Why does the lowest priced bid win so often?

Asking the right questions will help a quality submission shine through and prevent price being the primary reason for winning that contract

If you’ve ever been involved in procuring a new repairs, maintenance or property compliance contract  then like me you’ll have probably spent a lot of time marking tender responses from bidders and an equal amount of time making contracts work to deliver against the specification.

When contracts don’t perform as well as expected, situations can escalate quickly into disputes that stop the contract delivering the end result for the customer and take a lot of time and money to resolve.

With this in mind here are some thoughts on some small changes that might help us all ‘do’ procurement better.

Why does the lowest tendered rate so often win?

I’ve often been frustrated as a bid ‘marker’ that the standard qualitative questions don’t do enough to separate bidders. This can mean that no matter whether you’re assessing 50/50 or 80/20 in favour of quality,  although there may be outliers, once you add up the scores on the doors, most of your bidders will be within a few points of each other. Simple maths means that all that can separate the bidders is the price, so even with a low weighting, the lowest price will generally win.

This can mean you end up with a bidder who hasn’t acquitted themselves particularly well in their quality submission winning the work with a low headline price. It’s critical to ask questions that focus on sorting the wheat from the chaff.

Are you confirming that the bidder is able to deliver to the specification in the first place?

A wise man once said that “Most contracts are won by accident”* . This might refer to the fact that occasionally, some bidders might not fully appreciate the specification they are being asked to deliver against.  Other times, bidders, might propose their ‘standard’ service  without understanding that you want something that is quite different.

In any case, it’s likely that when you’ve marked questions relating to how the bidder proposes to deliver the service, there may some differences between what you’ve specified and what the bidder is proposing.

Because bidders answers will meet some of the contract requirements, even a response that doesn’t fully meet the specification will score some marks that will count toward the final result. This means that even if a bidder doesn’t propose to meet your requirements they could still be appointed.

There are some questions that you will always want to ask but consider asking some specific questions about key elements of your specification.

Also, when you’re designing your scoring system, consider a system that awards “nul points” for an incomplete response that does not fully meet the specification.

Finally, why not have a Pass/Fail question at pre qualification stage that asks the bidder to confirm that they are able to meet the full specification and all requirements?  If they can’t then they’re out of the process and you’re more likely to be left with a choice of suppliers who are committed to delivering on your requirements.

Do your bid markers know what the contract requirements are?

It sounds obvious but specifications can be large and complex documents and not everyone reads them as thoroughly as you do!

Make sure that the staff scoring quality submissions know what the key contract requirements are. Consider providing them with a short summary of the specification and key requirements as part of the scoring pack  

Peter Salisbury is Director of Housing Consulting at Manifest

Photo by jesse orrico on Unsplash

© Manifest Associates Ltd 2018

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*It wasn’t me!