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Auckland Transport

Our sourcing standards Our sourcing standards

Our sourcing standards and procedures.

Every procurement opportunity must be commenced from a default position of an open competition, in which all potential suppliers have a fair opportunity to compete. This encourages competition which leads to better Value for Money and stimulates innovative ideas and solutions.

Notwithstanding this, there are occasions where Value for Money will best be achieved through a closed contest or direct appointment selection, this is discussed under Supplier Selection Methods.

In all instances the process and methodology to be followed, a statement outlining the Value for Money context, and the impact on the supplier market will be required to be documented in the Procurement Planning document.


Supplier selection methods

The determination of which supplier selection method will be used will depend on the relative importance of price versus quality:

  • Focus on price – the suppliers are ranked by price. The preferred supplier will be the supplier with the lowest price that meets all the quality requirements.
  • Focus on both price and quality – the quality attributes of the suppliers are graded and the preferred supplier is selected by balancing price and quality.
  • Focus on quality – the preferred supplier is selected on the basis of quality, with price being negotiated afterwards.

The appropriate price and quality weightings in supplier selection will be determined by the need to obtain best Value for Money. Where the scope of work is well defined, the resources available in the market place are well matched and an accurate estimate of cost can be provided, price may be sufficient to distinguish suppliers. As the complexity of the activities or the level of risk transferred to the supplier increases, or where achievement of standards becomes more important, the emphasis on quality over price will become more pronounced.

Factors which influence the supplier selection method and resulting attribute weightings used for tender evaluations are included in the diagram below:

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Based on these factors we will evaluate and select suppliers using one of the supplier selection methods outlined in the above diagram and outlined in the following paragraphs.

Direct Appointment

Direct appointment is the simplest of all the supplier selection methods. It involves the selection of a single supplier and the negotiation of commercial terms directly with that supplier for an agreed scope of works or services.

This supplier selection method is normally reserved for contracts with low value and low risk where there is a limited supplier market or level of expertise, or where there is significant Value for Money benefit in direct appointing.

In all cases, the rationale behind selection of the supplier will be documented through a Procurement planning document.

Direct appointment may only be used to select a supplier and establish a contract when:

  • The contract is of low value (<$100k), or
  • The supplier selection process commenced as a competitive tender, but only one conforming tender was received, or
  • A monopoly supplier situation exists, or
  • The contract is for an emergency reinstatement or to address a serious Health and Safety issue, or
  • It is determined that there is only one practical supplier, or
  • It is determined that competition will not deliver Value for Money, or
  • When under the PTOM delivery model, the Regional Commerciality Ratio determines that the award of operating unit will be determined by negotiation.

Where a Supplier Panel is in place:

  • the value limit for direct appointment of a panel member will be detailed in the Supplier Panel contract (this value will not exceed $300k);
  • Step 1 will not be required, as selection will be made from the Supplier Panel.

View process steps for direct appointment (PDF 64KB)

Lowest Price Conforming (ATLPC)

ATLPC is used where it is determined that best Value for Money will be obtained by having suppliers compete on price alone and there is no desire to pay a premium for additional quality.

The preferred supplier is the one that offers the lowest price and meets all the minimum requirements, including quality, as set out in the tender.

This supplier selection method should only be used for contracts with low value, low risk that are fully specified.

Note: Where a Supplier Panel has been established for a particular category, supplier selection method will be determined by the panel secondary procurement rules.

View process steps for ATLPC (PDF 75KB)

Purchaser Nominated Price (ATPNP)

ATPNP is used where the outputs required are difficult to specify or may be completed to a varying degree and where the price to be paid has already been determined.

Value for Money is obtained by selecting the supplier that provides the best proposal for the price set out in the tender.

The best proposal will be determined on the basis of the non-price attributes and any differences that the competing suppliers offer in terms of quantum of output.

ATPNP will typically be used for activities such as strategies, studies and investigations.

