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Tendering and Bidding Briefing:Give your tender a winning chance
Funded by
The Finance HubCharities Aid Foundation St. Andrew’s House18-20 St. Andrew StreetLondon EC4A [email protected] (020) 7832 3016f (020) 7832 3001
Development Trusts AssociationCharities Aid Foundation National Office33 Corsham StreetLondon N1 [email protected] 0845 458 8336f 0845 458 8337
acevo1 New Oxford StreetLondon WC1A [email protected] 0845 345 8481f 0845 345 8482
NB: Please note this briefing is a working document which will be updated to includedelegate feedback collected at regional seminars.
Abstract
The climate has changed for third sectororganisations across the country.Spending public money in an open andtransparent manner to achieve particularoutcomes has become a naturalrequirement for commissioners, and hasled to a “contract culture” for those theyfund.
Grants are becoming less common andcontracts are becoming the norm. Withcontracts comes formal procurement,which puts additional pressure on thirdsector organisations of all sizes. Theymust now be able to engagecompetitively in open tenders with publicsector bodies and private organisations,as well as with each other.
This may seem a daunting prospect, butthird sector providers should be activelytendering for services. The sector hasbeen innovating and adding value formany years. As a result it has someexceptional services to offer: the difficultylies in communicating this effectively tocommissioners.
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Introduction
The Government recognises thesignificant role already played by thirdsector organisations in public servicesand is keen for this to grow. An actionplan drawn up by the Cabinet Office in2006 set out reforms to increase thirdsector involvement in public services.
Further policy papers have repeatedlyhighlighted the desirability of a greaterthird sector role. This will mean moreservices will be tendered. The need forthird sector organisations to engageeffectively in competitive tendering willonly increase.
You may submit a tender • To retain the right to deliver an existing
service, or to • To win a contract for a new service.
The first point is important. In the futureyou may need to bid for services that youalready run.
You may wish to take on new services:• To develop your capacity, enabling
more people to benefit from yourservice,
• To move into new geographic areas,or • To move into working with new groups
of people.
This briefing summarises the differentkinds of tender processes, and explainshow best to manage each.
Key points
1. Find out whether and where tendersare advertised. This is governed byvarious regulations and laws, so payparticular attention to thecommissioners you might beinterested in working with.
2. Think carefully about whether totender for any given piece of work. Donot rush into bidding just because youare afraid of missing out onopportunities.
3. Give real thought to the pre-qualification stage of the tenderprocess, which provides anopportunity to take a step back andexamine your policies.
4. Find out as much as you can aboutthe commissioner’s objectives andrequirements. If there’s anything youdo not understand about the tenderprocess, do not be afraid to ask thecommissioner directly.
5. Partnership working has pros andcons. Consider these and set uppotential partnerships well in advanceof the tendering process.
6. Follow all the rules of the processscrupulously. Getting minor detailswrong can disqualify you. Preparecarefully for every stage.
7. Remember that your tenderdocuments may form part of thecontract. There may be no furtheropportunity to renegotiate what youhave submitted, so get it right firsttime.
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Types of tender process
As many public service contracts arecommissioned by local authorities (orprimary care trusts), you should look ateach commissioner’s contracting policiesor standing orders. Commissionersinterpret the requirements of EUlegislation in different ways.
Open Tender The details of an open tender are publiclyadvertised. The value of the contract willdictate where the advert must be placed:locally, regionally, nationally or across theEuropean Union.
Approved Provider List or Register ofContractors In some cases, only organisations on aparticular list are invited to tender for
services. Organisations are normallychecked for competence prior to beingplaced on the lists. Organisations cannormally apply to be put on the list onceeach year, at the time when theopportunity is advertised. This meansthat the contract commissioner does notneed to go through an expensiveadvertising process for every tender.
Single Tender The commissioner may decide to ask fora tender from a single organisation. Inthese cases the value of the contract isoften very low and there is usuallysupporting evidence as to why it isappropriate to choose a particularprovider.
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Case Study 1: Supporting People
This case study shows how changes inthe design of funding programmes maymean competitive tendering isrequired.
