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Top tips for joint bidding
- 1. Public Procurement in Wales • Annual procurement c£4.3bn • Over 90% of Welsh suppliers are SMEs • “Opening Doors Charter”- 2006 • Guide to Procurement and the Third Sector – 2008 • 2009 “Barriers to Procurement Opportunities” identified challenges for small and third sector organisations as: – Access to advertised opportunities – Difficulty getting through the “pre-qualification” stage – Contracts being too large to bid for
- 2. Low-value contract advertising • “Opening Doors” charter - advertising all contracts over £25k on www.Sell2Wales.co.uk 0 200 400 600 800 1000 1200 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 OJEU sub-OJEU Request For Quote
- 3. Simplifying pre-qualification • SQuID – Supplier Qualification Information Database • Welsh “Common Core” questions standardised • Almost all public sector organisations signed up to using them • Risk-based methodology for buyers to choose the most appropriate questions • Over 20,000 supplier responses now stored on eTenderWales for re-use, and functionality planned for new www.sell2wales.co.uk
- 4. Government policy and reports • Micro-business report – Jan 2012 – “Encourage micro-business to consider consortia approaches to public sector procurement.” • Procurement Policy Statement – Dec 2012 Open and Accessible Competition - contract opportunities are open to all and smaller, local suppliers are not precluded from winning contracts individually, as consortia, or through roles within the supply chain.
- 5. Wales Procurement Policy Statement - How:Welsh Government will: • provide www.sell2wales.co.uk, including the SQuID common question set. • maintain and develop the SQuID approach to supplier selection. • improve information on forward programmes by maintaining publication of the Wales Infrastructure Investment Plan. The Welsh public sector will: • use www.sell2wales.co.uk to advertise all contracts over £25k. • proactively publish their forward contract programmes • ensure that appropriate ‘lotting’ strategies are used. • apply the SQuID approach as standard to supplier selection. • encourage main contractors to use the ‘Tier1’ facility to advertise supply chain opportunities on www.sell2wales.co.uk.
- 6. Joint Bidding • Consortium bidding seen as a solution to “large contracts vs small suppliers” problem • Difficult to make it work, on both: – buy side – processes geared to working with one company – sell side – developing trust and managing risk • Few examples of success stories • ….Joint Bidding Guide
- 7. 1 Introduction 5 Consortium Pre formation 6 Structuresfor Collaboration 7 Scanning the Market 8 Opportunity Registration 9 Opportunity Assessment 10 Configuring YourConsortium 11 Governance and Compliance 12 Risk Planning 13 Estimating andPricing for Consortia 14 Documentation 15 Review and Submission 17 Presentation andNegotiation 18 Summary 1 Introduction 2 Joint Bidding Policy 3 Buy Side Preparation 4 Preparing to Advertise 6 Structures for Collaboration 7 Scanning the Market 8 Opportunity Registration 11 Governance andCompliance 12 RiskPlanning 16 Tender Analysis 17 Presentation andNegotiation 18Summary Joint Bidding Cycle Chapter for Both Sides Chapter for SupplySide Key Chapter for Buying Side
- 8. Key Stages for Joint Bidding Andrew Crossley, ServQ Alliance
- 9. “Businesses do not create and sustain partnerships – people do” Stephen M Dent – International Authorand Speaker on Alliances Understanding
- 10. Key Stages
- 11. Common Terms • What are your major goals – sometimes called your mission and vision? • How will you achieve these goals – often termed your strategy? • What are you really good at – your key competence? • What is your style of working with your customers and colleagues – your organisation’s culture?
