Is it just a Lotto?- How Buyers Evaluate Tenders

Wednesday, February 19th, 2014

The expense incurred by the private sector in responding to public sector buyer’s pre-qualification and tender documents is an ‘industry’ incurring £millions of unnecessary expense. Repetitive requests by buyers for the same supplier data, amounts to little short of a scandal.

Why can’t a data base be created that is available to all buying organisations? If it were, information could be sought on an exception basis.

However, the private sector has a greater concern than the cost, namely, that pre-qualifications and tenders are not rigorously evaluated. This is impossible to prove on a universal scale but our experience in advising the private sector and helping them challenge award decisions, indicates that many evaluation processes are less than robust.

There is a significant amount of learning from a Performance Audit of an ‘Aviation Fixed Base Operator Solicitation’ for Atlanta Airport[1]. Direct comments from the report are shown in italics below. The commentary is ours and is intended to make helpful observations for the procurement community.

“The city awarded the initial lease for the airport’s fixed base operation in December 1960. The lease had a 30-year term with an additional 10-year renewal option. The city renewed the lease in March 1992. The lease expired in March 2002. Since then, Mercury Air Centers has continued to operate the fixed base operation on a month-to-month lease under the terms of the expired contract.”

There is an interesting history to this procurement. The first request for proposals was in October 2003. In November 2004, procurement cancelled the solicitation. A second RFP was issued in April 2005. In July 2006, the Department of Procurement notified bidders of the results of the evaluation. The decision was protested. A hearing began in January 2007. During the hearing the chief procurement officer cancelled the solicitation.

“This action will require the fixed base operator project to be re-solicited for a third time.”

This history cannot inspire confidence in future procurement processes. Internal audit observed,

“We cannot reconstruct all of the events that occurred in this solicitation because procurement’s original support files are missing and three key staff members are no longer with the city.”

The fact that the files were missing raises questions about ensuring that an audit trail is meticulously maintained and that documents are archived for appropriate periods of time. Internal audit then continued by saying,

“While evaluations necessarily require subjectivity and judgment, problems with the process undermine the perception of fairness.”

The following bullet points should be very informative to all engaged in tender evaluation.

  • The RFP did not provide instructions on how to complete the summary of the financial offer. Proponents calculated and recorded their total offers differently resulting in offers that were not directly comparable. Evaluators used different approaches to score the financial offers and ultimate rankings on this criterion were inconsistent with the dollar values of the offers.
  •  The RFP did not describe how all submissions would be evaluated, such as the proposed facility improvements. Evaluators interpreted and applied criteria differently.
  • The firms’ financial capabilities were evaluated on different criteria than those in the RFP; the chief procurement officer subsequently acknowledged that some scores were in error and reversed them.
  • Procurement did not provide guidance or instructions to the evaluators.

As with all tender evaluation there is the potential for different evaluators to score according to their own bias, prejudice or ‘guesswork.’ The score ranges for one bidder was 50-24, whilst in another the range was 85-58. The report observes,

“Although the evaluators received no formal instructions, the Department of Aviation’s deputy general manager told us that he told the evaluators to score the proposals in a ‘definitive manner.’ This instruction could have encouraged evaluators to inflate small differences in proposals. Signature Flight Support’s total raw score exceeded the second highest proponent’s total raw score by 61 points, approximately 18% of the total possible points.”

The audit report is an informative document, sounding alarm bells for those with loose tender evaluation processes.

For a useful checklist and guidance on tender evaluation processes please drop a email to Steve Ashcroft.

We now recommend you read “Tender Evaluation and reasons why you might be losing contracts”

 Sign up to the Brian Farrington “Think Procurement” e-newsletter now (see bottom of page).

[1] Performance Audit; Aviation Fixed Base Operator Solicitation. City Auditor’s Office. City of Atlanta. February 2007.


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One Response

  1. Wednesday, February 19th, 2014 at 11:52 am

    […] We now recommend you read “Is it just a Lotto?- How Buyers Evaluate Tenders” […]