In 2003 the Government brought in a newprogramme called Supporting People,which supports vulnerable people tomaintain their independence inaccommodation. Although many newservices emerged as part of the newprogramme, many more had been aroundfor years and were previously funded byvarious separate pots of money.
For providers this was very positive insome respects: they no longer had toreport to different funders in differentways, or to seek funding from manydifferent funding pots.
However, the new Supporting People‘Grant’ came with a contract for each oftheir services. Many such contractsconsolidated small pots of money into abigger single pot. This meant a muchlarger contract value per annum.
Once the initial contract came to an end,council contract standing orders meantthat the services had to go out tocompetitive tender.
Although service providers had beenrunning services successfully for years,they now found they had to tendercompetitively to retain those services.
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Finding opportunities to tender
The first challenge for any organisation isfinding out when things are tendered. Asshown above, the size of the contractaffects where the tender is advertised. Ifyou expect a commissioner to advertise apiece of work, you should find out whereand when they intend to advertise it.
Most areas of work have a trademagazine where many of the tenders willbe advertised. Many national newspapersalso carry tender adverts.
Increasingly the internet is used toadvertise tenders. If you type “tenderportal” into any search engine you willfind a whole list of different sites withinformation on the latest contracts to betendered. Many sites charge for access,but others are free.
Two sites for large tenders are
• www.government-online.net/home.asp• http://ted.europa.eu/Exec?DataFlow=
hRead.dfl&Template=TED/homepage&hpt=ALL&StatLang=EN
This second link is to the EnglishLanguage Page of Tenders ElectronicallyDaily (TED), which lists opportunitiesthroughout Europe. It includes all tendersabove a specific size from local andnational governments across Europe.
Many local councils and GovernmentDepartments advertise tenders. You willknow which departments are mostrelevant to your work. Spend some timegoing through their own websites to see iftheir tenders are advertised.
Many of those who advertise throughtheir own web pages offer individuals andorganisations the opportunity to sign upto e-mail notifications or to receive RSS-feeds, which notify you of newinformation as it is put up on the website.
Should you bid? It is all too easy to jump at every tenderthat comes out, for fear of missing out onan opportunity. Before you do, considersome of the key facts. A lot of hard workis required to put a tender together. Youmay reach the end of a long process onlyto discover that you don’t want to, orcannot, do the work anyway.
Ask yourself:• Does the piece of work fall within your
aims and objectives?• Does the piece of work fit with your
business plan and strategy?• Do your governing documents (e.g.
your Memorandum and Articles ofAssociation) allow you to undertakethis work?
• Will it enhance or detract from otherareas of your work?
• Do you have, or can you develop, thecapacity and infrastructure to deliverthe service?
• What do you know about theparticular commissioner? Do you wantto provide a service for them?
• Do you have relevant experience in the• Client group?• Geography?• Type of work?
• Are all the clauses in the proposedcontract acceptable to yourorganisation?
• Is the time that will be spent insubmitting a tender worth it? Considerthe contract value, the overall value toyour organisation, and your likelihoodof winning the contract.
• Will TUPE (staff transfer) be involved ifyou win the contract and what are theassociated risks?
If you have a negative response to any ofthe above questions then you shouldconsider very carefully whether to tender.You may find it helpful to undertake a riskassessment.
All tender processes vary but thefollowing approach seems to be usedmost often.
1. Pre-tender qualification
Initially there will be a pre-tenderqualification process to establish a selectlist. Your organisation will need to provideinformation on your processes, policies,and relevance for the general area ofwork. For example, to get placed on alist for adult services you would need toprove your charity had some experienceof working with vulnerable adults, or hadrelevant transferable skills.
The prequalification questionnaire is yourfirst opportunity to present yourself to acommissioner. It can give you a chanceto learn how the commissioner willexpect you to work. Other backgroundinformation you receive may tell you howthe commissioning organisation ismanaged.
Undertaking a prequalificationquestionnaire can be extremely positivefor an organisation: it makes you take astep back and examine your processes.Give yourself plenty of time to completethe stage, as you may need to amend orupdate your processes.
