Tender: ways to keep providers in good shape, avoid errors and make the right choice

The offsite ABT-ACTE Russia conference «Purchases in business travel and MICE» was held on August 27 in Saint Petersburg in Grand Hotel Emerald. Session participants started their day with a delicious breakfast made by the chefs of Turkish Airlines, one of event partners. And it ended in boutique hotel Indigo with an educational cocktail, the general sponsor of which was Abu Dhabi Tourism and Culture Authority. Partners of the conference also included Amadeus, Mikenopa, Air Charter Service and Accord, Saint Petersburg Convention Bureau, Holiday Inn Moskovskye Vorota and apart-hotel Vertical.

The educational program lasted the whole day. As senior commodity manager of Fazer Bakery Russia Julia Lazareva noted in her speech, tenders and RFPs, unlike bids that included auctions and public calls, were not subject to the Civil Code of the Russian Federation. Ant it means they may be held according to the company`s policy as open or closed procedures. At the same time, if a tender is an open one, the best practice is to use electronic platforms, in the speaker`s opinion. «It simplifies document flow, analysis, reports, saves resources and improves the company`s reputation», Ms Lazareva added.

Ideally, at the stage of the project the company should already have a standard contract. Before the provider declares his service fees, you should ask him whether he is ready to accept provisions of this agreement, ethical standards and internal rules of your company. If he is not, it is probably not worth considering the commercial offer of this participant at all, or you should mark it as «limitated» for your working group. In the expert`s words, it saves time, especially if the number of tender participants is large.

Large companies often have a long procedure of agreement negotiation, because it follows several stages. Ms Lazareva advised such companies to sign a letter of intent. Ant to do it the very day you announce tender results. «In this protocol you stipulate all the agreements you have reached with the provider during the tender procedure», the speaker explained.

As the expert noted, every quarter or every year (depending on the duration of the project) at all the stages of contract implementation you should monitor whether the second party observes the agreements achieved and control the quality or services provided. «You should agree with the provider on the following condition in advance: you will pay for services in proportion to their quality — be it 100%, 70% or 25%. It is to be included into the agreement together with quality standards your assessment is based on», Julia Lazareva advised.

Some conference participants admitted that they used such a scheme in their work with providers already — they sign a service level agreement (SLA). By the way, tender participants usually agree to such conditions, because competition in the industry is rather severe.

The next speaker, procurement manager of Accenture Inna Rukhadze stressed that you should include these provisions not only into the agreement, but also into the tender application. The expert also reminded the participants of the fact that it was important to ensure equal conditions for all the participants, when you hold a tender, that is you should send requests and extra information to all of them simultaneously. And you should set a clear deadline for their offers.

In her speech Ms Rukhadze dwelled on the process of RFP preparation and provider assessment criteria. «In my experience, even if your provider has been working with you very well for a long time, you should keep him in good shape and hold a tender every 3-5 years all the same — to make him stay alert! It improves service quality», the speaker assured the audience.

In Ms Rukhadze`s words, when you hold a tender, you should determine not only the amount of services you want the provider to offer you, but also assessment criteria — price and non-price ones. All the criteria are given a certain weight (and make 100% when summed up), and then the participants are given points from 0 to 10 for every criterion. All the figures are put into the table and the result is calculated. Besides, non-price criteria should include key requirements, the participant not meeting them drops out of the tender. For example, the company`s own car park, if you choose a taxi service.

Besides, this fact was one of the main requirements of BNS Group to the participants of transport service tender. Head of business travel department of the company Julia Evlakhova spoke about other aspects of choosing a taxi service.

«We also excluded transport companies who worked on pre-payment conditions, because we want to understand what we pay for», the expert explained. «At the same time we do not ask for payment grace: it is a service based payment that is made monthly within 5 calendar days after source documents are provided».

