transaction advisory services overview

tender structuring and management services

dcs advisory Experts team

tender structuring & management





Daniel Dean

Vienna, Austria

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James Weiss

Vienna, Austria





Lloyd Richardson
Washington NC, USA





Mark Moseley
London, UK





Victor Saltão

​Atlanta, USA





Paul Warren

Vancouver, Canada

Meet Our Competitive Tender Structuring & Management Experts Team!


WHAT WE DO

SERVICES WE OFFER

In many cases, both public and private sector entities choose to or may be required to procure developers, financing providers, contractors and service providers through competitive tender mechanisms.  Many public sector entities have legislative or regulatory frameworks in place within their jurisdictions, which require that certain types and sizes of procurements use competitive tender (and within certain procedural guidelines).  In other cases, as one of the conditions for certain types of International / Development Finance institution (IFI/DFI) financing, guarantee or other support, procurements of goods and services related to a supported project, industry or sector may need to utilize competitive tender, subject to the IFI/DFI's procedural standards.  There are many examples of circumstances where private developers/sponsors may need to conform with local procurement laws, DFI/IFI procurement guidelines or both.  In other cases, public or private sponsors may simply wish to implement an international competitive tender simply because they believe it is the best means of attaining the best value.


Tender processes can be relevant in the case of competitive PPP/P3 procurements, or public or private sector procurements of individual or aggregated contracts.  Competitive PPP/P3 project tenders may be structured as one-stage or multi-stage processes.  The most common, and strongly preferable PPP/P3 competitive project tender approach is where a companies or consortia of companies need to bid on all life-cycle project services (which may include development and construction, operations & maintenance and potentially decommissioning, in the case of generation assets).  This one-stage approach requires bidders to price-in all life cycle elements of the project in their bid, and bear all performance risk over the term of the PPP/P3 contract.  In some cases, given specific circumstances of a project, it may not be practical or possible for bid consortia deliver a single one-stage bid.  In these cases, it may be desirable to implement a a two-stage or multi-stage tender process, where at the first stage a investor / sponsor / developer may be selected (either through a competitive process or on a negotiated / sole-sourced basis).  In the second stage (or subsequent stages) of the tender, services such as project design and construction, operations & maintenance (O&M), long-term maintenance, etc. may be procured through competitive tender.  This two-stage or multi-stage approach is an alternative that should only be considered as a last resort, as there is usually significant value lost due to the de-linkage of life-cycle risk allocation and pricing.


DCS provides expert advisory services related to tender structuring and management.  For any client who is required to, chooses to or may be considering to undertake a competitive tender, we can assist the client in optimally structuring the tender within the relevant guidelines.  When structuring competitive tenders for the development and construction of projects, or rehabilitation/renewal projects, and for services, we generally advocated using a net present value (NPV) whole life-cycle bid evaluation approach.  In order to   This whole-life evaluation approach should also include impacts of different financing (in particular in the case of bidder-arranged financing such as Export Credit Agency / Export-Import Bank "ECA/Ex-Im" financing or vendor financing), guaranteed performance levels and risk allocation.  In many cases we will structure a competitive tender whereby (for example, under an EPC/EPCM/DB tender), competing bidders would be evaluated and rewarded for bringing favorable ECA/Ex-Im, vendor or other low-cost financing from their home jurisdiction(s). 


To the extent possible, we generally encourage our clients to combine development and construction services with the long-term operations and maintenance of projects or assets.  This generally requires both a long-term project agreement structure (such as a long-term concession or offtake agreement, and the tender requirement that development and construction providers (such as EPC/EPCM/DB contractors) and O&M & long-term, cyclical maintenance providers for a consortium or joint-venture and bid their combined services.  This tender structure allows for a superior evaluation of the true life cycle costs of the asset, as higher cost development and construction costs may be offset by lower O&M costs and superior asset performance over the service life of the asset.  In many cases, this may also introduce competition/commercial issues such as whether all participants may need to be exclusive or whether particular contractors may be free to bid with multiple bidding groups.  The exclusivity/non-exclusivity requirements imposed on bidders is always circumstance specific and we are accustomed to analyzing this and advising as to the most appropriate and optimal structure.