View process steps for ATPNP (PDF 76KB)

Price Quality Method (ATPQM)

ATPQM is a supplier selection method where the quality attributes of suppliers who meet the tenders requirements are graded and the preferred supplier is selected by balancing price and quality through the use of a formula.

ATPQM is used where it is determined that best Value for Money will be obtained by having suppliers compete on both price and quality and selecting the supplier that offers the best combination of the two. The process that we use to determine how additional quality is to be valued (i.e. the attribute weightings) will be clearly stated in each tender.

View process steps for ATPQM (PDF 79KB)

Quality Based Method (ATQBM)

ATQBM is a supplier selection method where the quality attributes of suppliers whose proposals meet the tenders’ requirements are graded and the preferred supplier is selected solely on that basis. Under this approach, suppliers usually provide a price with their tender, which forms the starting point for subsequent price negotiations.

ATQBM will be used where it is determined that best Value for Money will be obtained by selecting the supplier on the basis of quality alone. There is no competition on price.

Traditionally, this approach has been limited to professional services contracts, but this approach may also be used on some technology contracts or construction, ECI and Alliance contracts where the scope of the outputs cannot be fully described or where selection on quality is important.

View process steps for ATQBM (PDF 77KB)

Evaluation attributes

We will ensure that the evaluation of tenders is structured, robust and transparent by describing in the tender documents which precondition and/or attributes will be evaluated, the weighting to be applied to each attribute, or whether the attribute will be assessed as a pass/fail.

Preconditions

Preconditions, sometimes called prequalifying criteria, are prerequisite requirements that must be met. The purpose of using preconditions in tenders is to eliminate suppliers who do not have the minimum capacity or capability to deliver the contract, not to limit market competition.

Preconditions will be stated in such a way that it can be easily determined whether the supplier meets or does not meet the precondition. Failure to fully meet any precondition will result in the suppliers’ offer being rejected and removed from any further evaluation.

Non-price attributes

The following non-price attributes will be used to evaluate proposals for all supplier selection methods:

Mandatory


Capability The supplier’s capability in areas relevant to the outputs being purchased.
Skills The competence of the personnel that the supplier proposes to use in areas relevant to the outputs being purchased.
Methodology The procedures the supplier proposes to use to achieve the specified end result.

Optional




Track Record The supplier’s record of delivering works or services to the quality standards required, on time and within budget.
Resources The equipment, including facilities and intellectual property that the supplier proposes to use to deliver the outputs.
Functional Requirements The ability of the supplier’s solution to meet the functional or technical specifications required.
Health and Safety* The ability of the supplier to meet the required Health and Safety standards.
Financial Viability* The supplier’s ability to access the financial resources required to deliver the outputs to be purchased.

Note*: Health and Safety and Financial Viability will be assessed on a pass/fail basis only.

Non-price weighting for ATPQM tenders

We allow a combined non-price weighting of between 30% and 80% to be applied to the non-price attributes under ATPQM. When using ATPQM we will:

  • Undertake a sensitivity analysis to ensure the weightings set will result in a realistic Supplier Quality Premium (SQP).
  • Ensure there is an awareness of potential resultant SQP prior to the outset of the tender process.
  • Consider the use of LPC when low price non-price weightings (less than 40%) are planned to be used.
  • Consider the use of Quality Based Method (QBM) to remove the potential price risk of a resultant high SQP, when high non-price weightings (greater than 70%) are planned to be used.
  • Consider scaling the resultant SQP’s where a non-price evaluation results in what is considered an unrealistic SQP. This should only be undertaken in exceptional circumstances and reasons will be fully documented in the Tender Evaluation Report.

Staged supplier selection

Staged supplier selection involves breaking the procurement process into two or more stages. Undertaking a staged process can deliver better Value for Money by reducing administration costs, however this needs to be balanced against the additional time required to undertake.