- 12. Know yourself • Our goal is to improve the life chances of disadvantaged young people under the age of 19 in South East Wales. (Mission) • By 2020 we want all our young people to be educated, trained and motivated to succeed in their chosen line of work or vocation (Vision) • We will do this by building successful alliances with local government, charities and communities. We will collectively mentor and support our young people on their lifestyles and personal potential. This will help build self esteem and create a positive outlook for the future. (Strategy) • + Know Your Culture, Strengths & Weaknesses
- 14. Configuration • Do you need a base for bidding? • Use secure computing • Have a partnering process (BS11000-1:2010) • Cross map skills and capacity • Look for resource gaps • Create risk plan ASAP • Consider exit strategy
- 15. Assessment
- 16. Lessons from Case Studies
- 17. Key Challenges • Within Consortia: • Building and sustaining trust • Sharing information (financial) • Time planning for bid stages • Understanding potential exit arrangements • With potential Clients: • Dealing with financial thresholds (PQQ) • Agreeing the contract delivery structure • Managing risk perceptions and assessment
- 18. Positives • Within Consortia: • Assessing Strengths and Weaknesses • SYNERGY - Build complementary skills and resources • Practical risk assessment and planning • Using a Relationship Management Plan • With potential Clients: • Creating joint savings and delivering VFM • Economic impact and community benefits
- 20. Legal Issues • Competition Act 1998 prohibits activity that prevents, inhibits or distorts competition • Do not create oligopolies that could: • Prevent, restrict or distort competition • Fix prices, restrict production, carve up markets • Share confidential information to ‘rig’ markets • Create ‘no bid’ agreements • Agree how risk and liabilities are managed
- 21. Legal Needs • Adopt common sense! • Use strong policies and procedures: • Governance (and anti bribery rules) • Risk management • Resource allocation • Membership and code of conduct • Confidentiality of information within bid team • Overcoming conflicts of interest • Write these into your Consortium’s RMP
- 22. Price Sensitivity • Often you have to sign non collusion statements in the bids, therefore: • Do not share sensitive price information in restricted markets (oligopolistic or monopolistic) • Consider using a Bid Manager to ‘ring fence’ confidential cost information and prepare team estimates • Consult the OFT website and specialist support e.g. Wales Co-operative Centre or WCVA • Behave professionally at all times with other people’s data and information (data protection)
- 23. Summary • Do as much ‘pre formation’ work as possible • Large joint bids demand professionalism • Ensure your Senior Executives back your bid • Plan your time and resources effectively • Get professional help if you need it – ASAP • Timetable key meetings for decision making • Adopt the new Joint Bidding Handbook • Use the recommended processes • Get hold of BS 11000 Parts 1 and 2 and use them!
- 25. BeforeBefore
- 26. Special Purpose VehicleSpecial Purpose Vehicle The Special Purpose Vehicle The Membership Usually the core consortia partners Hold assets The Board of Directors Drawn from the members Employ Staff Draw down grant fundingBid for contracts
- 27. Special Purpose VehicleSpecial Purpose Vehicle Pros Cons Promotes more of an equal partnership amongst the members. Can be difficult to attract funding as no track record of delivery at start-up phase. Once established can be used over and over again to deliver new initiatives, bid for contracts. Lack of understanding of the model by commissioners. The model can be flexible, so if agreed, not all members need be involved in delivery, for example. Could create additional costs for the founding members – need to balance this against the proposed return. Membership can be expanded if additional skills / coverage is required. As no one partner has direct control, this could put off those who like operate in this manner. Can be established using a non-for profit legal structure or can be more commercial. Can be time consuming to establish, hence can be obstructive if working to a tight timescale.
- 28. Cilydd • Independent tea houses and cafes in North Wales. • Share a common commitment to an independent ethos. • Improve their approaches to marketing, buying, training and quality standards whist retaining their own individual identities. • Aim to create a unique tea and coffee culture for North Wales. • Future aim – establish a co-operative roaster for members.
- 29. Lead Body ModelLead Body Model Lead Body This organisation would draw down the required start-up funding, lease any premises, employ staff. Lead Body Board of Directors / Membership The lead body is accountable to its own Board of Directors and membership. Steering Group Made up of all delivery partners Delivery Partners Delivery Partners
- 30. Lead Body ModelLead Body Model Pros Cons It is a model that public sector bodies are used to working with and their procurement processes and management systems are geared up to work around this model. The financial responsibilities fall with the lead body, hence you need to identify an organisation willing to take that risk. Gives the commissioner a single point of access for services to be delivered. The sub-contracted members of the consortia could feel disenfranchised as it is not an equal partnership. Can be pulled together relatively easily if working within a tight timescale. Small organisations still at a disadvantage, as due to their size, they would never be in a position to tender as lead body so would always have to act as a sub-contractor body. Smaller organisations can benefit from scale of working with larger partners who can act as lead body.
- 31. Case Study – N. Wales Textile Recycling Consortium • 6 social enterprises in North Wales looking recycling textiles collectively. • Textile recycling has become a highly lucrative market. • Better bargaining power with textile merchants if work together – can command a higher price fore textiles. • Can also have more control of end use of clothing e.g. ethical markets. • Aim to set up a textile recycling depot – creates jobs and training opportunities for people in N. Wales. • Collectively bid for local authority recycling contracts.
