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Prior to initiating the tendering process, buyers will discuss the key elements involved in the tender process. It is crucial that Supply Management and departments both agree to the following before issuing the tender:
- Most suitable tendering format to be used (ie, Request For Proposal, Request For Bid)
- Selection criteria and evaluation process
- Vendors to be included/excluded
- Vendor requirements
- Minimum generic specifications to be included
- Essential terms and conditions to be included in the tender documents
- Clarification of the responsibilities and roles of both departments during and after the tendering process.
- End user concerns with respect to any of the vendors, or with any aspects of the bidding process
Usually one of two evaluation methods is selected depending upon whether a Request for Bid or Request for Proposal document is used.
Type 1 : REQUEST FOR BID - Evaluation Process
Assumption: All Vendors receiving the Request For Bid (RFB) are qualified.
Basic Principle: In the absence of any other selection criteria included in the tender document, contract awards must be made upon the basis of the vendor submitting the lowest, qualified bid.
- Review all vendor responses and eliminate those vendors which do not meet all the product specifications or vendor requirements (eg delivery).
- Illustrate on a spreadsheet, all costs submitted by those vendors who met all of the specifications and requirements - select the vendor with the lowest price.
Type 2: REQUEST FOR PROPOSAL - Evaluation Process
When evaluating Requests For Proposals (RFP), there are three (3) approaches used:
- Approach 1: by the process of elimination or short-listing;
- Approach 2: by an Evaluation Model using weights and scores;
- Approach 3: by using a combination of the above approaches (1 & 2).
Approach 1: Evaluating by Elimination
- This approach works best in situations where, (given certain technical requirements), the vendor response(s) makes it relatively easy by the process of elimination to "Short-List" to the best two or three remaining vendors.
- By then reviewing at other selection criteria in the RFP (ie, past performance, references, warranty offered, price, etc.), a final decision can be made to award the contract to the vendor who best meets all the criteria specified.
Approach 2: Evaluation Models
- When the decision to select a particular Vendor is not clear due to the subjective nature of the requirement(s) being tendered, (i.e., evaluating consultants) or because all Vendors responding to the Request For Proposal have submitted what appears to be equally good proposals, a possible evaluation tool to consider using is the Evaluation Model.
Approach 3: Using a Combination of Approaches with Evaluation Models
The Evaluation Model is a table whereby each of the selection criteria being used is assigned a weight to signify the relative importance of that factor in making the final decision.
- Using the example shown in Exhibit #3, the criteria of price was given a weight factor of three (3) in the evaluation of an Request For Proposal submitted for consulting services.
- Each weighted factor was then multiplied by the score received. In the example given, the Vendor received a price score of eight (8) out of a possible ten (10) and this score was then multiplied by the assigned weight factor (i.e. 3), for a total price category score of twenty-four (24). This calculation is applied throughout the Evaluation Model and in our example, the Vendor rated an overall score of seventy-nine (79).
- The advantage in using Evaluation Models is that although they are not an exact science, they do however, provide a reasonable method of quantifying subjective criteria which is equally applied to all Vendors.
- Evaluation models are often used when a number of people are involved in the procurement decision.
STEP 3: Developing a Letter of Justification
After Tenders have closed and the department has evaluated all responses, in accordance with the selection criteria, Supply Management requires a brief Letter of Justification from the department before a Purchase Order can be issued. The purpose of this letter is not to determine if the department has made the "right" decision; in many cases, the level of expertise is greater at the department level than with Supply Management.
In requesting a Letter of Justification, Supply Management is interested in insuring that in their selection departments have considered the following:
- Have used only the selection criteria listed in the tender document to evaluate Vendors;
- That the process to select the successful Vendor(s) and thereby eliminate the others was applied fairly to each Vendor and consistent with what was stated in the Request For Bid or Request For Proposal;
- Letters of Justification confirm that the University's tendering process was properly conducted (i.e., that all Vendors were treated fairly and evaluated equally.
Please see the sample Letter of Justification. Note that this is a particularly detailed example, made so primarily for illustration purposes.
Exceptions to the Tendering Process:
There are three (3) exceptions to the tendering process:
- Sole Source Justification
- Emergency Purchases
- Sole Source Justification By Reason Of Compatibility
Exception #1: Sole Source Justification
A Sole Source purchase is one where the specifications of the product/service, limit its purchase to the only one known source of supply. A brief statement attached to the Purchase Requisition form which states the reason(s) for the specification(s) and why an alternative(s) is not acceptable is required.
End users should be aware that although the item may not be tendered to multiple vendors, Supply Management may still issue a RFP or RFB to the particular vendor in order that contract can be established.
Exception #2: Emergency Purchases
At the discretion of Supply Management, legitimate emergency requirements may be excluded from the Tendering process.
What is the definition of an Emergency Purchase?
- An Emergency Purchase is classified as a procurement which is needed to "protect life and property, prevent substantial economic loss, and/or prevent the interruption of essential services".
Exception #3: Sole Source Justification By Reason of Compatibility
To ensure validity and reliability of research results, a researcher can request that the same manufacturer's equipment be purchased as is already in their laboratory. This is usually because both pieces of equipment will be integrated in some way in conducting experiments.
- A brief written request is to be forwarded to Supply Management outlining the need for compatibility