howtoprepareandevaluatetenders · beachieved,andthe“technical”specification...

How to prepare and evaluate tenders

Introduction 2Ethics 4The Competitive Tendering Process 5Requirements in the Specifications to be Evaluated 8Prequalification 8Invitations to Tender 9Form of Tender 9Tender Opening 10Tender Evaluation 10Decision of the Review Panel 13Bibliography 14Appendix 15

Tel +44(0)1780 756777 Fax +44(0)1780 751610 Email [email protected] Web www.cips.org JUL 07

1 Introduction

Every organisation whether profit making or non-profitmaking, such as charities or service organisations, has arequirement for purchasing. The value of spend andthe degree of sophistication can vary greatly with thenature of the product or service and with thecomplexity of the business itself. Today’s competitivedemands require the procurement or purchasingprocess to be accomplished in a capable andprofessional manner.

A contract can stand or fall on the expertise andperformance of the Purchasing Manager or Buyer, whomust always be striving to obtain goods and/or servicesat best overall value for money. Much more is involvedthan simply issuing requests for quotations, receivingbids and choosing the lowest as being the moreappropriate.

Tenders, the subject of this guide, have been a featureof good purchasing and supply management for manyyears, though some experts now question the wisdomof frequently inviting tenders as this conflicts with thenew partnership sourcing approach. Even in long-termagreements, or partnerships, the process often startswith an invitation to tender.

Before the tender stage is reached, it is essential tohave a management team in place to deal with theTender Process, thus ensuring the legalities areobserved and that ownership of the process isestablished. This is sometimes referred to as theProcurement Project Team. It must be borne in mindthat there is a risk element to the process and the teammust, therefore, be knowledgeable enough to minimisethat risk, accepting responsibility for it should theunforeseen occur, and be able to rectify the situation.On occasion senior management must be involved toensure that company strategy is not compromised.

If the organisation making the purchase, that is thecustomer organisation, has not planned the utilisationof its resources properly and does not keep up withcurrent trends in its specific industry, if it ignores thecommercial and legal aspects of setting up a contract,then the risk of failure or unplanned expenses will begreater.

The number of people involved in the process andtheir expertise will, of course, reflect the complexity ofthe project in hand at any specific time.

How to prepare and evaluate tendersIntroduction

2 Tel +44(0)1780 756777 Fax +44(0)1780 751610 Email [email protected] Web www.cips.org JUL 07

A “How To” Handbook produced by the Professional Practice Team of CIPS,detailing the process of tendering from the purchaser’s point of view.

DEFINITION

Tender An offer, usually in writing, to execute work orsupply goods or services at a stated price, andunder stated conditions.

To Put Out to Tenderor to Invite to Tender orto Request a Tender

To invite or request tenders in respect of executionof work or supply of goods and services

Request/Invitation toTender

Usually, the documentation used to invite tenders;however, an invitation to tender can also be verbal.

Prior to inviting tenders, the procurement organisationshould have some idea as to which organisations arelikely to be potentially suitable supply sources, or atleast have knowledge of the contenders in the marketplace. This is achieved by reference to historical dataon past performance of supply, and from vendor ratingsystems, as well as by a review of technical sources,such as magazines and company annual reports, and soon. Some organisations use simple computerprogrammes and databases to aid the selection of anumber of likely suppliers. The disadvantage of thisapproach is that the systems need to be keptcontinuously up-to-date.

Information available on such databases wouldprobably include:

• full trading name and address• product group• specific products by type• turnover and past performance, if available• any specialist knowledge or expertise• references

The list can be added to as the buyer’s knowledge ofthe supplier is updated, probably by full VendorAppraisal Techniques, a most useful tool in thearmoury of modern purchasers.

From this list the buyer can select a number ofpotential vendors whom he feels will be capable ofmeeting his requirements for quality and delivery at areasonable cost. Care must be taken at this initialstage, otherwise truly competitive bids to the requiredstandard may not result.

