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Anne Petterd - Baker & McKenzie - Protecting against Hiccups to the Procurement Process
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Anne Petterd - Baker & McKenzie - Protecting against Hiccups to the Procurement Process

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Anne Petterd delivered the presentation at the 2014 National Hospital Procurement Conference. …

Anne Petterd delivered the presentation at the 2014 National Hospital Procurement Conference.

The 2014 National Hospital Procurement Conference explored a number of cost-saving measures in the hospital procurement ecosystem. Highlights included sessions on improving efficiency, savings and patient safety within Australian Hospitals.

For more information about the event, please visit: http://bit.ly/hosprocurement14

Published in: Leadership & Management

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  • 1. Baker & McKenzie, an Australian Partnership, is a member firm of Baker & McKenzie International, a Swiss Verein with member law firms around the world. In accordance with the common terminology used in professional service organisations, reference to a "partner" means a person who is a partner, or equivalent, in such a law firm. Similarly, reference to an "office" means an office of any such law firm. © 2014 Baker & McKenzie Protecting against hiccups to the procurement process Anne Petterd, Partner Baker & McKenzie, Sydney anne.petterd@bakermckenzie.com 2014 National Hospital Procurement Conference
  • 2. © 2014 Baker & McKenzie 2 Key message ‒ Procurement problems are a customer and supplier issue ‒ Each can  Cause problems for the other  Prevent problems arising
  • 3. © 2014 Baker & McKenzie 3 What do people complain about? ‒ Not a genuine procurement opportunity ‒ Took too long to decide and reduced scope ‒ The tender terms didn’t say that item was in scope ‒ Tender instructions unclear ‒ Bidder ignored instructions ‒ Incumbent / other bidder unfair advantage ‒ Improper contact with / acceptance of entertainment by procurement team ‒ We were excluded for a minor non-compliance
  • 4. © 2014 Baker & McKenzie 4 Disruption to procurement ‒ Delay in releasing awaiting authority to proceed ‒ Pause during to clarify scope / address scope removal ‒ Hold up evaluation due to tender response problem / probity issue ‒ Hold up contract award  Tender response problem / probity issue  Awaiting authority to commit ‒ Legal challenge to undo contract award  Legal options can differ for government and non- government conducted procurements
  • 5. © 2014 Baker & McKenzie 5 Is hospital procurement special? ‒ Funding uncertainties  Can hamper ability to commit funding and projects ‒ Whole-of-government projects  Extra layer of bureaucracy and planning to rollout ‒ Utilisation of mandatory panels  Stakes of missing out are higher ‒ Highly specialised supplies  Characteristics might not be appreciated by procurement officer  Limited pool of subject-matter experts ‒ Use of practices not contemplated by tender terms
  • 6. Tips
  • 7. © 2014 Baker & McKenzie 7 1. Well drafted tender terms ‒ Do give Customer appropriate flexibility  To exercise discretion on non-compliances  To make judgement calls without abandoning tender ‒ Do set expectations for bidder behaviour  Conflicts of interest, improper assistance ‒ Do clearly stipulate response format to enable comparison of “apples with apples” ‒ Don’t make excessive use of mandatory requirements ‒ Don’t contain unnecessary legalese or unrelated terms
  • 8. © 2014 Baker & McKenzie 8 2. Clarification questions When to ask • Could answer affect an important aspect of technical solution? • When question has been answered informally and you need to rely on it • When complaining about the issue later is not an option When not to ask • Risk of educating other bidders • Unfavourable answer • Unhelpful answer • Don’t really need answer – will it change what you do?
  • 9. © 2014 Baker & McKenzie 9 3. Be alive to probity issues ‒ Customers and bidders both need to be trained  Need strategies to spot and manage probity issues ‒ Actual and apparent conflicts of interest both carry risk  It’s not just corrupt conduct that’s problematic ‒ Examples  A helping hand – improper assistance?  A ticket to the footy – conflict?  Using the customer’s former employee on the bid Tip: Sanity check approach to an issue with someone not intricately involved
  • 10. © 2014 Baker & McKenzie 10 4. Dealing with mistakes Bidder Late tender Missing tender document Incorrect submission Assess options quickly Potential disadvantage Significance Customer Disclosure of bidder confidential information Ambiguous tender requirement Assess options quickly Potential disadvantage Significance A
  • 11. © 2014 Baker & McKenzie 11 5. Completing responses ‒ Tender terms must be clear on form of response customer wants  Eg is a full response wanted on contract terms or just main issues?  Consider explaining to bidders why want responses in that format (eg to compare “apples with apples”) ‒ Beware clarification responses that unintentionally allow changes to format of response ‒ Bidders must understand instructions … including what silence means  Eg “You will be deemed to accept a term unless you state a non-compliance against it”
  • 12. © 2014 Baker & McKenzie 12 6. Be upfront on project uncertainties Customers ‒ Appreciate bidder effort in preparing responses ‒ Not being upfront can mean  Loss of goodwill  Claims for additional costs because bidders have not had a chance to factor in changes Suppliers ‒ Be realistic about the nature of the customer  Budget pressures  Whole of government rollout risks ‒ Be clear to customer on change of schedule impact
  • 13. © 2014 Baker & McKenzie 13 Final example ‒ Customer conducted a tender process ‒ After tenders received customer realised tender terms hadn’t addressed identifying GST component in pricing ‒ Customer asked tenderers to clarify ‒ One bidder added 10% + $380K to its price ‒ Customer did not pick this up and awarded tender to that bidder ‒ Unsuccessful bidder successfully challenged ‒ Awarded contract was void … Customer and bidder each caused the problems
  • 14. Thank you

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