Don’t abandon the PQQ process just yet

Stephen Ashcroft
posted by Stephen Ashcroft
18 August 2015

Clare Tetlow’s blog last week reminded me of what is important about the pre-qualification questionnaire (PQQ).

I ask both buyers and suppliers to reflect on the following:

Not having a PQQ stage risks diminishing the quantity and quality of tender responses. Suppliers (of which some 98 per cent of the UK supply markets are SMEs) are faced with onerous bidding requirements without any assurance from a two-stage/shortlist process. This means bidders just need to be more strategic, carefully picking which tendering opportunity to pursue, and more importantly, which to ignore.

What will this mean for the buyer and potential SME suppliers? Under a ‘restricted’ procedure, an SME can complete a number of (less onerous) PQQs with ‘fingers crossed’ they will be invited to put in (the much harder) effort to win the competitive tender. But SMEs do so with the comfort of knowing that if they are shortlisted, they have an improved chance to win.

We all know bids cost money, and it’s more than an administration cost when the bidder loses – it’s also a lost opportunity. Let’s put the costs into perspective. Recently a colleague was faced with a 60-page ‘open’ procedure invitation to tender for a contract worth £20,000, requiring an equally dense response. At more than £333 per page, that’s a frightening return for any business.

The lack of a PQQ stage risks complicating the evaluation with lowest price taking priority over value for money. Where a supplier pursues a deliberately low price strategy, the buyer is potentially stuck with a sub-optimal solution or service through a commercially naïve evaluation model. Equally, fudge the process and the increasingly litigious environment for higher value contracts (see the recent court case involving Milton Keynes Council for details) illustrates the potential financial and reputational risks.

No PQQ stage increases the resource burden, and risks a non-compliant or more costly evaluation. Who knows how many complete tender response documents containing rich commercial, technical, financial and legal information will be received? 10? 30? 130? Faced with an (unknown) number of tenders, all compliant with the PQQ ‘simple questions’, means each and every tender must be evaluated. Who will do this – the internal team, or will it be an added external cost to the process? What about the resource implications if each unsuccessful tenderer wants, and is entitled to, a debrief?

Are we sure, as Clare suggested, the opportunity for suppliers to provide more complete, priced tenders will actually result in “improved bid quality”? It would be interesting to see how the volume of responses has varied since the new public procurement regulations have been introduced. I question whether this the right strategy to ensure the public sector can position itself as customer of choice?

The PQQ procedure very much has its place. The value of due diligence – ‘looking back’ - at the capacity and capability of bidders is a key facet of the procurement strategy.

Will the European Single Procurement Document (ESPD) be the panacea lawyers envisage? The ESPD is an electronic self-declaration document to be submitted by suppliers interested in tendering for contracts to public bodies. It is intended to simplify the process of qualification by tenderers self-declaring they meet the necessary regulatory criteria or commercial capability requirements, without needing to submit proof unless subsequently selected as the appointed supplier. The date to introduce the ESPD for the UK has not yet been finalised. One major flaw to note: what happens when the identified ‘appointed supplier’ cannot provide the proof? Be careful with that PQQ (and associated evaluation models).

Stephen Ashcroft is associate director and lead for procurement and commercial advisory at AECOM

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