Procurement and Bid Processes
Procurement is a process. Different experts have different opinions regarding when the process begins and when it ends, as well as how many stages are in it. There is also discussion as to the bid process. Is the bid process different from the procurement process? In my opinion, the bid process is a subset of the procurement process.
The procurement process contains the same essential elements whether competitive or negotiated. The difference is in the details. The procurement process has three main stages.
1 Pre-Contract, 2 Bid Development, 3 Contract Development, and 4 Contract Administration.
Stage 1 Pre-Contractual starts with realizing there is a need. What this need is varies from small to large, from simple to complex. The first step is developing a definition of what is needed. Part of the definition is a Statement of Work or Requirements Definition. This describes the goods or services that are required. Other elements such as delivery and cost will be listed separately.
Once this is determined, the steps (and timing) of the procurement process need to be planned. Included in this is the creation of the evaluation criteria and development of the bid document (RFP). This Stage ends with the issuance of the bid.
Stage 2 Bid Development starts from this issuance. It includes all activities involved in the bidding – the bid, bidders’ conferences, questions and answers (Q&As), amendments, site visit, plant inspections, demonstrations, and/or oral presentations. Questions from potential bidders can cause delays or, is some cases, cause a cancellation and restart of the Pre-Contract phase.
Stage 3 Contract Development starts once the bids have closed. The bids are evaluated against the evaluation criteria. The first step is usually to assess all bids received to verify if they are ‘responsive ‘(i.e. meet the bid criteria) or ‘non-responsive’ (i.e. do not meet). Then the remaining bids are assessed. In the case of a ‘price’ bid, the lowest responsive bidder is awarded the contract. In the case of a blended bid (quality/price) the winning bid will depend on the bid evaluation criteria used. All internal processes such as recommendation for award to higher authorities are included in this stage.
This is also the stage where negotiations normally take place with the selected firm.
Stage 4 Contract Administration starts immediately upon award of the contract to the selected firm. There is a need to do debriefings to unsuccessful firms and to respond to bid challenges.
This stage has all the monitoring elements such as progress reports, delivery and payments. Many times, in services, changes to the contract need to be made. This is also part of the process. Unfortunately, this is the area that is the weak link. Once a contract is issued, there is pressure on the contracting officer to start or continue work on other RFPs or bids. Contract administration is overlooked.
Having explained the procurement process let me take a moment to explain the bid process. The bid process is a subset of the procurement process but contains only elements of some of the procurement process.
First the Bid Process starts at a different point for the Procurement process with the creation of evaluation criteria based on the Statement of Work (part of Stage 1). Continuing, the bid process then contains all of Stage 2. In Stage 3, only the first half - evaluation of the bids is part of the bid process. As for Stage 4, Debriefings to unsuccessful firms and dealing with bid challenges is part of the bid process.
So in summary, the bid process focuses on bids and bid issues. The procurement process focuses on the complete process from the creation of the need to the completion of the contract.