Smiling but sinking: why the competitive tendering system must change
In commercial and business-to-government markets, competitive tenders are the very first transaction that sets the tone for how buyers and suppliers do business together. They have been around for a long time now. And buyers will argue that they are working – to a point. Unfortunately, however, the competitive tendering system is broken in ways that buyers simply don’t get to see, because suppliers are too scared to tell them.
Recently I surveyed a range of suppliers to find out what they really think of competitive tenders and dealing with procurement. All of the survey respondents were employed in organisations that need to pitch for business via competitive tenders in Australia. 53% were from commercial businesses; 31% from professional services firms; and the remainder worked in not-for-profit organisations that compete for block-funded government service delivery contracts. 63% were from large organisations with 200 or more employees, with the remainder evenly split between medium-sized organisations (50-200 employees) and small businesses fewer than 50 employees.
The resulting comprehensive report, Smiling But Sinking, examines the attitudes and experiences of suppliers to competitive tendering and dealing with procurement in three key areas:
- The timelines suppliers were given to respond to competitive tenders,
- Their experience of buyers’ tender response requirements, and what they needed to submit within those deadlines, and
- Their backend experience of the feedback they received from buyers about their tender submissions, and its usefulness for continual improvement purposes.
Their responses show that competitive tendering is increasingly challenging and difficult for suppliers, mostly in ways that are entirely preventable.
Key findings – timelines and deadlines
Tender timeframes have dramatically decreased, and suppliers are now given only half the time that they believe they need, to respond. At the same time, buyers’ information requirements either haven’t changed, or are increasingly onerous, while deadlines are often rubbery and prone to change. About a decade ago, the most common response timeframe for a competitive tender across industries was four weeks, but this has changed.
Most survey respondents said that they are now given two weeks to respond to a tender in their business or industry (52.8%), while almost the same percentage (50%) said that they believe four weeks is a reasonable response timeframe. 97.6% now say that tender deadlines are getting shorter, while response requirements either have not changed or have increased. Two-thirds of respondents also said that in the last 12 months, they received at least one tender with an impossibly short deadline.
Shorter deadlines are putting pressure on suppliers to redeploy staff at short notice, and to significantly redistribute their internal workloads in order to respond. A third of respondents said they had ‘very often’ been forced to take staff out of their day jobs for a significant period of time when they were not expecting to, in order to cope with the demands of a tender. A whopping 72.2% also said they had ‘often’ or ‘very often’ received a tender at a difficult time, such as the week before Christmas, with a requirement to respond over a holiday period or peak working period when they were short of resources.
Key findings – tender response requirements
Vague, inadequate and confusing tender documentation comes at a cost to supplier response time and resources, and affects the accuracy of submissions. Requests for scope clarification frequently go unanswered, or are answered too late to be useful, and duplicate or irrelevant questions continue to complicate the task of responding to tenders. In the last 12 months, the majority of respondents (58.4%) said that they had ‘often’ or ‘very often’ found tender questions difficult to interpret and or answer. The remainder said that this was an issue for them occasionally.
More concerning, three quarters of respondents had ‘often’ or ‘very often’ seen poorly defined tender requirements that generated confusion among, and questions from, themselves or other suppliers. As a result, a third said that they had ‘often’ or ‘very often’ asked clarifying questions about a tender to the customer’s nominated representative, only to receive no answer, or an answer that came too late to be useful. Half of respondents said that this happened occasionally, and only a small minority said that it had never happened. A similarly large minority (41.7%) of suppliers said that they ‘often’ or ‘very often’ found that buyers put out multiple amendments and addenda to their tender documents, forcing them to re-work parts of their tender response.
Key findings – customer feedback
Despite the significant effort they expend in responding to tenders, suppliers continue to get inadequate feedback to help them improve. There is a lack of feedback overall, and a lack of specific feedback beyond (too high) ‘price’. When feedback is given, often it’s considered generic, and in some cases, may even come across as if the buyer has not read the tender that they are providing feedback on. In the past 12 months, 50% of suppliers said that they ‘often’ or ‘very often’ received no feedback; a further third said that they didn’t receive feedback on some occasions, and only a small minority had not had this experience.
As one respondent put it, ‘Any feedback would be great.’
A solid majority (63.9%) had also been told they lost a tender because of their ‘price’, without any other useful feedback on their submission. Suppliers were also asked to nominate what frustrates them the most about customers’ decision-making process and feedback on their tender submissions. ‘Lack of honesty’ was the top answer, closely followed by lack of confidence that the buyer had actually read their submission, and then the absence of useable feedback.
What happens next?
To change any relationship for the better, we first need to consider our own part in it. This means looking at our own habits and patterns, and the reaction they invite from the other party. This is true even in buyer and supplier relationships, where buyers hold the purse strings and therefore, the majority of the power. These preventable problems with the competitive tendering system have major implications for buyers, who are missing out on valuable insights from suppliers into how they can compete better and do business better. As well as the supplier feedback, Smiling But Sinking also contains three quick wins buyers can implement in each area – tender timelines, response requirements and giving feedback. My hope is that this study will break down some of the communication barriers that exist between buyers and suppliers, helping buyers to make improvements to the competitive tendering system that will generate goodwill, collaboration, and better results for everyone.
About the author: Robyn Haydon
Robyn is an engaging and authoritative speaker and business development consultant specialising in competitive tendering. Her clients have won and retained business worth hundreds of millions of dollars with many of Australia’s largest corporate and government buyers. She is also the author of three books, including Value, Winning Again, and The Shredder Test: a step-by-step guide to winning proposals.