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Top Tender Tips

The following Top Tender Tips are from the “other side” as a consultant representing the customer who is seeking tender responses. These comments are based on Corporate GIS writing and managing a large number of tenders over the last couple of decades ranging from $50K to $15m for government agencies, Councils, Utilities, and private companies.

#1 – Why it is necessary to be HONEST in Tender References?

When you’re responding to a tender and get to the section where they ask for references, how honest should you be?

VERY, is the answer!

A couple of years ago I was managing a tender for a major government agency – it was a GIS & Asset Management software and services tender (for several million dollars), and a number of the bidders were services companies fronting the usual range of software solutions. I was checking the references for the short-listed bidders and one referee said “Nah, never heard of them”. We talked for a bit, and he wasn’t joking – he really had never heard of the company who was giving the reference and never had any work done by them.

The bidder was making the reference up and never thought we’d check.

So that was the end of that bidder. If he was prepared to lie on his tender submission, then how could you ever trust his work. He probably did this all the time but had never been caught before.

Always, Always, tell the truth on tender references. Because the people evaluating can, and often do, call the referees to have a chat to get an understanding of how the bidder does their work, how they respond to scope changes, how they manage their contract and so on.

And if the vendor won’t give references because (they say) “that’s a breach of privacy”, then you know they’re lying.

Most happy clients are happy to talk with prospective clients of a vendor. So, if the vendor doesn’t have clients who are happy to talk to others, then that means that they are not happy clients, and likely very unhappy ones.

#2 – How to avoid Vendor low-balling

Almost every tender that we have managed has involved vendors trying to low-ball their price so that they win against their competition while selling their solution as the best and most sophisticated.

That is, they describe and demonstrate the Mercedes Benz solution without saying that they have given a price for only a Holden Ute (without any disrespect to a great ute).  “But that’s dishonest”, you might say, “isn’t that like selling the sizzle without the sausage.”

So, there is always a need to make sure that vendors are honest in filling out their pricing schedules.  If they really do have a great solution, then they should include the price of that solution, not try to low-ball it.

To ensure that this price is correct, I always make sure that the following clause is prominently shown on each pricing schedule:

“This schedule for this fixed price tender will be taken to include the costs for ALL items and features as bid by the Tenderer and which <customer name> will use to support the operational technology environment required by this tender.  Any hardware, software, services, installation, configuration, maintenance, support, training, project management and consulting which is not included in this Schedule but which is shown in the tender response (either in the written tender response or as demonstrated during the tender evaluation) and is found to be required by <customer name> will be deemed to be included within the fixed price contract and must be provided at no additional cost to <customer name>.”

In effect, this clause says that if the vendor describes or demonstrated a software capability / feature in their bid, then it will be assumed that this capability / feature is included in the price if they are selected, and a contract is signed.

This effectively stops vendors from demonstrating the “bells and whistles” but then selling the basic solution, because they can only demonstrate that which they have priced.  If they demonstrate some advanced feature, then it will be deemed to be included in the price and must be provided at no additional cost.

This stops vendors from low-balling dead in their tracks.

#3 – How to stop Vendors no-balling

Almost every tender that we have managed has involved vendors trying to low-ball their price.

Some even no-ball their price and try and get away with it.

This is how they do it.

Instead of providing a price in the pricing schedules, one large established vendor responded as follows:

“The cost for the implementation of customised functionalities with bespoke application development is not included in our response. This is due to the necessity to discuss with Council to identify the specific functional requirements to achieve Council’s desired outcomes. We can work with Council to establish the essential customisation requirements in a separate engagement”

The “specific functional requirements” were listed in detail in the tender document. Every other vendor had managed to provide a price for them, but not these guys.

In other words – they were saying “award the contract to us and then we’ll tell you how much it will cost.”

Needless to say, that didn’t work.

So, we told them they had 2 options:

  1. Because their response did not include a completed pricing schedule, they would be rejected within 24 hours, or
  2. They could re-submit the pricing schedule with prices just like all the other vendors did.

But because we had to compare prices between vendors, we told them that we could alternatively estimate their price for comparison purposes by estimating the number of days multiplied by their rate which they had provided in another schedule. They didn’t like that idea, at all.

What a surprise, they decided to fill in the schedule and provide a price. And guess what – their total price rose by 30%.

And that was the reason that they didn’t want to put in a price in this schedule – because they thought it would blow them out of the water – and it did.

This approach stops devious vendors in their tracks.

#4 – Why is spatial data so important in Tender evaluations

In some GIS systems, spatial data is intrinsically “tied” to the way that the software expects the data to be, particularly for some spatial applications such as utilities. If the data is not formatted correctly, then the software may ignore it, or worse still it may mis-interpret it. So, it makes sense that you know about this BEFORE you buy, not after.

