Anne Petterd - Baker & McKenzie - Protecting against Hiccups to the Procurement Process
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Transcript of Anne Petterd - Baker & McKenzie - Protecting against Hiccups to the Procurement Process
Baker & McKenzie, an Australian Partnership, is a member firm of Baker & McKenzie International, a Swiss Verein with member law firms around the world. In accordance
with the common terminology used in professional service organisations, reference to a "partner" means a person who is a partner, or equivalent, in such a law firm. Similarly,
reference to an "office" means an office of any such law firm.
© 2014 Baker & McKenzie
Protecting against hiccups to the
procurement process
Anne Petterd, Partner
Baker & McKenzie, Sydney
2014 National Hospital Procurement Conference
© 2014 Baker & McKenzie 2
Key message
‒ Procurement problems are a customer and supplier
issue
‒ Each can
Cause problems for the other
Prevent problems arising
© 2014 Baker & McKenzie 3
What do people complain about?
‒ Not a genuine procurement opportunity
‒ Took too long to decide and reduced scope
‒ The tender terms didn’t say that item was in scope
‒ Tender instructions unclear
‒ Bidder ignored instructions
‒ Incumbent / other bidder unfair advantage
‒ Improper contact with / acceptance of entertainment by
procurement team
‒ We were excluded for a minor non-compliance
© 2014 Baker & McKenzie 4
Disruption to procurement
‒ Delay in releasing awaiting authority to proceed
‒ Pause during to clarify scope / address scope removal
‒ Hold up evaluation due to tender response problem /
probity issue
‒ Hold up contract award
Tender response problem / probity issue
Awaiting authority to commit
‒ Legal challenge to undo contract award
Legal options can differ for government and non-
government conducted procurements
© 2014 Baker & McKenzie 5
Is hospital procurement special?
‒ Funding uncertainties
Can hamper ability to commit funding and projects
‒ Whole-of-government projects
Extra layer of bureaucracy and planning to rollout
‒ Utilisation of mandatory panels
Stakes of missing out are higher
‒ Highly specialised supplies
Characteristics might not be appreciated by
procurement officer
Limited pool of subject-matter experts
‒ Use of practices not contemplated by tender terms
Tips
© 2014 Baker & McKenzie 7
1. Well drafted tender terms
‒ Do give Customer appropriate flexibility
To exercise discretion on non-compliances
To make judgement calls without abandoning tender
‒ Do set expectations for bidder behaviour
Conflicts of interest, improper assistance
‒ Do clearly stipulate response format to enable
comparison of “apples with apples”
‒ Don’t make excessive use of mandatory
requirements
‒ Don’t contain unnecessary legalese or unrelated
terms
© 2014 Baker & McKenzie 8
2. Clarification questions
When to ask
• Could answer affect an important aspect of technical solution?
• When question has been answered informally and you need to rely on it
• When complaining about the issue later is not an option
When not to ask
• Risk of educating other bidders
• Unfavourable answer
• Unhelpful answer
• Don’t really need answer – will it change what you do?
© 2014 Baker & McKenzie 9
3. Be alive to probity issues
‒ Customers and bidders both need to be trained
Need strategies to spot and manage probity issues
‒ Actual and apparent conflicts of interest both carry risk
It’s not just corrupt conduct that’s problematic
‒ Examples
A helping hand – improper assistance?
A ticket to the footy – conflict?
Using the customer’s former employee on the bid
Tip: Sanity check approach to an issue with someone
not intricately involved
© 2014 Baker & McKenzie 10
4. Dealing with mistakes
Bidder
Late tender
Missing tender document
Incorrect submission
Assess options quickly
Potential disadvantage
Significance
Customer Disclosure of bidder
confidential information
Ambiguous tender requirement
Assess options quickly
Potential disadvantage
Significance
A
© 2014 Baker & McKenzie 11
5. Completing responses
‒ Tender terms must be clear on form of response
customer wants
Eg is a full response wanted on contract terms or just
main issues?
Consider explaining to bidders why want responses in
that format (eg to compare “apples with apples”)
‒ Beware clarification responses that unintentionally
allow changes to format of response
‒ Bidders must understand instructions … including what
silence means
Eg “You will be deemed to accept a term unless you
state a non-compliance against it”
© 2014 Baker & McKenzie 12
6. Be upfront on project uncertainties
Customers
‒ Appreciate bidder effort in preparing responses
‒ Not being upfront can mean
Loss of goodwill
Claims for additional costs because bidders have not
had a chance to factor in changes
Suppliers
‒ Be realistic about the nature of the customer
Budget pressures
Whole of government rollout risks
‒ Be clear to customer on change of schedule impact
© 2014 Baker & McKenzie 13
Final example
‒ Customer conducted a tender process
‒ After tenders received customer realised tender terms
hadn’t addressed identifying GST component in pricing
‒ Customer asked tenderers to clarify
‒ One bidder added 10% + $380K to its price
‒ Customer did not pick this up and awarded tender to
that bidder
‒ Unsuccessful bidder successfully challenged
‒ Awarded contract was void
… Customer and bidder each caused the problems
Thank you