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Challenges
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Solutions
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Competitive tendering processes: Primes will vary in the way they engage with potential sub-contractors. Some will form strong partnerships early on that endure through the selection period. Others will have strict and formal processing for selecting sub-contractors that they will run in parallel with their own response process. These selection processes may be impersonal and sometimes not entirely appropriate; in an effort to demonstrate absolute neutrality, the arms-length engagement comes into play.
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- Understand the customer process: Ensure that you understand the published process and timescales for the procurement as this will help you to understand and be sensitive to the prime's schedule of events. It will also help you understand if the prime is being reasonable and open with you in its demands
- Establish the prime's approach by asking questions: Each prime contractor will have its own mechanism for engaging with sub-contractors. This will vary from well-established corporate processes involving project and procurement staff in a very formal manner to less formal project level approaches. Each prime with have a greater or lesser willingness to work collaboratively. Again, this will vary from involving the sub-contractor as a valued partner to treating the sub-contractor as a commodity supplier. It is important to establish early on the style to be expected as this will set the tone of the whole procurement. There is little point wasting time trying to work in collaborative style with primes who do not wish for this; it is more likely to cause conflict than harmony.
- Respect the protocols: It will almost certainly be appropriate at this stage to allow the prime to manage all the direct engagement with the end customer. You are now officially in sub-contract mode, so do not cut across this without agreement from the prime and/or the customer.
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Arms-length engagement: Prime contractors may prefer to maintain full control of the customer relationship and solution architecture and may be disinclined to involve sub-contractors other than for the part of the solution for which they have been identified. The implication here is that the sub-contractor may lack the complete picture. This may lead to poor risk assessment and management and loss of opportunity for innovation and creativity.
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- Be well-informed: Using information gathered during the Identification stage and anything else you can find out through contacts or the public domain, ensure that you have built up a good understanding of the overall programme and the role you can play. Ensure that you use this information when engaging with or submitting formal responses to the prime.
- Establish the prime's approach by asking questions: Each prime contractor will have its own mechanism for engaging with sub-contractors. This will vary from well-established corporate processes involving project and procurement staff in a very formal manner to less formal project level approaches. Each prime with have a greater or lesser willingness to work collaboratively. Again, this will vary from involving the sub-contractor as a valued partner to treating the sub-contractor as a commodity supplier. It is important to establish early on the style to be expected as this will set the tone of the whole procurement. There is little point wasting time trying to work in collaborative style with primes who do not wish for this; it is more likely to cause conflict than harmony.
- Respect the protocols: It will almost certainly be appropriate at this stage to allow the prime to manage all the direct engagement with the end customer. You are now officially in sub-contract mode, so do not cut across this without agreement from the prime and/or the customer. This protocol will contribute to a non-cooperative prime being able to maintain control, but if you have developed your own source in information, you can defend this position more easily.
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Unclear requirements: The customer and the prime(s) may be involved in an active dialogue that results in changing requirements. Sub-contractors may receive several iterations of requirements and be required to review and refine responses and pricing accordingly. Often, only those requirements relevant to the specific sub-contractor will be cascaded down and this can lead to an incomplete picture, which can result in poor risk management and loss of opportunity for innovation and creativity.
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- Be well-informed: Using information gathered during the Identification stage and anything else you can find out through contacts or the public domain, ensure that you have built up a good understanding of the overall programme and the role you can play. Ensure that you use this information when engaging with or submitting formal responses to the prime.
- Ask questions: Don't be afraid to ask for clarification of context or detail. Best practice guidelines state that competitions and procurements should be conducted in an open manner, so set the tone early on that this is required and appropriate. The response you get will provide valuable information about how you are positioned.
- Provide clear, unambiguous responses with assumptions: All formal responses must clearly state what you intend to do, how much it will cost and the assumptions you have made in reaching these conclusions. Seek to confirm or eliminate assumptions before submission, but where this is not possible. state clearly that if the assumptions are wrong, there may be an implication.
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Unreasonable deadlines: There will be a timetable for responding and the prime will be under pressure to formulate its own response whilst ensuring input from its sub-contractors. The timescales for the sub-contractors will be even shorter than for the primes and this puts greater pressure on the sub-contractors.
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- Check the facts: Ensure that you understand the overall stages in the procurement, and the prime's/primes' process. Note that if the prime has to submit a bid on a certain date, the sub-contractor(s) will be required to submit their bids to the prime earlier. Check when at each step of the way.
- Be prepared: Set aside appropriate resources as soon as you know when responses will be required.
- State your needs: Don't be afraid to tell the prime that you need a certain amount of time to prepare a quality response. They may be able to accommodate this and may prefer a quality response slightly later than a poor response on time. There is no harm in asking if you have justification.
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Delays in bid timetable: In addition to short response timescales, there may be delays in the bid timetable, which, in the case of public procurements can be substantial and cause bids to run into several year.
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- Assess the risk: Be aware that delays can happen and ensure that your business could withstand this. Note that it will be entirely outside of your control.
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Bid costs: The cost of bidding is expensive and sub-contractors will generally be expected to foot the bill themselves unless they are being contracted to fill a major resource and skill gap in a prime bid team. Primes will expect sub-contractors to regard the bidding process as a pre-sales cost and do anything and everything free of charge.
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- Check what the prime is getting paid for: Funding may be available as part of the bid process to run tests and trials. If there is money available for the prime, it is reasonable that there will be money to cascade to the sub-contractors.
- Check if the prime is prepared to pay for anything: If you are filling a skill or resource gap in their team and they are intent on using your company in the bid without a competition, it is worth asking.
- Be prepared: If possible, monitor bid costs to build an accurate picture of costs over time. Learn how much effort will be required and make sure your business can withstand it.
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Customers and primes lack of understanding of drivers and constraints of smaller businesses: Customers and primes may appear to make unreasonable demands on sub-contractors because they do not understand the challenges of a smaller business and they are constrained by their own corporate processes.
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- Understand them: If you encounter unreasonable demands, take the time to understand why this is, if they will engage with you. Then you can address it in an attempt to get better behaviour.
- Take the time to explain: If they will engage with you, take the time to explain to them the critical drivers and constraints and ask them to respect this in their demands and contracts.
- Be wary of those who persist in unreasonable behaviour: Seriously consider if you want to be and can withstand over the life of a project unreasonable behaviour. If not, be prepared to walk away and say so.
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