Guideline 5.2 - Request for tender contents

Standard Terms and Conditions

Transfund New Zealand has published a Model Agreement for Professional Services which includes appropriate general conditions of contract.

Safety and Insurance Requirements

Section 5.2.2 of this Manual means that contracts valued at $15,000 or less can be arranged with a simple exchange of letters.

Project Scope and Specification

Wherever practicable, tendering authorities should specify end results and should avoid specifying the method to be used.

The reason for this is that results specifications promote the objectives of an efficient CPP better than methods specifications. A results approach requires the tendering authority to specify the target outputs to be achieved and it is then up to the tenderer to propose the method to be used to achieve the tendering authority’s objectives. For example, a client would specify a project in terms of outputs such as:

"To determine the average speed of vehicles in the inner city".

The specification would not tell the tenderer how to go about doing the job.

At the present time, there are some limitations on the practicality of a complete results-based approach where present techniques do not permit an assessment of the quality of the end result immediately after project completion.

Price Models

1. Consultant-Specified Lump Sum (where the consultant submits a fixed dollar price to undertake the contract).
2. Priced Schedule of Quantities (where the consultant submits a price based on a schedule of rates multiplied by the tendering authority’s estimated quantities of each unit of input, summed to give an indicative lump sum).
3. Schedule of Rates (where the consultant submits a price per unit of input or per unit of intermediate output).
4. Client-Specified Lump Sum (where the tendering authority specifies the maximum funds available for the contract).
5. Any combination of the above.

It is expected that the most common form of price model will be one that combines lump sum for some components with priced schedule of quantities for other components. This gives an overall lump sum to enable comparison of tenders but moves some risk (in terms of quantities) to the tendering authority and also gives information which can be used to calculate variations to cost.

Transfund New Zealand has a preference for maximising the use of the consultant-specified lump sum price model where this model is feasible. Tendering authorities should specify a lump sum price model where the work content can be reliably gauged in advance. When used appropriately, the lump sum pricing model brings greater competitive pressure to bear to increase efficiency and hence minimise price. Another advantage is that the administration costs of a lump sum pricing model are comparatively low.

Where the work cannot be readily defined prior to tendering, then either the schedule of rates or priced schedule of quantities price models may be more appropriate.

A client-specified lump sum may be particularly suitable for research or investigatory projects. In such cases, prices are likely to be very similar and can be given a low weighting. Tender evaluation will focus on differences in quality attributes such as methodology.

Where the work content of some components of a contract can be reliably gauged prior to the contract, but the work content of other components cannot, a tendering authority may specify a combination of lump sum, schedule of rates and/or priced schedule of quantities within any one RFT.

Tendering authorities should ensure that RFTs for projects of a similar type and size are consistent and specify price in the same way whenever practical.

If a tendering authority wishes to let a consultancy assignment with both design and supervision components, it needs to carefully consider the most appropriate price model for the subsequent supervision phase. It will often be hard to judge the amount of work involved in that supervision until the design is completed and the contractor is engaged. It is therefore suggested that the RFT contain an estimate of the number of hours of supervision required and that this be used by consultants to provide a priced schedule of quantities. See Guideline 5.2(4)(2) above.

Inefficient price models such as cost plus should not be used.

The use of provisional sums should be minimised so that as many parts of the job as possible are competitively priced. Any provisional sums are removed when calculating the price grade under Section 4.8.2(2) of this Manual.

Late Tenders

Tendering authorities should have an established policy late tenders. It is recommended that this policy be to not accept late tenders under any circumstances.

If a tendering authority’s policy is to accept late tenders then such tenders should only be accepted in exceptional circumstances.

One major reason for this wariness in accepting late tenders is that competing tenderers may disclose the contents of their tender to the "late" tenderer who could then alter their tender accordingly.

This refusal to accept late tenders unless there are exceptional circumstances ensures that the onus remains on the tenderer to do everything possible to ensure that the tender is received on time.

If a late tender is accepted, this should be clearly indicated in the tender evaluation details recorded, on the contract file.