How to prepare and evaluate tendersIntroduction

JUL 07 Tel +44(0)1780 756777 Fax +44(0)1780 751610 Email [email protected] Web www.cips.org 3

Before considering the detailed stages of the tenderprocess, the buyer should bear in mind the importanceof ethics in the tender process, as this is the area wherepressure may be brought to bear on the unwary buyer.

The Chartered Institute of Purchasing and Supply Codeof Ethics has gained wide acceptance, and provides auseful guide for the buyer. It is reproduced inAppendix 1 of this booklet.

Though specifically referring to “Members” of the CIPS,the Ethical Code is an excellent guideline for staffinvolved in the purchasing or contractual process.

One of the precepts is that both the letter and the spiritof the law should be observed in commercialtransactions. This means that legal niceties should notbe substituted for the basic principles of honesty andintegrity.

The offer and receipt of business gifts andentertainment are sensitive areas for buyers despitebeing widely recognised as part of traditional businesspractice. It is prudent to bear in mind that there isseldom any such thing as “a free meal”. A small gift isa gesture, a large gift is considered a bribe. A largenumber of “small” gifts can give rise to the sameconnotations as a “large” gift. There are many welldocumented cases of buyers who accepted gifts andhospitality ending up in court charged with and foundguilt of corruptly accepting inducements.

How to prepare and evaluate tendersEthics


The main objective of the tendering process is toensure the “best fit” supplier is selected to supplygoods and/or services to the customer which offersbest value for money. Such a supplier is likely to besound commercially, technically competent, financiallysound and perceived as best for the task.

The stages of the process are listed here and will bereferred to and expanded upon as necessary. Severalstages may overlap and run concurrently, dependingupon complexity of the project.

3.1 Contract Strategy3.1.1 The buyer, in consultation with all interested

parties, legal, engineering, finance, productionand, most importantly, the end user, should agreeas early as possible the overall strategy for theproject or purchase. Plans should be agreedconcerning the operation of the tenderingexercise, writing the detailed specification, thescope and appearance of draft tender documents,the timescales of the process and the team whichwill have responsibility for the evaluation of bids.

3.1.2 Account must be taken of the type of contract tobe used and the timetable, the number ofapproved or qualified potential tenderers. If anentity is in the public sector or it is a utilitysubject to EU legislation, the requirements of theEU regulations and financial thresholds must betaken into account.

3.1.3 A timetable of anticipated events is essential andshould be completed, at least in draft form, asearly as possible to ensure target dates areachieved. Named persons with responsibility foreach activity should be included to allow themtime to allocate the necessary dates and times.

3.1.4 The buyer should ensure all likely requirementsfor the goods, or services, are identified andincluded in the bid process. There is nothingworse than nearing completion of one bidprocess only to find someone else in theenterprise has a need for the same or very

similar product. A whole company businessplan, if properly prepared, should remove therisk of ignoring total requirements.

3.1.5 The team should seek senior managementapproval for the proposed strategy beforeimplementation.

3.1.6 The duration of any contract, particularly servicecontracts should be agreed at the outset. InCentral Government, for instance, this is normallybetween three and five years, in order to ensurethat the procurement organisation continues tobuy in the best market, and that access to publicsector contracts is open. It is a commercialdecision taking into account all costs involved inthe tendering process, the balance between thevalue of long-term contract against short-termones and any known likely changes in therequirement for the service.

3.1.7 Further areas for the team to consider areimprovements in technology, the likelihood ofnew contractors or suppliers entering acompetitive market, price adjustments that couldbe foreseen, and the dangers that may arise fromlong-term contact with one supplier.

3.1.8 Potential conflict of interests should beconsidered both within the company and bidevaluation group and, in the service area, thepossibility of contractors being invited to tenderfor conflicting or concurrent activities.

3.2 Specification3.2.1 The specification is a most important section of

the invitation to tender documentation, both forthe purchasing organisation and for potentialsuppliers, since it is the specification which setsout precisely what characteristics are required ofthe products or services sought.

