cl-nz logo
Story image

Understanding compliance: a current look at the tendering process

01 Aug 2008

The tendering process is designed to give companies and government departments a good overview of applicable solutions, allowing proposals to be evaluated and chosen on a fit for purpose and value for money basis. Often strict compliance laws apply and, increasingly, environmental factors are being taken into consideration. The Channel takes a look at changes in the tendering process, the effect of sustainability and compliance on a tender bid, and how to increase your win rate.A current lookGovernment departments are obliged to go to tender for any project over $100,000 and the tendering process is theoretically designed to be totally transparent and fair. Ideally, government departments need anyone who is eligible to put forward a proposal, but in reality the costs of responding can be prohibitive, especially for smaller firms and start-up companies. The government has recognised this and is working on ways of making the process faster and less costly for all involved. David Sheppard, ICT Advisor for the ICN (Industry Capability Network — a business unit of New Zealand Trade and Enterprise that works to link purchasers with competitive local suppliers) told The Channel, “it can cost anywhere from $5,000 to $100,000 to respond to a tender. Some people who may have the best solution are not responding because they can’t afford the time.” In response to this there is a range of initiatives being undertaken by the GPDG (Government Procurement Development Group), such as the development of standard contracts. At present everyone offers their own contract and even the most subtle of changes will mean a respondent has to change their answer to fit, often in consultation with a lawyer. Standard contracts, although they won’t be mandatory, will help to save time and money for both the government and tender respondents. Sheppard said it will also enforce best practice on clauses that are contentious, such as ‘liquidated damages’ and ‘termination’. Significant progress has been made on this venture which will help to streamline the tendering process. Another area of advance is an initiative to make the tendering process less onerous by implementing a short qualification process before moving onto the more in depth tendering process. “Pre-qualification has been introduced in many areas to reduce the risk of responses, including selection of proven performers,” said Kate Walker, CEO of RMAA (Records Management Association of Australasia).  ICN’s Sheppard explained how they are trying to encourage people to begin using EOIs (expressions of interest) comprising eight to 10 differentiation questions that respondents should be able to reply to in three or four pages. Based on those responses, a limited RFP (request for procurement) would then be issued to three or four vendors/suppliers, thus reducing the time and cost of responding.The GPDG is also promoting and raising the profile of procurement specialists within the government departments, turning the specialty into a profession. It is conducting a series of courses to promote best practice in developing, writing and responding to RFPs which will lead, once again, to a much simpler format and a more streamlined process. Making sense of trendsPeter Royle, Chief Executive of GSB, said there is a growing use of tendering as a way to engage suppliers in the public sector, springing from a greater awareness of the need to go to tender to ensure they get a process which gives a high degree of transparency in dealings with clients; a need that is particularly great since they are accountable for spending public funds.Clive Levido, Fortinet Country Manager for New Zealand, commented on government’s interest in getting value for money. “Government agencies are very focused on getting more for their dollars. Fortinet has seen this trend around the world and New Zealand is no exception. There is now a much more sophisticated understanding of costs than in the past, as government agencies are now much more aware of ongoing support and administration costs.” With value for money being fairly high on the government’s list of criteria, many vendors are choosing to form alliances or consortiums with specialists in other fields of IT. This allows bidders to provide more cost effective and targeted solutions by aligning themselves with specialists who have niche skills that they can bring to the solution, rather than having to go out and acquire the technology and skills, often at vast expense. “There are an increasing number of alliances as the tendering content has become more complex with the ever changing technologies,” explained RMAA’s Walker. Another reason for this trend (and a trend in itself) is that “people are qualifying a lot harder,” according to Jeff Healey, Corporate Marketing Manager for HP. That is to say that bidders are being a lot more selective about the tenders they respond to, ensuring that they have a good chance of winning. Conversely, the tendering process may be decreasing in the public sector according to Fortinet’s Levido who told The Channel that “in recent years there have been fewer enterprise technology tenders. Tendering processes themselves for enterprise have also become much more streamlined, and now are often panel-style closed tender situations”. He said the reason behind this is it costs the customer a lot of time and money to go through the tendering process, so simplifying the process often makes sense. This trend allows private sector organisations to be very selective about who they choose to invite to tender, possibly inviting just a single source. In this case it tends to be a lot more about making sure they are not being overcharged for the solution that is being delivered. The influence of environmental factorsSince the Prime Minister has said New Zealand will become leading edge in its stand on carbon neutrality, the sustainability story has become a major part of the tendering equation. “The government is committed to carbon neutrality so it is looking at anything where it might achieve this goal,” commented GSB’s Royle. The Ministry of Economic Development has been tasked with leading the Sustainable Government Procurement Project, one of six key projects that comprise the government’s “Towards a Sustainable New Zealand” program, which will make sustainability a core component of government procurement policy and practice.  “Sustainable procurement is high on the government’s agenda and has already produced a number of new considerations for those making procurement decisions in agencies. New standards, targets and guidance in a number of non-ICT categories have already been produced and implemented and work is currently underway in ICT and sustainable buildings,” said Phil Weir, Manager of the GDPG at the Ministry of Economic Development.  Good practice government procurement arrangements will contain standard tender and contract clauses that incorporate sustainability considerations, considerations which are already cropping up in tenders. “Fortinet now routinely sees questions in tenders asking for ‘green credentials’, as well as information regarding the recyclability of the actual solution or the carbon footprint of the customer’s organisation. Questions like, ‘How will this solution help us reduce our carbon footprint?’ are becoming common,” said Levido. Questions do not simply consider the recycling program of the solution and solution provider, rather they address concerns of social responsibility such as supply chain responsibility, the design for the environment program, or your commitment to a reduction in energy use. Companies that routinely respond to government tenders are beginning to incorporate these concerns into their company policy. Robert Monteith, Government Manager at Gen-i, told The Channel, “the sustainable environment story is the biggest thing happening across the company and mandatory procurement rules have been updated to reflect the environmental issue. I think that sustainability will have a higher weighting than the cost factor”. In fact, some have said that sustainability could account for up to as much as 60% of the government tender equation.As the question of sustainability gains increasingly greater importance, certain technologies will be favoured above others. Steve MacDonald, Engineering Manager for Australia and New Zealand at Check Point Software Technologies explained: “Even in the security market we are getting a lot of questions around green computing. The major draw card there in most IT circles is virtualisation”. As organisations run out of space, power and air conditioning capacity in their data centres, a lot of ‘green’ computing or virtual computing solutions are being applied, which not only address those specific business problems but are also more environmentally aware and sustainable.As with any new trend or requirement, there is a lot of education and standardisation that needs to take place. “We are starting to see that not a lot of education has gone on around a lot of the terms in sustainability and around environment,” said HP’s Healey.  Just ticking the box is not enough. Organisations need to understand the concepts and jargon that surround environmental programs and corporate and social responsibility. Sustainability buzz words have specific meanings that bidders need to understand before they can respond to the tender effectively.The compliance equationSustainability is just one aspect of compliance; it can also mean complying with the format of a tender, compliance issues within another organisation and compliance with new or revised laws, such as The Holidays Act, The Public Records Act and The Unsolicited Electronic Messages Act.Complying with the format of a tender is relatively simple; you must provide the requested information in the requested format at the requested time and place. The second category, complying with legal issues or compliance factors within organisations such as a DHB or the Department of Justice, is somewhat more difficult because it requires a detailed knowledge of the industry’s key pain points and any changes in the law that are of concern to a client’s specific sector. Large companies tend to have sector managers whose job it is to keep an eye on any new legislation that might be coming out. Smaller companies can also keep track by subscribing to trade magazines and associations and keeping in close contact with potential clients.  “We are in the middle of putting together a compliance CVP (customer value proposition) to help our people understand better how to identify compliance requirements of organisations,” stated Gen-i’s Monteith. It is designed to help staff understand the risks to their clients of not complying so they can demonstrate the value to that business of coming up with new processes that would allow them to comply. The compliance CVP will be launched in Gen-i’s offices nationwide very soon and applies across the board, from commercial organisations meeting tax requirements to charitable organisations meeting charitable requirements.Although there is no ‘one-size-fits-all’ solution for understanding compliance laws, Sean Lynch, Partner at Henry Hesketh law firm said, “With regard to compliance, businesses need to understand their sector well and understand what compliance issues relate to the industry sector they are operating in”. When changes in the law occur, such as those likely to come out shortly making privacy laws more stringent, it is important to think laterally about what changes may be required within a business process. These days, for example, the rules surrounding