Procurement and Porn…when it’s bad, it’s very bad

Procurement and Porn…when it’s bad, it’s very bad

Blog General | Aabida Allaham

May 19, 2014

And what you can do when faced with a flawed tender request

Have you ever been on the receiving end of a bad tender process? We have and we’re not too embarrassed to admit it that it wasn’t just once.

Tenders are the bloodline of any organisation. They allow a firm to stretch its innovative thinking, display its expertise, demonstrate good budgeting and accountability practices while rallying employees around a common goal. But it’s also like porn. When the tendering process is bad, it’s very bad and can cause the bidding firm both time and money-an SME’s currency- when it is treated with a lack of respect particularly by ministries and state agencies.

So that got us wondering here at Mango Media Caribbean, how you can spot a bad RFP and what can you do when you feel the process is freakingly unfair.

Our senior content creator, Aabida Allaham, caught up with Margaret Rose, attorney at law and Executive Director of the Caribbean Procurement Institute who said, among other things, that agencies have the right to become whistle blowers.

The question is, given how small and tightly networked the business community is in T&T: can you afford to?

Aabida Allaham: How is procurement defined?

Margaret Rose: Procurement is the process by which you acquire goods, works and services. Although typically it is viewed as limited to the transaction or bidding phase of the process, it actually spans an entire business cycle from the identification of a need right up to the review of the work or service or disposal of the goods.

AA: It’s a simple enough definition yet the process has become so complicated. Should the same set of rules/guidelines apply to the public and private sector when it comes to tendering?

MR: When you are looking at public sector procurement you are looking at public money, tax payers being expended and with that comes an inherent conflict of interest as typically the persons who are implementing that buying function – notbeing the owners of the money – may be tempted to treat with the process in a way which serves their private interest as opposed to the public good and achieving value for money.  So in public procurement there is a great need for persons entrusted with the function be held to account for the manner in which they spend that money.

That has been the major reason for a divergence in the approach between public procurement rules and private rules. You see, traditionally, in private procurement which includes individual and closely held companies or owner managed companies  where the buying function is being carried out by the owners that conflict does not usually arise.

However, as an increasing spotlight is being placed on good corporate governance  post Enron & then the 2008 financial crisis, the lines between public and private procurement are not as clear.  Now, the need for shareholders to ensure that their procurement process achieves value for money and in a manner in which their agents are held accountable is being recognised.

AA: Small firms are particularly vulnerable to these kind unethical practices. The numbers of agency personal assigned to work on the pitch, often means that the key individuals cannot undertake billable client time on existing business. Are there signs that a small business owner be on the lookout for when assessing the credibility of the tender?

MR: You are speaking to an issue that is a very significant problem, and not only in Trinidad and Tobago, the globe, and that is how to provide greater access to SMEs in the public contracting process.  SMEs are seen as significant in driving economic development in a country and region.

But to answer your question, suppliers who question the credibility of the tender and are asking themselves whether to expend critical resources to make an offer, need to look at the history of the buyer , get some history on them, and educate themselves.

Also, understand what the buyer’s duties are to you, understand what the buyer’s responsibilities are in terms of running a fair tender process and so that as you are going through the process you can immediately highlight where things are going right and where things are going wrong.

Then you should immediately put it in writing, write a complaint and say that such and such is the case and then you have created further avenues for you later on because the spotlight is on the process now.
The suppliers actually do have the power, but it’s whether they have the courage to exercise that power because in our society because it’s so small, you constantly hear the argument that if we come out and do anything we would never get a contract again, but, the way I look at it, if you don’t come out and do something then the system that you are complaining about will never change.  A bit of a catch 22 really.

AA: Getting an RFP 2 to 3 days before the submission date is a bad sign, not so?

MR: That’s  definitely a red flag. They just want to show that they have given people the opportunity to bid but they are really not giving you any reasonable or fair opportunity to bid by giving you such short notice depending, of course, on the type of tender that you are looking at.

So for example, the reasonableness of the time that they are giving you to bid depends on the nature of the project and you should use your understanding of your market and industry to assess the reasonableness of the time period.
Also another red flag would be specifications which seem unduly restrictive or not typically necessary for the type of project. Once again, knowing your market and industry is key. If when you consider the tender, you see that it is clearly being specified in such a way that only one particular supplier who you know in the country has the exclusive rights to distribute this particular kind of thing would be able to meet with it; well you will know right away that these specifications have been geared to meet one of your known competitors.

AA: Okay so timing is critical, how about if you are being asked along with ten other firms to bid on specific project? Should you decline in those instances?

MR: There is no law or rule of practice which states that there is a maximum amount that should be invited. It depends on the size of the tender, the amount of time that the buyer has.

The more people that submit a pitch, that means the more competition you are engaging in and typically the theory is with more competition you drive the price down, you get more market information and so the more tenderers the better for the buyer.