3.2.2 There are two main types of specification - the“functional” specification which sets out thefunctions that the goods and/or services areexpected to fulfil, including the performance tobe achieved, and the “technical” specification

How to prepare and evaluate tendersThe competitive tendering process


which stipulates the technical characteristics ofthe goods or services, usually designated inaccordance with accepted national orinternational technical standards.

3.2.3 As a general rule, the specification should includeexpected performance or output but should notnecessarily define how this should be achieved.To do so may lead to more costly solutions to thepurchasing organisation’s requirements than mightbe proposed by potential suppliers. There is littlepoint in specifying a Rolls Royce if a family carwill do the job to the satisfaction of the customer.

3.2.4 The following is a check list of some of theaspects which, depending on the nature of therequirement, might need to be considered forinclusion in an invitation to tender:• the scope and/or functions of the work or

service required• the output required• the quality expected• estimated maintenance requirements when

appropriate• the number or amount• any standards required to be achieved, or

applied• timescales• start date required• finish date if “time is of the essence”• a schedule of deliveries• any inspection required and at what stages• details of free issue materials• accommodation details for installation• insurance cover required for contractors• costs in use of components or complete

product where appropriate• response times• details of measurement of the work

3.2.5 The following details must be included:• Interfaces – the name of the person in the

purchasing organisation who will haveresponsibility, on behalf of that organisation,for aspects of either the tendering process, orfor aspects of the management of anyresulting contract, should be given.Equivalent contacts at the supplier are alsorequired.

• Resource specialisms – particularly whereoverseas companies are concerned, theprofessional qualifications of all participantsshould be required, and details of anystandards involved, such as ISO or ENstandards. Any compatibility with existingequipment, even if included in thespecification, should be highlighted.

• Objectives of the requirement - it can often beadvantageous to alert potential suppliers tohow or where precisely the requirement fitsinto your enterprise or process. Whennearing completion of the tender process, itcan be of assistance to invite tenderers toview the location or existing process.

• Clarity - the prospective supplier’s role shouldbe clearly stated, and all terminology properlydefined.

• Completeness – to ensure the goods orservices supplied operate as expected, detailsof any ancillary work required for satisfactoryinstallation and working should be given indetail.

• Measurability – details of any measurableoutputs should be described, as well as whowill do the measurement, and the reportingprocess to be used.



3.2.6 Quality standards must be clearly defined toensure there is no ambiguity, particularlybetween the requirements set out in thespecification and information provided throughany discussions or other documents. All criticalaspects of the contract should be identified and itmight be necessary to determine and show howthey will be identified and measured. It could bethat approval of a quality plan is a condition ofcontract and a requirement for assessment of thebids.The sort of information which might be includedon a quality plan is:• the named people involved in implementing

the quality plan• how the contract will be monitored, measured

and reported upon• the procedures and controls in place• the quality of materials and how these are to

be defined• how the service or materials will be provided• the method for resolution of difficulties or

disputes• details of any improvements incorporated or

proposed.

3.2.7 All documentation must clearly detail theresponsibilities of the customer and supplier withrespect to testing and/or acceptance of the goodsor service on completion of supply.

3.2.8 In the event of a failure, by a supplier orcontractor, details should be included to theeffect that the customer reserves the right toemploy another supplier or contractor tocomplete the contract, with all resulting costsbecoming the responsibility of the failedcontractor or supplier.

3.2.9 Use of any existing services must be detailed. Caremust be taken, however, to ensure suchrequirements will not limit the scope or range ofpossible cost savings. As an example, would anytraining provide better value if carried out off-siterather than utilising in-company training resources?

3.2.10When drawing up a specification and/or contractdetails the need for competition must bemaintained. As an example, gains anticipatedduring the life of the project or process, or frommore efficient equipment, must be consideredwhen preparing any specification or tenderwhere the exercise is a retendering one.



4 Requirements in the specification to beevaluated

4.1 The task of the evaluation exercise is to selectthe bid or tender which will give the Best Valuefor money at best overall cost. This will mostlikely result from balancing cost, quality, delivery,performance and risk. The necessary criteriaused in making this decision will includetechnical compliance, the capacity and capabilityof the bidder, the quality offered and theprices/costs of alternative bids.

