#8 Intent in Contracting
Are you confused and don’t understand the names given to the various procurement documents that you see on the electronic bid boards? If so you are in the majority, not the minority. What the document is called changes depending on the buying organization (federal, provincial, municipal, government agency). Although e-bid boards are used mainly by the public sector, the name of the document also changes depending on the private industry firm. Everyone seems to have their personal preference for what a document is called.
The names are numerous: Request for Proposal, Request to Bid, Invitation and Tender, Invitations for Bids, Request for Quotation, Request for Standing Offer, Request for Supply Arrangement, Purchase Orders, Request for Information, Notice of Intent, Advance Contract Award Notice, etc., etc. Every time I think I have seen the complete list, someone invents a new term. It can and is an unacceptable risk to ‘assume’ documents are what their title indicates.
The best approach is to regard bids by their intent, not the titles. This results in the documents being grouped into only a few categories. For simplicity, I recommend four main groups: Pre-Bidding, Sole Source/Negotiated, and Competitive: Goods and Competitive: Service. It becomes even more important to look at the ‘intent’ since the same term can be used for different categories. For example, Notice of Intent can be a pre-bidding announcement of a forthcoming bid or a notification that the buyer intends to negotiate with one firm.
Documents associated with pre-bidding are normally not considered contractual. When a public sector agency is looking for ideas or how to improve an on-going situation, it might send out a ‘Request for Information’ document in order to solicit ideas that can be incorporated in a future bid document. Similarly, it might send out an ‘Advance Notice’ which may contain a draft bid document. The idea is to allow firms to have an opportunity to review and make suggested changes to the bid document. In complex procurements, this can save time and effort. Many questions have been answered and comments incorporated into the final document. On the other hand, pre-bidding may be contractual in nature. The notice may be used to announce a prequalification of possible bidders. Only those firms who are successfully prequalified will receive the actual bid document. The theory is that this method is easier for evaluation, the firms are known and those selected are expected to bid.
This category applies almost exclusively to the public sector. Firms, when buying from one source normally simply negotiate for what is needed. This applies to both sole source (the only source of supply) and single source (the source of supply chosen). The public sector has different pressures and requirements. There is a need to justify (explain) why only one source is chosen, especially when the cost is significant. In these cases, the information regarding the bid and the selected firm is posted on-line, along with an explanation of the reason for the selection – sole source, only known source, directed procurement, etc. An announcement of this course of action can and does avoid challenges and accusations of playing favourites.
The public sector in Canada uses many different titles for e-bidding. Fortunately competitive bidding for goods often uses the word ‘Tender’. Dividing competitive into the two categories makes sense as bidders for goods (e.g. Copiers) have a different orientation than for services (e.g.eg. consulting). This break also represents the two major methods of evaluations. Goods tend to rely on price while service relies on a blending of quality and cost.
This is the fourth and final category. The intent of buying a service is having something done that you cannot do on your own (e.g. insurance) or to extend your resources (e.g. Temporary Help). Request for proposal is the most common term used but it has two distinct usages in Canada. First there is the specific legal meaning. Second, it is a generic term for three different documents - Request for Proposal, Request for Standing Offer and Request for Supply Arrangement. This can be thought of a similar to Kleenex, Scotch tape, Aspirin, Zamboni. These represent a specific product. At the same time, they have become common usage for any situation needing this type of product.
As I stated at the start, the key is not what the bid document is titled but the intent of the public sector organization. Many times I have seen the wrong title used by inexperienced procurement officers. Firms have to learn to ignore the title and to read the content to ascertain the “INTENT”.