Tendering & Negotiating MoD Contracts

Overview

What does the ‘huge shift in tendering and negotiating thinking’ mean for contractors? How exactly has the role of MoD purchasing changed?

This Report covers every aspect of competitive tendering, negotiation and contractual negotiations in this new era. There can be few people who combine Tim Boyce’s experience and expertise with a gift for explaining issues and procedures with such clarity. As Tim Boyce writes in the Introduction, ‘it is important to realise that the SPI embraces a conceptual shift in the role of the MoD procurers’.

This Report aims to draw out the main principles, processes and procedures involved in tendering and negotiating MoD contracts. The main emphasis will be upon tendering for ‘equipment’ and related services. In this sense ‘equipment’ includes both systems and individual products. Collectively MoD refers to these as ‘articles’ because this is the phraseology used in the MoD standard conditions of contract. It is also to be noted that it is MoD policy to make use of open competition in the placing of contracts. However the word ‘tendering’ is not used exclusively in the context of competition.

Generally speaking it means the making of proposals to MoD, whether or not in competition, which are intended to induce MoD to place a contract. The context of this analysis of tendering and negotiating is SMART Procurement. Since this is a relatively new regime, the commentary will also note some of the pitfalls, opportunities and consequences of the new approach.

Who will benefit from this report?

Expert guidance, tips and techniques for dealing with the MoD for:

• Contract directors and managers
• Commercial directors and managers
• Development directors and managers
• Production directors and managers
• Project directors and managers
• Finance directors and managers

Content

Content Overview

1 Introduction

• First principles
• The procurers
• Integrated Project Teams (IPT)
• Internal customers
• Project life cycle
• Our friends in industry

2 Competitive Tendering: the pre-bid phase

• Getting ready
• To ‘team’ or not to ‘team’
• MoD policy
• Main contractors, prime contractors and prime systems integrators
• Teams and independents
• Team management
• The official Invitation to Tender (ITT)
• Price
• Acceptance of portion of tender
• Tenders for selected articles
• Alternative conditions
• Drawings
• The Montreal Protocol
• Dangerous articles and substances
• Submission of tenders
• Tender results
• The tenderer’s Certificate of Tender
• Special Notices and Instructions (SNI) to tenderers
• Bidders’ conference
• Raising questions

3 Competitive Tendering: the post-bid phase

• Impartiality
• Commercial confidentiality
• Tender validity
• Decision times
• The MoD Tender Board
• Suspiciously low prices
• Best and Final Offers (BAFO)
• Decision process
• Understanding
• Assessment
• Adjudication
• The meaning of cost, risk time and performance
• Best overall Value for Money (VFM)
• Industrial implications of tender decisions
• Industrial Participation (IP)
• Final decision-making
• The decision
• Debriefs
• Contract changes

4 Principles and Processes of Negotiation

• The authority
• The commercial branch and the IPT
• Contractual delegation
• Formal and informal negotiations
• The commercial branch
• Principles of conduct
• Principles of behaviour
• Planning and preparation
• Analysis
• General tactics
• MoD tactics
• Approaches for the contractor

5 Contractual Negotiations

• Taut contracts
• Custom and practice
• Foci of negotiation
• Terms and conditions
• Price
• Payment
• Timescales
• Specification
• Acceptance
• Intellectual Property Rights (IPR)
• Liabilities
• Variations and claims
• Subcontractors

6 Non-competitive Business

• The absence of competition
• Non-competitive tendering
• Tender evaluation
• Fair and reasonable prices
• Principles and process
• The shift of bargaining power

Reviews

“Tim Boyce has the highest command of the commercial domain. His great technical skills in this area have been applied in the most complex of commercial negotiations. His experience in the cut and thrust of business, whether as customer, supplier or partner in the supply chain has given him great understanding and balance.”

John Craen, variously MD of ITT Defence, Thorn EMI Defence and Plessey Military Communications

The author

Tim Boyce began his career in the Ministry of Defence holding executive positions in contracts, contracts policy and finance. His industrial career began at Plessey in 1980 after which he enjoyed appointments with Siemens, British Aerospace and more recently as commercial director at BAE Systems. His functional responsibilities have included contracts, commercial, procurement, estimating, legal, project accounting and the implementation of the European Business Excellence Model.

He is a member of the Chartered Institute of Purchasing and Supply (CIPS). His committee work includes the CIPS National Contracts Management Committee, the CBI Contracts panel, the CBI Defence Procurement Panel and the CBI/MoD working groups on partnering and incentive contracting. He was the CBI observer at the HM Treasury Central Unit on the purchasing working group on incentivising industry. In 1997 he was invited by the Director General of the CBI to join the CBI Public Private Partnership Forum. He has lectured widely in the UK and the US.

He has written many other books, including Understanding SMART Procurement in the MoD, Successful Contract Negotiation, Successful Contract Administration and Commercial Risk Management.