4.2 As a matter of good procurement practice alltenderers should be made aware of the criteriabeing used for the particular bid assessment.Any changes made to the evaluation processmust be communicated to ALL potential biddersto ensure parity of tendering.

4.3 If “Time is of the Essence” then it must be stated.If compatibility with existing equipment isnecessary then that fact must be clearly stated asa prime requirement or criteria in assessment.Where time is “the essence of the contract”, aclause which may be inserted into a contractwhere delay could result in consequential loss tothe buyer, could include the words; “Time ofPerformance Shall be the Essence of ThisContract”. Should delivery be delayed thenLiquidated Damages clauses may be enforced.

4.4 Where there is a requirement that full shippingand demurrage costs should be included in thetender and possibly shown as a separate item,this should be stated. These costs can beconsiderable should the successful supplier befrom overseas and if not supplied in detail mayresult in the bid being non-competitive whenconsidered at bid evaluation.

4.5 It is normally desirable to state the language tobe used in the tender. However, if this is notdesirable, then it is recommended that detailshould be included as to who will bear anytranslation costs should documents be in anotherlanguage than that of the purchasing

organisation. These costs can be heavy,particularly where a long, full technicalspecification is involved. Translation can alsoeffect time scales and should be considered atthe strategy stage of the tender process.

5. Communication5.1 No bidder should be given preference, or assisted

with clarification, without the same advantagebeing given to other tenderers. It is permissibleto visit the premises of bidders as an aid toassessment of their capabilities. From thepotential bidders point it may be of assistance tothem if they can visit the customer’s premises toascertain exactly how the equipment or servicewill be integrated into the existing procedures.This, too, is acceptable provided that only relevantdetail is shown. The facility must be offered toall bidders and it is up to them to availthemselves of the facility should they wish.

5.2 It will probably be necessary to meet withbidders after their bids/tenders have beenopened and assessed. This should only be forthe purposes of clarification of points, and toinspect the quality methods and productionmethods offered in the bid documents. Allfindings and conversations must be accuratelyrecorded. Should relaxation or changes in thestatement of requirements or specification beoffered to one bidder then the same must becommunicated to all bidders.

5.3 All communications must be through recognisedchannels and should be via the named personsin the bid documentation. Unauthorised contactwith others should not be allowed.

5.4 Parity of tendering must be observed.

How to prepare and evaluate tendersRequirements in the specification to be evaluatedCommunication


6. Prequalification6.1 Prequalification of prospective tenderers is used

to ascertain that only those who meet specificcriteria, and have the necessary capabilities, areconsidered for inclusion in a list of invitees tobid. It is a recognised means of limiting the sizeof a bid list should there be the likelihood ofmore bids than it is reasonably acceptable tohandle.

6.2 Normally prequalification results fromresponses to a specific list of questions posedby the customer. These would relate toexperience of the service or equipment, thecapacity to supply, the quality available, thefinancial stability and competence. More recentis the environmental commitment of thecompany and the procedure for compliancewith such legislation as the EU PackagingDirective.

6.3 Good practice is to notify all interested bidderswhether or not they have been included on theshortlist.

7. Invitations to tender7.1 Invitations to tender should normally consist of

the following sections; it will however dependupon the complexity of the requirement.

Part 1 Defines the contract, giving details of timescalesfor commencement and completion

Part 2 Contains the “Conditions of Contract” whereinthe commercial details are explained in simplelanguage; where appropriate the draft contractcan be included.

Part 3 Should be a pricing schedulePart 4 Will give details of the scope of the work or

services or the quantity and frequency ofrequirements of goods or services to besupplied.

Part 5 Depending on the size of the contract, shouldhighlight all procedural requirements, such asthird party inspection, variations if any, thecommunication route and names of people

involved in discharging contractualrequirements and so on.

