I am reminded daily by contractors about how difficult it is to bid on municipal projects.
Very often, there are contractors and manufacturers from the business community that say it is simply too difficult to be a supplier to government. Often, there is more than a degree of merit in these complaints.
Local preference policies, for instance – which discriminate against suppliers solely on the basis that they come from down the road – more than fit the bill of being unreasonable barriers to entry. Other unreasonable barriers grow out of excessive zeal for creating the appearance of integrity.
Consider, for instance, the following instructions given to prospective suppliers by New York City.
For every proposed city contract, a city agency is required to consider whether the contractor has the requisite “responsibility” for the contract award.
Before engaging in the city procurement process, you may want to take a hard look at your firm’s history of business integrity, as well as whether your firm has the capability of fully meeting the demands of the work.
To do business with the city you must:
• Be prepared to demonstrate that your firm has the resources and experience to do the job successfully;
• Be prepared to publicly and truthfully disclose your firm’s management and ownership, and (key people), with an expectation that any of their legal or performance problems will need to be explained;
• Be current on your obligations, including paying corporate, real property, payroll taxes and social security contributions, as well as water, sewer, and other local assessments; and
• Pay prevailing wages, where legally required.
The process goes on to explain that if you are selected, as a winning bidder or proposer, and your contract exceeds certain statutory dollar thresholds, you will have to submit a VENDEX Questionnaire to substantiate that your firm has the experience and business integrity to perform the city work.
The questionnaire is a sworn statement made on behalf of the firm and its (key people) and particularly where past legal or performance problems were disclosed, will be subject to rigorous examination.
It may not be that New York City – which purchases more than CAN $9 billion in construction, services and material a year – has so much business to offer that it can get away with being so demanding (although no doubt it will discourage some suppliers from competing for city business, nonetheless). But, even for New York, it must be difficult to secure compliance with these requirements when the contract relates solely to occasional or short-term contracts, particularly those of low dollar amount.
Whatever the experience of New York may be, it is highly unlikely that there would be much enthusiasm for a similar rigmarole if it were a contract for a small city in Canada.
I only came across this type of strict tendering process when working for a construction client in New York.
The more exacting the requirements of the tender, the more costly it is to participate in the process.
From the time that we were small children, we are told that time is money. Yet for some reason this basic principle of commerce is often forgotten by the people who put together tender instructions, which require a supplier to provide page after page of information that is, at best, only distantly related to the supply that is made under the contract.
What is particularly disturbing to contractors is the fact that frequently they are asked to provide precisely the same information as they just provided a few weeks before with respect to another tender. All options being equal, when faced with the choice of pursuing a municipal contract, or a private sector contract, it is a fair bet which of the two options a contractor would take.
Stephen Bauld is Canada's leading expert on government procurement. He can be reached at email@example.com.