At this point think about the types ofwork that may be tendered by thecommissioner and consider possiblepartners for these projects. A relationshipwith a potential partner takes a long timeto establish, so it should be worked onbefore the tender is advertised.
2. Tender packs and expressions ofinterest
Once on the select list, you will receiveinformation about tenders from thecommissioner. If you are interested in
finding out more about a specific tender,you will need to submit an expression ofinterest. This does not commit you totendering.
When you have received a full tenderpack you should go through it and findout exactly what is involved in the tenderprocess and the contract itself. Askyourself again whether it is appropriate togo for this tender.
It is often worth trying to find out why acommissioner is tendering a service andwhat they are hoping to achieve. It couldbe that they are tendering because theywant to generate economies of scale; orbecause they are not happy with thecurrent provider. It may be a new servicewhere they want to see innovation. Theymay have to tender under their ownpolicies and have no particular goal inmind.
There is generally a period during whichquestions can be asked regarding thetender. Usually questions have to besubmitted in writing and answers areshared with all those who expressed aninterest.
3. Writing the tender
Make sure you leave plenty of time forwriting and submitting the tender. Thereare often unexpected problems, so allowmore time than you think you will need.
Commissioners are generally obliged togive you information on how they scoretenders, but they don’t always send thisout.
Whenever you are tendering you shouldask for the scoring mechanism that is tobe used as this way you can ensure thatyou focus your answers to maximise thepoints received.
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The tender process
Preparation
Before writing the tender it is worth takingsome time to go through the followingquestions. Then you can work youranswers into the tender later on.
The first question is: why is the serviceneeded? Why should the service exist atall? The easiest way to demonstrate thisis through an example.
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Domestic Violence Refuges: the need As an organisation you should knowwhy a service is needed. For instance, ifthere were no domestic violence thenthere would be no need for any refuges.
• 1 in 4 women and 1 in 10 menexperience some form of domesticviolence at some time in their lives
• It takes an average of 35 attacksbefore a victim will report domesticviolence to the police1
• 88% of people saying they hadexperienced domestic violence inthe British Crime Survey did not seeit as a crime.
• There is significant under-reportingof domestic violence especiallyamongst some socio-economicclasses and ethnic communities.
You should also know who it is aproblem for, for example • The victim, • Children of the victim, • Other family members, • Neighbours,• NHS, • Housing Department, • Police.
What are the demographics? Based onthe figures, how many people in thearea concerned could reasonably beassumed to experience domesticviolence?
This sort of information makes it real. Asthird sector service providers we areextremely good at developing servicesbecause we have seen needs. Becausewe know them so well we sometimes
forget to explain them. Rememberingwhy the service is needed in the firstplace will help give your tender thepassion and drive required.
1 The Times, July 9th 2007
After that consider the followingquestions:
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What are the factors that influence thistender?
• Why is it being tendered? • What are the gaps in the current
service?
Why is your organisation best placed todeliver what’s needed?
• What’s your experience of the clientgroup involved?
• What’s your experience of thegeographic area?
• What else have you done that’s similar?• What’s your unique selling point (USP)?• How many people have you helped
before?• What is the competition like? • Could you offer something significantly
different to what is currently beingdelivered?
• Would a consortium bid with otherproviders be favourable?
• What added value can you bring?
What will you actually do? • How will you do it? • What are the numbers of people you
will work with (could be stated in theservice specification)?
• How long will you work with them for?• Is there a pathway/process they will go
through?• Where will it take place?• Will it use new approaches /
technology etc?
What are the outcomes? • What will be the outcomes for peoplein the service?
• What will be the outcome for the widercommunity?
• How many people will have positiveoutcomes?
• What will be the benefits for otherrelevant bodies e.g. reduced crime,lower hospital admissions?
• How many people will report that theyare happy with the service?
Who else should be involved? • Which other organisations orauthorities would you seek to involve,and at what stage?2
2 For more information on outcomes and tendering, see the Finance Hub’s Impact Briefing
Partnership models
Your organisation may wish to work withother organisations, making joint bids forwork. This gives the benefit of being ableto take on much bigger areas of work.
