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March 18, 2019 | Bonfire Interactive
Fair and open competition is fundamental to public procurement. However, from a vendor’s perspective, public sector bids and RFPs can seem anything but open, thanks to the complex rules and cumbersome submission processes.
The reality is that many organizations are inadvertently excluding vendors from their opportunities: not through any policy violation or compliance issues, but simply due to the difficulty and hassle of doing business with the organization.
There are many barriers for vendors in public procurement. It starts with the challenge of finding open opportunities in the first place and continues throughout the submission process: interpreting legalese-filled forms, spending hours by the photocopier collating copies, paying for costly shipping, and facing disqualification for postage delays or other wild cards. At the end of the day, many qualified suppliers decide that it’s simply not worth it.
Unfortunately, research shows that this problem is worsening rather than improving. The State of the RFP Benchmarking Study, which looked at RFP processes in 190 organizations in North America, found that in 2017, 16% of projects received only one submission. This is a 3% increase from the previous year. Furthermore, 38% of projects received only two submissions, a 5% increase from previous years.
Other studies that included both bids and RFPs have reported even higher numbers, with one study showing that 25% of tenders received only one bid.
A lack of competition signals that your processes are not truly as open and transparent as they should be, but that’s not all — it also seriously impedes your ability to ensure best value.
Economists show that the number of bidders in a procurement influences the relative difference between expected price and award price, confirming what most procurement professional already know: more competition equals better prices.
In a typical fixed scope, price-only procurement, one additional bid can result in 3% cost savings. For a more open-ended type of project with defined outcomes but flexible scope, that can be much higher at 8% or more.
For public sector teams under pressure to maximize funding and reduce costs, accepting the status quo of two or three vendors per project is no longer feasible.
To increase competition, you need to get your opportunities in front of more vendors. Newspaper advertisements and Excel-based vendor lists are a limited and outdated way of reaching vendors in today’s connected world. Clients using Bonfire Strategic Sourcing platform have reported a 5x increase in the size of their vendor database. Here’s why:
Once vendors are aware of your opportunities, it’s up to procuring organizations to demystify the rules and regulations and remove barriers to participation, so vendors have every chance of succeeding.
Here’s how sourcing software platforms help:
Keeping up-to-date vendor lists is a constant struggle for procurement teams, made even more difficult when you’re doing it with paper forms or email and Excel. However, without clear visibility into your vendor community, it’s impossible to know where to invest vendor outreach or other growth initiatives. Sourcing software provides:
Your ability to deliver best value to taxpayers depends on sufficient competition. See how Bonfire could help you get more vendors involved with your opportunities in a 20-minute demo webinar.
Looking for more vendor competiton benchmarks? Read our 2019 State of the RFP report.