Archive for June 13th, 2011

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Open Public Tenders

June 13, 2011

Well here is a step in the right direction. It is very rare indeed to see an open public tender, let alone broadcast on the Odessa City website. In this case a tender for infrastructure in Odessa.

Yes I know tenders even submitted like this are open to corruption or nepotism. There is no perfect tender system as tenders are not awarded upon lowest price alone anyway. There are other factors involved in selecting a successful tender and price is but one component. It does not hold that the lowest price will win this tender in Odessa anymore than it does a tender process in the UK.

Having run companies that have been invited to tender, I can assure you that whilst you always tender to insure being asked again in the future, you do not always get the outcome you expect. There have been occasions when the companies I ran have tendered ridiculously high bids as we didn’t want to take that specific job but also did not want to upset the client because of further work they may have that we would have wanted, and still won regardless of the tender costs submitted.

We also tendered, with an exceptionally sharp pencil (a euphemism for cutting profit margins to the bone), to make sure the company would be the most cost affective submission and lost to a much more expensive competitor.

There are many, many nuances and considerations in a tender bid. The costs of even submitting a quality tender can be enormous. I once was involved in a SPV for a tender for the Leeds Supertram Project. The tender costs reached £2,000,000 for our particular consortium before the then Labour Government pulled the plug on the project. The costs involved for rival consortium’s (of which there was only one serious rival) will also have been around the same figure.

The issue of sealed envelope bid as stipulated in Odessa City announcement does not state whether it is a double envelope bid or not. The premise of a double envelope bid is that technical and financial issues are submitted separately and the tender assessed primarily on the technical merits (or lack of) without the influence of costings.

Sealed bids, of course, mean nothing depending upon the morality of those receiving them. If the committee is corrupt and/or self-serving, then there is always room for nefarious acts. There is many a dark and murky tale to be told by my elderly father over the dealings within Bristol City Council in the late 1960’s early 1970’s. That tradition of murky and underhand dealing continued for a very long time around various City Councils in the UK. In Manchester it was still prevalent in the 1990’s and brought down one of my then competitors, CWS Engineering, when eventually matters were exposed.

All of that said, this remains a step in the right direction for Odessa. It may be, and probably is, given the source of funding, that Odessa had no choice but to do it this way in order to provide a transparent procurement system and audit trail back to the original lender.

As I have pointed out above, this does not remove the opportunity for corruption and nepotism completely. That is an impossibility, but whilst the decision making may be open to variants of transparency/opaqueness together with the finances at the coal face, it at least makes it harder because it is in the public realm from the beginning with the procurement and audit trail also accessible by the public sooner or later.

At the very least, one or two layers of fog will be lifted from the process.

More of this kind of thing please Mr Mayor, regardless of who is footing the bill!

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