Market research

When there is limited knowledge of the supplier market, or products and solutions in the market, a Request for Information (RFI) can be a useful tool to formally seek information from suppliers as to the types of goods and services currently available. It should be noted that a RFI is a market research tool and will not be used to select or shortlist a supplier. If it is decided to proceed with the procurement the RFI will be followed with a tender.

Shortlisting

Shortlisting prospective suppliers has the ability to promote value for money by:

  • Reducing the costs of tendering by reducing the number of full submissions called for.
  • Ensuring only high quality suppliers are selected to submit a tender.
  • Reducing the administrative burden of evaluating tenders.

However, we recognise that overuse of a shortlisting processes could have potential disadvantages, including; decreasing overall market sustainability and competitiveness, creating a barrier to entry for some suppliers, or increasing the time and cost associated with the procurement process. As such, appropriate market considerations will be undertaken before deciding to use a shortlisting process.
Where appropriate, we will shortlist by conducting a Registration of Interest (ROI) followed by a Request for Proposal (RFP) or a Request for Tender (RFT).

At the end of the ROI evaluation, suppliers will be advised whether or not they have been shortlisted. Suppliers who fail to make the shortlist will be offered feedback at the conclusion of the second stage RFP or RFT evaluation.

For guidance when shortlisting is used, we will:

  • Shortlist to three to four suppliers for contracts valued up to $5m.
  • Shortlist three suppliers for contracts above $5m.
  • Include an indicative methodology attribute at the ROI stage, to encourage innovation.

In all cases the ROI will detail the parameters used for shortlisting and how attributes evaluated in the shortlisting process will be carried forward, if applicable, into the RFP or RFT evaluation.

Use of Supplier Panels

Supplier Panels are put in place when a buyer wants to establish a relationship with a group of suppliers to deliver a series of like activities for a specified period of time. In all cases supplier panels will be put in place through an open competitive process.

Where a particular procurement is covered by the scope of an established supplier panel, the panel should be used to deliver that work in all cases. Each panel has its own secondary procurement process written in the Supplier Panel Agreement.

Competitive tendering

Competitive tendering is the default method under which we will source goods and services above the value of $100k.

Depending on the value of the procurement we will conduct either a closed or open tender process as detailed below:

Contest Type Procurement Value Tender Available to
Closed  $100k to $300k Minimum three willing and able suppliers
Open >$300k All willing suppliers

In addition to the value of the procurement we will also consider the following when planning to undertake a competitive tender process:

  • The scope must be clear to all parties and suppliers must know their costs of delivery.
  • There must be an adequate number of suppliers.
  • The suppliers must be technically competent and must actually want the work.
  • There must be sufficient time for tendering.

If all of these considerations are not met then tendering may not deliver a value for money solution and direct appointment may be considered.

Electronic tendering

We are committed to leveraging the efficiencies and cost benefits, both to us and our suppliers, of electronic tendering.

We use The Government Electronic Tendering Service (GETS) to:

  • Publish all tenders and subsequent addenda.
  • Receive responses to tenders.
  • Receive questions from suppliers and use answer functionally to respond to tender queries.

In all cases non-price and price responses will be required to be submitted in separate electronic files.

Minimum time periods for tenders

We acknowledge that responding to a tender takes time.

If sufficient time is not given to suppliers to respond it may impact the quality of responses.

The following table details the minimum time periods for tenders to be published on GETS.

The minimum time periods are minimums and should not be considered normal. The actual time in market will be dependent on size and complexity of the procurement.

Contest Type Tender Type Minimum Time Period
One Stage Process Request for Quotation (RFQ) 8 working days
Request for Proposal (RFP) or Request for Tender (RFP)
<$300k using ATLPC
8 working days
Two Stage Process Registration of Interest (ROI) 10 working days
Request for Proposal (RFP) or Request for Tender (RFT) 15 working days

Supplier questions

We encourage questions during the tender process. Questions should be made on and will be responded to using the GETS question and answer functionality. Unless the question contains information that the supplier identifies as commercially sensitive the questions and answers will be made available to all potential suppliers.

