Procurement Action - Some processes
(Written by N. R. Jayaraman)
Different methods of procurement process is adapted for the procurement of goods, machineries and equipments. It will be difficult to state which of the processes will be the best since the tendering process depends on the product and quantities required by the Organization. Also it depends on the nature of the product, nature of machineries and equipments being procured, the extent of trouble free supply from the suppliers etc. Some of the goods may be of proprietary product in nature and can not be tendered unless it is officially supplied by different traders.
The success of tendering also depends upon the suppliers interest in taking part in the tendering process. Many of the suppliers may not show interest in taking part in the tenders floated by certain Organizations whose reputation in the process of tendering may be viewed unfair. All these factors will influence the procurement strategy in spite of the selection of the best process of procurement in a given situation.
Single tendering process to multi layer tender procedure is adapted by the Organizations for the procurement of machineries, equipments and goods especially which are Governmental controlled ones. The tendering is generally done by publishing the requirement in the News Papers and other such mediums. Listed suppliers are also contacted for the requirement. Once the advertisement appears in print media many suppliers and dealers take part in the tender, some of whom may be new in the trade or agents agent. The vetting of such tenders will become difficult and may lead to disputes at times. Sometimes even the genuine suppliers may not take part in view of unfair trade practices followed by some Organizations. This is the general scenario.
Therefore where the nature of the product or service is sensitive in terms of cost and supply, the capability of the supplier is not correctly known, and the actual specifications is not exactly known as multiple suppliers produce the same product under different names, some organizations go for short listing the potential suppliers before going in for the bidding process. One such process is called the Expression of Interest (EOI ).
It is seen on many tenders that once procurement action for a specific goods is known, some of the agent firms who may be registered firm but may not have enough experience may go into some sort of illegal agreement with the main suppliers and take part in the tender as though they are the original suppliers. They prevent the original firms from participation which otherwise would have resulted in competitive prices. This leads to litigation later as the price paid may be unfair, the after sales services may be poor, the cost of future supplies of spares and accessories if it is machineries supplies may be high and after some time the service back up may not be available too after few years.
These are all common problems noticed in the trade. Therefore in order to avoid all such complications, eliminate unreliable middle men, agent firms, and to get the best product with good back up mechanism on a long term basis the EOI is adapted for services and products of high value and sensitive in nature.
EOI may be used to find other suppliers who may have the correct Goods one is looking for or right type of machineries and equipments one is looking for and get them take part in the tender. This process is not meant to disqualify potential contractors.
The EOI is beneficial in many respects as many useful information is derived .
- Suitable technologies and machineries and equipments to augment the production demand.
- The serious contenders to offer the Goods
- Whether the supplier has sufficient expertise to deliver the Goods required or not will be known before tendering.
- Whether the supplier will be able to offer reliable after sales service will be known.
- The financial status of the firm can be assessed to include them in the tendering process.
- Elimination of incompetent Contractors and middlemen is possible.
- Receipt of better proposals will be the main benefit.
What is the general format used for the Expression of Interest Advertisement ?
The advertisement may appear something like the following.
While Expression of interest is called for the supply of Goods, Equipments and Machinery, another form of tendering involves calling Request for proposals (RFP) which will be meant for acquiring the services when an Organization desires improvement in the working, find out new solutions to a specific problem or desire to establish a project or desire to hire the services of some consultancy for some specific work.
Remember that a proposal is different from the tender since the request for proposals offers solution and the cost will be discussed later. Also the proposals need not be uniform as each firm will have different solution to offer for the same problem. A Request for Proposals (RFP) is a project-based process involving solution, qualifications, and price as the main criteria that define a winning proponent. An RFP can range from a single-step process for straightforward procurements to a multistage process for complex and significant procurements. A proposal is different from a tender. Unlike a tender, an RFP is not an offer, but only contemplates an offer. How is the Request for Proposals beneficial?
- Deciding on a preferr
- ed solution or service and to negotiate with them for price and other terms.
- Short listing better offers and interact with all of them to find the best option
- One can take the solution of more than one agency is one single solution may not be sufficient for the expected service or solutions.
- When satisfactory solution is not received, it can pave way for changing the requirements and ask for further submissions from the same firms who had responded to the RFP as the process will be more transparent in nature.