Part 6 The specification; if a “Technical” specificationthis should give full details of the work, supplyor service to be undertaken; current preferenceis for this to be a “performance” or “functional”specification, which allows freedom of choiceto the bidder as to how best to meet therequirement.

Part 7 Any drawings and/or plans required to allowbidders to ensure their offered goods or servicecomply, not only to the specification, but alsoto those drawings originally issued as part ofthe Technical Specification.

Part 8 Should contain details of free issue goods, ifany, and the arrangement for such free issue.

Part 9 Gives details of submission of bids, such as timeand precise location, that late bids will not beaccepted, the date of bid opening and whether itwill be open or closed. Open bidding is whereall bidders have the option of being present toview and note total prices submitted by allbidders. Often used overseas as a means ofavoiding accusations of corrupt practices as onlythose bids opened, registered, and with theirtotal cost announced, will be considered in theevaluation process. Where appropriate,information should be included on the tenderevaluation methods that should be adopted.

Part 10 Will detail the terms and conditions anticipatedin any resultant contract, so that bidders maytake any “special” conditions into considerationwhen compiling their tender.

All invitations to tender for a specific product or servicemust be identical on issue.

How to prepare and evaluate tendersPrequalificationInvitations to tender


8. Invitations to tender8.1 It is normal procedure to conduct invitations to

tender under the sealed bid process. In this,every bid must be submitted sealed and onlyopened at the due time, on the due date, whichhas been notified in the Invitation to Tender.Tenders must be submitted by that date at thelatest.

8.2 Bidders must describe in full how they will fulfilthe requirements of the purchasing organisation,with details of delivery and payments.

8.3 The bid must also include a signedconfidentiality agreement that there has been nocollusion between themselves and other bidders(a bidding ring), and that there has been noimproper contacts or discussions with any of thecustomer’s staff. It would be advisable to alsocontain details of insurance cover for allrequirements, for the safe completion of anycontract which may be confirmed.

9. Tender opening9.1 The Tender Board can be a standing group. It

might consist of a board member as chairman,the purchasing director, probably a technicalexpert, and a non-aligned person to act assecretary.

9.2 To ensure equality of treatment of all tenders, theTender Board meets on the nominated day, at thenominated time, in a location suitable toaccommodate all interested parties, if a publicopening. If not, in a closed office. All bids aredate and time stamped and recorded, with totalcosts noted.

9.3 Late tenders or bids should preferably not beopened but should be date and time stampedand returned to the bidder with a letter ofexplanation. It may be that in some companiesALL tenders are opened and those which werelate, annotated as such, and kept separate fromvalid bids, submitted within the timescalestipulated.

How to prepare and evaluate tendersInvitations to tenderTender opening


10. Tender evaluation10.1 The bid analysis team, as identified in the

introduction to this guide (as the ProcurementProject Team), have now to assess allcomponents of all bids. Firstly to ensure the bidis compliant, and that all parts are complete, thento compare and assess all parts, to identify thebest value for money bid overall. It is mostimportant to ensure that the necessary skills areincluded in the team. For example, a financialexpert, a technical expert, a purchasing expertand, if necessary, a commercial or legal expert.

The process must follow a defined pattern towhich all participants subscribe, to ensure allbids are dealt with in exactly the same way. Themethods for comparison have to be fair,thorough and demonstrably so, shouldinspection take place.

10.2 The Financial Assessment should ensure that• all costs are properly covered in the prices

offered• bids are comparable that is, that currency

conversions are correct at that time• any price escalation formulae are correct and

cover the effect these might have during thelife of the bid or resultant contract

• alternative costings for alternative methods ofmeeting the specification are identified andlogged separately

• the costings compare with, or are lower than,estimated costs when the project was conceived

• details of any extra costs are identified in thebid. Examples are delivery and shippingcosts, customs charges, insurance,documentation, and any testing andinspection charges

• discounts are offered where appropriate• retentions’ are properly identified• terms of payment are included• costs of spares are included in the offer

