. This can help them identify specific areas to focus on for future bids for other clients.
- Share information on the winning bidder: Without breaching confidentiality or procurement rules, share general information about the winning bidder, such as the strengths of their proposal and how they met the evaluation criteria. This can help a losing bidder understand why the winning bidder was successful.
- Professional and empathetic communication: Maintain a professional and empathetic tone throughout all communications with a losing bidder, acknowledging the effort they put into the bid and expressing appreciation for their interest in working with you.
- Timely communication: Inform losing bidders of the bid outcome as soon as possible to minimise uncertainty and speculation. Prompt communication can help prevent an escalation of concerns or doubts.
- Finality in decision-making: Clearly communicate that the decision is final and not subject to negotiation, emphasising the evidence that the procurement process has been followed in accordance with established guidelines and regulations. Remove any doubt or ambiguity from the process.
By adopting these steps, you can effectively communicate with losing bidders, minimising the likelihood of an internal investigation within any of the bidder organisations that may motivate them to raise a formal legal challenge against your decision.
It is essential to maintain transparency, professionalism and empathy throughout the process to foster a positive relationship with all bidders, even if no further business opportunities are currently available with you because you never know when you may need their expertise in the future or who they are connected with.