June 20, 2011
by Paul Emanuelli
PURCHASINGB2B MAGAZINE: MAY 2011
The paper-based bidding process hasn’t changed much with the times. In fact, bid submission practices remain trapped in a tendering time warp, frozen throwbacks to the pre-Internet era.
That’s about to change. This article explains how inherent systemic inefficiencies, accelerating timeframes, trade treaty developments and technological innovations are all converging to convert our outdated bidding systems into a paperless procurement process.
Systemic inefficiency and waste
It’s a tale of two technological eras trapped within a single tendering cycle. While electronic posting may have become a mainstream standard for many public institutions, this advancement has only served to obscure the technological atrophy that continues to plague the bidding stage of the tendering process.
While tender calls can be downloaded electronically at any time of day and night, public institutions continue to manage manual bid receipt processes, where bids are only accepted in paper form during business hours, at prescribed locations, within strictly enforced timeframes.
In addition to being slow and inefficient, this paper-based bidding process creates a colossal carbon footprint. Add up the thousands of bidding processes run by public institutions across Canada every day, multiply those competitions by the number of suppliers who respond to each tender call, and then multiply that number by the multiple copies of each bid that have to be shipped to the purchasing institutions, only to be shredded after the evaluation of tenders, and what you get is a T-Rex size mountain of waste. Time is running out on these soon-to-be-extinct paper-bound tendering practices.
With ever-accelerating time-pressures, institutions need to boost tendering cycle efficiencies somehow. The planning and drafting stages of the procurement process are already squeezed to the breaking point, as are the post-bidding evaluation and contract finalization stages. This puts purchasing institutions under greater pressure to shorten the period between tender call posting and bid submission.
However, in a system where the bidding window can determine whether a supplier responds to a tender call, and in an environment where lawsuits are fought over bids that are submitted even seconds after a bid deadline, timing is everything. Shortening the posting period threatens to undermine the open competition and value-for-money objectives at the heart of the public procurement process.
Purchasing institutions need to buy some time somewhere without compromising open competition. Electronic bidding offers a clear solution for accelerating the bidding process while preserving an adequate window for bid submission.
Trade treaty developments
The ever-expanding network of open procurement treaties is also compounding these timing pressures. Within Canada, the Agreement on Internal Trade (AIT) requires reciprocal non-discrimination for all Canadian suppliers, which means that suppliers from coast-to-coast are entitled to an equal opportunity to compete for public sector work. Under the AIT, institutions must keep their bid opportunities open for a “reasonable time”. Institutions that set their bid submission deadlines to the minimum amount of time required by local suppliers may actually be setting themselves up for a bid protest by engaging in a form of prohibited local preference. Enabling electronic bidding will help institutions address this risk by giving all eligible suppliers, regardless of location within Canada, an equal opportunity to submit their bids.
If the domestic trade treaty obligations under the AIT aren’t enough to tip the tide towards electronic tendering, then international treaty developments soon will be. The 2010 Canada-US Procurement Agreement (which applies to sub-federal public bodies) and the treaty negotiations between Canada and the European Union (which are intended also to expand open competition to sub-federal institutions across Canada) will open the floodgates to an expanding pool of international bidders. It will also create an irresistible pressure to adopt electronic bidding procedures.
Legal and technological enablers
Fortunately for procurement professionals, technology is catching up to the tendering cycle to provide the three missing links required to complete the transition to paperless bidding. First of all, encryption technologies are helping to preserve the integrity and confidentiality of electronic bids, which is essential to preserving the integrity of the paperless bidding process. Secondly, key public infrastructure protocols are enabling the electronic signatures required to provide legal certainty and enforceability to paperless bids. Finally, industry groups are quickly working out the technical and contractual intricacies for converting paper-based bid bonds to digital bid bonds that can be attached to electronic bids. These legal and technological enablers will soon serve as the final catalysts for launching us into an era of paperless bidding. b2b
Paul Emanuelli’s procurement law practice includes a broad portfolio of public sector institutions across Canada. He can be reached at email@example.com.