This list is necessarily not complete, but gives anindication of the type of cost make-up thatshould be considered. Should all bids exceedthe estimated cost, decisions have to be made asto whether to continue and reappraise theestimate, or to abandon and recommence thewhole exercise. There are, of course, variationsthat may be considered, such as reducing thesize or the quality, or otherwise reducing thespecification. If this is acceptable, then allbidders need to be alerted to allow them torebid, if desired. Alternatively, it may benecessary to enter negotiations with the two orthree lowest bids, in an effort to reduce costs tomeet the estimate. Care needs to be taken hereto ensure that the requirements are not soaltered as to be susceptible to the accusation, byunsuccessful tenderers, that the requirement haschanged so much, that they could have put in abid on an entirely different basis.

10.3 The Technical Assessment

This should be carried out by the technicalmembers of the group, but in association withothers, when cost alternatives are offered.

If a detailed specification was issued for aparticular reason, then every detail must beclosely checked to make sure it conforms withthe original. If, however, a functionalspecification was issued, then the checks shouldbe limited to ensuring the equipment or serviceoffered will meet the requirements of the end-user. Any modifications or alternatives offeredmust be assessed individually, and whether anyone is more cost effective than another. Thisagain will have to be confirmed with the rest ofthe team, prior to positive decisions beingreached.

How to prepare and evaluate tendersTender evaluation


Where necessary, it is permissible to check withthe bidder to ascertain that the productioncapacity or manpower claimed is in factavailable. This is probably best done by visitingthe bidders’ premises and carrying out a physicalinspection.

Care must be taken where the tender invitationstipulates that any spares included in the offermust meet stated requirements, and that the costquoted for spares is compatible with the mainbid. It is not unknown for spares’ costs to bequoted at inflated rates to compensate for tightpricing on the main element of a bid.

10.4 The Capacity Assessment

Closely linked with the Technical Assessment,and often taken as part of it, is to check allaspects of the bidders’ capability to performaccording to the contract. This may includedeeper inspection of financial viability, toascertain if they can purchase the necessary rawmaterials, in the first place, or if they are likely toseek financial assistance “up front”. This is notunknown in some industries where the cost ofraw materials is a large part of the bid. In suchcases, it will be necessary to negotiate veryprecisely the terms and conditions at the time ofletting any contract.

Where the procurement organisation is expectedto put money up front to finance initial provisionof materials, comparisons of offers on a DCFbasis will illustrate the respective effects ofdifferent offers on the procurement organisation’scash flow.

The Assessment Group should be aware of anyadditional costs which may occur as a result oftheir decision as to whether to accept or reject aparticular bid.

For example:• will there be a cost resulting from loss of

economy of scale (it may of course improve)?• if the offer is for the provision of services, are

the resultant staff savings or reduction (orincrease) in support services fully accounted for,including any costs arising from the requirementsof relevant employment legislation?

• have any redundancy costs been fully assessedand included in the benefits assessment?

• if offers for the provision of services are beingassessed, have the costs of any long-termagreement, such as those for telecommunicationsinstallation and copier rental or items which mayno longer be required, been included?

10.5 It is important that throughout the assessmentprocess transparency is maintained and seen tobe maintained. A clear and documented audittrail must be provided. All decisions, and thereasons for them, should be clearly documented,signed by the responsible parties, and filed withthe bid documents.

Any clarification sought during the process mustbe recorded, as must any change to specification,or terms and conditions. As noted above, majorchanges must be notified to all bidders, withequal opportunity being given to all to amendtheir bids, if they wish.

How to prepare and evaluate tendersTender evaluation


11. Decision of the review panel11.1 Having agreed which tender provides best

overall value for money, taking into accountprice, quality, timing, and costs in use whereappropriate, a decision can be taken about theaward of the contract

11.2 Most organisations will have establishedprocedures, including levels of delegatedauthority, usually on a defined financial limitbasis, under which managers at different levelsmay take decisions on award of contracts.

