tendering for government business workshop compressed

Department of Employment, Economic Development and Innovation

Tendering For Government Business

Workshops

Helping Queensland BusinessWin Government Contracts

Bill Cristaldi

Robert McRuvie

2© The State of Queensland, Department of Employment, Economic Development and Innovation, 2010

Workshop Structure

• Session 1: Money, Authority and Need:– Basic Principles of Doing Business with the Government.

• Session 2: The Procurement Process

• Session 3: The Transaction: Buyer’s side

• Session 4: The Transaction: Supplier’s side

• Session 5: Closing the Deal


Government ProcurementBasic Principles

• Selling to the Queensland Government is much the same as doing business with any other buyer.

• What does the Queensland Government buy?– Normally spends $11B/yr Good and Services

• $5B Capital Works• $6B Infrastructure

– For 2010/11 QLD Govt spending $17.09B (this level may be maintained for the next few years)


Government Procurement Categories

SPECIALISED CRITICAL

ROUTINEVOLUME

Expenditure

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• MONEY: Where is it?

• AUTHORITY: Who has it?

• NEED: Who wants it?



MONEY: Where is it?

• Queensland Government Department and Agencies are the buyers– Money from the appropriations set out in the Budget documents

• Subject to Procurement rules set by the QLD Government Chief Procurement Office– Available online (www.qgm.qld.gov.au)



AUTHORITY: Who has it?

• Procurement Officers in each Department and Agency have the authority to manage procurement activities

• They are responsible for managing the PROCESS



NEED: Who wants it?(Note: These are not the same people as the procurement officers)

• These are the people who manage the programs that provide services or products to the community

OR• They may actually provide the services and need the

goods or services being procured to do this


Government ProcurementFinding the money

• www.heirg.com• www.heirg.com/projects/index.php

• www.projectservices.qld.gov.au/doingBusiness/tenders.asp

• www.icnqld.org.au

• www.budget.qld.gov.au/budget-papers/bp3.shtml

• http://projectgateway.icn.org.au/default.php

• www.qgm.qld.gov.au• www.qgm.qld.gov.au/03_tenders/index.htm

• www.qgm.qld.gov.au/02_policy/better_purch.htm


Government ProcurementFinding the money

• www.defence.gov.au/index.cfm• www.dplusi.defence.gov.au/• www.defence.gov.au/dmo/id/aic/• www.industry.qld.gov.au/dsdweb/v4/apps/web/content.cfm?id=4949

• www.lgtenderbox.com.au

• www.tenders.gov.au/

• www.dip.qld.gov.au/infrastructure-projects/index.php


Government ProcurementPre-Qualifying for Opportunities

• www.publicworks.qld.gov.au• www.publicworks.qld.gov.au/resources/Pages/PQCSystem.aspx• www.works.qld.gov.au/bpu/pqc/pqc_industry_guide.asp

• www.qbuild.qld.gov.au/index.asp

• www.mainroads.qld.gov.au/en/Business-and-industry.aspx

• www.training.qld.gov.au/training-organisations/user-choice/pqs/index.html


www.qgm.qld.gov.au


Going Green

• Queensland Government Procurement is going green

• This means that we need to understand the impact of policy change!

*Effective from 1 January 2008


Going Green

In Practice• 30% of State Government Procurement must be sustainable*

• For Q Fleet (who operate 14000 vehicles) this means that of the 5000 vehicles it buys each year at least 1500 must have an Ecofriendly rating of 5.5 or better.

• Overnight GM and Ford lost access to that % of the Government’s vehicle purchases with the Prius and other Hybrids the winners

Source: www.toyota.com


Going Green

• The development of sustainability as a feature of procurement policy is at an early stage

BUT

• It has a strong commitment from Government and will take an expanding role over time.

• Currently embedded in the Value for Money principles


Going Green – How you could respond!• Example: Service and Maintenance of DERM QPWS Trucks

– Tender form Company A – installed an Ergon smart meter in the meter box, installed triple glazed windows and roof insulation to reduce air-conditioning and fan loads, utilize low energy LED lighting, tick the green box on the energy bill, use low flow restrictors on all taps, capture the water runoff from the roof and use it to irrigate lawns and flush toilets, have a high pressure cleaning bay with waste water recycle plant, have onsite waste water and oil storage capture tank and get ISO14001 waste mgt company to responsibly recycle oil and dispose of waste residuals, invoices printed on recycled paper, Price $25/hr

– Tender from Company B – Don’t worry about the waste,oil and water “She’ll be right”, Price $20/hr

Which tender should DERM choose?