- 32. Hub and Spokes ModelHub and Spokes Model
- 33. Hub and Spokes ModelHub and Spokes Model Pros Cons Don’t need the same type of legal arrangements associated with the SPV model as each member has their own relationship with the commissioner This model would mean the commissioner would engage in a financial relationship with all the partners not just with one body, be it a lead body or a SPV. Given the changing nature of public sector commissioning and the move towards rationalisation of process this may not be something they would be keen to entertain as a viable model. Allows for flexibility so delivery organisations can develop and change over time quite easily. Allows for more innovative service delivery.
- 35. Legal ConsiderationsLegal Considerations Issue Potential Solution Clear Understanding of the Relationship Between Consortia Members Joint Working Agreement Disclosing sensitive information Non-disclosure Agreement Collective Ownership of Assets Creation of a Trust Declaration of Trust Document Ownership of Products / Services Be clear on any potential Intellectual Property issues Role of the Lead Body Managing Agent Contract
- 36. Legal ConsiderationsLegal Considerations Issue Potential Solution Delivery within a Lead Body Model Sub-contract Agreement Engaging with New Members Accession Agreement Membership Prospectus Ensure the Consortium is Recognised as Social Enterprise in its own Right Socially Structured Memorandum and Articles of Association Clarity on Role of Steering Group in Lead Body Model Terms of Reference
- 37. Legal ConsiderationsLegal Considerations Issue Potential Solution Employing People Contracts of Employment HR Policies Taking on Assets Lease / Freehold Agreements Payment of Partners Internal Payment Schedule Costs Open book information Revenues and profits Joint working agreement
- 38. Our RoleOur Role • Advice on suitable business models, organisational and legal structures • Advice and support with governance issues • Business and financial planning advice and support • Finding finance and helping to access grant funding where appropriate • Support with HR issues • Support with developing important equalities strategies and environmental management systems • Training and mentoring
Editor's Notes
- THIS IS NOT THE TITLE SLIDE – DO NOT ADD TEXT TO THIS SLIDE
- Are you clear on your own strategic rationale for engaging in this consortia – what is it helping you achieve? Do you have a clear understanding of how your chosen partners are going to help you achieve this goal? Do you have a clear set of aims and a clear strategy? Do you know practically how your going to execute this strategy – your structure is a vehicle for delivery – not an end in its own right.
- A special purpose vehicle (SPV) is a newly established body to which delivery partners become members. It is the SPV that bids for contracts, and it is the collective delivery capacity of its members that gives the SPV its ability to deliver. It is the SPV that has the relationship with the client (the commissioner) and controls payments to its members for services delivered under the contract. The management board of the SPV is usually made of representatives from each member, unless the size of membership gets so big that a delegate management board is then elected. This structure better allows for organisations having an equal voice as there is no 1 lead agent. Documents such as a membership agreement, joint working agreement and Heads of Terms are used to underpin the delivery of each contract that the SPV wins, and ensures the distinct roles and responsibilities of each partner are made explicit.
- This model would see a network of existing providers who maintain their existing funding arrangements but are brought together under a single management structure to provide a seamless service. Members of the model would develop shared processes and systems to support service delivery, and a joint working agreement would exist between the members so the distinct roles and responsibilities of each member are made explicit.
- Ownership of Assets Collective Ownership is a key consideration for consortia. More easily defined in a SPV model – the new vehicle holds assets on behalf of members. Lead body model is more grey – how do you prevent the lead body from having a claim on assets in the event of financial difficulty? a) Create a Trust which can hold the assets – this would need to be clearly understood by the funders. b) Put in place a declaration of trust document – legally binding document stating the lead body as the trust holder of assets for the collective purpose of the consortium. Ownership of Products and Services If you’re using a consortium to sell a product on your behalf need to be clear on who actually owns the product. If you’re developing a new service with partners, be clear on where the potential Intellectual Property for the service / product sits. Role of the Lead Body It would be appropriate for the lead body to be issued with a managing agent contract to specify their role and responsibilities in managing the project. The timescale for the initial contract would need to be agreed. The review process for this contract i.e. against what measurable parameters would need to be agreed by both the members and the lead body. Will there be a managing agent fee and how will this be set and reviewed?
- Sub-Contract Agreement Clarity in delivery framework and expectations. Clarity in process for payment. Clarity in terms of review and evaluation of work. Membership Prospectus - Particularly useful if asking new members to make financial investments.
- Payment of Partners Will all parties be paid at the same time? Managing cash in an equitable and transparent manner is critical to trust Costs How will costs be apportioned equitably at different stages on the consortium lifecycle? How do you deal with unforeseen costs? How do you deal with pre-contract costs? Revenues and Profits How will revenues from your consortium’s contract be apportioned? Will members have a common approach to pricing their services? Will there be any funds retained centrally for e.g. contingency / marketing?