11.3 Where decisions have to be referred upwards,recommendations should be put forward,detailing the factors, including price andperformance, which have defined the best offer.These should be shown in comparison with thedetails of the nearest competing bids, whereappropriate, with reasons for their rejection. Aspread-sheet presentation of the competing bidsis often helpful in recording the factors leadingto the final recommendation or decision.

11.4 Following acceptance of the recommendation forcontract award, the formal contract should beprepared. In some circumstances, post-tendernegotiations can be initiated with the successfultenderer to improve details of the successfuloffer, such as delivery programmes, packagingand transport details. As indicated above, suchnegotiation must not fundamentally change thebasis on which the tenders were originallyrequested; parity of tendering must be retained.

Other points to discuss and agree at this timecould be:

Discounts:• negotiated and hidden• prompt payment• bulk purchase• annual order

Payment Terms:• timing• how by• documentation• responsibilities• insurance• transfer of ownership

Having discussed and agreed all matters relating to thebid, it is now time to write and agree the contract andits terms and conditions.

How to prepare and evaluate tendersDecision of the review panel


• Procurement in the Process IndustryA Lester and A Benning 1989

• Purchasing and Supply Chain ManagementKenneth Lysons and Brian Farrington (SeventhEdition) 2006

How to prepare and evaluate tendersBibliography


CIPS Ethical Code1. In applying to join the Institute, members undertake

to abide by the Charter, Constitution, Memorandumand Articles of Association, Rules and By-Laws of theInstitute. The Code set out here was approved bythe Institute’s Council, and is binding on members.

2. Cases of members reported to have breached thecode will be investigated by a DisciplinaryCommittee appointed by Council. Where a case isproven, a member may, depending on thecircumstances and gravity of the charge, beadmonished, reprimanded, suspended frommembership or removed from the list of members,and no longer be allowed to use the designatoryletters FCIPS, MCIPS. Details of cases in whichmembers are found in breach of the Code will benotified in the publications of the Institute.

PRECEPTS3. Members shall never use their authority or office for

personal gain and shall seek to uphold and enhancethe standing of the Purchasing and Supply professionand the Institute by:a) maintaining an unimpeachable standard of

integrity in all their business relationships, bothinside and outside the organisations in whichthey are employed;

b) fostering the highest possible standards ofprofessional competence amongst those forwhom they are responsible;

c) optimising the use of resources for which theyare responsible to provide the maximumbenefit to their employing organisation;

d) complying both with the letter and spirit of(i) the law of the country in which their practice:(ii) such guidance on professional practice as may

be issued by the Institute from time to time:(iii) contractual obligations;e) rejecting any business practice that might

reasonably be deemed improper.

GUIDANCE4. In applying these precepts, members should follow

the guidance set out below:a) Declaration of interest. Any personal interest

which may impinge, or which might reasonablybe deemed by others to impinge, on amember’s impartiality in any matter relevant tohis or her duties should be declared.

b) Confidentiality and accuracy of information.The confidentiality of information received inthe course of duty should be respected andshould never be used for personal gain;information given in the course of duty shouldbe true and fair and never mislead.

c) Competition. While bearing in mind theadvantages to the member’s employingorganisation of maintaining a continuingrelationship with a supplier, any arrangementwhich might, in the long term, prevent theeffective operation of fair competition shouldbe avoided.

d) Business Gifts. Business gifts, other than itemsof very small intrinsic value, such as businessdiaries and calendars, should not be accepted.

e) Hospitality. Modest hospitality is an acceptedcourtesy of a business relationship. However,the recipient should not allow him or herself toreach a position whereby he or she might bedeemed by others to have been influenced inmaking a business decision as a consequenceof accepting such hospitality; the frequencyand scale of hospitality accepted should not besignificantly more than the recipient’semployers are likely to provide in return.

f) When it is not easy to decide between what isacceptable and is not acceptable, in terms ofgifts or hospitality, the offer should be declined,or advice sought from the member’s superior.

5. Advice on any aspect of the precepts and guidanceset out above may be obtained in written request tothe Institute.

How to prepare and evaluate tendersAppendix 1


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