As the speaker noted, a very important requirement is daily pre-trip medical checkup of drivers. Because there were situations when after the previous night shift the driver virtually fell asleep when he drove the car. Other conditions include English-speaking drivers. However, only for comfort class and business class cars. And BNS Group warns the transport company about it beforehand (if a foreign partner or an employee does not have an English-speaking companion).

Functional requirements also include full trip detalization (including time, kilometres travelled, price, address etc.). «Many taxi services still use slips — documents that are issued when you use a payment card to pay for services. Far not all the passengers check slips that are filled in by the driver. Unfortunately, not all the drivers are honest — they may increase kilometres or time travelled. In case of doubt full trip detalization allows us to calculate trip cost ourselves using a certain formula», Ms Evlakhova commented the situation.

Irina Kostuykova, head of business travel of Kaspersky Lab shared her experience in holding an auction as a way of building the hotel program. In the speaker`s words, you can hold an auction in case you have access to an online auction platform, as well as a sufficient amount of participants — hotels that meet your requirements to price policy, service level and location (hotels should have approximately the same quality and price level). The corporate buyer in its turn should provide its prospective providers with a good lot — ensure the necessary amount of nights.

The speaker described the main stages of auction preparation and processing. «When you send your final invitations with the date and time of the test and the live auction, it is very important to make a reservation (that meets the ethics of the purchase procedure and the Civil Code) that the lowest price offered does not guarantee agreement conclusion and is not the only offer assessment criterion. It provides you with the room for maneuver and lets you take into account material, as well as non-material criteria», the expert continued.

The criteria you may use to make your choice include price of a standard room with breakfast and Internet included, extra charge for late checkout, no-show charge in case of visa expiry, hotel rates for a stay of more than 10 nights, LRA, the number of blackouts (days when the hotel does not provide the corporate rate). Each index is given a certain weight in percentage points. The table should follow the single logic — the higher any of the figures, the lower the chance to win with this total sum of points. «When there are a lot of auction participants that have similar results and you have to exclude someone, we sometimes make a blackout calendar. If it is approximately the same for two hotels, you should exclude one of them», Ms Kostoukova advised. Auction results should be sent to everyone, including those who did not win.

Special aspects of a tender for a MICE agency were the topic of the speech of Natalia Mladenseva from Imperial Tobacco. What is the paradox of purchasing event arrangement services? «A typical customer`s approach is to start a tender with a request for an offer that should include a concept, accommodation and price. At the same time, do many people really have a clear idea of what they want to get as the result? This is why it is impossible to get an adequate price at the point, when we ourselves do not understand what we want», the expert expressed her opinion. «And in order to avoid it, first of all, we should request for the agency`s expertise, including the concept and approximate price. First you have to understand what direction to follow. And next, make a clear scenario with timing with your project group. Make a specification that would be clear for everyone. All you will have to do then is to send it to agencies, and they in their turn — to fill in their prices in it. Only then you can speak about fair prices and compare offers».

The speaker stressed that you should not try to purchase a project the way you purchase furniture. Events are a unique product. If you want to get high quality service and the final product, concentrate your efforts on the search of people you need. People make events. And this is the key to success.

And how do agencies themselves see the tender process? How can they make a decision whether to participate in the tender or not? Artem Chernyshov, customer service and business development director of MaxiMICE told conference participants about it.

There are two kinds of MICE tenders: tenders to enter the pool of providers and those for a certain event, when a new provider is needed. The first variant is more «transparent and comfortable» for the agency. «But even if we have entered provider pool, it does not guarantee you anything!», Mr Chernyshov warned the participants. «It only means that the agency will definitely get customer requests/invitations to take part in event arrangement tenders. But it does not guarantee starting business with the customer».

There are hidden pitfalls in event tenders as well, for example, if the event is very large. «It is highly improbable that the customer will commit a large event, say, for 800 participants, to a new agency. But even if you understand that you will hardly be chosen, you must not prepare your offer in a slipshod manner. Anyway, you should do your best! Because there is always a chance to win», the speaker is persuaded. «And you should never refuse to participate — you will not be offered anything next time».