The Holidays Act tend to be codified into HR systems. What IT providers need to take into consideration is how these changes should be incorporated; will a simple upgrade to the software suffice or will you need a change to the underlying database and structures? There may even be a manual workaround that will save excessive financial outlay and only cost the manager an hour’s time once a month. “We want our people to think about all of those aspects when talking to their customers and to have an informed dialogue,” said Monteith. “It is really important to understand that with a lot of things it is not just about the systems but about the people and the process as well.”A potential area for compliance issues is that of data protection and the outsourcing of data storage. “There is an increasing trend for organisations to outsource their storage or management or hosting of their website or their data and that trend creates risks around the security of data and compliance issues. Any organisation that is going down that path needs to ensure that the contractual terms with the third party are thorough, meticulous and provide the sort of comfort that the primary party needs in order to ensure that its data and the data of its customers, and various other people and organisations who may have information contained within that data, is going to be protected and used in the correct way,” clarified Hesketh Henry’s Lynch.According to Lynch, the trend seems to be to place the onus on the organisations to ensure that they are compliant: “The onus is on the party or organisation that’s alleged to have breached a particular law to prove that it hasn’t – it’s a growing trend in this IT compliance sector, not just in New Zealand but globally”.  He went on to say that the best way to stay on top of compliance laws is to consult a good IT lawyer since, apart from the privacy commissioner (who deals with privacy laws relating to personal information), there is no one website or source who can give an overview of this space other than an experienced, professional lawyer.Increasing your win rateCompliancy issues are becoming increasingly complex in the tendering process and will play a major role in an organisation’s win rate. By ensuring compliance with format, legislation and sustainability clauses you will increase your chances of winning. You must “qualify hard” as Gen-i’s Monteith put it – “If you opt out of responding to five out of 10 of the RFPs that you would normally respond to in a month and you still win the same number (because you are going to concentrate hard on those five that you are going to respond to) then your win rate goes up to 100%. Spend time and money on the stuff that you really have a chance of winning – don’t scattergun.” You need to be aware of your potential clients and keep your finger on the pulse by building relationships with them, finding out when the incumbent’s tender is finishing and researching the direction the organisation will be taking after that. “It’s one thing to fill out a spread sheet in a blind tender process, but it’s another thing to actually have an on the ground understanding of what that specific area or government department is trying to achieve,” said Check Point’s MacDonald. RMAA’s Walker suggests that if you make the effort to get to know the decision-makers, you may even be able to influence how the tender is written.Other ways to increase your win rate may mean forming an alliance with someone in the region to demonstrate you have a partner with local knowledge. Provide specific examples of how a task would be tackled, including case studies of past work you have done to provide compelling evidence of your company being fit for purpose. Small businesses tend to lose potential business because their answers are too general and do not provide enough specifics. You will need to provide all the information that is necessary while keeping your answers succinct and to the point – no one wants to read a waffling, boring reply that doesn’t seem to address the key issues.ICN’s Sheppard said you should follow the criteria word for word: if the same question is asked twice then copy and paste the answer, as the information you provide will be split up into sections to be looked at by different people and they need access to all the information in the right place at the right time. By providing the information in the correct format the markers will be able to compare the responses much more easily and everyone will benefit from the fair and transparent process.One of the best things that you can do is to get an external party to read the full, finished proposal. You may have had many people providing responses to different questions, which then need to be collated and checked through, not just for typos and spelling errors, but also to ensure that the question has actually been answered properly. “Even the most experienced people can get caught up answering what they think has been asked rather than what has actually been asked,” said Gen-i’s Monteith. Often one question can contain many parts and someone needs to check that each part of that question has been correctly addressed and answered. Sometimes the tender documents are not clearly written or could be interpreted in different ways. If a question is not clear then ask for clarification, as not answering the question correctly could mean you don’t even make the shortlist. Finally, for every tender that you make a bid for, make sure you ask for feedback as this information will be invaluable to helping you gain experience and possibly win the next tender you apply for.Compliance aside, the key to winning a tender is to understand the culture of the organisation that is issuing the tender and the compelling event that is driving their need to go to tender. Ultimately, the process is about them, not you.