Procurement risks during clarifications

Specifications are the conduit with which buyers communicate the details of their requirements to prospective suppliers.

Purchase and Supply with Nyasha Chizu

Whilst every effort is put to eliminate ambiguity in the specifications, they still exist and are corrected by means of clarifications.

The same happens with respect to the suppliers who employ all measures to ensure that their bids and the subsequent solutions offered are understood by the evaluation team of the buyer.

In all cases, the chances of ambiguity ever exist and require engagement from both parties to put each other at equal level of understanding.

There are no hard and fast rules of managing this process in the private sector. The underlying principle is the achievement of value for money procurement and any means of achieving it is acceptable.

The situation is different in the public sector where there are specific laws to manage issues of transparency, fairness and equal treatment of prospective suppliers in a tender process.

In the public sector, the Procurement Act (Act) and Regulations (Regs) and the request for proposal (RFP) form the legal basis with which the tender process is managed.

Section 31 (1) (e) of the Act assumes that specifications are comprehensive and unambiguous at the time of inviting bids. Whilst effort to achieve a comprehensive RFP is desired, the law under (f) of the same section provides for possibilities of clarifications and modification after the initial issue.

With respect to clarifications of submitted bids after tender opening, the law is not specific on how they are supposed to be treated. Section 31 (1) (m) provides for award of tenders to valid tenders that offer the lowest price.

Negotiations after tender closing are not permitted under (n) of the same section.

In this regard, it is easy to construe clarifications as a means of negotiation since it implies receiving additional information after tender opening increasing the risk of rejecting valid offers.

The Government is at risk of accepting expensive solutions on the basis of the award only to the valid tender that offers lowest prices.

UNCITRAL Model Law (2011) provides for award of tenders to the most economically advantageous tender (MEAT). Validity of tenders in line with our Act is limited to suppliers that provide all elements that the RFP requires.

Some omission of documentation such as submission of certificate of incorporation, list of directors, tax clearance certificate, etc renders bids non-compliant. Under the Model Law, receipt of additional information that does not improve the technical and commercial offer of a supplier is acceptable to harness the MEAT criteria.

Further, it allows for scoring of the requirements to remove the binary qualification provided by our Act and considers award in line with MEAT.

There is another element of risk during tender clarifications where buyers fail to adequately address queries from tenderers. It is likely that claims of unfair practices increase or, suppliers offer bids with conditions or, some may withdraw from the competition. In some cases, the risk of favouritism is cited during clarifications when the level of detail on the clarification differs between participants.

Although it is expected that all bidders receive the same information, the risk of a favoured one receiving more information still needs to be managed.

Clarifications before tender closing and during evaluation are critical to ensure the buyer is capable to procure the right goods and services. They have a bearing on the effectiveness of the solutions offered and the overall cost of the acquired goods and services.

Nyasha Chizu is a Fellow of the Chartered Institute of Procurement and Supply writing in his personal capacity. Feedback: nyashachizu@harleyreed.com Skype: nyasha.chizu

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