Tiego has shared its experiences of responding to tenders in open procedures for municipalities and regions in webinars organized by the Association of Municipal Economists (KEF). We have noticed several development trends in municipal accounting that accelerate the need for group reporting systems. One example is that the Council for Municipal Accounting has tightened the language regarding increased requirements to consolidate even when ownership stakes are relatively low. The requirements for municipal accounting audits have also been tightened, as reviews must be conducted on audited financial statements, which increases time pressure. Last but not least, increasing values are being generated within the group, making efficient and timely reporting beneficial to politics and decision-makers.
Part 1: General Recommendations
Tiego's procurement consultant Magnus Josephson presented his experiences from thousands of procurements, specifically adapted to the procurement of group reporting systems, in the following nine points. Magnus Josephson has experience from both the supplier and municipal/regional perspectives.
1. Definition of "System" – Purchasing a "system" implicitly means a combination of products and services that will be used over a long period, at least 8-10 years. You need to have a long-term perspective.
2. Distinguish between "Purchase" and "Investment" – It is common when investing in a system to focus more on the result of the procurement (project goals) rather than on the result of the investment (effect goals/measurable outcomes throughout the contract period).
3. Define Measurable "Goals" for the Investment – What measurable goals can be achieved with a group reporting system that provides maximum benefit?
4. Evaluate the Tenderer's Ability to Achieve the Goals – The supplier that can provide the best evidence, i.e., examples and proof that they will achieve the goals, should receive the highest score.
5. Weight the Price a Maximum of 20%, with the Remaining 80% for the Conditions to Achieve the Goals.
6. Why Should Negotiated Procedures Be Considered Instead of Open Procedures? – A negotiated procedure can be used when it is difficult to foresee what the optimal solution will be without negotiating with the supplier.
7. The Right Team – Procurement is a team effort. The main responsibility should lie with the business manager who has knowledge of how the system should be used.
8. The Agreement Should Start with the Purpose of the Collaboration – Details will be worked out during the contract period.
9. Ongoing Monitoring of Key Quality Metrics – Metrics should reflect that both the supplier and buyer have done things on time, with the correct figures, at the agreed price, and fulfilled the contract.
Part 2: Tiego's Experiences from Current Tender Documents
Evaluation Model – Tiego has seen well-thought-out and ambitious evaluation models, and there need to be qualifying requirements for suppliers. It is more beneficial for suppliers if the buyer asks open questions with descriptive requirements rather than using detailed must-have requirements.
Implementation Project – Tiego appreciates the requirement to submit an implementation plan as part of the tender. Tiego's implementation plans always include milestones where the status is evaluated during the implementation in three categories: 1. Registers and reports, 2. Input data, 3. Consolidation. Regarding training, Tiego believes that participants' system competencies should be built over time, and it is recommended to document what Tiego calls a "test level" at each milestone.
Annex: Buyer's Current Situation and Conditions – Describe the current situation as accurately as possible, including the number of people involved and the time for the closing process. Common reasons for deciding to invest in a group reporting system include time-consuming processes, reliance on specific individuals, high complexity with many companies, and the need for monthly financial reports.
Functional Requirements – In an open procedure, many qualifying MUST requirements increase the risk of disqualification and lead to fewer suppliers responding to the tender. Key areas include: Group Consolidation Methods, Group Structure, Account Structure, Intercompany Transactions, Eliminations, Flow Analysis, Notes, Cash Flow, and Impact and Reports.
Response Appendix / Offer – Tiego's experience is that there is a risk that a predetermined way of calculating prices leads to a suboptimal pricing model for the municipality. A negotiated procedure provides both the supplier and the buyer with a better starting point to create cost efficiency and added value.