Supplier Selection Processes Must Support Finding The Best Suppliers

Supplier selection is a fundamental element of private and public sector procurement. That seems almost too obvious a statement to commit to print, yet sometimes it seems that organisations forget just how fundamental it is, and how important it is to get it right.

In the public (government) sector it is arguably even more critical than in private firms. While making the right selection decision clearly has an impact on future business performance of the buyer (the more important the supplier, the more critical this becomes of course) then in the public sector we have the additional issue of the regulatory environment.

Poor, unfair or fraudulent supplier selection processes and decisions can lead to disappointed suppliers challenging, legal cases and delays to contract award. So getting this part of the procurement process right is critical.

One factor that must be considered is whether the selection process allows the buyer to differentiate properly between bidders. Historically, we tended to see evaluation processes that more often than not asked too many questions of bidders and were over-complicated. But on some occasions now, we are seeing the opposite – evaluation that does not really allow the buyer to determine the “best” supplier or suppliers.

Sometimes that is because of a desire to simplify evaluation, perhaps driven in part by eSourcing systems, where asking “yes / no” questions makes it easy to automate the scoring process. But if most suppliers’ “score” 100% because they can say “yes” to all the questions, then the selection decision may come back to price above all else.

Even if questions are not quite as binary as that, if it is relatively easy for suppliers to score well, maybe even 100%, then you will not get that differentiation.

There are rumours that this problem may be behind the collapse of the Crown Commercial Service management consultancy framework competition in the UK recently (see here for more detail). The questions in this case were mainly around describing business processes, and some at least covered appropriate areas to investigate. But the marking methodology was basically binary – you “fully addressed” the need, or you didn’t. It is quite hard to justify a “zero” mark in that case,  so it may be that most bidders scored 100% and again it all came down to price.
So if you are designing evaluation processes, think carefully about questions that will really get at the factors which determine the value the bidder can provide. Think about what would mark out a truly exceptional supplier from a merely adequate. Then make sure the marking mythology allows some variation in the marketing against those bids. Personally, I like this sort of scheme; while it requires competent markers, who can maintain a good audit trail in case of challenge, it does tend to differentiate the best bids from the merely adequate.     

Going back to the CCS case, it may also be a question of resource and the size of the bidding population. It is tempting to simplify marking when you are going to get hundreds of bidders. But it can come back to bite later, as we have seen.

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