Merily Rool: The Secrets to Conducting a Successful ICT Tender
ICT tenders, with their unique characteristics, are very exciting. The government has several large competence centers where high-quality ICT tenders are conducted, but other procuring entities are sometimes also forced to dive into the complex world of ICT tenders. Therefore, it’s a good idea to approach an ICT tender with a well-thought-out plan.
In ICT tenders, there are many things that can go wrong, which can have a wide-ranging impact on the quality of national services, etc. When handling ICT tenders, it's always important to start with understanding which problem is being solved. However, we often see that procuring entities start with the question of how to conduct the tender. This starting point is not ideal because it assumes that the procuring entity already knows exactly what and how it needs to achieve. But is that always the case? I dare say that in the ICT field, it may not be, because ICT is creative.
What to Definitely Do in ICT Tenders?
Market Research: ITL has aptly noted in its guide that market research provides confidence. Indeed, through market research, it is possible to address several open questions, seek and receive good advice to ensure the tender is well-prepared and executed, and that the desired result is achieved. In the framework of market research, you can ask for feedback on public procurement documents, including the technical description, or ask specific questions from as many suppliers as possible. It’s important to note that the results of the market research must also be published among the procurement documents. In my opinion, there is no downside to conducting market research, as even the time spent on it doesn’t substantially change the course of the tender but could potentially save a lot. Moreover, it provides the opportunity for suppliers to contribute to the creation of the technical solution, in addition to the technical aspects of the procurement. Market research can be carried out both in the public procurement registry and, with a sufficiently representative sample, by directly contacting potential suppliers. After the market research, it’s essential to consider mitigating the competitive advantages of the participating companies, but there’s nothing complicated about that.
Procurement Tools: Good practices today include framework agreements and dynamic procurement systems based on resource or hourly-based billing for results, supporting the creativity, flexibility, and agility characteristic of the ICT sector, which cannot be achieved by conducting tenders with a fixed scope and cost. It’s essential to distinguish between procuring a result or a resource – in the case of a result, the procuring entity knows precisely what the contract's objective and scope are. In the case of resources, the objective of the contract is known, but the scope may be flexible, and only the resource needed to achieve the objectives is procured, to be worked on together with the procuring entity. A result can be procured either on a fixed fee basis or an hourly rate basis. Procuring a result based on wages or resources allows for applying agile development principles, whereas procuring a fixed scope and price result is no longer recommended as a good practice. Therefore, it’s essential for the procuring entity to understand what exactly is being procured, as in the case of resource procurement, simple procurement documents can be created, while for fixed results, highly detailed procurement documents are necessary, which should certainly be validated with suppliers during market research.
Quality Evaluation: The Ministry of Finance recently published a detailed guide for evaluating quality in public procurement. ITL has noted that ideally, cost should be up to 30% of the entire evaluation, with the remaining portion dedicated to checking what quality can be achieved for the price offered. The goal of creating evaluation criteria is to identify the best price-quality ratio, which in turn constitutes the most economically advantageous offer. Therefore, be bold in evaluating quality, but do not do it artificially in a way that doesn’t distinguish between good and average suppliers. Ensure that quality control is directly linked to the procurement contract (e.g., through a test task), and that the task to be completed under the quality criteria is not too simple, thus awarding maximum points to all suppliers, as this would ultimately return to a situation where the winner is decided on the price comparison. In such cases, the winner will be the one with the lowest price, which is certainly not the desired outcome in an ICT tender. The guide mentioned above offers plenty of examples of such criteria. Also, don’t fear lengthy disputes during quality evaluation if the evaluation decisions are transparent and well-founded (see below).
Team Competence: There has been public discussion previously about the discrimination occurring in ICT public procurements through the creation of personal conditions for team members. To avoid discrimination, the best solution is to create conditions that are checked for the entire team as a whole. This means that if it’s essential for the procuring entity to have specific experience and competence from the team members carrying out the work, it’s best to allow for the fulfilment of these conditions for the entire team. This also encourages the supplier to assemble the best team based on their company's experience, ensuring the most optimal completion of the procurement contract.
What to Avoid in ICT Tenders?
Rigidity: According to both my opinion and the opinions of industry representatives, the biggest stumbling block in fulfilling ICT procurement contracts is the "rigid writing" of the procurement contract in terms of both the procuring entity and the contracting partner's actions. The procuring entity has very few mandatory elements that must be included in the contract, yet we often find pages of various requirements and provisions that create confusion and can overwhelm the procuring entity. Therefore, design documents in a way that they allow, for example, for hourly or piecework billing under framework agreements, the involvement of multiple suppliers using intelligent solutions, the procurement of various types of ICT services (from analysis to testing), flexible handling of dates, and the establishment of specific grounds for amending the procurement contract (according to the Public Procurement Act §123 (1) point 2). A good idea is to determine the content of the work based on the objective in the case of open scope work, rather than according to the procuring entity's vision of the different stages. The supplier is an equally knowledgeable partner on the other side of the table, so it’s appropriate to jointly put together a concrete plan!
Limiting Competition: Competition can be limited through various requirements (which can be appropriate), but it can also be done indirectly, for example, through unreasonably short deadlines for submitting bids or executing work. Also, creating very specific templates (see above thoughts on team competencies), transferring significant risk to the supplier, entering into long contracts, etc., all limit competition. A typical example of limiting competition is vendor lock-in, where intellectual property rights mean only one supplier can develop and maintain a specific information system, and others are unable to compete without building an entirely new system. Competition is such an important principle in public procurement that its promotion should be an objective of every procurement – the procuring entity should be a proactive promoter of competition, not an unjustified limiter of it.
Lack of Transparency: Openness and transparency are also requirements under the general principles of public procurement, but often these are approached creatively. As a procuring entity, don’t hide information that is not a business secret. Share feedback on bids and contribute to making every subsequent bid better than the previous one. Transparent proceedings may attract even more suppliers who are eager to contribute to the development of the country’s ICT.
Summary
Therefore, I am convinced that the secret to a good ICT procurement lies in reasonableness: this means that if the starting point for the procurement is an understanding of what problem needs to be solved, and an understanding that there are several possible ways to solve it, which can only be shown by experts in the field, then we will conduct a good procurement. There’s a saying that when there are two lawyers in a room, there are three opinions – I believe this is also true in the ICT world. Problems can be solved in many different ways, which is why every team of specialists has its thoughts on how to reach the result. Therefore, even if the procuring entity has a team of excellent specialists with very creative ideas, it’s important to also listen to those specialists who will actually implement the work. These specialists can be found on the other side of the Public Procurement Register, i.e., among the suppliers.
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