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Risk management in the tendering process

Many organisations view the tendering process as a ‘necessary evil’ that enables them to win contracts and deliver services on behalf of public sector organisations and private companies. In practice, it is a highly valuable and insightful process that enables a competitive marketplace to be maintained where UK suppliers have the opportunity to expand their portfolio through a fair and transparent process.

However, it is not risk-free, and for both the buyer and supplier it is important that they identify potential risks early in the process from both a contractual and operational perspective so that all parties are aware of their responsibilities, expectations and working requirements.

Risks to the buyer

Whilst most buyers, particularly those in the public sector, are extremely experienced in the tendering process, it is important to note that there are always risks, which, if not properly managed, could have negative repercussions, including:

  • Financial implications – most buyers have a procurement team responsible for preparing tender documents such as service specifications, contracts, TUPE data, financial envelopes etc., and to review/assess tender applications and award based on quality and pricing criteria. Where risk factors are not addressed effectively, and the tendering process is not robust, it can lead to financial implications for the buyer where the supplier cannot or is not meeting their obligations.
  • Risk of delay to procurement due to clarifications or appeals – if tender documents do not explicitly detail the requirements of a service, then numerous clarifications raised by applicants to clarify ambiguity can lead to delays, withdrawals, or extensions whilst the buyer seeks clarification. Furthermore, if applicants feel they have been marked unclearly appeals could cause delays. Where procurement is time-sensitive this can have a detrimental impact on the start of a contract, or if it is being delivered as part of a larger framework could delay other contracts.
  • Risk to reputation – whilst not excluding new companies, buyers often focus heavily on suppliers’ previous experience to identify whether they have the skills and competencies to deliver against the specification. This is because choosing the ‘wrong’ applicant could lead to quality issues, dissatisfaction, and damage to the buyer’s reputation.

Risks from the perspective of a bidder

As a bidder, when answering questions on risk management, it is therefore important to ask yourself ‘what does the buyer want?’. For example, if their questions lean heavily to reducing risk in the supply chain it may be that they have experienced issues in the past. By looking at it from this perspective, you are then well-positioned to identify areas where you can ‘sell’ your company or add value, gaining valuable marks.

Satisfying the buyer of your ability to deliver services

It is important as a supplier and bidder to recognise and understand the risks/concerns that buyers face, and where appropriate address how you can manage them through your service.

It is not enough to say ‘we have done this before and we know what we are doing’: as a supplier, you need to provide detail that emphasises your capabilities and suitability for the contract.

It is therefore important that you, the supplier:

  • Read the ITT documents in detail to verify you are eligible, and it is a service you want to deliver. Things to check for include:
    • A minimum financial threshold that could disqualify you.
    • Minimum standards – for example, in health and social care, most buyers require you to have an overall CQC rating of ‘good’ to proceed.
    • The number of providers/lot allocations – it may require a provider and you cannot meet the obligations: alternatively, frameworks may not generate enough work for them to be appealing.
    • Any accreditations/memberships required to deliver the service such as CQC and OFSTED in health and social care, Gas Safe Registered, ISO accreditations etc.
  • Review contractual obligations to ensure you can meet all requirements.
  • Attend pre-tendering/buyer engagement events where possible to understand what the buyer wants in layman’s terms and how they want services to be delivered – this can provide valuable insight and information that is not reflected in the tender documents.
  • Raise clarifications about anything you are unsure about. This does not count against you and has no bearing on your submission.

Types of risk management tender questions

Based on all the above you can appreciate why the buyer for a contract is liable to ask questions around risk management in tenders in order to protect themselves from unforeseen issues/challenges during the contract duration. Through our extensive experience of completing approximately 600 tender submissions per year, we have identified general themes and types of questions that are typically asked surrounding risk management, including:

  • Financial management to verify you are in a financially stable position to deliver services and are not wholly reliant on the contract tendered for.
  • Business continuity to satisfy themselves that appropriate strategies are in place to ensure continuity of service should an event such as a fire disrupt service delivery.
  • Contingency arrangements to manage staff absences, peaks in demand, and increased workloads over the contract lifecycle. Generally, this is about assuring the buyer that you have considered all options and are well placed to manage services without falling behind schedule or meeting demand.
  • Supply chain arrangements and how you manage performance across your workforce and your subcontractors, focussing on topics such as selecting and vetting subcontractors, establishing service level agreements and key performance indicators and managing quality of workmanship.
  • COVID-19 and what measures you have put in place to protect staff and other stakeholders.

When responding to risk management questions it is important to include relevant examples where appropriate, to evidence how you have managed these risks in your service. This adds a layer of legitimacy and authenticity that enables the buyer to feel secure in your ability.

Bid writing support

As tender writing experts, Executive Compass is familiar with the risk management process and have written numerous, winning bids across a wide range of sectors addressing risk management topics.

Contact us today to discuss how we can support you to tender for a contract.

 

Call us now to speak to a member of our Bid Team:

0800 612 5563 or direct to mobile: 0773 940 7746

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