Page 34 - Australian Defence Magazine June 2021

34 DEFENCE BUSINESS BEST PRACTICE
JUNE 2021 | WWW.AUSTRALIANDEFENCE.COM.AU
Absolute certainty that the outcome will be the solution required, regardless of who wins the competition
Understanding the life cycle cost of equipment when purchasing items that will be in service for a long period of time, with substantial through-life operation and main- tenance costs.
Good market engagement helps you explore how best to achieve value for money from your upcoming pro- curement, this can include the capture of rough cost data to check affordability and ease passage through ap- proval gates. Effective early engagement
and a greater understanding of all asso-
ciated costs, supported by risk analysis
and robust data, leaves suppliers better
informed and primed to respond effec-
tively to your tendered contract.
pect of this is critical as it will underpin any decisions and choices that are made, informing the procurement strategy, scenario testing (Value for Money), negotiation and eventu- ally contract management.
CRITERIA DEVELOPMENT
Criteria Development methodology can also be deployed right at the outset of a procurement – in fact, the earlier the process is started, the better the outcome is likely to be. By capturing all the available information and providing
Commerce Decisions has seen an in-
creasing desire by governments procur-
ing complex military platforms to select
solutions and suppliers partly on the basis
of the likely whole life cost of ownership,
even when not including the through-life operation and maintenance of the platforms in the initial acquisition contract. As costs become more uncertain the further into the future you look, developing a life cycle cost evaluation methodology that can incorporate uncertainty and risk into the evaluation of cost with comparable and objective results, is critical to running a fair competition.
For each potential project, you’ll need to consider what the high-level drivers are, as well as the market engagement themes. These could include Procurement Approach, Solu- tion Performance, Information Sharing, Deliverability, Com- mercial Approach and Value Management threads. Every as-
BELOW: Working together as early as possible with all options on the table helps the production cycle.
“CRITERIA DEVELOPMENT METHODOLOGY CAN ALSO BE DEPLOYED RIGHT AT THE OUTSET OF A PROCUREMENT”
stakeholders with a unified view of your proj- ect’s objectives you will ensure that all proj- ect goals and requirements are clear, avoiding any unnecessary delays further down the line.
And digging a little deeper into the plan- ning process, it’s important to consider the full range of potential bid profiles, perhaps the ‘usual suspects’ plus a handful of low cost and some gold standard options. Most evalua- tion methodologies would relate all bids to the cheapest compliant, but what happens if this
bid is suddenly out of the competition? Not always what you’d expect, rarely what you’d hope. We frequently read stories of bidder collusion in the media and it’s often the evaluation method that gives power and effectiveness to their attempts to defraud competitions.
One example of the above is a road dualling construction project where previous road section projects hadn’t con- sidered the implications of making incorrect assumptions about the experience of interested bidders. The result was a winning contractor who needed significant, and unexpected support to deliver against their commitment – adding cost, time and unnecessary risk to the project. Unhappy with this approach, the same Authority subsequently sought our ad- vice and adopted our robust methodology to successfully regain control of the project, mitigating all previous risks.
This illustrates the importance of transparency and sharing sufficient information with bidders, ensuring they understand what’s important to you as well as providing evidence of every decision you make along the way. Pub- lishing your evaluation method and the detail will give bid- ders greater insight into what a successful bid looks like, helping you get better quality bids and ultimately better outcomes. And equally important is the maintenance of a full audit trail of how and why the winning tender was selected. Without this evidence how will you be able to successfully defend a challenge and justify your decisions?
In times of increased uncertainty, the probability of facing negative press, wasted budget and legal challenge becomes even greater. Wouldn’t it be good if you knew, before going to market, that you’d be in a position of confidence and defen- sibility with your procurement evaluation design?
By engaging your market early and adhering to industry best practice, you can support your suppliers in success- fully responding to your tender. Better market engagement means better quality bids and ultimately better value for money outcomes. ■
Peter Marshall is the Services Director at Commerce Decisions