Going Green – How you could respond

DET Example Tender Inclusion Clause (for Organisation)

1.1 ORGANISATIONAL COMMITMENT TO SUSTAINABILITY PRACTICES

1.1.1 To allow the Principal to assess the Offeror’s commitment to sustainability and performance, including demonstrated sustainability improvements, the Offeror must respond to all the questions listed in Response Form 6.21 – Organisational Commitment to Sustainability Practices. The following criteria are specific to the sustainability performance of the organisation, not the individual Goods. (a) Employment Practices - What the organisation does to adopt fair employment practices of its workforce

employees and sub contractors. (b) Environmental Management – A description of the system, processes and practices that enable the

organisation to reduce its environmental impact, to meet its legal environmental requirements and achieve continual improvements of environmental performance.

(c) A description of processes and practices that demonstrate the organisation’s commitment to sustainability principles and improving the whole of life sustainability performance of the organisation.

(d) Greenhouse gas emissions (GHG) – A description of steps the organisation has taken to reduce its greenhouse gas emissions.

(e) Packaging – A description of initiatives that the organisation has in place to minimise/reduce the amount of packaging used.

(f) Corporate Social Responsibility (CSR) - A description of the formalised programs or initiatives that the organisation has in place that are directed towards meeting social and ethical responsibilities and objectives.

(g) Transport and Logistics - A description of initiatives that the organisation has implemented to reduce the environmental impacts associated with transport of goods.


Queensland GovernmentProcurement Policy

Government Procurement must:

• Support Government Ambitions

• Provide Value for Money

• Meet transparency, accountability and probity requirements

• These factors mean that there are differences to the customary buyer/supplier arrangements


Queensland Government Procurement Policy

State Procurement Policy aims to:

• Maximise opportunities for Queensland business to supply to the Queensland Government

AND• Achieve social, economic and environmental benefits for

the Queensland community.


Queensland GovernmentProcurement Policy

Departmental and agency Procurement Officers should:

• Give Queensland businesses full, fair and reasonable opportunity

• Understand the markets from which they buy• Follow the processes that assist local suppliers to

identify opportunities• Devolve procurement decisions to the lowest practicable

geographical level to provide opportunities to business in regional Queensland


Government AmbitionsToward Q2

• Strong: Creating a diverse economy powered by bright ideas.

• Green: Protecting our lifestyle and environment.

• Smart: Delivering world-class education and training.

• Healthy: Making Queenslanders Australia's healthiest people.

• Fair: Supporting safe and caring communities.


Government Ambitions


Government AmbitionsHow they influence Procurement Practice

Supply of Paper for the Department of Environment &Resource Management

Tender from Company A

Pulped sourced from world heritage listed protected

rainforests in Indonesia Offer Price $1.0M

Tender from Company B

Pulp sourced from environmentally and responsibly managed

commercial forests in Queensland Offer Price $1.3M

Which tender should DERM choose?


Government Ambitions

DET Tender Inclusion Clause (for Goods)1.1 SUSTAINABLE PROCUREMENT (Applicable to Part A and Part C)

1.1.1 A sustainable procurement objective is the driver of two mandatory requirements of this Invitation to Offer. Offers will need to demonstrate: (a) Legal sourcing of materials - The Offer must provide evidence in Response Form 6.20 – Sustainability,

that the Goods offered are manufactured from legally sourced timbers. Proof of compliance with this mandatory requirement can include, certificates of chain of custody or international sustainable forest initiatives or a recognised forest management standard or a declaration by the accountable officer;

(b) Emissions and pollutants - The Offer must include a declaration and provide evidence in Response Form 6.20 – Sustainability, that the Goods offered are manufactured using a minimum standard of E0 board, equivalent or better.

1.1.2 Product Sustainability Performance

In addition to a response to the mandatory requirements, an Offer for Part A or Part C needs to include a response in Response Form 6.20 - Sustainability that will allow the Principal to assess the sustainability performance of products offered. The following criteria are specific to the sustainability performance of the Goods, not the organisation.

(a) Eco label status of Goods (i) The Offer needs to identify any products offered that are certified by the Good Environmental

Choice Australia (GECA) eco label. Hard copy evidence of currency needs to be provided. (ii) The Offer should identify any Goods offered that are certified by other ISO 14024 Type 1 Eco-

labels, or certified by Eco Specifier. Identify the name of the certification and provide evidence for each product.

