Typically, when you respond to a tender, you respond directly to the specification, outlining how you, as a potential supplier, will meet the buyer’s requirements as outlined.
A ‘variant bid’ is a response to a tender in which you propose innovative or alternative approaches to meeting the buyer’s needs, departing from the methodology or requirements laid out in the specification.
Variant bids have traditionally been a major aspect of tendering, and OJEU public sector contract notices include a clause letting you know whether or not variant bids will be permitted. However, many companies are still unsure about what constitutes a variant bid, as well as why and how they might submit one. In this blog, we look at what you need to know about variant bids.
Identifying whether a variant bid will be accepted
A public sector contract notice published under the OJEU regulations should always clearly tell you whether a variant bid will be accepted:
It is not always so easy to tell if a variant bid can be accepted if you are working on a private sector tender, or a public sector tender that does not meet the OJEU thresholds. If the contract notice does not say whether a variant bid will be accepted, you should be able to find further guidance in the appropriate tender documents, most probably in the instructions to tenderers, memorandum of information or the specification. If none of these apply, you can contact the buyer via the portal to clarify.
Why might the buyer NOT allow a variant bid?
Most tender exercises are designed to allow a like-for-like comparison of proposals. Commercial submissions and quality sections alike are therefore built around set outputs and specifications. If a tenderer were to make an alternative bid, the outputs may be different, even if the outcomes are the same; this makes it difficult for the buyer to compare and score each submission. Similarly, prices and rates might not be directly comparable.
This could all make running the tendering exercise much more difficult, and much more costly, for the authority. If accepting variant bids means there is an increased risk that the tendering exercise will be less equitable and fair, this could leave the decision open to a challenge from an unsuccessful bidder, in turn delaying contract start, and further increasing costs to the authority. It is therefore much simpler and less risky for a buyer to issue a tender and ask that all bid writers accept the specification, and respond on that basis.
What are the benefits of variant bids?
Issuing a specification that all bidders simply accept is not without its drawbacks:
- It does not allow the authority to be flexible and improve the specification after the tender process commences, based on the expertise and knowledge of bidders.
- Potential opportunities to achieve improved quality or value for money might be missed.
- It may dissuade bidders who could successfully meet the intended outcomes of the procurement from tendering if they cannot agree to minor points of the specification.
- Overall, it leads to rigidity and fewer opportunities for innovation.
In fact, we are seeing more and more tenders where variant bids are permitted, as buyers are increasingly seeking out value for money and creative ideas from subject matter experts. The latest update to public sector procurement legislation reflects this, with negotiation and the innovative partnership procedure giving more freedom for specification to evolve during the tender process. It therefore stands to reason that bidders may consider making variant bids, and make their case to the authority.
As a supplier, you can benefit by proposing amendments to the specification to better reflect how you would see the service being delivered. Any unattractive elements of the service might be more flexible, as long as you have an alternative proposal that will be preferable to the buyer as well as to you.
How to make a variant bid
If you are making a variant bid, your submission should clearly state this. You might, for example, provide a statement or a table to show which items from the specification have been amended in your proposal. You would then need to remember:
- Your responses throughout the tender should be based on your variant bid. This may create some challenges when answering questions that were written to reflect the original specification, so make sure that whatever you are submitting is still telling the buyer how their outcomes will be met.
- The buyer might view your proposal as an increased risk; it is your duty to convince them otherwise, and to prove that your approach will exceed their original expectations.
- It is highly likely that you will be asked more clarification questions, as the buyer will need to confirm finer details of your proposal. You must therefore be prepared with convincing and compelling responses to any likely questions.
If multiple bids are permitted, you may wish to make two bids – one based on the unaltered specification, and one variant bid. You can use this approach to give the buyer choice. If they are too risk averse or otherwise unconvinced by the variant bid, you are not out of the running, as you might still win the contract with the non-variant bid.
Overall, all your decisions should be based on what will work for the buyer. Only make a variant bid if you know that the buyer will be open to one, and ensure you frame all the benefits of your proposal in terms of what the buyer wants, not what you want.