When, as a result of a question, there is a requirement to make a change or an addition to the published tender documents a GETS tender addendum will be issued.

If we are unable to promptly respond to a question, or the change or addition to the tender documents is material to the supplier’s response, we will consider extending the deadline for responses.

In addition to the GETS functionality, all tenders will specify a Tender Information Contact Person; this person is the only person authorised to discuss the tender once published until the award of the contract.

Interactive tendering

Interactive tender meetings provide a useful means of assuring that expected project outcomes will be delivered. The meetings will be commercial in confidence and non-contractual in nature.

We will use an interactive tender process for high value (>$5m), high risk procurement activities, or where it is determined that best Value for Money will be obtained by using the process. Where an interactive process is to be used, the process will be documented in the tender documents.

The key purpose of the interactive tender process is to:

  • Clarify the intent and improve the standard of the tender by ensuring all parties are aligned on the specified requirements.
  • Provide a forum for an open exchange of information and ideas.
  • Allow additional information transfer to more clearly identify risk, so it can be better managed.
  • Allow the supplier to put forward conceptual ideas, or alternate proposals and for Auckland Transport to provide feedback on the acceptability of these.

In all cases when interactive tendering is used we will ensure that the process is conducted fairly and no supplier receives an unfair advantage over another. We have used the interactive tender process for a number of years and it has proved to be an invaluable process with clear benefits for our organisation and our suppliers.

Tender receipt

The electronic tender box will be opened by the Procurement team. As part of the opening process all responses will be checked for compliance with the requirements of the tender.

Any compliance issues will be dealt with prior to any evaluation commencing. This may involve the requesting of additional information omitted from the initial response. In such cases the omitted information will be requested to be submitted in such time that the supplier obtains no unfair advantage over the other suppliers.

All tender documents will be held securely until they are required for evaluation.

Evaluation of tenders

Tender evaluation is the process that enables the selection of the most appropriate tender that achieves the best Value for Money. The method of evaluation will be documented in both the Procurement Plan and the tender documents. A separate Evaluation Plan will be used for all procurements valued above $5m, or that are considered high risk. A good evaluation will result in the objectives of the procurement being achieved.

Commonly, evaluation will be carried out by the following eight stage process:

  • Stage 1 - Open tender box.
  • Stage 2 - Evaluation of preconditions.
  • Stage 3 - Individual Tender Evaluation Panel (TEP) member evaluation.
  • Stage 4 - TEP consensus and reference checking.
  • Stage 5 - Price evaluation (if required).
  • Stage 6 - Due diligence and determination of preferred supplier(s).
  • Stage 7 - Negotiation with preferred supplier(s).
  • Stage 8 - Determination of successful supplier.

Tender Evaluation Panels (TEPs)

The make-up of the TEP will be dependent on the value, complexity and risk of the procurement and will include a Transport Agency qualified evaluator if the procurement is subject to Transport Agency funding and valued over $200k.

The TEP will be managed by a suitability qualified and experienced TEP Chair and may be supplemented by Subject Matter Experts (SMEs). SMEs will not participate in evaluation meetings but will be available to answer questions from the TEP via the TEP Chair.

For high value or complex procurements the TEP Chair will not score and will generally be a member of the procurement function, who understands the rules of the evaluation and ensures that the evaluation process is managed in a fair, robust and defensible manner.

In addition to this a separate commercial evaluation panel may be utilised to evaluate complex price schedules, undertake financial viability and due diligence checks and assist with commercial negotiations if required.

The TEP will not be named in the tender documents to ensure TEP members cannot be influenced by potential suppliers.