(b) Hazardous Substance Content (i) Indicate whether there are any substances of concern including cadmium, chromium,

polybrominated biphenyls (PBB), polybrominated biphenyl ethers (PBDE), chlorinated paraffin or absorbable organic halogen used in the manufacture of the offered products. This includes coatings (paints, lacquers and varnishes), textiles, adhesives, joinery, and use of pesticides in the treatment of timber. Please provide full details and evidence.


Toward Q2 AmbitionsHealth Example Tender Inclusion Clause

20.3 The Queensland Government has framed its 2020 vision for Queensland around five ambitions that address current and future challenges. Targets have been set for each ambition.

Ambition

Strong - Creating a diverse economy powered by bright ideas

Green - Protecting our lifestyle and environment

Smart - Delivering world-class education and training

Healthy - Making Queenslanders Australia's healthiest people

Fair - Supporting safe and caring communities

(For further details on these ambitions please refer to the following website: - http://www.towardq2.qld.gov.au/tomorrow/index.aspx) Queensland Health is committed through its purchasing to advance these Government ambitions wherever practical.


Government Procurement RulesValue for Money

• Assessment of any proposed procurement must take account of:– Contribution to the advancement of Government Ambitions

– Non cost factors such as quality factors, fitness for purpose, quality, service and support and sustainability considerations

– Cost factors including• Whole of life costs and transactions costs associated with

acquisition, use, holding, maintenance and disposal


Value for Money

Transaction Costs can include:

• Negotiating and finalising a contract

• Contract details such as:– Prepayment for future delivery– Payment in instalments– Warranties and guarantees for quality– Provision for future maintenance and service– Options for additional future purchases at a guaranteed price

• After contract settlement:– Costs involved in monitoring the terms of the agreement


Value for Money

Benefits of dealing with Local Suppliers:

• Readily available spare parts, service and support• Better warranty service• Shorter supply lines• Easier contract administration• Employment• Economic support for the local community


Government Procurement RulesAccountability, Probity and Transparency

Accountability:

Integrity of the process. Accountability is the obligation to explain (or account for) the details of each stage of a specific procurement has been undertaken.

Probity:

Integrity of the buyer and the supplier. Probity requires the process to be conducted ethically, honestly and with fairness to all participants.

Transparency:

Integrity of the process is demonstrable. Many aspects of the decision-making process are publicly accessible. Transparency must apply to every stage of the procurement process i.e. Planning, Purchasing & Contract Administration.


Government Procurement Policy

Some final considerations:

• Workplace Performance• Workplace Health and Safety• Quality Assurance• Delivery• Sustainability• Price


Government Procurement

The transaction

from the Buyer’s side


Planning

The buyer with the need should:

• Analyse and approve the need• Arrange a probity audit (where appropriate)• Specify requirements (supply market analysis)• Meet requirements including expenditure approval• Determine the most effective procurement method• Determine sources of supply• Develop evaluation criteria / terms of conditions


Buying

Government business is made available through:

• Pre-qualified Suppliers

• Standing Offer Arrangements

• Public Tenders

• Restricted (selected) Tenders

• Direct Purchase


Pre-qualified Suppliers

• A register of pre-qualified suppliers is established (usually) only for high value and / or complex purchases

• Rigorous evaluation process determines suppliers that demonstrate a capability to meet requirements

• Can be drawn from over a specified period as projects are implemented


Standing Offer Arrangements

WHO: Can be more than one supplierWHAT: SpecifiedWHEN: Set period (normally 3 + 1 +1)PRICE: AgreedQUANTITY: Undefined

• The result is the establishment of an agreement with panel of suppliers for a particular product from which a government buyer will have the option to choose based on specific requirements according to different locations or needs.

