Procurement
November 27, 2014

If it’s broken…

Roy Wiseman’s blog, “In defence of direct negotiation,” on the CGE blog site (cgexecblog.wordpress.com) is well worth a read. So too is the 2012-2013 Annual Report of the Procurement Ombudsman, Frank Brunetta – as with all of his reports, it should be mandatory reading for any procurement professional (opo-boa.gc.ca).

Mr. Wiseman listed a plethora of problems with current federal procurement practices that are legitimate, valid and need change. One was: “Only bidders who submit formal and fully complying responses to the issued RFT or RFP will be considered. (The requirement for ‘fully complying’ bids is important. I have participated in processes in which as many as three-quarters of submitted responses were rejected, often for seemingly trivial reasons – i.e., missing signatures – that could easily be corrected in a less formal process.)”

Mr. Brunetta talked about “a number of…situations where…bids were rejected by departments over what [suppliers] viewed as insignificant administrative shortcomings. A typical example was…a potential supplier responding to a contract opportunity which required the curriculum vitae (CVs) and diplomas of staff being proposed for the work. As part of the mandatory criteria, the department requested that bids include one original and four copies …The supplier provided the original CVs and diplomas for the staff…but, through an administrative oversight, did not include the four copies. The department deemed the supplier’s bid non-compliant and rejected it.”

Two writers, same story. It is a problem, but there is a solution used by many organizations around the world: substantive compliance. A bid is accepted if it complies with the essential (substantive) requirements in a call for bids, and if any errors or omissions are trivial.

It makes a lot of sense. The challenge lies in clearly circumscribing that “trivial” category, and ensuring that the resulting definition can be applied consistently across government. I see a safe and sensible approach.

Competitive procurement has three general classes of “requirement”: mandatory; point-rated; and administrative/procedural.

When properly developed, mandatory requirements (qualified as “must”) are clearly substantive: they speak to minimum supplier characteristics that are essential to the success of any resulting contract. Failure in a bid to demonstrate compliance is thus not trivial, and no such failure should result in a bid being accepted.

Point-rated requirements are for the qualitative evaluation of a bid, and providing the necessary information to permit full and fair evaluation is already at the discretion of the bidder (usually phrased as “the bidder should provide”). I don’t think that bids are ever rejected for failure to do so. The bidder simply gets low or no points.

Administrative/procedural requirements are almost certainly the source of the supplier complaints about rejection for “trivial” reasons. They most often appear in a call for bids in the Instructions to Bidders, and even on close examination they rarely have anything to do with the subject matter of the procurement or a bidder’s ability to do the work.

They do, however, serve a purpose. For example, requiring “X” paper copies of a bid means that each bid evaluator will work from a document provided by the bidder, and there is no chance of information being garbled or lost if the department makes copies. Still, can you come up with a good reason why a bid should be rejected because the bidder only included three paper copies of the bid instead of the specified four? It has nothing to do with the ability of the bidder to do the required work.

However, two seemingly “administrative” requirements MUST always be complied with: a bid must be received at the specified location by the specified date and time, and the bid must be formally signed by the bidder. If either of these requirements is not met, the package submitted is not a legal bid – clearly a substantive issue – and cannot be considered.

A colleague challenged this: What about bid bonds, or insurance, or conflict of interest declarations? That’s for next month.

In the meantime, with those two exceptions, adopting substantive compliance, and letting a bidder “fix” an administrative error or oversight would be a substantive step toward ensuring that potentially best value bids are not rejected for those “trivial” reasons. Compliance – the decision as to whether to accept a bid or not – should be based on the merits of the substance of the bid.

In sum, will a “trivial” error put your procurement and eventual contract at risk? If Yes, make it a mandatory. If No, don’t reject.

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