Is pre-qualification fair and equitable?

Summit, Sep 2004 by Newman, David

Hmmm - fair and equitable. Defining fair and equitable is clearly a factor in the crucible, but for now let's pretend it means that suppliers each have a reasonably good chance to bid for, and get, government contracts, and that the "playing field" is level, or at least equally slanted, for all. In principle, pre-qualification appears attractive to everyone concerned, saving the buyer and seller time, effort, money and process once it is in place. So, let's have a look at what the public procurer should do to make sure the process is fair and equitable.

As usual, this Chatroom has three well-qualified participants. John Holinsky is a senior federal government procurement executive faced with the daunting and often thankless task of sincerely designing public procurement to ensure that it's fair and equitable. The CFIB's Garth Whyte is one of the foremost business and economic observers and analysts in Canada. Michael Asner is a respected procurement and management consultant and a former columnist at Summit magazine. What do they think? Well, let's see; let's chat!

Getting to know you...

Asner: Lots of organizations use the pre-qualification process. Some break the large task down into two steps: first the pre-qualification and then the RFP. Others simply put the pre-qualification as the first part of the RFP... a short set of mandatory requirements that permits the vendors to be self-selecting. Both can get you great solutions. I prefer the combined approach for several reasons, generally based on the "simple is better than complicated, short is better than long" approach to procurement. Bertrand Russell, in his history of western civilization, spoke about the "principle of parsimony" or Occam's razor: where given two equally valid explanations of a phenomenon, take the simpler one. With downsizing and crisis management, I look for ways to eliminate tasks, so one is always better than two - fewer documents, evaluations, phone calls, less time, and fewer meetings to get stakeholder buy-in.

Holinsky: Pre-qualification of suppliers is one of the tools used in the procurement process and it can be effective. Generally PWGSC posts notices of procurement opportunities on the government electronic tendering system, commercially available as MERX, inviting suppliers to submit their proposal on a case-by-case, requirement-by-requirement basis. A contract is awarded to the qualified firm submitting the 'best value' proposal as defined in the solicitation. We also use processes to pre-qualify suppliers prior to the award of the contract itself, for example, a complex procurement requiring an extensive proposal with a number of specific criteria for a bidder to be eligible. The solicitation could be conducted in two phases. Bidders submit their competency profile, experience, previous contracts, managerial structure, unique expertise, special capabilities, facilities or whatever is needed. This first stage submission is evaluated and firms are determined to meet the necessary qualifications or not. Only those that meet, or subsequently meet, the criteria are invited to bid. This two-stage process can avoid a company spending considerable effort to prepare a proposal only to find it does not meet the basic requirement to be eligible.

Whyte: Like many aspects of public sector procurement, the devil is in the detail. Business can understand why governments may want to pre-qualify vendors. It makes sense to identify who can do the job and it can ease an overly complex process considerably. It also makes sense for vendors as it avoids repetitive and expensive pitches to government - the cost of bidding can be expensive and time consuming. How the pre-qualification is done is the essential factor in whether or not it's fair. This means that initially pre-qualification could be more work and expense for the buyer. It is crucial that government procurement specialists have the expertise and resources to research and assess the capabilities of the full range of suppliers, including those that may not be traditional. Governments who use pre-qualification had better use procurement specialists who know what they are doing and who understand the marketplace for their commodity very well. In the first stages of procurement, this is an added task - savings for government and suppliers come in the contracting process.

Getting to know all about you

Whyte: Small businesses can be especially disadvantaged if pre-qualification is not done right. Few small or medium businesses can spare the time or money on the resources needed to make themselves sufficiently known to compete with larger vendors for government contracts. Yet they may be equally or even more capable of delivering or performing the product. So governments have to make an extra effort to research suppliers and offer an equal opportunity to all potential vendors.

Asner: If the pre-qualification is very general, such as for 'systems integrators,' there will be a large pile of documents to review, taking time and energy. This can drag you into the 'qualification' business with lists of approved firms rather than the 'procurement' business. One client I know, after placing an ad in a newspaper for vendors to be pre-qualified as negotiators or facilitators or some other fairly generic skill, got hundreds of responses. The client was committed to evaluating each response, treating all 'fairly and equally.' They dedicated staff and resources to organize all the responses and, before they knew it, they were in the 'pre-qualification, maintain the list, business.'