Mila Sidorina, marketing director of Carlson Wagonlit Travel Russia shared her information on life hacks with travel and MICE service buyers. The expert`s valuable advise based on her professional experience should help establish communication during the tender between the both parties — corporate buyers and agencies. As the speaker noted, the main indices of high quality work are changing: for some the key word is «pretty quick», for others — «mutually beneficial», and for the third, unfortunately, «to muscle in and to make you cave in». «It seems to me that the main focus today should be on efficiency. All the effort you have made should bring the expected result quite quickly. It means that if you ask us the right and necessary questions, we will answer them quickly and in detail, because we appreciate everyone`s time», Ms Sidorina said.

For the years of her work in the industry, Mila Sidorina`s professional baggage has gathered long lists of Do’s & Don’t’s for companies who launch tenders. What should you focus on and what to avoid? For example, you should not definitely send your request from some unknown address — an email on Yandex, for example. The agency should understand who it receives the RFP from. «Indicate your corporate address, your position in the company, contact information for feedback», the expert said.

Agencies often receive requests as Excel tables. The speaker admits that it is a very convenient working format. But it requires very careful and qualified attitude from tender organizers themselves as well. «Be aware of pitfalls! In the Excel document you created there may be hidden extra sheets that you forgot to delete, or some other information — even the author`s name with the extension of one of large TMCs», Ms Sidorina warned the participants.

Besides, tender requirements sometimes include a list of hotels in Russia and abroad the agency has contracts with, including price of a standard single room. «But it is no secret that all large TMCs try to minimize their relations with hotels in order to cut document flow costs. And work with aggregators», the speaker stressed. «So this criterion should not be decisive for customers when they choose an agency».

Some new material for thought was provided by Roman Burkov from YES. The speaker noted that different departments in the structure of the company are responsible for mobile telephony and travel costs. «At the same time about 30% of costs account for roaming, your agent knows for sure who goes where and when, and is aware of all the changes in the route. So we have assumed that a TMC is an optimum management point for mobile telephony information. And to manage communication costs is also a way to save on business trips», Ms Burkov is persuaded.

Business travel cost cut is also one of the goals of Amadeus e-Travel Management — an online self-booking solution that is intended for centralized management of every step of a business trip. Business development manager of Amadeus Svetlana Volkova spoke about the key advantages of this product. They include full compliance with the travel policy, availability of as much contents as possible, different search options (for example, by timetable or by rate), an efficient coordination process. «You need not go to your boss or send him emails, the system does it automatically. Moreover, the boss or the authorized person will get full information on the trip planned, including information about the employee, trip goal and destination. And the main thing — full information on its cost. And the Single View module lets the manager see all the options that were offered and the variant that was chosen by the employee», the expert explained.

Besides, as Ms Volkova noted, you cannot include extra service fees into the system, which makes the booking process transparent. But you can implement the company`s corporate agreements with providers — and TMCs will not be able to refuse booking their services.

The guests of the conference also took part in the panel discussion devoted to communication problems of buyers and providers during the tender and looked for ways to solve them, learned about purchase mechanisms in Saint Petersburg Convention Bureau, the advantages of Turkish Airlines corporate program and received instruction on business charters from Air Charter Service.

«Events like this are important and necessary, because we will never learn about each other without them. So we are always glad to take part in them not only as participants, but also as speakers», Elena Yazeva, head of sales department of Saint Petersburg Convention Bureau said. «Business travel and the meetings industry are some of the most rapidly growing industries. So it is necessary to establish communication. Turn to us — we are a kind of a „message box“. Anyone can knock on it and we will help!»

«The conference was very useful, because it included a wide range of urgent issues of tender procedures, provider selection criteria were discussed. We have taken notes of a lot of provisions that other companies include into agreements», protocol coordination manager of FC Zenit Ksenia Dobryagina noted.

Natalia Travova