Selecting a Contractor

Councils use many methods of selecting an outsourcing contractor. These include:

  • Registrations of interest and/or tendering - this is a more transparent process, and councils generally have good access to experienced people to administer tendering processes. Registrations of interest are a moderately formal method of producing a short list of contractors. They can be generated through public advertisements or by asking selected consultants to prepare a statement of relevant skills and experience. Registrations of interest are typically requested prior to asking for tenders from the short listed contractors.
  • Requests for proposals - this can be undertaken for either the initial set-up, or on a regular basis. Requests for proposals are more formal, involve the preparation of an offer of service, tender, or bid, and may leave scope for contractors to show innovation in their approach to the work.
  • Direct approaches - a contractor of choice can be approached, formally or informally. This approach is commonly taken if specialist skills are being sought. However, there may be legal or policy limitations on the value of work that can be undertaken by a contractor without an open, formal process - check this before proceeding.
  • Previous experience - a planner who has previously worked at the council may be preferred due to their knowledge of systems.
  • Previous performance - there are obvious advantages in going back to a contractor who has performed to expectations on a previous occasion.

Prior to awarding new contracts or renewing existing contracts, it may be appropriate to trial several current and potential contractors over a month or two to ensure that contractors are able to deliver the required outputs in terms of cost, quality, and timeliness, and to confirm that council is receiving the best service possible.

If a more informal approach is being considered, such as a direct approach, ensure that the Council's documentation of the expected deliverables is adequate to clearly inform both the council and the potential contractor. There is a clear advantage in developing the contract, including the scope of services first, and using it as the basis of obtaining the proposal(s) from the contractor(s). By developing the contract first, and providing it to prospective contractors, both the council and the contractors are aware of the terms, and by responding are committing to complying with them.

The selection criteria will depend to a large extent on the type of services required. When selecting a contractor to provide specialist skills, technical skill will be very important. Some general selection criteria may be:

  • availability of an appropriate skill mix

  • processing experience

  • adequate quality control procedures

  • value for money

  • capacity to meet the council's workload requirements

  • the ability to integrate into the council's systems

  • responsiveness for overflow processing

  • quality of references from previous clients.

Councils often engage more than one contractor, for both technical input, and overflow work. This can have the advantage of spreading the workload across several contractors, providing contingencies if there is a conflict of interest or if a contractor is unavailable. This is particularly the case for larger councils where there is a significant outsourcing workload.

For smaller councils, there may be a strong desire to form a close relationship with one or two primary contractors in order to minimise risk and maximise integration into the council team. Potential advantages with an exclusive contract include reduced management input and possibly the opportunity to negotiate a better rate. Ensure there is scope for review of exclusivity in the event of poor performance. Also consider what conflicts of interest are being created, and whether the council risks becoming a dominant purchaser in the local consultant market. This may lead to fewer choices and greater cost for other sectors of the community.

Feedback from councils has shown some dissatisfaction with the level of experience and skill shown by some consultants. This can be as a result of not understanding or communicating each other's needs, and a lack of specificity in contracts. In addition, it is important for councils to understand that consultancies need to make a profit, and that in most instances senior planners will need to charge more than junior planners. Over-emphasising potential cost reductions will almost inevitably lead to junior consultants undertaking the bulk of the work, possibly with inadequate senior supervision.

Being realistic about fee expectations assists in managing both the council's and the consultant's expectations. Take these matters into account particularly when the council issues the request for service and selects the service provider.

To resolve potential fee expectation issues, consider drafting a contract that:

  • specifies individuals and rates by name
  • specifies workload commitments by named individuals
  • specifies the contractor's internal review procedures.