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Issues with the procedures for evaluating bids in a competitive tendering process

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LNW-GW Joint

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The Civity contract for Northern's trains will principally be between the Rosco (Eversholt) and CAF.
One of the benefits of leasing is that the risk lies with the owner/funder (Eversholt) and not the TOC/DfT.
There will also be warranty conditions, but I wouldn't know how the fleet is situated for that - the last unit has only just been accepted into service.
Northern (and/or Eversholt) will probably suffer some consequential loss from the removal of units from service and possible back-fill.
TPE will probably be a bit nervous about their 397s (also owned by Eversholt).
WMT/TfW (using different Roscos) will probably be protected by warranty terms as none of their trains have been accepted yet.
CAF keeps winning orders in Spain and across Europe, including from SNCF, so they must be doing something right.
 
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Nym

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Making cheap trains.
And knowing how to meet the minimum requirements for OJEU each time so they pass, then be the cheapest.

OJEU / TfL / DfT requirements for evaluation of tenders means you're not permitted to know who each bidder is, and you need to select the cheapest unless it's an "Abnormally Low Tender"
 

stj

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Making cheap trains.
You get what you pay for.Cheapest often costs more in the long term.I expect this is the result of competetive tendering and CAF wins on price not quality and gets the contracts.
 

py_megapixel

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And knowing how to meet the minimum requirements for OJEU each time so they pass, then be the cheapest.

OJEU / TfL / DfT requirements for evaluation of tenders means you're not permitted to know who each bidder is, and you need to select the cheapest unless it's an "Abnormally Low Tender"
Does this mean there is no mechanism at all to reject a bidder with a particularly poor reputation, if their bid is the cheapest but not by too much? That seems incredibly poorly thought out.
 

Bletchleyite

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And knowing how to meet the minimum requirements for OJEU each time so they pass, then be the cheapest.

OJEU / TfL / DfT requirements for evaluation of tenders means you're not permitted to know who each bidder is, and you need to select the cheapest unless it's an "Abnormally Low Tender"

As much poorly-written tenders. You could presumably include something like the bidder having to provide independently audited evidence of quality of previous orders, e.g. in terms of quantity and severity of defects (you can't realistically expect none on this sort of product).

Should you have to? Clearly not, but it's like locking your door at home, you shouldn't need to, but if you don't you can expect your stuff to go missing pretty quick.
 

Nym

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Does this mean there is no mechanism at all to reject a bidder with a particularly poor reputation, if their bid is the cheapest but not by too much? That seems incredibly poorly thought out.
That is correct, and it is. You're not permitted under the regulations to discount a bidder based on previous performance once you hit the OJEU thresholds.

Is why when I've been evaluating bids previously, I've had quite a fight on to try and prove some solutions technically non-compliant with the requirements (in a manner that commercial managers will understand). Because if you don't meet the required level of technical compliance as part of the evaluation, you can then be excluded, but it's only based on the information provided by the bidders, you're not permitted as an evaluator to carry out external research, except for consulting with industry experts for hypothetical questions (and as evaluator, you're supposed to be this expert anyway).

As much poorly-written tenders. You could easily include something like the bidder having to provide independently audited evidence of quality of previous orders, e.g. in terms of quantity and severity of defects (you can't realistically expect none on this sort of product).

Should you have to? Clearly not, but it's like locking your door at home, you shouldn't need to, but if you don't you can expect your stuff to go missing pretty quick.
You could yes, but bids are rarely written by anyone with common sense or engineering knowledge. And those who include any of it are overridden by management (yes, speaking from experience of preparing public tenders!).
 

southern442

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Doesn't that mean we are all but guaranteed to get the lowest quality train each time?
 

Wolfie

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Doesn't that mean we are all but guaranteed to get the lowest quality train each time?
Not only trains. I've done contract selection in areas other than the railways and getting agreement from HMT to select anything other than the lowest compliant bid is an uphill battle.
 

