Procurement Perspectives: Poor specifications may force bidders to guess

Poorly written specifications may force bidders to guess what the customer wants.

Public or private procurement should not be in the guessing game.

On the other hand, there are clear risks in being overly specific when drawing up the specifications.

Inflating the list of requirements that must be satisfied increases cost, so it is worthwhile to focus on what is truly necessary. There are essentially two approaches to specification preparation. The first, the problem-solving or statement of objective approach, is to set out a general statement of purpose or objectives of the procurement exercise.

This approach leaves it to the prospective suppliers to determine whether they can address the contracting authority’s declared need.

The second, the detailed specification approach, is for the municipality or other contracting authority to attempt to define the technical requirement of a product that will satisfy the procurement need that it has identified.

Perhaps surprisingly, until very recently, governments have tended to favour the latter approach over the former. In recent years, however, this approach has fallen into disfavour. Several reasons can be advanced for this change in attitude.

First, the detailed specifications approach is inconsistent with treaty and other legal requirements for an open competition for government supply contracts.

For instance, in Re Waters Chromatography, the former Procurement Review Board of Canada determined that Agriculture Canada had drafted specifications in such a way as to bias a contract competition. The department had conducted a market investigation process before taking a tender to market, at which time it had identified a preferred source of supply.

The complainant argued that the tender requirements effectively locked out other suppliers.

The board agreed:

“This case discloses ample proof that what actually went on in this procurement was a pre-competition, held by Agriculture Canada in private, in the course of assessing what the market had to offer that might meet their needs. These were knowledgeable people with much more than a passing acquaintance with the technical details of the investments they wanted to acquire. Knowing their needs intimately, they assessed the market with a critical eye and went straight to the conclusion that they had found the product that best met those needs. They got the price quotation and then they instructed DSS to acquire it.”

The specifications had been drafted with the intent of a predetermined outcome:

“When faced with the incidental requirements of the law to conduct an open competition, they went along with that. But they didn’t intend to risk ‘losing’ in that competition; so, they prepared a specification with 13 mandatory requirements for the pump, five more for the auto-sampler, and two for the overall system, which are set up mainly in terms of particular product features – but which, as the above analysis shows, were open to a series of criticisms that go straight to the issue of fairness to those potential suppliers who would be invited to bid.”

For most goods and for any construction-related service, the specifications section of the RFP or tender document covers three broad areas, which may in some cases overlap to some extent. They are functional specifications, design or technical specifications and performance specifications.

For specifications related to the operation of a capital facility, the conduct of a program, or the delivery of a service, performance specifications constitute a further area of concern.

The functional specifications reduces a broad range of possible solutions into a fairly wide range of maybes. The design specifications are intended to further limit the scope of the list. The distinction between the overall functional specifications and the design specification is one of level.

If the functional specifications give the view from 10,000 feet, the design specifications are the view down around street level. Yet despite this distinction in perspective, one fact is clear: the design specification must be fully consistent with the functional specification.

Stephen Bauld is a government procurement expert and can be reached at swbauld@purchasingci.com. Some of his columns may contain excerpts from The Municipal Procurement Handbook published by Butterworths.