What makes procurement processes efficient and effective
Our Commonwealth Government advisory team provide insight into planning, innovative thinking, documentation and processes surrounding efficient and effective procurement.
While providing legal support to Government agencies, we see a lot of procurement processes, and they come in all shapes and sizes. As a result of having worked on the good, the bad, and the ugly, we see a lot of opportunities for making these processes more efficient, whether that be by making them less time consuming, less costly, or requiring less external assistance.
As we enter a new financial year, this article is designed to pass on our lessons learned and inspire agencies to enhance efficiency in their procurement planning for the year ahead. These suggestions may be obvious, but they serve as positive and useful reminders of how to make your procurement processes as efficient and effective as possible.
1. Plan, plan, plan, and plan some more!
As the old adage goes: ‘proper planning prevents poor performance’. In a procurement process, proper planning allows you to ensure that you are requesting the right information and that you are prepared for any curve balls that the procurement may throw at you. For example:
- Knowing your requirement inside out and back to front means you can describe it clearly in your documents, seek appropriate pricing and information from tenderers, and foresee procurement risks that may arise. Failure to do these things may result in tenderers imposing price premiums, proposing a solution that doesn’t reflect your vision, or resulting in a contract that doesn’t work.
- The right procurement process can make or break your procurement. Consider whether it will be best to stage your procurement, particularly if you need more information from the market, or whether to use an existing procurement vehicle (examples include a marketplace or panel or piggybacking off an existing agency arrangement).
- Knowing the market and the industry, you are procuring from means you can direct your procurement process towards the industry sector best suited to provide your requirement. Using existing panels and marketplaces is a great start, but make sure you are selecting the right procurement vehicle. Use the correct product/service category under the right marketplace. Getting this wrong could be a disaster for your procurement.
- Factoring in any time constraints is essential to ensure there is enough time for document preparation and review, the evaluation and approval processes, and transitioning in and out. Make sure you have sufficient remaining term with incumbents available on any existing relevant contracts.
2. Think innovation
Be innovative by thinking outside the box when considering options for meeting your requirement. You could consider the following questions:
- Do you need to buy the product, or could you buy services that provide the product and associated management and support? Consider whether it would be more cost-effective to buy the product directly while taking advantage of 'whole of government' discounts and finding a vendor to support and manage the product.
- Does another agency or another division in your agency have a pre-existing solution for your requirement that could be repurposed? Instead of reinventing the wheel, consider using pre-agreed re-use or extended use rights in another contract.
- If you are going ahead with a procurement, how can you encourage the market to be innovative in their proposals? Could you describe the solution generally and invite ideas and options? You’ll need to make sure you build an evaluation process that caters for different options and doesn’t make it hard to submit or evaluate innovative proposals. You may also wish to consider conducting an initial request for information (RFI).
This would allow you to conduct early engagement with industry such as collaborative industry briefings to hear about what the market can provide. This will help you develop your requirements prior to conducting the formal procurement (e.g. a multi-stage procurement). For the RFI option, it would not be mandatory for vendors to participate in order to be eligible for a future procurement.
- If you are developing a contract, what are new ways of creating the best possible contract rights and protections in areas such as remedies, governance, flexible usage, re-use, transformation to new forms of solutions, and agile delivery of iterations of the solution?
contract could improve upon it.
3. Document production
We think this is one of the most important aspects of a procurement. Having clear, concise, and consistent documentation will assist in ensuring the procurement runs as smoothly as possible. Consider the following:
- Prepare a list of the documents that you will need, including a list of the attachments that you need for each document. Track your progress in updating documents against this list. One team member should be responsible for coordinating document production, but allocate document updates to the person with the most appropriate skills.
- Use templates or precedents to streamline document production. If there is an existing contract, consider whether to use this as a basis but tailor it with a more modern approach and stronger obligations where those obligations were negotiated down with the current contractor? Your agency, or another agency, has probably done this before. Don’t be afraid to ask around, or seek input from your advisers.