• Usually estimates of product volumes are provided for the guidance of suppliers


Public Tenders

WHO: Any supplier can submit a bid

WHAT: Specified

WHEN: Set timeframe

PRICE: Competitive evaluation

QUANTITY: Set

• Open (public) tender– When suppliers and products are well known


Restricted Tenders

Staged Procurement

• Public registration of interest to ascertain market capability and capacity with selection criteria

• Short-listing of suitable suppliers and then seeking formal offers from them


Direct Purchase

• Secure value for money by minimising process related costs

• Requirements undertaken as per departments procurement procedures


Supply Market Analysis

• A technique used by buyers to identify market characteristics

• Aims to help understand how markets for a particular product or service operate– Market directions– Significant suppliers– Suppliers view of government as a buyer


Testing the Market

Types of documents that may be put out:

• Information seeking– Market research or testing– Could be part of a staged procurement process

• Supplier seeking– Will actually lead to a supplier being chosen


Evaluating (Products and Services)

The procurement officer / buyer will:

• Establish suppliers technical and commercial compliance• Identify bids not meeting mandatory requirements• Establish the total or life cycle costs• Assess technical suitability of each offer• Assess commercial cost / benefits of each offer• Compare costs of the offers received• Determine the best value for money• Document reasons for non-acceptance of lower priced conforming

offers• Assess any risks arising from the evaluation process• Confirm capability / capacity of product and supplier to perform


Evaluating: Product1 2 3

Attribute overseas Caboolture Brisbane

Min 190kW Diesel Engine Pwr Rating 180 190 200Max governed road speed 100km/hr fully laden yes yes yesMin 15 Tonne payload 14.5 15 20Integrated Airconditioning yes yes yesSeating for up to 6 people yes yes yesCurrent model < 6 months old yes yes yesHeavy duty steel tip body 2.4metres W x 5.5metres L yes yes yes60 Litre SS Water Tank plastic yes yes2 off chassis mounted tool boxes yes yes yes

Colour white to AS yes yes yes

Quality Assurance to ISO9001 yes no yesQuality Assurance to ISO14001 yes no no

Yellow and Orange with Reflective tape

yes , no additional

cost extra $1500 extra $3500

Dunn & Bradstreet

Site Visit

Referee Checks (2 off)

Price A$ k 100 150 180

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• 60% Meeting Evaluation Criteria, 30% Due Diligence, 10% Referee Reports


Evaluating: Services

• Proposed Methodology• Expertise / qualifications• Relevant experience• Management capability• Position of their price in the market• Financial condition and stability

Rating

1 Inadequate Does not meet level required

2 Marginal Barely meets requirements

3 Acceptable Meets the requirements

4 Good Exceeds the requirements

5 Excellent Significantly above requirements

60% Meeting Evaluation Criteria, 20% Presentation on Methodology, 20% Referee Reports


Considerations in Supplier Evaluation

Building Confidence

And Trust


Building Confidence and Trust

• Price position in the market– Keep it real

• Management capability– Introduce key people– Note special abilities / capabilities

• Technological and quality capability– Identify advantages

• Financial condition and stability– Demonstrate adequacy of cash flow

• Just-in-time capability (if required)– How well do you do it?


Building Confidence and Trust

• Additional Services provided, e.g. design, engineering, product innovation– Highlight

• Location– Does it satisfy the needs of the contract

• Available capacity– Ensure its available

• Logistics– Materials handling and shipment facilities

• Industrial relations record


Building Confidence and TrustMichael Carney has nearly thirty years experience in government

at Commonwealth and State levels. He has spent a major part of his career directly involved in international trade negotiations in Geneva at the World Trade Organisation, the United Nations in New York and in the capitals of Australia’s major trading partners including China, Thailand, the United States and Taiwan. In developing the positions to be presented, defended or secured at negotiations he has worked closely with industry representatives to ensure that their (and Australia’s) interests are paramount.

Government procurement is among the issues where Michael has contributed significantly to the international arrangements being negotiated. He has led Australian delegations comprising Commonwealth and State Procurement officials to negotiations in Geneva. He has worked with the Australian Procurement and Construction Council to establish more consistent and comprehensive approaches to international commitments by the Commonwealth and State Governments.

Its all about the quality of the people


Deciding

In deciding, Government Buyers will:

• Obtain and evaluate bids from suppliers

• Negotiate where necessary

• Obtain or provide approval

• Prepare purchase order / contract


Administering the Contract

Government Buyers will also:

• Follow up and or expedite any issues that may arise

• Receive and inspect goods or services supplied

• Certify invoice and pay supplier

• Update records


Government Procurement

The transaction

From the Supplier’s side


Open Tender

What you should see:

• Background and context of tender / offer• What the need is• What the relevant operational policies are• What the conditions of tendering and proposed

conditions of contract are• What are the evaluation criteria?• Part Offers• Lodgement procedures


Requests for Tender / Offer

You should also expect to see:

• The identity of the purchasing agency• The format and content required• Whether –

– Post offer negotiations may be held– Best and final offers may be sought– Alternative or part offers may be considered

• Advice that – – The lowest offer need not be accepted nor any offer accepted– Non-conforming offers will not be accepted


Tender Considerations - Products and Services

• Look for the WILL, SHALL, MUST in tender documents (Mandatory Requirements)

• Remember DESIRABLE features may be taken into account when all else is equal

• Ensure you contact your referees and let them know about your tender– The best referees are other Government Buyers.


