The importance of coherent tender specifications

Under the Preferential Procurement Policy Framework Act 5 of 2000, an “acceptable tender” means “any tender which, in all respects, complies with the specifications and conditions of tender as set out in the tender document.” However, what if the specifications themselves are defective or ambiguous?

In most cases, when a procuring institution contracts for goods or services, they must detail to the public exactly what they require, in order that their needs can be responded to meaningfully. It is demonstrable in instances like the Kusile and Medupi Power stations debacle that the success of not only a procurement process, but an entire project at large, can turn on the work done during the specification stage in the procurement process. Whether a procuring institution needs a pen or a power station, it is of paramount importance that the market fully understands what the purchasing institution requires.

It is logical that functionality evaluations must go hand in hand with clear specifications, without which any evaluation may be arbitrary. The Courts are repeatedly faced with both disgruntled bidders and embarrassed purchasing institutions alike, seeking to set aside a procurement process or award where miscommunication has prevailed, alternatively where unfair or anti-competitive specifications formed the basis of evaluation and award. Even a cursory glance at a quarterly law report will produce several examples of these exact situations.

The cause of these scourges can often be complex. Procurement practitioners, often ill-equipped or under-resourced through no fault of their own, can often find themselves between a rock and a hard place, attempting to cater for the end-user’s requirements whilst traversing the minefield of public procurement regulation to avoid audit findings. Further, end-user departments, often faced with skills shortages themselves, may be uncertain of what the exact need is, or what solutions are available. This can lead to reusage of often outdated, defunct or inappropriate historical tender specifications in the face of changing institutional needs or market conditions, which in turn leads to an erosion of the pillars of procurement, including fairness, competitiveness and cost-effectiveness.

As a starting point to avoiding legal challenges, procuring institutions struggling with problems such as these should be honest with themselves as to their capacity and competencies in-house. A deficiency in these areas will inevitably lead to shortcuts being taken in the procurement process, and the most crucial step often being overlooked; early market engagement.

For a specification to inform a fair, competitive and cost-effective process, a procuring institution must have a sound understanding of not only what risks need to be managed, but also the solutions that are currently available in the marketplace. It is at this stage, before a multi-year binding agreement is contemplated, when the opportunity for potential suppliers to proffer cutting edge and/or innovative solutions is most ripe, and ample time is available for a procuring institution to consider sustainable, economical and socio-economically responsible suggestions.

It is old wisdom that a stitch in time saves nine, and an investment into the crucial aspects of any procurement at specifications stage can save hundreds of thousands or even millions of Rands in preventing white elephants, fruitless and wasteful expenditure and legal fees down the line.

If the above sounds all too familiar, or if your organisation has been subject to ambiguous specifications in a tender process, our knowledgeable, experienced and competent team is willing and able to walk with you along any public procurement journey, and we encourage your further engagement with us.

Chad Phillips

Senior Associate | LLB LLM (Public Procurement Regulation and Policy)