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eSourcing software in Public Sector Tendering

This describes some of the ways in which web based software can help public sector organisations comply with common regulations. This article draws upon our experience of working with public sector organisations in Canada, New Zealand and the United Kingdom to provide some ideas for how to use eSourcing and eRFX software in public sector tenders.

Background

Public sector organisations face unusual challenges when evaluating and selecting a vendor for a major contract. By definition, the number of "stakeholders" in a public sector tender is vast - potentially all taxpayers can claim to be an interested party. All these stakeholders want reassurance that their taxes are being spent efficiently and fairly. Another factor is that public sector spending represents a very large part of the economy's GDP. As such, it can have a significant impact on levels of competition in the market. Finally, public sector organisations are often obliged to publish their accounts, so expose themselves to a media hungry for news of scandal or corruption.

For all these reasons, it is essential that public sector tenders are conducted in such a way that their diligence and impartiality are beyond question. Most governments publish regulations for the conduct of procurement activities that attempt to enforce this. Whilst it's beyond the scope of this article to address these regulations in depth, it is possible to identify some common benefits that public sector organizations derive from the use of eSourcing software.

What is eSourcing software?

eSourcing is simply a term given to software that assists with the sourcing process - identifying, assessing and selecting vendors. The two most common types of eSourcing applications are eRFx products and eAuctions. eRFX products help with managing RFP, RFQ, ITT, and PQQ projects. The focus is collecting information from vendors about their products and services in such a way that useful side by side comparisons can be made. Typically, eRFx products enable the buyer to frame their requirements in the form of questions, the vendors to answer the questions online, and the buyer to then score and analyse the responses.

Why use eSourcing software?

The main reason to use eSourcing software is to cut down on the administrative burden of collecting and analysing information from multiple vendors. This is a pure efficiency gain. However, by capturing the entire process on-line a number of other benefits emerge, many of which directly address the needs of the public sector. These benefits, elaborated upon below, are:

  • Audit Trail - all vendor and buyer actions are logged and timestamped
  • Multiple Evaluators - the RFP can be scored separately by different evaluators working in parallel.
  • Uniform Communication - ensure that all bidders received identical information
  • Uniform Evaluation - ensure that all bid's receive the same consideration
  • Feedback for rejected vendor

Audit Trail

One of the strongest but most simple benefits of eSourcing software is that all user actions can be recorded. For example, if one vendor emerges with a suspiciously high score for one aspect of their response it is possible to trace which users input the scores for that vendor, whether earlier scores were overwritten, what the early scores were, and so on. Or, consider the case where a vendor submits their RFP response after the deadline. Rather than claiming that it got lost in the post, or the bicycle courier got lost, there is now a deadline record of when the vendor last logged in, and when they tried to submit their response.

Many public sector tendering regulations (for example EU procurement rules) mandate that a timed record is kept for each significant action in the tendering process. So, when working with post and paper documents, it is necessary for a witness to observe, time and record the moment that a bid is received, and it's envelope opened. With eSourcing software, records like this are created by default as an inherent part of the system.

Multiple Evaluators

One of the easiest accusations to level at a tendering exercise is the charge of favouritism to one vendor at the expense of the others. At its most ugly the charge is of outright corruption, and can lead to criminal charges. Ensuring that no favouritism is present is very challenging. A common approach (and under some regulations a requirement) is for multiple evaluators to read and score the same set of vendor responses. Of course there is no reason why multiple evaluators cannot be involved in an off-line process. However, for a 400 hundred question RFP, with 8 vendors, and 6 evaluators, there would be 19,200 scores. Clearly, working with paper documents and perhaps disparate excel spreadsheets, there would be considerable administrative burden and scope for error.

Fully featured eRFx software will include in-built support for multiple scoring sets. In our own product, SupplierSelect, when Multiple Scoring Sets are enabled, each evaluator will record their own scores. Users with appropriate permissions can view other user's scores, and then record a definitive "Agreed" score. Consolidated scoring information can be downloaded into spreadsheets for further analysis, for example checking that there is consistent scoring bias with any of the evaluators.

Uniform Communication

EU procurement rules, and those of many other regimes, dictate that all bidders receive exactly the same information from the buyer. This may sound like a banal and obvious requirement, but it's implications are surprising. For example, if a vendor sends an email asking for clarification about one aspect of the RFP, the buyer is not allowed to answer the email directly to that vendor. Instead, they are obliged to publish this new information to all vendors.

This style of communication is very easily facilitated when using a good eRFX system. There is usually some message board functionality, together with rules about whether or not to permit messages sent to just one vendor. So, in this case, one vendor posts a message with a question, and the answer is then published so that all vendors can see, and are notified of its publication.

Uniform Evaluation Period

Another common rule is that all tender submissions must receive the same amount of attention. In practical terms, this means that all vendors' responses must be evaluated over the same period of time. Therefore if one vendor submits their response significantly before the deadline, this should not allow them to receive greater consideration than other vendors.

Translating this into practical terms, if the response is submitted either by post (for hard copy documents) or by email (for spreadsheets and word documents) then the evaluator must not open the envelope, or read the email, before the deadline. Clearly, this is very difficult to demonstrate.

Once again, when using eRFX software, such considerations may be taken care of in the background. In SupplierSelect, for example, it is possible to set a flag for an evaluation project which hides all vendors' responses until the deadline has passed.

Feedback for rejected bidders

Bidders who fail to win a contract greatly value detailed information as to where they failed. This can help to improve for future tenders, or to learn not to go through the bother and expense of bidding for inappropriate tenders. Many public procurement regulations stipulate the failed vendors must be given detailed feedback.

Working offline, this requirement means that the evaluator must prepare reports for each vendor detailing how they were scored, and where they fell short. A time consuming job.

eRFX software can greatly help, since good products will provide an option to publish to vendors details of how they scored, compared to the average and winning scores.

References

EU Procurement Legislation

New Zealand Public Sector Procurement Guidelines

┬ęSupplierSelect Ltd. 2008

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