Added to that, the ability for the GIS to integrate with your other systems, such as assets, rates, etc is going to be vitally important when the system is running in your workplace.

That’s why it is important to make sure the GIS works with YOUR data, not the vendor’s data which they have practiced with a large number of times and has most likely been heavily optimised to provide good performance and quick searching.

Then if you do buy that system, you know how it operates using YOUR data and on YOUR business processes.

That’s why it is important that tender evaluations include “scenario testing”. That is, undertaking a cut-down version of several of YOUR business processes using YOUR data. So, if you do end up buying that system, you know it will work in YOUR environment with YOUR data. And in the middle of a scenario test, you should give the vendor additional data to see how they load/use it.

Some vendors will try and talk you out of doing this, telling you how difficult this will be for them and suggesting that there is not going to be any difference with using their data. But make them prove it – after all, you wouldn’t buy a car without a test drive, so why should a GIS be any different?

#5 – Why is Probity Essential in Tendering?

A couple of months ago we received a Request for Quotation (RFQ) from a Local Government organisation in Victoria.

This RFQ was for a project which was a continuation of annual projects done over the previous 5 years. The RFQ included last year’s report done by a competitor. The RFQ website showed reports from the same competitor for previous years.

Had the competitor already won the job and the RFQ “process” was just for show?

Was the RFQ even legit?

Were they genuinely seeking alternative proposals, or just “going through a process” to justify re-engaging the same company?

Responding to a RFQ takes time and effort, particularly to do a quality proposal. So, was it worth the effort when it looked like it was already a “done deal”?

When you are spending your own money, you can buy what you like, but when you’re spending taxpayer’s money (as was the case with this organisation), it is important to seek a range of prices and honestly, fairly and transparently evaluate them to get the most cost-effective outcome.

That’s where probity comes in. There is federal legislation about probity.

Probity is MANDATORY for government, local government and most large corporations.

To ignore probity is to invite Ministerial scrutiny and, in some extreme cases, corrupt conduct findings.

Bureaucrats and politicians have gone to jail for ignoring probity rules and running sham RFQ’s.

So, with what was the outcome of the RFQ?

What a surprise – the competitor won again as they had done for the last 5 years.

Was this a proper evaluation and a legit process – doubtful.

Will we respond to the RFQ when it comes around next year, particularly given the work involved to do a professional response? What do you think?

#6 – Why do Vendors often self-select to lose?

All Tenders have a winner (except for unusual circumstances), so the focus is usually on selecting the winner.

The winner should be the vendor who has the best solution, is the most cost-effective (not necessarily the cheapest) and has the track record and customer base to support all this.

But the tender process should also ensure that the losers “really have lost”.

What do I mean by this?

Ideally there should be defensible reasons for why losing bidders have lost.  This is really important so that there is acceptance by the vendor community (particularly by those that lost) that the tender process has been run properly, that the winner really has won, and won correctly, and that probity has been maintained.

This process is helped enormously when Vendors self-select to lose!

Some time back, I published an article in Position magazine about how some vendors adopt the Bradbury approach during tender evaluations (so named after Steven Bradbury who won an Olympic gold medal in ice skating in 2002 when all of his competitors fell over.)

The article is included in one of the blogs – still worth a read.

#7 – Separating the demo from the jock

We’ve all seen the slick demo’s given by vendors, making it look really easy, particularly for GIS software.  And then you try it yourself and find it isn’t as easy as it looks.

Often this is due to:

  • the demo jock is good at what he/she does and has extensive experience in making it look really easy
  • the demo jock has used the data for the demo lots of times before and knows what to expect from each query, often because they have built the data to show the query performing quickly and correctly
  • the demo jock runs through standard business process functions, not your specific ones

As obvious as it sounds, the purpose of a software tender is to buy the software, not the demo jock.

So how do you separate the jock from the demo when you’re trying to evaluate tenders.

That’s a really good question.

One of the easiest ways to remove the demo jock’s slickness is to make sure the demo is done using your data on your business processes.

You may not totally eliminate the need to “see past” the jock’s capabilities, but it will make it easier for you.

#8 – Vendor Comments

Recently I’ve had some email comments about some of my recent Top Tender Tips posts, mostly from vendors who disagree with an aspect of a post.

Over the years I have found that most vendors are self-absorbed in their product and can’t understand why we wouldn’t promote their software saying things like, “we’re the biggest GIS vendor on the planet, why wouldn’t you recommend our software”.

Or they try and shoot the messenger by saying, “what would you know” and in so doing try to denigrate my comments. And on it goes…

As such, we’ve come in for our fair share of adverse comments over the last couple of decades. It goes with the territory that when you are impartial and independent, not everyone will be happy with what you say. Particularly when you “tell it like it is” about the capabilities of some software product.