AA: What are your best tips on how firms can protect their creative ideas? You know the kind of ideas you present during the process but are politely declined in the letter awarding the contract to someone else. Yet two months on, there they are in an ad campaign.

MR: If you have an idea that is expressed in a unique fashion, you should go ahead and ensure you protect it by obtaining copyright registration. You can also let the buyer know that certain information in your proposal is subject to copyright laws and insert non-disclosure agreements and commercial confidentiality clauses in your proposals.

The creative industry is quite difficult, you have to demonstrate that this idea is yours and how you have conceived it.

Alternatively, don’t give out more than you need to. You put the hook, just enough, but that’s all.  If you really need to put out more, then you need to take precautions.

Let’s say you have been invited to tender for PR and marketing services for an event and you have an idea about how to brand the event. That is certainly something that you can protect and that you would want to protect. If you create the brand and you put it in your RFP which I certainly advise that no one should ever do, well then that is something that you can sue to protect if you see them using it, but just the idea of having a particular type of promotion for example is not typically something that you can really protect under intellectual property law.

If you must put it out there, then what you have to do is express it in a way that is very specific and unique and ensure that it is protected by registration and that you have included express terms in the tender as to the intellectual property restrictions. In so doing, you provide yourself with avenues to sue for compensation for breach of intellectual property rights.  But of course this is all hypothetical and this is definitely an area where there is no one standard rule or approach which will result in successful protection of your idea. It is very much case specific.

AA: You initiated the procurement institute along with Senator Helen Drayton and Woodrow Whiteley, was there a particular reason for the start up?

MR: Yes, we were colleagues from three distinct professions, law, construction and finance and we each recognised that our educational programmes/background were very deficient when it came to issues relating to public procurement law and practice.  How our government spends our money is arguably the most critical question that any citizen should be asking of the Government because the government has the resources of the country and we should know how they are using those resources to help develop the country.

Procurement had basically been side-lined for quite a while. It was a secondary function within the finance function and post 1990 you saw a sort of global revolution taking place in how procurement was being perceived. We were all passionate about learning more and in so doing we recognised that there was no avenue to obtain the knowledge that we needed in order to apply it to our respective practices.  We all travelled abroad and sort out the information and saw how difficult it was to obtain same in the region.  Also recognising the critical linkage between procurement and development we saw the need for the creation and collation of regional resources on the subject and for critical professional procurement capacity building.  So with a vision for being a resource and catalyst in the region for capacity building and reform and after liaising with world experts and leading academic institutions CPI was born in December 2006 and we have been developing ever since.

AA: So your role is mostly educational?

MR: It is twofold; there is an internal and external dimension to our work. Internally, it is building professional and institutional capacity at the national and regional levels for undertaking procurement in order to obtain best value within a fair and accountable framework which respects equality of access for citizens to public procurement opportunities.  Externally, we want to empower policy makers and technocrats in respect of public procurement reform initiatives and in the negotiation of international agreements, trade investment agreements, and economic partnerships, as increasingly procurement policy has become a politically powerful tool to protect local industry and support social projects and development.

Here we focus on the strategic use of procurement to pursue social, industrial and environmental objectives.

AA: How is the intent translating into measureable success?

MR: These things are not easily measured.  We believe that CPI initiatives like the Caribbean Public Procurement Conference (CPPC) which we have hosted every two years since 2008 has contributed to a heightened awareness of the need for good procurement governance by stakeholders.  IT is the only regional forum of its kind and we bring in some of the world’s thought leaders, academics, practitioners and authors in the field along with the regional experts.  Since 2007 we spent time networking and working with world experts and international bodies and tertiary institutions to develop programmes which are legally and culturally relevant.  Over the years we have trained now over 1500 persons in various aspects of procurement law and practice.  We have certified 105 regional professionals in procurement law in a landmark procurement law programme developed by one of the Commonwealth’s leading law schools, the Osgoode Hall Law School Toronto, Canada. We are currently working on a masters programme.  We have also begun to publish articles and encourage our faculty to conduct research and present papers which are regionally relevant.

In addition, CPI has sponsored the established of the non-profit Caribbean Association of Procurement Professionals (CAPP) which now has approximately 300 associate members from throughout the region and we are working with the International Federation of Purchasing & Supply Management (IFPSM) to establish certification routes, professional designations and basic entry criteria for the profession.  CAPP is also about supporting professionals engaged in the procurement process, we have a code of ethics that they must all sign up to, and we support them with issues that they are going through in their organisation.  Our feedback from our programmes has always been tremendous which encourages us to keep going although we have not undertaken a formal impact assessment of our unique intervention, it is something that we are considering doing in the near future, that said, we are a resource for any professional or entity wanting to learn how to use their procurement function more strategically, to obtain best value within a fair and accountable framework.