The table below describes the minimum requirements of a TEP:

Procurement Value Non-Scoring Chair Scoring Evaluators (minimum) External Evaluators (Maximum)
  • <$300k ATLPC
No Two  Nil
  • <$500k (any category)
  • <$300k (PS)
No Three One
  • >$500k (any category)
  • >$300k (PS)
Yes Three One (Two if more than five scoring evaluators)

Notes:

  • When using the collaborative delivery model staff of the other organisation(s) will not be considered external evaluators.
  • On high value high risk procurement a separate price/commercial evaluation team may be used to evaluate price responses.
  • Variation to the above will require specific approval by the Group Manager Procurement on the Procurement Plan.

Role of the TEP Chair

The TEP will be led by the TEP Chair who is responsible for:

  • Reviewing the Procurement Plan and tender documentation.
  • Ensuring all evaluators understand their obligations as an evaluator, in particular with respect to confidentiality and probity.
  • Ensuring all evaluators and SMEs sign a Conflict of Interest and Confidentiality Form prior to evaluation. Where an evaluator or
  • SME indicates a conflict or potential conflict ensuring the appropriate mitigation is undertaken.
  • Acting as the single point of contact for the TEP, including managing all questions from and to the TEP.
  • Ensuring all evaluators individually score each response in full prior to meeting as a group.
  • Ensuring all TEP discussions are appropriate and relevant and the TEP agree on a final group consensus score.
  • Ensuring no individual supplier is advantaged or disadvantaged.
  • Ensuring the correct process is followed for the supplier selection method being used and that at the end of the evaluation a Tender Evaluation Report is completed and approved.
  • Ensuring that all suppliers are advised of the outcome of the tender, and are offered the opportunity for a debrief.

Grading scale for non-price attributes

We will use the following 0 to 100 grading system when evaluating tender responses:

Rating Description Score
Excellent
(significantly exceeds the criterion)
Exceeds the criterion. Exceptional demonstration by the Supplier of the relevant ability, understanding, experience, skills, resource and quality measures required to meet the criterion. The response identifies factors that will offer significant potential added value, with supporting evidence. 85, 90, 95, 100
Very Good
(exceeds the criterion in some aspects)
Satisfies the criterion with minor additional benefits. Above average demonstration by the Supplier of the relevant ability, understanding, experience, skills, resource and quality measures required to meet the criterion. The proposal identifies factors that will offer potential added value, with supporting evidence. 65, 70, 75, 80
Good
(meets the criterion in full)
Satisfies the criterion in full. Demonstration by the Supplier of the relevant ability, understanding, experience, skills, resource and quality measures required to meet the criterion, with supporting evidence. 45, 50, 55, 60
Minor Reservations
(marginally deficient)
Satisfies the criterion with minor reservations. Some minor reservations of the Supplier’s relevant ability, understanding, experience, skills, resource and quality measures required to meet the criterion, with little or no supporting evidence. 25, 30, 35, 40
Serious Reservations
(significant issues that can’t be addressed)
Only partially satisfies the criterion with major reservations. Considerable reservations of the Supplier’s relevant ability, understanding, experience, skills, resource and quality measures required to meet the criterion, with little or no supporting evidence. 5, 10, 15, 20
Unacceptable
(significant issues not capable of being resolved)
Does not meet the criterion. Does not comply and/or insufficient information provided to demonstrate that the Supplier has the ability, understanding, experience, skills, resource and quality measures required to meet the criterion, with little or no supporting evidence. 0

Note: Failing to fully meet any precondition, scoring a fail on any attribute assessed on a pass/fail basis, or failing to score above 20 on any weighted attribute, will result in the supplier’s offer being rejected and removed from any further evaluation. 

Alternative responses and added value premiums

We encourage innovation from the supplier market and encourage the submission of alternative responses. As we move towards true RFPs effectively all responses will be treated as an alternative and will be considered for an added value premium. The added value premium may be a positive value (if the response adds value) or a negative value (if the response adds cost). When submitting an alternative response, suppliers should clearly quantify the added value they believe their alternative response provides.

Reference checking

We will carry out reference checking to assist in determining whether the supplier can deliver the output described in their tender response.

