How to avoid a procurement headache
The changing face of waste management procurement is creating some major headaches for local authority officers. Bob Read and Adam Read offer a tonic to ease the painChange is the one constant that the waste management sector can rely on, and change will continue to impact our sector, whether in the form of legislative requirements, targets, policy decisions or procurement routes and processes.
Any change inevitably causes some degree of pain for those employed in delivering the core services, whether as a local authority client or a contractor tendering for the service. Identifying these headaches and planning for them is critical if we are to deliver the services necessary both cost and benefit.
The procurement of waste collection services has witnessed more than its fair share of change during the lifespan of existing contracts. This has been shaped by more integrated collection, recycling and street cleansing services. New guidelines from the EU on contract procurement include the rise of competitive dialogue to allow solutions to be developed during the process, and the need for procurement procedures to be designed and delivered in the most robust manner.
With contracts now worth more than ever before and with bidders more likely to challenge decisions, local authorities going out to tender need to develop transparent, robust and politically supported tender documents, businesses cases, and evaluation approaches to minimise the risk of their procurement being delayed, challenged, or failing to reach closure.
The duration of collection contracts on seven or 10 year cycles means that authorities don't often get to practice the 'art' very often. In the intervening years the focus will have been on contract monitoring, enforcement and public engagement and not on procurement procedures, contract specifications and evaluation matrices. By the time the contract renewal comes round many of the key staff from the last procurement process will have moved on to pastures new.
This is headache number one - getting the right people together, people who really understand what service is required and how to effectively procure it. Often this involves looking to external advisors for support and guidance. This situation is likely to get worse in the short term as authorities seek to reduce costs and allow staff to take early retirement or redundancy.
During the last contract cycle, new processes and standards have evolved, mainly due to the impact of the EU-based legislation, and the need for more openness within the process - to ensure less opportunity for unfair or collusive assessment. The skills required to manage the competitive dialogue process for example are very different from the traditional tender approach. Careful consideration must be given to choosing the process that will give you the best result and this must be decided at the earliest opportunity.
Headache number two - ensuring that the process and documentation is right first - can be addressed head-on by building upon existing contract documentation and using successful documents and procedures from neighbouring authorities. Early market engagement is critical to ensure that competition is built in to the process and to ensure sufficient numbers of bidders are involved throughout the programme - this will avoid headache number three, which is a lack of competition.
Test the market
Using a prior information notice is the first step to letting the market know what you have planned; don't be afraid to do some soft market testing and bring some of the potential providers in to help scope the process. Good early engagement should also ensure that the specification is appropriate and of interest, critical if you want to generate savings or improve the services value.
Refining the process by setting established weighted criteria at prequalification, invitation to submit outline solutions, invitation to submit detailed solutions and call for final tender stages (if using competitive dialogue) is also about demonstrating the openness of the approach. This creates headache number four - establishing clear evaluation criteria, weighted effectively to suit the contract requirements and the local context.
This is paramount during the planning of any procurement and should be addressed at the outset of the project to allow time for a thorough analysis of how well the methodologies will work in reality, possibly through mock tender assessments, and allow time for the political process to run its course. These documents need to be signed off by the elected members who will need to support the methodology should a challenge arise at a later stage.
The ability to accurately weight the pre-determined selection criteria, to suit the requirements of the local specification, or strategy is fundamental to the successful outcome of the project. Getting public input to 'what is important' will help the political process, and using specialist consultants to share best practice and to test the robustness of the methodology could save a lot of headaches downstream.
Don't lose your nerve
Many local authorities are becoming increasingly nervous to score criteria subjectively or qualitatively and this is driving their requirement to have more strictly defined scoring methodologies for all criteria. Good advisors will always challenge scoring systems and help structure systems that minimise the risk of challenge.
However, with a more defined breakdown of the criteria, and sub criteria, and a more analytical approach to scoring, the inevitable result is that the gap between the scores of any number of experienced contractors will become eroded. Contract award could be determined by one simple or minor omission for one criterion only. This leads to headache number five - bidder's scores become closer - and decisions become even harder to make or justify.
The closeness of scores will inevitably lead to more challenges against the award, and greater scrutiny of the process, drilling down as far as specific questions and individual scores for criteria and sub-criteria. This is headache number six - more challenges and lots of additional work - at a time when the main aim should be to get on with the preparation for mobilisation at the start of a new contract.
The biggest concern for almost all procurement procedures is headache number seven - ensuring enough time is allowed for addressing all other headaches - and reducing the risk of anything else going wrong. A clear project plan of events with sensible time scales will help to alleviate this risk, including political decision making dates and periods of inactivity due to elections. This should be agreed at the very beginning of a project with everyone involved in the decision making process, both internal officers, external advisors and elected members.
We should remember that there are many examples of smooth and pain-free waste collection procurements to learn from. But, thinking about the risks and plans to mitigate, manage or deal with them should help keep the procurement on track, to budget and out of the press. And if you only encounter seven headaches throughout the duration of the whole procurement exercise then you will have done remarkably well.
Bob Read is an associate consultant at AEA and Dr Adam Read is practice lead of AEA's resource efficiency and waste management practice.
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