Winning Council business may appear bureaucratic and surrounded in mystery and myths. Some of these myths are:
- The Council only looks at the lowest price
- Tendering is costly
- Local Councils should award contracts to local business
- The Council does not care about local business
The purpose of this document is to try and dispel some of the myths and to lift the veil that still surrounds tendering. It also captures important issues in the tender process, which suppliers/service providers should be aware of.
The Council only looks at the lowest price
In the past the main consideration of some Council’s when awarding contracts was price, and the lowest priced quote or tender. Today, however, with the ideals of 'best value' this is no longer the case, although price is still an important factor, other aspects are now taken into account when deciding on the best offer. The Council will consider whole life matters in the evaluation process and will consider not only economic factors but also social and environmental factors.
Major PFI, partnered schemes or multi partnered schemes are procured on assessment of whole life matters in accordance with the scheme appraisal or business case. The basis of making whole life decisions revolves around economic, social and environmental factors e.g. initial design/construction costs compared with the long term consequences/costs in use. It has been recognised that the cost of operating and maintenance over the life of a building is generally five times the Capital Cost of the building and on top of this the cost of staffing/productivity/occupations is two hundred times the Capital Cost.
Tendering is costly
The tender process can be costly when the costs of stationery, postage and administration are taken into account. Tendering is however a fair process that is auditable and can be legally challenged if required. Local Authorities are responsible for spending public money and have to justify their decisions why they choose to purchase a specific product or service. It is not possible for competitors to obtain each others prices or gain knowledge of competitor’s bids as all tender returns remain confidential.
Recently the Council has developed its processes to cover electronic tendering. For further information see
Developments in Tendering below.
Local Councils should award contracts to local business
This is a view that is sometimes widely held by Small and Medium Enterprises (SME's) these companies consider as they pay their business rates to the Council they should be given priority when Council contracts are issued, however Councils are forbidden by the Local Government Act 1988 (Section 17) from awarding contracts to suppliers on the basis of geographical location. To some extent the wish to keep work 'local' is mirrored nationally by some companies within the U.K. who object to contracts being advertised and sometimes awarded to countries outside the U.K. within the European Union. European law requires Councils and public bodies to advertise all contracts that exceed various thresholds in value within the countries that form the European Union. Although this may mean that contracts are awarded to companies outside the UK, it does ensure that the Council considers bids from outside its boundaries, in order that best value may be achieved for its tax payers.
The Council does not care about local business
Dudley Council is interested in helping and regenerating the local economy, the Council is keen to ensure that SME's that form part of the local economy submit bids for contracts that they are quite capable of winning, however as detailed in the previous paragraph there is legislation in place that forbids Councils awarding contracts to companies purely because they are 'local'. Dudley Council has taken the following steps which it hopes will assist the local suppliers gain Council business and still remain within the law. These actions take the form of advertising all contract opportunities in the local press, and on the Councils web site, attending meetings and seminars with Business Link and WMRIEP to give local business an insight into their local Council, and to explain how it works and what level of service it expects from its suppliers.
The Council and the Third Sector
The Council is keen to work with the third sector (voluntary organisations, community organisations and social enterprises) and is committed to extending the role of Voluntary and Community Organisations (VCO's) in service provision. Whilst the tender process can sometimes feel daunting support and assistance is available.
Developments in Tendering
Dudley MBC believes that there are many advantages to be gained through the use of readily available technology. The implementation of ‘e-Procurement’ solutions is an important part of Dudley’s plans for the future and many areas of technology are already being exploited:
Procurement, Contract Management & Creditor Services has adopted an electronic tendering system, ‘InTend’, which is an easy to use web based system for sending and receiving tender documentation securely. Access to a PC with internet facility is all a business needs to take part in an ‘eTender’, this use of available technology results in efficiency and physical savings for all parties. Please visit the
Dudley MBC eTendering website for further information
Dudley MBC are currently evaluating the potential benefit to the Authority of tendering through an E-Auction Process. Full guidance would be offered to Suppliers if this process were to be used.
The Tender Process
There are five types of Tender:
- Open
- Restricted (following an open advertisement)
- Tender process from a standing list
- Negotiation
- Competitive Dialogue
Detailed below is a brief explanation of the procedures involved in the tendering process.
The tender process consists of three basic areas:
- Preparation
- Completion
- Analysis and Award
Preparation
Tenders are usually awarded for a two or three year period, there may be options to extend the contract for a further period, which will be subject to satisfactory service and price during the contract period.
The first part of the tender process is to agree a specification, terms and conditions with the customer who will use the products or service.
Advertisements will then be placed before the tender is due to commence, if the tender is valued in excess of the current European threshold then at least 52 days (40 days if the Tender is issued via InTend) must be allowed between advert being dispatched and the closing date of the tender. Advertisements are placed in the local press, publications circulating within business's that would have an interest in the topic being tendered, and on the Council web site.
Tender documents will be sent to companies that respond to the advertisements or to those who have previously expressed an interest in receiving the tender and who’s company names have been recorded on a database. Some Directorates maintain a list of Approved Contractors; companies may be selected in rotation from this list to tender for specific projects.
Completion of the Tender
When the supplier/contractor receives the tender documents it is important that they carefully read all the documentation and satisfy themselves that they can comply with all the requirements of the tender. There will be a contact address and telephone number quoted on the documents if the company should require any clarification. Suppliers/contractors must ensure that the information they provide is correct and accurate. If the tender is accepted the information provided on the tender will form part of the contract between the company and the Council. Care should be taken when pricing the document as most tenders will have a period where the prices are fixed and during this period no increase in prices will be considered. All price increases after the fixed price period must be supported by manufacturer’s evidence of increased prices.
Where a Tenderer has applied via the InTend system they will return the documents electronically by making an official submission as directed by the onscreen instructions. In the case of a hard copy Tender once the tenderer has completed the document it should be returned in the envelope provided, to arrive at the address on the envelope before the date and time stated on the envelope and should bear no marks that would identify the sender. Any tender received that has not followed these requirements will be rejected.
Analysis and Award
After the closing date and time have passed, all tenders that have been received on time will be opened by nominated officers of the Council. The tenders are then released for analysis which is generally tabulated on a spread sheet, where all aspects of the offers received can be compared.
Suppliers that are short listed will generally have completed the tender, and be competitive in terms of price, delivery, maintenance and quality. The recommended company or companies will be recommended to the appropriate Director for his approval to accept the tender(s). Following the approval of the recommendations the contract will be awarded.
What Makes a Successful Supplier?
Comments are sometimes made that the same companies always win Council business. This may be true but the reason for this success is that the companies have found the formula to win Council business. This is:
- Always complete the tender document accurately and in full
- Never miss or be late for the closing date and time
- Companies know their market, and are competitive, but still making a profit
- Show genuine interest in the progress of the tender analysis
- Understand workforce matters in procurement - please see the related document at the foot of this page for further information
Business Continuity
Dudley believes it is important for businesses to have a Business Continuity Plan in place to plan for disruptions caused by major incidents. The Council distributed advice on such plans to small and medium businesses in the borough during 2006 (
further information on Business Continuity.)
The Council looks favourably on suppliers/service providers who have such plans in place and who can demonstrate minimal risk in continuity of service. We strongly encourage all suppliers/service providers to be proactive in this matter.
