Fair and open competition is fundamental to public procurement. However, from a supplier’s perspective, public sector bids and RFPs can seem anything but open, thanks to the complex rules and cumbersome submission processes.
The reality is that many organizations are inadvertently excluding suppliers from their opportunities: not through any policy violation or compliance issues, but simply due to the difficulty and hassle of doing business with the organization.
There are many barriers for suppliers in public procurement. It starts with the challenge of finding open opportunities in the first place and continues throughout the submission process: interpreting legalese-filled forms, spending hours by the photocopier collating copies, paying for costly shipping, and facing disqualification for postage delays or other wild cards. At the end of the day, many qualified suppliers decide that it’s simply not worth it.
Supplier Engagement Efforts Soar, but Proposal Responses Lag
In our 2023 State of Public Sourcing report, we showed the 6.5 million supplier invitations were sent out, an increase of 47% from 2022, but the number of proposals only rose by 3.7%.
This lack of competition is a red flag, indicating that some processes may not be as open and transparent as they should be. But that’s not all — it also seriously impedes your ability to ensure best value.
The Price of Poor RFP Competition
Economists show that the number of bidders in a procurement influences the relative difference between expected price and award price, confirming what most procurement professionals already know: more competition equals better prices.
In a typical fixed scope, price-only procurement, one additional bid can result in 3% cost savings. For a more open-ended type of project with defined outcomes but flexible scope, that can be much higher at 8% or more.
For public sector teams under pressure to maximize funding and reduce costs, accepting the status quo of two or three suppliers per project is no longer feasible.
How Procurement Software Increases RFP Competition
Procurement software gives organizations a unique opportunity to increase their RFP competition without overextending their team. Here’s how:
Reach More Suppliers
To increase competition, you need to get your opportunities in front of more suppliers. Newspaper advertisements and Excel-based supplier lists are a limited and outdated way of reaching suppliers in today’s connected world. Organizations using Euna Procurement have reported a 5x increase in the size of their supplier database. Here’s why:
- Online advertisement and submission make it easier for suppliers all over the country to find and submit to opportunities, removing geographic limitations.
- Buyers can tap into a large pre-existing network of suppliers who do work for hundreds of other public organizations.
- Buying teams can invite suppliers by commodity code or location, notifying relevant suppliers of your opportunities without any manual work.
Make it Easy for Suppliers to Participate
Once suppliers are aware of your opportunities, it’s up to procuring organizations to demystify the rules and regulations and remove barriers to participation, so suppliers have every chance of succeeding.
Here’s how Procurement software platforms help:
- One central location for suppliers to find opportunities, register, and view all details and documents.
- In-platform Q&A and supplier communication so suppliers can easily get answers to questions and stay abreast of all addenda or clarifications.
- Structured step-by-step submission to reduce errors and ensure complete submissions.
- Online submission removes the cost and expense of printing and shipping, as well as risk of shipping errors, lost packages, etc.
- Instant confirmation of bid receipt, for peace of mind.
Visibility into Your Supplier Community Through Up-to-Date Records
Keeping up-to-date supplier lists is a constant struggle for procurement teams, made even more difficult when you’re doing it with paper forms or email and Excel. However, without clear visibility into your supplier community, it’s impossible to know where to invest supplier outreach or other growth initiatives.
Cloud-based procurement software provides:
- Easy online supplier registration with custom fields to collect and auto-expire supplier information.
- Visibility into supplier behavior: how many suppliers have viewed your opportunity, how many submit, what time they make their submission.
Read to learn more about increasing RFP competition with cloud-based tech? Request a demo of Euna Procurement today.