Building relationships with partnerscannot be done at the tender stage. Youneed to have a good existing relationshipin place. They should be organisationsyou feel comfortable working with, andwho can bring a different aspect orelement to the tender.
If you feel that a consortium bid may be
appropriate, then you will need toconsider various issues. Think aboutpartnership working, legal issues, dividingwork and drafting the contractualdocumentation. Costs will probablyincrease, as you will need to cover theadditional costs of servicing thepartnership, including VAT implications3.
Assess the risks and the pros and consof the partnership. If you decide that apartnership/consortium bid is appropriatethen it is worth seeking further legaladvice.
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Tender format
Tenders and bids may differ dependingon the size of the contract, thecommissioner and the type of tenderprocess. There may be different formsfor you to fill in and submit with yourtender. Some commissioners will setquestions for you to answer. Others leaveit to you to decide what to say.
Questions to AnswerIf questions are set, then make sure youanswer them all thoroughly, even if youhave to repeat yourself. Sometimestender documents are split up and givento different assessors. Assessors may notbe able to take your other answers intoaccount, so might deduct points fromanswers that seem incomplete.
When answering questions in a formaltender process, always try to give detailsof how you would actually do the work.Wherever appropriate, relate this back toprevious experience to show that youreally can deliver. Use a number ofexperiences: you don’t want to seem a“one trick pony”!
No Questions to AnswerIf there are no set questions, considervery carefully what to write. Look throughthe tender pack. There will almostcertainly be a service specification whichsays exactly what the commissionerexpects from the service. Structure yourresponse based on this, saying exactlyhow you would deliver each aspect.
The pack may also say what is expectedof the successful organisation, forexample:• Previous experience of working with
the client group • Knowledge of the geographic area • Knowledge of key policies and issues
for this service type • Experience of partnership working • Proven track record in delivering
services on time• Capacity within the organisation to
manage the project • Commitment to continuous
improvement
If there is such a list, then address all itsrequirements. If there isn’t a list, thencome up with your own, based on theoutline list above.
3 For more information on partnerships and VAT, see theFinance Hub’s VAT Briefing:
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Presentation Follow the rules:• If a format has been given, then stick
to it. • If the tender pack gives you a word
limit, then don’t go over: peopleactually do count them!
Make sure the document is easy to read.Give assessors a document that is welllaid out, in a logical format. It will beeasier for them to see how you meet thespecification and therefore allocate thepoints you deserve.
It is important to note that the documentyou submit is likely to become the basisfor a contract. You may not have theoption to change anything at a later dateshould your organisation be successful.Your costings, staffing levels, and detailsof what you will deliver must be thoughtthrough carefully, conservatively and withthe proper approval.
Very few commissioners base their tenderevaluation on cost alone, but it is worthfinding out how much emphasis will beput on cost.
There are several things to think aboutwhen costing a tender. Appendix A givesa list of things that you should consider.The Commissioner is likely to specify howyou should break down your finances.This may be very simplistic, for example:
• Front line staff costs • Management costs • Overheads
Work through your own process ofcosting the contract before completingthe Commissioner’s model. That way youwill know that you have factored in allyour costs.
Don’t forget the following:
• If the tender is for more than one year,then remember to cost in any inflationin the costs of staff and suppliers.
• Explain any assumptions that youhave made. That way, if thecommissioner doesn’t agree with theassumption, they can challenge that,rather than the price.
• It may be that you are requesting morethan it actually costs you to deliver theservice so that you can put a smallsurplus into your organisation’sreserves. This is a sensible approach,but make sure you explain it.
• Remember, if your staff or office arefunded by more than one projectallocate the costings fairly across thedifferent funders.
• Be wary of using round numbers, forexample saying that the pensioncontributions will be £3,000. Roundnumbers suggest that you’ve guessedrather than actually worked it out!
Full Cost Recovery
This model costs each service fully,including the relevant portion of overheadcosts. It ensures that overhead costs arecovered, and that each project or serviceis costed fully.
You may choose to subsidise a serviceinitially to help you to appear morecompetitive. If this is the case then youshould know why you are doing it, what itis actually costing, and how you willcover costs in the long-term4.
