Legal Laying down the law Claudia Gerrard
ITT’s often contain overlooked elements which might affect the pricing. And how many people check the contract terms & conditions?
T
endering is an integral part of the rail industry. Most clients use the tendering process to identify the suitability of a contractor to carry out the proposed services and to ensure that they obtain the services they really want. From the contractor’s viewpoint, when faced with an invitation to tender, the key issue usually relates to the pricing. Pitch too low and you might run the contract at a loss. But pitch too high and you might put yourself out of the running. Of course the key to success is winning the business and making a profit in the process. Perhaps easier said than done. In reality, there are many factors which might affect the likelihood of achieving that success. And the starting point, inevitably, is the invitation to tender. The ITT, as it is commonly called, can vary from a page or two of general requirements, through to dozens of pages listing in detail everything required by the client. Most people will view the tender from the perspective of the services only, but there are often overlooked elements which might affect the pricing. The ITT can include services, goods, and provision of staff. It might also include references to the need for staff to be transferred, as part of the tender process, from an existing contractor to the successful tenderer.
In addition, it is quite common for the contract terms and conditions to be attached as part of the ITT. Yet how many people actually read and assess them to see if they affect the pricing? Take a real life scenario. A company recently sent us an ITT for review. As part of the document, there were lengthy contract terms and conditions. Wisely, the company was concerned about the legal implications and the possible impact on the tender response.
Tendering: top ten tips
1. Find out what the client wants It is important to know precisely what you are supplying and how the services are to be provided. The more certain the obligations, the better. Otherwise you could find yourself in a dispute with the client 2. Seek clarification on areas of uncertainty Prior to tendering, check with the client if there is any confusion. Opening a dialogue at an early stage means you’re more likely to understand what is required. This should help you get the pricing right 3. Review any terms and conditions It is important to read through any contract conditions and seek specialist legal advice if required. Having to meet onerous obligations can drive up your costs and runs the risk of affecting your profits 4. Know your liabilities and obligations Service levels, standards of service and warranties all impose obligations on you. Make sure you can meet those obligations and, if not, consider whether it is wise to tender at all. Open-ended obligations means you run the risk of being in breach. This could have cost implications if the client makes a successful claim against you 5. Look at payment provisions As with the example, a lengthy payment process may mean you have to wait a long time to be paid. Also check whether there are any set-off provisions and, if so, the circumstances when the client can withhold money from you 6. Challenge onerous clauses as soon as possible The time to challenge the contract is before you tender, or, if that isn’t possible,
mention the objectionable clauses as part of your tender. If you tender on the basis of a contract, it is harder to challenge it at a later date. But, be wary of making your tender too unattractive by challenging minor matters 7. Review all documents referred to in the ITT If the ITT refers to other documents, check them before submitting your tender. Often, reference is made to the client’s internal policies and you need to back those off in your contracts of employment. You also need to make sure that you can comply with them and that the cost of doing so is not prohibitive 8. Use extra caution when tendering for public sector work Be aware that your tender could be disclosed to third parties, including competitors, under the Freedom of Information Act 2000. Always qualify your tender with the right to be consulted before any information is disclosed. And protect your proprietary information, such as pricing 9. Back off any obligations in employment contracts In particular, ensure that any client policies are reflected in your contracts of employment. Matters such as use of IT, phone and other facilities need to mirror the client’s requirements if staff are working on site 10. If successful, make sure staff are trained and informed Make sure staff are aware of any relevant policies, provide training as necessary and keep them informed of any changes
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