It is often said that the best defence is a good offence. This proactive thinking is prevalent throughout our public procurement training, emphasizing the importance of carving out adequate time to do effective procurement planning.
Part of that planning should include considering strategies for selection of the ‘best value’ supplier – which will vary depending on the specifics of the procurement – as well as consideration of contract provisions that enable your organization to monitor, track and manage the promised deliverables to ensure that the expected value is received. Consider these two aspects of planning to be proactive steps you can take to minimize the risk of supplier challenges. Let’s examine these two different but related strategies in more detail.
Pre-Qualification and Supplier Shortlisting
Generally speaking, pre-qualification of suppliers involves either the setting up a standing arrangement for use when planning future procurements, or the shortlisting of supplier candidates for a specific procurement under consideration. In either case, the idea is to vet suppliers based on criteria such as experience, past performance, references, key personnel, safety record and the like.
This is not a process that explores specific solutions or innovative proposals they may offer, although it could vet suppliers based on the range of products or services they supply. Doing this work before the RFx is issued ensures that only the ‘cream of the crop’ suppliers, based on pre-determined factors, are invited to participate, eliminating the risk of executing contracts with inexperienced or otherwise unsuitable suppliers. As many procurement professionals learn through the school of hard knocks, such suppliers are often incapable and/or unwilling to perform as specified, leading to costly disputes and challenges with those suppliers.
Keep in mind that suppliers spend time and effort responding to these pre-qualification processes and therefore they will carefully assess the ROI they might expect for their efforts. This is particularly true where there is no procurement on the immediate horizon and it is, therefore, hard to know when or how a contract will materialize. The key to success when screening for capability is to ensure that you fully develop the shortlisting requirements and communicate those to the market, along with the intended process for selecting from the resulting list. For example, when setting up a pre-qualified standing arrangement list for future use suppliers will want to know not just what you are looking for, but how the list will be used.
- Will it be used rotationally?
- How long is the list valid for?
- How many suppliers are on the list, and what is the process for removing suppliers from the list?
These are all questions that you will need to have answered for your internal team anyways and will need to decide when planning the pre-qualification process. Pay particular attention to any Trade Agreement requirements around pre-qualification and standing arrangements such as those included in Article 508 of the CFTA and 19.8 of the CETA.
Treat the shortlisting process with the same rigour and attention to transparency as any procurement process, ensuring that advertising and duration restrictions are meticulously adhered to. Remember, if suppliers are not successful in getting on the list they will not have access to the contract opportunity(s), and this in itself can lead to challenges. Done properly these processes should not create any binding common law obligations for your organization, however, lack of fair process by a public body is always assailable under non-contract related areas of law such as Judicial Review.
While not necessary for every procurement, a pro-active and well-developed shortlisting process can go a long way towards ensuring a smooth, challenge-free project or contract rollout.
Tools for Managing Contract Deliverables
Ensuring that the right suppliers are considered for contract award is only half the battle when it comes to avoiding supplier challenges. The bulk of challenges that we have seen hit the courts or tribunals stem from lack of contract management and appropriate documentation on the part of the owner, which very often can be traced back to lack of a clear, concise and measurable scope definition or statement of work.
You have all heard the adage ‘what gets measured gets managed’. Part of the hard work during procurement planning must be developing a performance management framework for the resulting contract, which embeds a clearly articulated and measurable scope statement, coupled with meaningful and usually graduated contract remedies for failing to achieve the stated expectations.
These frameworks may be quite simple with two or three service levels and a simple evaluation process embedded into the body of the contract, or they can be very comprehensive and include detailed schedules and appendices to the contract. Keep in mind the importance of balance and ensure the effort anticipated to manage and track performance is commensurate with the size, duration, complexity, and risk associated with the contract or project.
Once you have developed an effective scope statement, it is then a fairly simple matter to attach remedies that not only help to bring performance back in line with contract expectations, but also help protect against future supplier challenges by ensuring contract evaluation results are tracked more globally within your organization.
Whether they perform well or perform poorly, that information can be used for future procurement decisions provided this intention is clearly spelled out in the contract, and the process for invoking any prohibition or bidder debarring is reasonable, proportionate and defensible. This is an area where legal counsel should have considerable input and ensure that all legal obligations and stakeholder expectations are factored in.
Taking the concept of the performance management framework one step further, comprehensive Vendor Performance Management systems are emerging as a best practice in larger organizations with the bandwidth to devise and implement such systems. For an excellent illustration, check out this article that explores how the City of Ottawa moved from inconsistent, paper-based evaluation to a centralized database and ‘phase-in strategy designed in collaboration with industry and other key stakeholders.
We have covered supplier assessment protocols from two angles: vetting for experience before embarking on the formal procurement and linking contract performance results to the ability to get future contracts with your organization. Spending time on these important aspects of procurement planning will help pave the way for smooth and challenge-free procurement and contracting processes and ensure that you can demonstrate that expected value was received. When linking contract results to future opportunities, there is the added benefit of keeping the supplier’s attention on quality of delivery for every contract they hold with your organization.