The Department of Expenditure has flagged restrictive qualification and evaluation practices in government procurement of consultancy services, cautioning procuring entities against excessively high turnover requirements, disproportionate emphasis on a consulting firm’s past experience and manpower conditions that are not commensurate with the actual requirements of an assignment.
In an advisory, the Procurement Policy Division of the Department of Expenditure said its review of three years of Central Government consultancy tenders on the Government e Marketplace found practices that could unnecessarily restrict competition. The department has asked procuring entities to follow the qualification and evaluation framework prescribed under the Manual for Procurement of Consultancy Services, Second Edition.
Govt questions 5 to 10 times turnover requirement
One of the key concerns flagged by the government is the practice of prescribing minimum qualifying financial turnover at five to 10 times the estimated cost of a consultancy assignment.
The procurement manual says such requirements may increase the likelihood of adequate experience and capacity but can also reduce competition.
The Department of Expenditure has said qualification criteria should be fixed on a reasonable basis and that higher minimum qualifying turnover should be prescribed only when adequately justified.
For higher value procurements, the department has said the minimum annual turnover should not be blindly linked to the value of the assignment. It has suggested that an upper cap may be considered so that competition is not restricted “only to the big four or five Consultancy Firms.”
The model qualification criteria in the procurement manual suggest minimum average annual turnover of 200 per cent of the value of the assignment, with at least 50 per cent of that turnover coming from consultancy service contracts during the specified period.
Bidder’s own credentials to determine qualification
The government has also clarified that a consultant should be assessed on its own experience and capability while determining qualification.
The experience of a bidder’s subsidiaries, parent entities, affiliates or other separate entities cannot be counted as the bidder’s own experience. Similarly, assignments completed by individual experts while working privately or through other consulting firms cannot be claimed as relevant experience of the consultant or its partners or sub consultants.
The provision is intended to ensure that qualification is linked to the capability and track record of the entity that is actually bidding for the assignment.
Key personnel to carry greater weight
The government has also sought to give greater importance to the people and methodology proposed for executing a consultancy assignment.
Under the model technical evaluation framework, a consulting firm’s relevant experience carries a suggested weightage of 5 to 10 per cent. The proposed approach, methodology, work plan and understanding of requirements can carry 20 to 50 per cent, while the qualification and adequacy of experience of key staff can carry 30 to 60 per cent.
The manual says the weight given to the firm’s experience can be relatively modest because this factor has already been considered during shortlisting. It recommends greater weight for methodology in complex assignments and for key personnel where they are critical to the quality of performance.
The technical proposal is to be evaluated against predefined criteria on an absolute basis rather than simply by comparing one proposal with another.
“A comparative evaluation would single out the best proposal on a relative scale, but still could leave the Procuring Entity with a poor proposal,” the manual says.
Headcount criteria must match project needs
The Department of Expenditure has also flagged requirements for minimum payroll strength that go beyond the manpower actually required to execute a consultancy assignment.
The department’s review identified such requirements as another practice that could unnecessarily restrict competition. The qualification framework says criteria should be based entirely on the capability and resources required to perform the particular contract satisfactorily.
The manual says qualification criteria may consider factors including the consultant’s experience, personnel, equipment and facilities, financial standing and relevant compliance requirements.
Start ups get scope for 20 per cent relaxation
The procurement framework provides for relaxation of qualification criteria for start ups by up to 20 per cent, subject to the start up meeting the required quality and technical specifications during the request for proposal stage.
The provision can enable newer consulting firms to participate in government consultancy assignments despite having a shorter operating history or lower financial scale, provided they meet the required technical and quality standards.
Shortlist generally limited to eight consultants
The government has also prescribed parameters for shortlisting consultants. For competitive procurement of consultancy services, the shortlist should have a minimum of three consultants under Rule 184 of the General Financial Rules, 2017 and generally should not exceed eight consultants to avoid delays in subsequent evaluation.
For Expression of Interest processes, the manual recommends simplified fail pass benchmarks instead of marking schemes where appropriate. A firm meeting the minimum benchmark for each criterion can be declared qualified.
For complex assignments, scoring may be used to assess the relative strengths and weaknesses of applicants and create a robust shortlist. The manual says consultants normally securing the minimum required marks, which is generally 75 per cent, should be shortlisted, with the qualifying requirement specified in the EoI document.
No qualification criteria favouring foreign consultants
The procurement framework also says qualification conditions should not be designed in a manner that gives an advantage to foreign consultants at the expense of domestic consultancy providers.
“There should be no qualification criteria that would be advantageous to foreign consultants at the cost of domestically provided consultancy,” the manual says.
For certain small assignments, the shortlist may comprise only national consultants where qualified domestic firms are available at competitive cost, where the nature of the assignment does not justify participation by foreign consultants, or where foreign consultants have not expressed interest.
The Department of Expenditure’s advisory seeks to ensure that qualification and evaluation conditions are aligned with the actual requirements of each consultancy assignment and do not unnecessarily narrow the pool of eligible bidders.
The framework also allows procuring entities to waive minor deviations in qualification criteria where these do not materially affect a consultant’s capability to perform the contract.
