|With public sector tendering, pricing used to be the be all and end all, but in this era of MEAT (Most Economically Advantageous Tenders), public bodies rarely issue a tender with the pricing element accounting for over 75% of the total evaluation. The change stems from criticism that public bodies were chasing to the lowest cost as the only way in determining who they awarded contracts to. This approach was highlighting major flaws and often ended in unsustainable contracts, whereby successful bidders had priced so close to the bone that they ended up not being able to service the contract. It sometimes resulted in no provision for certain critical items or having to re-tender the contract, resulting in thousands of pounds’ worth of wasted effort.
Of course, public bodies do still place an enormous importance upon the cost, but it is not everything it used to be: We see some really complex pricing matrices for our clients to complete and we see some extremely simple spreadsheets, or even just a ‘Total Cost’ field. However, it is worth noting that public bodies are getting more and more pernickety on the compliance side, ie. if you haven’t completed it exactly as they ask, then you risk being removed from the process. An example we recently encountered was when a bidder who had spent six weeks painstakingly drawing their resource in to the most important bid they had competed in for years, was deemed non-compliant because they hadn’t added their company name, registration details and VAT number to the opening working sheet of the pricing (even though they had included these details elsewhere within the bid pack!).
Because of this, we have highlighted some critical actions for you when completing pricing workbooks:
1. Read the instructions (again and again)
2. Don’t be so caught up in the commercial considerations of your price offer that you miss their compliance instructions
3. If they say complete ALL highlighted boxes, complete ALL highlighted boxes. Even if the additional discount box is 0%, state this.
4. Send it back as per their instructed naming convention
5. Never change the format or formulae (unless you clarify this with them first)
Pricing Strategy (High Level)
1. Your bid must be sustainable
2. Ensure your bid is profitable, but yet competitive
3. If there is an e-auction, decide whether you will keep back some margin discount for that or load all the discounts in at the tender stage (this will very much depend on their instructions, ie. whether or not you have to compete in the e-auction)
4. If there are optional discounts that aren’t weighted, make sure you apply the discount into a weighted field so it obtains more points within the evaluation