Costing a tender
4 Acevo and the Finance Hub have several other publicationson achieving full cost recovery.
TUPETUPE standards for Transfer ofUndertakings (Protection of Employment)regulations 2006.
TUPE often applies when a service istendered and an existing provider isreplaced by a new one. It means that theemployees in the original services oftenhave the right to be transferred to thenew organisation. They then have all theirprevious rights protected, such as hoursof work, pay, holiday and pensionentitlement.
Organisations tendering for services willneed to examine whether TUPE will applyif they win a tender and consider whatthis will mean in the future.
It is really important that providersconsider the risk of TUPE when biddingfor contracts, and receive all the
necessary information to be able toproperly assess their liabilities and costs.Sometimes Providers will be asked tocomplete a Confidentiality Agreementbefore the Procurement Department willrelease such information.
Check whether the submission shouldinclude TUPE costs. The tender packmay be silent on the matter. Considerwhether the TUPE costs lead to anuncompetitive price. Assess the likelyimpact on the organisation and the timeand investment required to deal withculture change and changes in workingpractices.
Take into account the numbers of stafftransferring. Assess the number of staffrequired to deliver the contract againstthe number of staff eligible for transfer,and properly cost into the bid anyredundancy costs that result.
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Following the tender rules
The tender process can often feel overlybureaucratic. However, the processes aregenerally put in place to ensure fairness,as the resulting contract is often worthsignificant sums of money. Follow all theguidelines carefully.
Many organisations have put significantamounts of time into preparing adocument only to have it rejected beforeit’s even been opened. If the frankingmachine puts the name of yourorganisation on the outside of theenvelope, this can disqualify you!
Make sure that you:• Return all the documents requested • Sign all the documents that need
signing • Do not identify the organisation on the
tender envelope• Stick to deadlines – they are not
negotiable• Follow any restrictions on
communicating with otherorganisations (especially if trying toundertake a consortium bid)
• Do not alter any of the officialdocumentation provided.
Case Study 2: Check, check and check again! This case study shows the importanceof checking every tender carefully.Don’t just cut and paste!
In 2006, an organisation (who shallremain nameless!) was tendering forseveral different services advertised by alocal authority. The format was the samefor all tenders and much of theinformation going into the documentswas the same.
Therefore some of the information wascopied and pasted between documents. Unfortunately one of the pieces of
information that was copied over was thecosting. This resulted in the organisationbidding for all three pieces of work withthe same breakdown and cost. Not onlydid this mean that the price breakdowndid not support what was said in the text,but the Authority had stated upper limitsfor prices.
In two of the three cases, this meant thatthe price submitted by the organisationwas higher than this and thereforeinstantly rejected!
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4: Short listing and the evaluation panel Following the closing date for thesubmission of tenders, a panel will meetto evaluate them. They tend to use asimple scoring mechanism.
If your organisation has been short listed,you will be invited to attend an interview.Full details of the interview should becontained in a letter and if they’re not,don’t be afraid to phone up and ask forthem.
The interview will, as with the tenderevaluations, be a scored process, soensure that you find out the scoringsystem before you get to the interview.
Consider who from your organisationshould attend the interview: generally thiswill be two or three people. Show thatthe organisation is taking this tenderseriously, so a senior member of staff,such as the Chief Executive, shouldattend to answer questions about howthe work fits with organisation’s strategy.
The person who would actually bemanaging or delivering the service should
also attend. All too often this is wheresome large organisations fall down: theysend a business development team whohave no front-line delivery experience andtherefore can only give abstracttheoretical answers instead of realexamples. You could also take a memberof front-line staff and perhaps a user ofyour current services.
Make sure that you prepare well for theinterview. If there is a presentation, thenpractice it and time it several times. Thinkthrough the questions that you are likelyto be asked and how you might answerthem.
All members of the team should be ableto answer relevant questions. Be verywary of the Chief Executive answeringtoo many questions. This suggests a lackof faith in the ability of the staff involvedin service delivery.
Each member should understand • their part in the interview, • how their role fits into the
organisation,
• what their part will be if the tender iswon.
