The challenge: only one supplier would get the contract
Our client is a production company that has made film for some of the largest brands in the Nordics since the early 2010s.
Now one of Sweden's largest universities was to procure film production for its entire operation. A framework agreement worth over SEK 10 million, running for up to four years. Open procedure under LOU, the Swedish Public Procurement Act. And most important of all: only one supplier would be accepted. No ranked list to step into as number two. Either the contract or nothing.
The evaluation used a value-added model. Tenderers submitted three work samples, assessed by a group at the university against three criteria, and each grade was converted into a deduction in kronor from the tender sum. The lowest comparison sum won.
How we worked
We calculated what the quality was worth in kronor
We spent an unusual amount of time on pricing and market analysis before submission, and that is where the procurement was decided.
When we worked through the evaluation model it turned out that the deductions a top-graded tender could collect were worth more than the entire price range the tender would be priced against. Quality therefore weighed more heavily than price. The grade steps were also strongly non-linear: the difference between a good and a very good work sample was worth several times more than a good work sample gave on its own.
The conclusion ran contrary to what most do in a procurement: we advised the client not to cut the price. Every krona spent instead on making the work samples sharper paid for itself many times over. Every krona of price reduction was only a krona.
We read the mandatory requirements as if the buyer were hunting for errors
The university wanted to see three reference assignments with different profiles: one with a public administration, one aimed at foreign markets and a third comparable assignment. None older than three years. And here lay the trap: every assignment had to have a delivery period of at least twelve months.
For a production company that is a counter-intuitive requirement. A film production takes weeks, not a year. Anyone who instinctively puts forward their finest films as references is out. We chose assignments that were long customer relationships instead, wrote out the delivery period explicitly and checked every date against the calendar.
The award decision shows how decisive that became. Four of eight tenderers did not qualify. Three of them fell on the formalities of the reference assignments: delivery periods that were too short, and in one case a reference that was also too old. The fourth did not meet the turnover requirement.
Half the competition was gone before anyone had even looked at the films.
We chose work samples by the requirement profile, not by the portfolio
The work samples could not be just any films. One of them had to be produced for a university or college, another aimed at a foreign audience and a third have a purely marketing purpose within a given maximum length. All three also had to be made by exactly the people the tenderer named in its assignment organisation.
That last requirement is easy to miss. Choose your strongest work sample and then staff the contract with other people, and the link breaks, and with it the points. So we began at the other end. First which people the client wanted to commit to the assignment organisation, then which films they had actually made that matched each requirement profile.
The result
Our client received the highest or second highest grade on every assessment criterion. No other tenderer came close.
On price they did not. The client's tender sum was clearly above the competition, but the added value from the work samples was so great that the comparison sum was still the lowest in the procurement, by a margin.
The client took home a framework agreement worth over SEK 10 million with a term of up to four years, at price levels that can be delivered on while staying profitable. No price pressure, no starved calculation to try to rescue during the contract period.
Three things to take with you into your next procurement
Work out what quality is worth before you set the price. In a value-added model the quality criteria are priced in kronor, in black and white in the tender documents. If they can be converted into more than you were planning to charge, cutting price is the wrong strategy.
Read the mandatory requirements as an opponent, not as a salesperson. Half the tenders in this procurement were rejected on formalities. It is rarely competence that sinks a tender. It is a delivery period of eleven months.
Choose references and work samples by the requirement profile, not by what looks best. The highlights of the portfolio are rarely the same thing as the assignments the buyer is actually asking about.
Facing a procurement you know you ought to win?
If you have the best delivery but not the lowest price, it is the preparation that decides: the market analysis, the price strategy and the review of every mandatory requirement before you submit. That is exactly what we do.
Book a free consultation and tell us about the procurement in front of you.
Written by Sören Björnstad, CEO and bid specialist at Anbud Direkt. We work with Swedish public procurement every day.