Tag Archives: tender process

Tenders are the Worst Form of Procurement

Tenders may be the traditional form of procurement, but it’s time they were consigned to the dustbin of the past.

This article was originally published on LinkedIn by Austin Harrison.

“Procurement by tender is the worst form of procurement, except for all the others”

Winston Churchill, British politician, army officer, and writer, 1874-1965

Actually, Winston Churchill never said that, but if he’d been a Bid Manager I reckon he totally would have.

Procurement by tender is, by and large, a solution to a whole lot of problems that ought not to exist. Nepotism, backhanding, bribery and intimidation – those old-school gangster favourites – are obnoxious and illegal and commercially inadvisable, and picking with a pin is a terrible way to get an optimal result. I fully accept that tendering is as about as fair and sensible a method of procurement as I’ve come across.

Then again, if aliens landed and were introduced to the concept of tendering, they might wonder why we’ve created an entire sub-industry devoted to a single method of acquisition that doesn’t always get the right result for the purchaser and doesn’t always guarantee a sale for the best vendor.

Tenders – A Hugely Expensive Lack of Control

As someone who supports sales for a living, the issue I have, if one accepts I’m not a gangster, is that tendering is hugely expensive, and doesn’t quite work like it says on the tin. Purchasing, even of large, complex and multi-component tangibles, as well as intangible stuff like ideas and values, works a bit better for both parties if it’s treated more like old-fashioned shopping.

The buyer needs to try it on, to prod and poke and feel the width, and the vendor needs to suggest politely that while tangerine sequins are a bit last season, this one here is timeless and elegant and 20 per cent off.

A glaring anomaly, for me at least, is that as soon as an invitation to tender is issued, both sides lose a significant element of control. From the sales side, there might have been months or years of locating, learning about, and leading a prospect towards a solution that meets and exceeds needs that have been properly and professionally identified.

An RFx is issued, and suddenly any such headway can be diminished or completely negated. For the purchaser, they give up the tactile, lived experience of shopping and replace it with acquisition by form-filling at arms-length.

And if we’re being brutally honest, both the form and the response can be poorly designed and quite a long way from what is wanted or what is actually delivered.

Re-channelling some of the blood, toil, tears and sweat

While the tendering thing fills up my time quite satisfactorily, I’d prefer to expend a little more effort on winning business, and a little less on just joining in. Tenders are unlikely ever to disappear (and nor should they), but that doesn’t stop me from exploring any alternative approaches.

I’m lucky that the field I work in is flexible to some extent in respect of the sales process. It’s been possible for my team, in collaboration with others, to provision my sales colleagues with written collateral that is designed to preempt, or at least influence (in a non-gangster way) procurement by tender. I believe we’ve had some success with the following:

A Buyers’ Guide to Tenders

More of an infomercial than an advert, this encourages a prospect to ask questions of prospective suppliers. They are, of course, the kind of questions that my company would enjoy answering, and our logo and testimonials are prominent, but for those prospects who are in the early stages of procurement, I believe it’s actually a really useful item

The Case for a New [insert your offering here]

A more substantial justification for change, and how to go about it (define why you’re shopping, don’t let the wrong people make the decision, focus on advantages rather than risk, examine the risk of not changing, etc.). Includes plenty of stories of successful procurement (of my company’s products, but then those are the only stories to which we have access…)

How to write a Request for Proposal

If we have to go down the RFP path, it’s great to receive something that we can respond to properly. You may be surprised, but this isn’t a shameless spruiking for my company’s products. Rather it highlights sensible things to ask, and how best to encourage an honest and comprehensive response (e.g.; a spreadsheet with 500 or 1,000 closed questions might actually deliver less information than 50 broad questions that can be completed as the respondent sees fit, kind of thing) 

A Host of One-Pagers

A host of documents, from one-pagers upwards, that serve to address questions from prospects that repeatedly crop up during the sales process. For my line of work, these include collections of case studies focused on a particular market sector (who else like me has your products?), outlines of change management and ongoing support services, descriptions and examples of opportunities for return on investment, explanations of solution architecture and overarching compliance, etc., etc.

While it seems that these documents have had some impact, it’s difficult to measure precisely how much. Certainly, we’ve received RFPs based on our suggestions, but often we’re not sure if a particular document reassured or persuaded a particular prospect sufficiently for a them to sign the contract.

That said, I take the view that my job is to support the salesfolk, and if they consider this sort of thing helpful, that, for me, is a decent result.

Do you do anything to anticipate or guide procurement by tenders, and move forward into broad, sunlit uplands? What are your experiences here? Always keen to learn more….