Vendors get angry because they don’t like people saying things which they consider to be “bad”, about their product.

We’ve also done over a dozen industry surveys in the Spatial Information Industry over the last 20 years or so, with the reports distributed to industry participants. In addition, we’ve also done a similar number of specific surveys and vendor product comparisons for private companies, with “warts and all” reporting back to them.

One vendor even threatened to take us to court because our reporting of industry statistics on his product didn’t show his company in the best light. This was industry responses that we were reporting, not our personal comments.

The industry thought his product was poor, so we said that, politely. His response was to threaten us, because he couldn’t understand how anyone wouldn’t see that his product wasn’t “the best”.

Our response to his threat to sue us was “Go ahead, make my day”, as the great Clint Eastwood said.

Therefore, in an industry full of vested interests (mainly from vendors trying to sell their products), who are you going to offer as the “trusted source” when the CEO is asked to sign off on the tender outcome.

All CEO’s that I have met are not stupid (that’s why they are the CEO), and they will be looking for a properly run and fair tender which meets probity guidelines and has demonstrable outcomes which meets the functional needs of the organisation.

How will your next tender measure up?

#9 – Tender Pricing

Tenders are more than just submitting prices. They are also about capability, experience, credibility, resources, trust, R&D strategy and so on.

But most vendors focus on pricing, because that’s where the sales rep earns his/her money and that’s how the vendor makes money and (hopefully) earns a profit to keep the whole ship afloat.

Pricing is also the major issue that the customer fixates on, because everyone has a limited budget, and the tendered price must be within that budget.

So, what is the strategy that most vendors use when it comes to pricing on tenders?

Go low. Go low. Go low.

The Vendor’s mantra is to beat their competitors, almost at any cost – that’s why they “low-ball” their tenders. They demonstrate the Rolls Royce (unless you’re very careful during the demonstrations) and then they sell you a Holden Ute. They do this to sell you the promise of the Rolls but for the cost of a Holden Ute which will (hopefully) be less than their competitors.

But then how do Vendors make their money if they continue to “low-ball” their price all the time?

The secret is variations.

Most tenders are vague and full of holes in specifying the functional requirements. So, unless you have a very good tender specification, a Vendor will price what you have vaguely asked for in the tender, and then when the contract is signed and you go to implement the system, that’s when you will hear those words “Oh, is that what you wanted”, while they express surprise that you actually wanted the system to work.

Then the next set of words you will hear is “well, that will be a variation and will cost you an additional $x to implement”. By this time, the contract is signed, and the Vendor has got you “by the throat”. You have nowhere to go but to agree to their inflated variation if you want the system to work.

This is how Vendors get the price back up to where it would have been if they didn’t have to low-ball the tender to win.

Is this legal or even ethical? You decide, but it is the reality when dealing with vendors and tenders.

That’s why is it so VERY important that you have a tight specification (so it is not vague, and variations cannot be argued) and to ensure that they only demonstrate what they have priced (so you can see what you are getting).

So, how will your next tender measure up?

#10 – Functional Requirements

Defining your functional requirements are critical when tendering for a GIS.

Think of it like getting your house plans drawn up before you get a quote from a builder. You wouldn’t think of just getting a builder to build your house without getting plans agreed. Even ignoring Council requirements to get building approval, it just wouldn’t make sense to start building your dream home without having plans showing where the bedrooms are going, where the cupboards are, what type of kitchen would you want, etc.

So, why do a number of organisations do just that when they go out to buy a GIS? They pay scant attention to the functional requirements (ie the house plans) and then wonder why they haven’t got the GIS they wanted.

In tender tips #9 I discussed the need for having well defined functional requirements in order to avoid variations. But it’s even more basic than that.

If you can’t define what the business functions are that you want the GIS to do, then how can you expect the vendor to know what you want to do. And how can you know that you have achieved the milestones set in the tender unless you have defined those milestones?

Unfortunately, most tenders are vague and full of holes (functionally speaking), so many people are setting themselves up to fail when implementing GIS. Vendors will implement that which you have defined in the contract coming out of the tender, and unless your requirements are well defined, then the chances are that they will not be what you want.

That’s why is it so VERY important that you have a tight specification so that you get what you want and need, not what the vendor thinks you want and then charges you variations to get it to what you need because you haven’t defined those functional requirements in your specification.

So, how will your next tender measure up?

#11 – Writing a GIS Tender Response

A competitor’s recent LinkedIn post on how to write a tender response opened with “Writing a tender is like writing a job application ― your goal is to convince someone why you are the right company to hire. The big difference is that with tender writing, you’re setting your own price for the job, which will have a big impact on whether you secure the contract.”

The focus on price again misses the point. The vendor is not setting the price – the customer already has a budget price window.

