Why government tenders should include direct questions about risk

Many industry bidders are completely unaware of how important managing tender risks is for government buyers. Direct questions about risk would help ensure all bidders have the opportunity to minimise their risk of delivery, enabling the best solution to be selected.

Government tender evaluations focus on both minimising risks and maximising value. Sometimes risk is expressly evaluated and other times it’s considered as part of a more general response; however, regardless of how it’s assessed, risk is always, or should be, a consideration during tender evaluations.

managing tender risks
Managing tender risks is important for government

However, many (perhaps most) industry bidders are unaware of how important managing tender risks is during a tender assessment. Bidders are more likely to focus only on the value side of the equation – sometimes even, short-sightedly, on bottom line price. They often neglect to explicitly address factors that would mitigate their risk and therefore improve their overall chance of success.

The main reason for this is that the questions related to managing tender risks tend to be woven throughout the tender and not explicitly linked to risk. The questions instead align to three key (albeit unofficial) questions that government uses to evaluate risk:

  1. Does the bidder understand my needs? – These are the questions around context, such as policy alignment, security considerations or even the physical environment the solution may delivered into, etc.
  2. Will the bidder’s solution meet my needs? – These are the questions around company capability, capacity, solution maturity, market experience, references and case studies.
  3. Will the solution work? – These are the questions related to the mechanics of the solution and how it will be delivered.

While industry bidders are accustomed to answering these individual questions, there’s a good chance their responses are focused on demonstrating the value of their solution, without much consideration for the risk. This means the government buyer is probably not getting the information they truly need to make an accurate risk assessment – and potentially missing out on great solutions.

Include direct questions about risk

There’s an easy solution to this: include direct questions about risk in government tender documentation. This will ensure a) all bidders have equal opportunity to explicitly address the risks of delivery in their response, and b) government receives all the information needed to fully identify and minimise risk to select the best solution.

Examples of direct questions about risk include:

  • What risks does the bidder see in the proposed solution or product?
  • Are there particular risks associated with delivering into a public sector environment?
  • How does the bidder propose to deliver the solution to minimise risk?
  • What strategies has the bidder used in similar projects to manage these risks?

I can’t think of a better set of questions to really draw out a company’s expertise and experience than one related to the risk of delivering something.

Innovation and ‘high-risk’

Including clear questions about risk also helps government assess bids that are a) from companies that might be new to government, or b) proposing an innovative solution or delivery model that may not have been widely used.

Traditional tender assessments may rate these bidders as high risk, without explicitly addressing what the real risk is. In such cases, the government buyer would benefit from a more solid base to assess innovation or perceived inexperience rather than simply ‘having a feeling about it’. For example, tenders might ask:

  • Describe how the solution meets the needs of government, or
  • Describe similar scenarios where the product or service has been deployed.

Adopting these strategies will help government buyers obtain the information they need for accurately managing tender risks. They also pave the way for open discussions between buyer and bidder to clarify risk exposure through further questions or tender interviews. This all helps ensure government is less likely to miss out on a strong, high-value or even innovative solution.

While on the subject of innovative solutions and risk, it’s worth pointing out the merit of encouraging bidders to submit alternative responses, where they also have a compliant response. This allows government to consider an innovative solution or delivery model within the ‘safety barrier’ of a compliant response.

Encouraging alternative responses is a lower-risk way for government to consider innovative solutions. Needless to say, bidders must describe any such alternative solution within the content of risk (and strategies to address that risk), as well as added value-for-money delivered to the buyer by contemplating that solution.

The overall equation

At the end of a tender evaluation, the final score reflects both the overall value-for-money index (non-financial score divided by tendered cost) and the risk assessment.

To give all bidders an even chance, they should be invited to demonstrate a) they are aware of any risks associated with their delivery, and b) what processes are in place to minimise the assessed risk of delivery. By asking direct questions about risk, government buyers can ensure bidders explicitly address any perceived risks and thereby weigh all critical factors to ensure the best solution is selected.

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