6 Top Tips for Running a Successful Law Firm Panel Process

Running a panel tender for law firm services can be challenging and time-consuming. So what can procurement do to ensure they tick the right boxes?

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A panel tender process can be long and arduous for all parties involved. A recent survey said 42 per cent of law firm respondents spend over 15 hours on each tender, with 19 per cent spending over 20 hours.

Firms complete multiple tenders each month. When you think that most respondents are partner or director level, this adds significant additional cost to a law firm’s operations. This will, in turn, factor into increased costs for the client.

Any tender must be targeted and specific, and aim to get to the right result as quickly and efficiently as possible.

We have set out our top tips to ensure a successful panel process below:

  1. Agree a clear strategy

Whether it is procurement, in-house legal, or claims managers, who ever uses the legal services and, ultimately, whoever is involved in selecting the panel composition, need to agree the strategy for any panel review.

You should consider questions such as:

  • Are you looking to reduce firm numbers?
  • If yes, how will you manage conflicts?
  • Is the aim to reduce costs?
  • If yes, how do you plan to manage increases to ensure firms remain incentivised to provide the best possible advice (and lawyers)
  • If no, how do you plan to manage increases and ensure you are not overpaying?
  • Do you want to look at innovation and technology?
  • Are you focusing on AFA’s or hourly rates?
  • How long will you look to hold rates firm for?
  • How will you manage individual lawyer annual increases? (For example, as a lawyer goes from being 1 year post qualified to 2 years post qualified)
  • Managing exceptions to the panel – how will you do it? (For example, if you need to use a specific partner from another firm due to expertise)?
  • How will you manage historic matters and pricing – especially if a firm is removed from panel?
  • How will you factor in and measure historic performance?

You need to make sure you document this, ensuring everyone is clear on and signed-up to the approach.

  1. Full understanding of legal spend

This may sound straight forward but for most organisations it is not. Many organisations resort to asking their own panel firms to provide spend figures to allow for more accurate analysis of historic spend patterns.

Many organisations find that when they come to undertake a detailed analysis of spend, there are limitations on their data. For example, data might not detail fee earner level, or how many hours a firm works on any individual case.

Real data and real analysis allows for side-by-side comparison of law firms, with the ultimate goal being to obtain data that allows for some means of understanding both cost and performance.

  1. Stakeholder Engagement

Too often procurement teams drive panel review processes without real input from those who use the legal services. On the other side, in too many organisations GCs and in-house counsel run tender processes without valuable input from legal procurement specialists.

You are left in a position where many tender processes do not deliver on the strategy set at the outset as old alliances between in-house counsel and law firms remain, or procurement drive too hard for reduction of cost. Some organisations have a more cohesive and collaborative relationship between legal and procurement but these are in the minority.

A real attempt must be made to bring together a “core team” to run the legal tender process, who are bought into the overall strategy and work together to run the process.

  1. Sticking to the strategy

Often great strategies are set but ultimately decisions are taken on hourly rate reductions or past experience with a firm.

While neither of these reasons of themselves are incorrect, if your strategy was to reduce your panel, you need to look beyond relationships, and take tough decisions.

Too often, final panels can be decided upon, only for an unsuccessful firm’s senior partner to get on the telephone to a key decision maker asking that they be reappointed – and they are then reappointed. It is very common and hugely undermines the value of the whole process.

  1. Concise RFP

If all you are interested in is rates, do not draw up lengthy RFP documents. It is still quite shocking to read some RFPs. They require weeks of a law firm’s time and require a whole host of analysts to review the responses. And this doesn’t even consider senior management time to accurately digest responses and take decisions based upon them.

Be honest when setting your strategy. Experience dictates that while you genuinely believe the questions you ask will form the basis of the panel decision, there are only a few core drivers. These include: rate; geographic spread; expertise; and departmental spread (particularly if looking to consolidate your number of firms).

This sounds simple, and many companies believe they are adhering to this. Yet, time and again the examples we see are unnecessarily detailed and burdensome to both sides.

  1. Performance management

The linchpin for much of this is performance management. In our experience, most companies either overlook this entirely or invest very little resource into it. While they will invest a significant amount of internal time and money on a tender process, they then fail to monitor performance, or measure any element of it, during the tenure of the panel.

The next tender rolls around and they undertake the process armed with only rates and anecdotal information on a firm’s performance. Organisations need to focus on understanding what value a firm brings them. Are they getting the best service for the best price, whatever that may be? This involves investment of resources into understanding what value is for you and how to go about measuring it.

Stacey Coote is a Legal Procurement Expert and a Partner at Coote O’Grady, a specialist Legal Procurement Consultancy.