Guidelines when dealing with Government

• Respect obligations of buyers

• Avoid perceptions of undue influence

• Avoid collusive and unfair practices

• Disclose conflicts of interest

• Provide accurate and reliable information


Operational Policies

• Sustainable Procurement Policy– Going Green

• Local Industry Policy– >$2,5M for rural and regional QLD, >$5m all others

• SME ICT Participation Scheme– Median value purchases >$250K

• 10% Training Policy– 10% requirement for construction projects

• Indigenous Employment Policy– 20% requirement for remote and rural construction projects

• Quality Assurance Policy


Other Policies and Agreements

• COP Employment and Outwork Obligations TCFL• GITC V5

– How to buy computers, hardware and software– IT goods and services of reasonably higher value

• Australia New Zealand Government Procurement Agreement (ANZGPA)

• Australia United States (AUSFTA)– 21 days notification; Goods and Services $679K, Construction

Services $9.57M, does not apply to health and education

• Other Free Trade Agreements (FTA’s)– Thailand, Singapore, Chile


Tender / Offer Document - Recap

Tender/Offer Document = Invitation to make a Bid

Request for a Price/Quote

Conditions of Offer

Buyers' side

The Specifications

Conditions of Contract

Supplier’s side/Bid


The Heart of the Transaction

SPECIFICATION

Tells buyer what is needed

Sets standards for quality

Defines customerneeds

Tells supplier the requirements


Responding to a Tender

ANSWER ALL THE QUESTIONS

Especially on the Specifications



• Be succinct

• Follow the format

• Repeat what you have said before if it answers the questionLearning experience:

Local Government tender for marketing and communications

“Oh my aching fingers how many times do I have to repeat myself”



• Be sure to address the terms the tender has specified for the required product or service

• Think about the evaluation criteria

• Emphasise YOUR STRENGTHS (NOT YOUR COMPETITION NEGATIVES)

• Bid must be received NO LATER than the specified time, that is on time


Submitting a Bid

• A conforming bid must be communicated to the designated procurement officer

• All terms and conditions must be notified

• When a bid is received, the bid may be:– Accepted– Rejected– Allowed to lapse– Withdrawn


Acceptance of a Bid

• When the price and conditions are agreed

• Must be formally communicated to the supplier

• Must be unconditional– All the terms of the bid are accepted by the buyer and the

supplier


Closing the Deal

• Just the same as any other contract

• A contract is– An agreement made between two or more parties– Legal rights and obligations are created– Enforceable in law


Closing the Deal

If you are successful:

Check that the contract:• Complies with the tender / offer

• Takes account of any agreed specifics of your bid

• Ensure you can fulfil the terms of the contract

• Request post contract award briefing


Otherwise

If you are unsuccessful:• Seek a debriefing and obtain the reasons• Contractor / value (>$100K)• Be diplomatic in your approach

If you choose to lodge a complaint:• Address the issues carefully• Contact the procurement manager first

• Follow procedures– Start with the Procurement Officer you dealt with – TAKE the debrief– QLD Government Chief Procurement Office– Crime and Misconduct Commission


Performance

• When the product / service is delivered and completed, a contract is considered to have been discharged / fulfilled

• Delivery In Full On Time (DIFOT)

NOTE

Contracts might also be discharged / ended– By mutual agreement

– By impossibility of performance (frustration)

– By breach or default on conditions

No cost penalty

Costs & Reputation


Still Think You Need Help

Office of Advanced Manufacturing


www.business.qld.gov.au• Bill Cristaldi

07 3224 8618

[email protected]

• Robert McRuvie

07 3224 7548

[email protected]


Still Think You Need Help

Defence Team


www.industry.qld.gov.au/dsdweb/v4/apps/web/content.cfm?id=10420

• David Belham

07 3224 7437

[email protected]

• Mary Willis07 3222 2937

[email protected]


Tender Document Sample

Refer to Workbook Tender Example


Thank you for your attendance

To contact your nearest

Regional Centre

Phone 13 26 50

tendering for government business workshop compressed

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