Reference checking will be carried out following ATPACE methodology after the tender has been evaluated on its own merit. Reference checking will include:

  • Checking with referees provided in the response.
  • Internal checking of prior performance on our projects.

Reference checking responses will inform the TEP and may result in adjusted scores for non-price attributes.

Due diligence

Due diligence is about independently verifying the ability of the supplier to fully deliver over the term of the contract. It is an opportunity for both parties to test their expectations and understanding of the deliverables and the contract. During this phase assumptions will be checked and roles and obligations clarified. If serious issues arise during due diligence that cannot be resolved the supplier will be removed from further consideration and the next ranked supplier promoted to preferred status.

We will undertake independent due diligence of the preferred supplier(s) in procurements valued above $5m, or that are considered high risk. Where particular financial records are requested for this purpose we will request that these be provided in a separate file in the tender response.

Negotiation with preferred suppliers

Where appropriate we will negotiate with the preferred supplier(s) prior to tender acceptance or contract award. We view negotiation as an effective risk management tool which, when used correctly and fairly, can add value to the procurement process. The primary objectives of negotiation are to:

  • Test the understandings and underlying assumptions that have influenced the supplier(s) in preparing their response(s).
  • Achieve a reduction in costs or an increase in value, where appropriate.

When negotiation is to be undertaken we will prepare a Negotiation Plan that will ensure:

  • All negotiations are conducted ethically and we do not use our position in a manner that might be considered unfair.
  • That the negotiation does not solely focus on reducing bottom line prices.
  • That the negotiation does not disadvantage other suppliers by forming an agreement that is materially different in scope from what was described in the tender.
  • That the negotiation and the results of the negotiation are fully documented.
  • That the negotiated agreement is sustainable and does not inappropriately compromise quality.
  • That when negotiating with multiple preferred suppliers, particular care is taken to ensure they remain fair and individual suppliers are not played off against each other (Dutch auction).

Notification of tender results

We will notify all suppliers in writing of the tender outcome and offer all suppliers the opportunity for a debriefing. This is seen as an important part of the evaluation process as it helps ensure future market competition. No details of any suppliers scores will be provided until the end of the evaluation process (after tender acceptance or contract award has occurred), however suppliers will be notified during the evaluation process if:

  • Their response has been excluded from evaluation due to non-conformance, failing to meet any prequalification, failing a pass/fail attribute or failing to score above 20 in any non-price attribute.
  • They have been shortlisted (or not) after the first stage of a two stage (ROI/RFP or ROI/RFT) tender.
  • They are a preferred (or not a preferred) supplier.

Our tender debriefings will focus on the strengths and weaknesses of the supplier’s response against the evaluation criteria, rather than a comparison to other responses received. Commercially sensitive information relating to other supplier proposals will not be disclosed as part of the debrief process.

Publishing of contract awards

We will publish the list of contracts awarded on our website under INSERT LINK
This list is updated on a monthly basis.

Unsolicited proposals

From time to time, suppliers may wish to approach us with a proposal to meet a perceived need, without being asked to do so. This is considered an unsolicited proposal. We want to encourage suppliers to put forward good ideas and will treat all unsolicited proposals in a way that is transparent and fair to everyone.

For an unsolicited proposal to be considered it will typically need to have one or more of the following attributes:

  • Unique elements.
  • Demonstrate innovation.
  • Provide a solution to a need that is not otherwise available in the market.
  • Support the long term market development and needs of Auckland Transport.
  • Align with Auckland Transport’s plans, objectives and strategic direction.

Details on how to submit an unsolicited proposal and the process by which we evaluate a unsolicited proposal as contained on the procurement page of our website INSRET LINK

The opportunity to put forward unsolicited proposals must not be used as an opportunity to get around the requirement for open competition.

If there is doubt about the uniqueness of a proposal an RFI should be issued to the market to verify the uniqueness of the proposal.