61653 HTAFC

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Making cheap trains.
Have they had any quality issues with their orders for other European railways? I did have an almost-failure on a CAF EMU in Catalonia, but one raindrop doesn't make a downpour- I've never had a failure on a UK CAF unit in many more journeys. In that case had the driver not found the right place to hit with a hammer (and left 3 cars behind at La Molina) it'd have been touch-and-go whether I'd have made my connection into the sleeper to Paris.
 

Nym

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Have they had any quality issues with their orders for other European railways? I did have an almost-failure on a CAF EMU in Catalonia, but one raindrop doesn't make a downpour- I've never had a failure on a UK CAF unit in many more journeys. In that case had the driver not found the right place to hit with a hammer (and left 3 cars behind at La Molina) it'd have been touch-and-go whether I'd have made my connection into the sleeper to Paris.
Other than all of the underframe cracking issues on the 332s and 333s, Mk5 brake cocks that don't work as intended (no HF assessment), Mk5 jumpers that tear themselves to pieces (inappropriate products selected) and numerous other notifiable incidents on the CAF fleets that just haven't come to the attention of the general public?
 

61653 HTAFC

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Other than all of the underframe cracking issues on the 332s and 333s, Mk5 brake cocks that don't work as intended (no HF assessment), Mk5 jumpers that tear themselves to pieces (inappropriate products selected) and numerous other notifiable incidents on the CAF fleets that just haven't come to the attention of the general public?
Oh, I'm aware of the many issues their products have had here, but hadn't heard of any major problems on the continent. Makes me wonder if the Northern units in particular were built to a price, with corners being cut to avoid CAF producing them at a loss.

Or maybe they prioritise their best engineers on the domestic orders? [/cynic]
 

py_megapixel

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-- This thread was actually started with this post (but some newer ones were moved in above it) -- I just wanted to clarify to anyone subsequently reading why I've summarised everything again for no apparent reason




To avoid dragging the thread about the current woes with Northern's CAF units too far off topic I've created this one to discuss how the actual tendering and bidding process is structured - not just in the context of trains, but in general.

I've requested that moderation move the relevant posts over, but in the meantime, here's a summary of the apparent issues, as raised by others on that thread:
  • All decisions have to be made based solely on the information supplied by bidders and possibly consultations with industry experts about generic points only - carrying out external research on the bidders is not permitted
  • Similarly, rejecting bids because the quality is suspected to be poor is not allowed unless the price is abnormally low - previous poor reputation is not allowed to be a factor unless demonstration of previous performance was a factor explicitly written into the ITT
  • There is a requirement to select the lowest bidder which does not have a specific reason to reject it.
  • This leads companies to put effort into designing their bids carefully to game the system somewhat by bidding as cheaply as possible without appearing abnormally low - and with quality to match. Companies who do this are more likely to win the contracts, even if they consistently fail in every other respect, which reduces the incentive for them to improve, ultimately leading to a worse outcome for the government and by the taxpayers.

There are people on this forum who know more about this than me, who will almost certainly be along to correct the inevitable mistakes I have made. But personally I think these rules seem very poorly thought out.
 
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Randomer

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So, up front, I have no experience of contracting for railway purchasing at all and very limited scope looking at procurement in my industry. However, I can see that procurement particularly for government organisations probably has broadly similar themes.

  • All decisions have to be made based solely on the information supplied by bidders and possibly consultations with industry experts about generic points only - carrying out external research on the bidders is not permitted
From my limited experience in other industries this seems to be very common. It prevents outside influences with unknown agendas or financial interests "poison pilling" a competitor. Most organisations in my industry aren't subject to OJEU or its new UK version procurement (and most individual contracts fall below the limits anyway) so it is much more common to see tenders written to a precise product with suppliers effectively bidding only on price or follow on support and this prohibition remains the case.