- Sell the opportunity to potential tenderers. Make sure your documents are tailored for your procurement and ‘sell’ the opportunity to the market. You need to tell your story up front in the request documentation to set the scene. In our experience this direct marketing tool is often understated. A good opening to request documentation involves clear, concise and creative drafting that entices tenderers to submit proposals. Explain why it is a great opportunity to assist the Australian Government to implement a very important and high profile policy initiative.
- Make sure your request documents are not ‘half baked’. Template documents issued with minimal updates tend not to encourage substantial effort in responses, and may result in a lack of understanding of your requirement.
- Ensure that all documents are consistent and tell a clear story. Have you used the same language throughout the documentation? Can any documents be consolidated, or is it appropriate to split out one document into many documents? Go simple rather than complex in your drafting.
- Provide clear requirements. When you are writing your requirements, consider and identify the information you want from respondents to assess compliance with your requirements. This extra step can make a huge difference to the quality of responses. It will reduce simple responses that don’t demonstrate how they will comply with a requirement) and the success of your evaluation. When poorly written requirements are released to the market, there is also risk that when evaluating the responses, you’ll end up comparing oranges with apples, including pricing. Some of the worst cases in our experience are when the responses don’t meet the agency’s requirements or budget because they have not been adequately described.
4. Team selection
Build your team with key players from many disciplines, and engage them as early as possible. If practical, ensure that your core team is consistent throughout the process. Your team should include:
- operational experts from the area of your organisation with the procurement need who can provide guidance on the business need, and the required outcome;
- procurement specialists to help with document production, procurement advice, and risk analysis;
- commercial specialists who can ensure the pricing framework is appropriate, and analyse the pricing received from tenderers; and
- legal and probity advisors to assist with the above (who may be internal or external).
Ask questions of other people in your agency (or other agencies) who have conducted similar procurements – subject to confidentiality and probity restrictions, of course. Seek specialist help where appropriate.
In our experience, engaging professional subject matter experts mitigates the risk of procurement failure—for example, often operational experts are best placed amongst the procurement team to advise on the technical requirements so that they are drafted in a clear way in procurement documentation. This means that tenderers will be able to properly understand the services required, and can therefore prepare an effective response for your procurement.
5. Conduct of the process
Procurement processes are designed to uphold standards of transparency, fairness, and accountability. Failure to comply with the process creates audit, reputational and political risks. Therefore:
- Step by Step - Take every step to follow the procurement process (including your legislative and policy obligations, like the Commonwealth Procurement Rules) to the letter.
- Don’t rush - Avoid releasing procurement documents in a hurry if they are not ready. If document issues are identified early in the process, fix them early by issuing an addendum rather than allowing the risk of confusion in responses, and difficulty in evaluation to grow.
- Protocols first and foremost - Implement the internal protocols needed to manage information and conflicts of interest. Seek support and advice early on to manage any issues.
- Accountability and transparency - Noting your recordkeeping obligations both from an audit perspective and under the Archives Act 1983 (Cth), keep good records of all steps in the process. If in doubt, record it.
- Efficient and effective evaluation - Make sure to evaluate against the criteria, and clearly document your evaluation on that basis.
6. Negotiations with a selected tenderer
During the evaluation process, you would have analysed each tenderer’s response. As part of this process, you should aim to:
- select a preferred tenderer or tenderers;
- determine the issues that will and will not negotiated with the preferred tenderer(s); and
- consider any alternative or fallback positions that you may accept.
When negotiating with the preferred tenderer(s):
- ensure that both parties have the right people in the room (including those able to make decisions), with subject matter experts on call if required;
- consider breaking down issues for discussions with the relevant experts. For example, if security is a key issue, get your security experts together to resolve the issues; and
- keep accurate records of any agreed positions, and promptly update your document set to reflect those positions.
7. Contract management
Hopefully, if you did all of the above well, contract management will be a breeze. But to make it even easier:
- consider preparing a contract management plan to translate the contract into details of who has to do what and when;
- establish effective communication and governance protocols;
- ensure you are proactively reviewing and managing performance and compliance issues; and
- don’t keep the contract in the bottom drawer to gather dust (but hopefully you won’t need it for anything other than a tool monitoring the contractor’s performance).
We hope this seven-step plan for effective procurement processes serves you well in the coming financial year.
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