Use the interview to go over some of thekey points you made in your tenderdocument. Remember that some maynot have seen your tender submission, sowill be scoring you on what you say thatday. Take the opportunity to stress whatyou can do that’s different from others.As with the tender submission, make surethat you back up what you’re saying withexperience.
If you are told at the beginning of theinterview how long the interview will take,make sure you tailor your answers toquestions accordingly. Many
interviewees take their time over the firstfew questions to try and ensure maximumpoints, only to end up running out of timeon question 7 and therefore losing all thepoints they could have scored onquestions 8, 9 and 10.
The points system may also be weighted,with points from the tender evaluationcounting as 70% of the total and pointsfrom the presentation and interviewmaking up the remaining 30%. A highscore in the tender document mighttherefore have more impact than a highscore at the interview.
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5 The final stages
Ask for feedbackDon’t forget to ask for feedback from atender process whether you weresuccessful or not. Any feedback will beuseful when it comes to tending the nexttime.
Room for negotiation is limited!Remember that the tender document willprobably form part of your contract. Youmust be prepared to deliver what youhave said you will, for the price you havestated. There may be a chance for somenegotiation at the pre-contract meeting,once you have won the tender. However,
this will only cover minor elements of thecontract. If in doubt over what can benegotiated, then ask.
It is often assumed that you can pull outof the process if you don’t want theresulting contract, but once you havesubmitted the document this is notalways the case. If you are unsure aboutwhether you want to undertake theresulting work, then it is best to resolvethe issues before you go to all the hardwork of putting the tender documenttogether.
About the author
Nichola Goom is Chief Executive of ROCCwhich is an umbrella body supportingorganisations in housing, care and support.
ROCC improves the lives of peoplerequiring support by providing training,information, consultancy, research andrepresentation to purchasers,commissioners and providers of housing,care and support.
ROCC provides:• Support, representation and co-
ordination for agencies working withvulnerable and disadvantaged people
• Expert advice and information on majorissues affecting the housing, care andsupport sector
• Quality learning and personaldevelopment services
• Cost effective consultancy and research • Mechanisms for the facilitation of
partnership working • Mechanisms for the direct involvement
of service users in strategic planningand decision making at all levels ofservice
ROCC have been working with providers indeveloping their skills in tendering forservices and to this end have developtraining aimed at improving organisationsability to competitively tender.
DisclaimerThe information in this article is believed tobe correct at the time of publication. It isgeneral in nature and is not intended to beexhaustive nor to provide legal advice inrelation to any particular situation, andshould not be acted or relied upon withouttaking specific advice.
Further readingPartnership in Public Services – An actionplan for third sector involvement – Office ofthe Third Sector (2006)
Full cost recovery – a guide and toolkit oncost allocation – acevo (2004)
Transfer of undertakings (TUPE – CIPD(2007)
Full Cost Recovery – Finance Hubhttp://www.financehub.org.uk
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Appendix A: Some cost itemsThe form below is designed to be aprompt for information which may berelevant. Not all of the costs below will be
relevant to your organisation, so gothrough this form and complete therelevant elements.
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£
Front-line staff salary
• Front line staff NI & Pension contributions
• Front line staff allowances
• Front line staff relief costs /locum cover
Management staff salary
• Management staff NI & pension contributions
Redundancy payments
Relocation expenses
Recruitment advertising
Staff travel costs
Essential car user allowances
Relocation expenses
Medical expenses
CRB checks
Mobile phone costs
Staff training
Subsistence costs
Actual delivery costs for the service –
ie food for animals if an animal shelter etc
Other accommodation rental
Heating & lighting
Photocopying & printing
Marketing
Telephone, internet & fax costs
Finance costs
Personnel costs / recruitment costs
Insurance
Utilities
Office cleaning
Refuse collection
Gardening
Rates
Security services
Rent
Redecorations
Equipment maintenance
Equipment hire
Depreciation
Room hire
Stationery
Postage
Books
Catering
IT supplies
IT maintenance
Board meeting costs
Marketing
Legal fees
Audit fees
Consultancy costs
Bank charges
Licences
Registration Costs
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