  • Similarly, rejecting bids because the quality is suspected to be poor is not allowed unless the price is abnormally low - previous poor reputation is not allowed to be a factor unless demonstration of previous performance was a factor explicitly written into the ITT
I have a suspicion that the DFT would look poorly on a process that allowed procurement using previous reputation simply because it would eliminate any element of competition with so few bidders. Realistically looking at the DMU market as in the Northern/TfW/WMR procurement the only two bidders were CAF and Stadler. If you eliminated one for poor performance no more competition. I suspect a well written ITT (invitation to tender) would get around this by specifying performance closely to one manufacturer but this then would be very vulnerable to challenge. Didn't the latest Danish locomotive purchases effectively block several competitors by specifying it had to be in service elsewhere in the EU for a specific amount of time to bid? Problem is that with the UK specific loading gauge and signalling systems this just doesn't seem practical.

  • There is a requirement to select the lowest bidder which does not have a specific reason to reject it.
There is a tyranny in all procurement of lowest price technically acceptable bid versus overall best value. To use an example; purchase PPE from an internationally known supplier which will guarantee the kit in terms of failure absent wear for 10 years when the EN* standard is 5 years guarantee or purchase from a supplier of lower quality but still acceptable kit which meets the EN. The 10 year kit is slightly more expensive but probably won't have to be replaced as soon so lower overall cost. However, you have to justify writing the ITT to exceed the EN if challenged by a supplier which is hard.

* Euro Norm, similar to a British Standard but EU wide, many are now the same i.e. BS EN XXX

Lowest technically acceptable isn't always overall lowest cost but it is very hard to write an ITT not vulnerable to challenge if diverging from the standards would be better value.

On a more general point the big problem for government procurement is the number of suppliers is dwindling for big ticket or specialised items with the amalgamation of manufacturers. If you compare the recent railway rolling stock purchases mentioned above i.e. it was down to CAF or Stadler you start to see parallels in defence procurement to use another large cost limited options environment. For example the bidding for the Type 31 Frigate, which specifically was meant to encourage bidders other than BAE, ended up being BAE vs. an alliance of smaller manufactures, so only two bidders with a third with no realistic chance. Same for example in the upgrade programme for the Warrior IFV which has now been cancelled after costing over a billion and not producing results, only two compliant bidders.

Even if one of the suppliers is consistently "gaming" the tenders in other countries and you ban them from bidding it leaves only one other supplier who could effectively decide the price. At which point is the lower quality supplier that much worse in terms of overall cost longer term?
 

35B

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To avoid dragging the thread about the current woes with Northern's CAF units too far off topic I've created this one to discuss how the actual tendering and bidding process is structured - not just in the context of trains, but in general.

I've requested that moderation move the relevant posts over, but in the meantime, here's a summary of the apparent issues, as raised by others on that thread:
  • All decisions have to be made based solely on the information supplied by bidders and possibly consultations with industry experts about generic points only - carrying out external research on the bidders is not permitted
  • Similarly, rejecting bids because the quality is suspected to be poor is not allowed unless the price is abnormally low - previous poor reputation is not allowed to be a factor unless demonstration of previous performance was a factor explicitly written into the ITT
  • There is a requirement to select the lowest bidder which does not have a specific reason to reject it.
  • This leads companies to put effort into designing their bids carefully to game the system somewhat by bidding as cheaply as possible without appearing abnormally low - and with quality to match. Companies who do this are more likely to win the contracts, even if they consistently fail in every other respect, which reduces the incentive for them to improve, ultimately leading to a worse outcome for the government and by the taxpayers.

There are people on this forum who know more about this than me, who will almost certainly be along to correct the inevitable mistakes I have made. But personally I think these rules seem very poorly thought out.
All bidders for any contract will be trying to ensure that their bid scores against the criteria for the procurement. They will have experience of how the scoring systems work, how the different factors interact with each other, and how their likely competitors will perform on aspects of those. One of the key factors in major procurement competitions, especially public procurement, is the feedback to unsuccessful bidders - extremely valuable intelligence.

While all this sounds like it rewards mediocrity - and it can do - it also guards against favouritism and comes close as possible to ensuring bidders can have a fair crack of the whip. Blacklisting suppliers for non performance is possible but is also a really tough step to take by a customer - it is a statement that they are inadequate, which begs questions about their existing contracts elsewhere.
 
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