Then they partially redeem themselves by saying “… it is not necessarily offering the lowest price but building a strong case for why you can provide the best outcome for the project to justify your final price.”

Their advice listed 9 points, most of which are confusing or just plain wrong:

Points 1 “use simple language” and Point 2 “keep it short” are obvious – really, if this needs to be spelt out, then the vendor shouldn’t be in this business.

Point 3 – “answer the criteria” is obvious and is probably the most important point, assuming the customer has stated the criteria (ie the functional requirements) in sufficient detail to provide cogent responses. But make sure your response answers the customers criteria, not some vague generic meaningless statement such as “spatially enabling the enterprise”.

Point 5 – “stick to a template” – NO. Please do not provide template boilerplate or PowerPoint slides masquerading as information. Be informative and provide a response with contains real and useful information to address the customers’ requirements.

Point 6 – “understand the process” – yes, of course. But even if your capability doesn’t meet the process, give the customer a bit of credit that they know what they are doing. The common response given by many vendors is “why would you want that” (even if it is implied) as they go about providing an answer to the question that the vendor thinks should be asked, not what was asked.

Point 7 – “use examples” needs to be appended by “sparingly”. The customer only needs to know that you’ve done it before in their domain, and excessive use of examples just leads to verbiage likely not read.

Point 8 – “outline your approach” is obviously needed but should be included in “understanding the process”. That is, “how can our approach meet your requirements”

Point 9 – “proofread” – duh!!

So, how will your next tender response measure up?

We can provide assistance with tender responses for vendors, but only for tenders we are not managing.

#12 – Functional Requirements

Previous Top Tender Tips highlighted that a tender is a lot more than getting a price. It should be about ensuring that the technical components of the GIS system match your business requirements, so that the system does what you need it to do.

It’s a bit useless having a tender that says, “we want a GIS” without defining what business functions the GIS should be able to do.

That is, the tender must include a reasonably detailed specification listing HOW and WHAT you want the GIS to do. That is, a Functional Requirements Specification (FRS).

So, what is an FRS? An analogy is that the FRS is the “house plan” for the house (the GIS) that you are going to build. You (obviously) need to tell the builder how many bedrooms you want, where they are going, where the cupboards are going, how big the kitchen is, and so on and you do that with a detailed plan of the house. You don’t need to tell the builder how to nail the studs or to sheet the wall, but you do need to tell him the bigger picture.

In the same manner, the FRS tells the vendor the broad sweep of the business functions that you want to do. You don’t have to include basic stuff like how to zoom and pan (cf: how to nail the studs or to sheet the wall from the analogy), but you do need to include major components, such as linear topology requirements (if needed), database connectivity (if required), analysis requirements, integration with other systems (eg asset management), 3D, etc.

The FRS also becomes the criteria against which you evaluate the tenders so (hopefully) you can get the vendor to work through a selection of business scenarios to show how their software can do the business function required.

That is, the FRS becomes the pivotal part of a tender:

* Get the FRS wrong and you either end up making the wrong purchasing decision and get a system that doesn’t do what you want, or you spend a lot of money in variations fixing the system.

* Get the FRS right and the GIS system is implemented smoothly within budget and meets all of your business requirements.

So, how will the FRS in your next tender measure up?

#13 – Probity Essentials

Maximising PROBITY in government tenders is essential – particularly if you want to keep your job!

Most probity problems come from a perception of undue influence by a Vendor, or favouritism towards one Vendor over another.  These problems are usually manifested when another vendor complains to the Head of the Department or Minister.

That is when your career may become terminal if you haven’t done everything correctly.

Obviously, you should treat all vendors equally and without favouritism, but how do you show that this has been the case if a complaint is made, and you have to prove that all the correct procedures were followed.

The easiest way is to keep a diary (paper or digital) showing all contacts, including phone calls and emails with each vendor, with dot points of what they said, and what you responded, etc.  In that way you can show a record of all vendor contacts if there is a complaint.  While having a diary doesn’t prove that you did the right thing, it is a very good first step and, importantly, it will demonstrate to the boss that you are diligent and taking this process seriously.

Another step is for each member of the tender evaluation team to sign a statement attached to the Tender Evaluation Plan saying that they have no vested interests in any particular solution and that they will evaluate each tender equally and impartially.  Each team member also needs to keep a diary of vendor contact.

From having run a large number of tenders, I have found that vendors are very good at informally contacting team members and subtlety seeking information or trying to influence the direction that the team is taking.  By diarising each of these “contacts”, the team member can protect themselves against future allegations of bias if it comes to that.

Of course, a Tender Evaluation Plan is essential and must be signed-off by the project sponsor.

So, how will your next tender measure up?

#14… – Further Top Tender Tips will be provided as they are posted on LinkedIn