In our role as the Tender Structuring and Management consultant, we will assist our client through the entire process of structuring the tender (which, in most cases will also entail our complementary workstreams such as Transaction Structuring, Risk Allocation Analysis, Financial Modeling, Debt and Equity Capital Fundraising) and managing and executing the tender until completion.  In many cases, a tender will involve sequential steps where interested bidders may first be (or may not be) required to submit expressions of interest (RFEIs).  The optional RFEI is then followed by a formal request for qualifications (RFQ) and request for proposal (RFP) process.   The following provide a summary of a typical competitive tender process:


  • Due Diligence Coordination.  We will lead the take a lead role in the compilation of all available legal, technical and commercial due diligence materials necessary for the transactions.  This is a process that will progress throughout the tender process.  However, it is best to immediately begin this process and identify whether any pertinent studies, reports, preliminary project designs and drawings, preliminary designs or data are lacking.  In the case that any major due diligence materials cannot be compiled from existing sources, we can advise our client as to whether a specialized consultant can be engaged to provide any missing data (or whether responsibility should be shifted to the bidders; due diligence processes).


  • Pre-RFEI bidder outreach (optional). In the industries we cover DCS maintains relationships with a wide array of potential financial and strategic investors, contractors, financiers and service providers in those respective industries.  Depending on the specifics of the project, including factors such as the nature of the contracting role, complexity of the project, depth or thinness of the contractor market, market familiarity with the project and jurisdiction, it may or may not be necessary for us to first organize a bidder outreach effort in the form of bidder "road show" presentations, site visits, etc. 


  • Request for Expressions of Interest (RFEI) (optional).  After an initial bidder outreach process or advertisement, bidders may be required to provide their expressions of interest in the project or service tender opportunity.  At this first stage our client is able to get a better sense as to the number and specific types and identities of the bidders.  Additionally potential bidders may have already voices some of their potential concerns about the project and critical factors that they see in their ability to bid effectively.  In some cases, either because of the project may already be well known to interested bidders and the potentially interested bidders may already be well-known to the client, or due to time and budget constraints, the RFEI process may be skipped.  We generally recommend that RFEI process not be skipped as it does usually provide valuable insights about the bidder universe and their perceptions, which can help inform how we proceed with the RFQ/RFP process.


  • Post-RFEI bidder outreach (optional).  After a sufficient number of expressions of interest (EIs) are submitted by potential bidders, it may or may not be necessary to organize another round of meetings, roadshows or "site visits" involving the potential bidders who submitted the EIs.  This is generally necessary or desirable in cases where there may have been substantive concerns or questions about the project or process raised already by potential bidders that need to be further understood, assessed and addressed in order to keep the desired level of interest and competitive tension in the bid process.


  • Drafting of Transaction/Project Agreements.  We will lead the drafting of all relevant transaction/project agreements (we generally recommend full-form agreement drafts if possible as opposed to detailed term sheets).  Detailed term sheets can sometime be used as an interim step.  Prior to final binding bids, full-form drafts of the relevant underlying transaction/project agreements should be provided to bidders.  Our recommended approach will take into consideration the comments provided thus far by bidders.


  • Drafting of Tender Document Package.  DCS experts will lead the drafting of the tender document package (the RFQ and RFP) and related tender documents, forms and certificates.  The full tender document package will be provided to pre-qualified bidders.  Our recommended approach will take into consideration the comments provided thus far by bidders.


  • Financial Modeling.  Depending on the type of tender, we may create a number of financial models on behalf of our client at this stage.  One of the critical financial models used for the tender process will be a "bid evaluation model", which is a standardized spreadsheet model which will be sent to all pre-qualified bidders and used to evaluate their final binding bid offers on a net present value (NPV) life-cycle basis, applying a prescribed set of assumptions and the only inputs bidders will be able to make into the model will be a set of guaranteed bid parameters (pricing, technical and performance).  Our recommended approach will take into consideration the comments provided thus far by bidders.


  • Request for Qualifications (RFQ).  The RFQ process entails requesting from interested potential bidders the provision of certain information related to their specific qualifications and credentials in terms of their relevant experience, financial wherewithal and other related information.  The RFQ may set forth minimum criteria in terms of number of comparable transactions, volumes, turnover, net assets, years of experience, etc.  Any such minimum thresholds should be carefully considered in the context of both the interested bidders at hand (so as to not set such standards too stringent as to disqualify an excessive number of competitive bidders, and not so low that bidders with questionable experience and financial standing can continue).  In the case where it is desirable to "down select" and move forward with a limited number of the most qualified bidders, the RFQ process can be used to accomplish a smaller group of pre-qualified bidders.  We will assist in the process of selecting the pre-qualified bidders in accordance with prescribed criteria.


  • Non-Disclosure Agreements (NDAs) (optional).  Similar to an M&A process, there are many cases where it is may be necessary to disclose material non-public information about the client and/or the project in order for bidders to provide a binding bid.  In some cases of public entities, this may be a non-issue if they are subject to "freedom of information" and public disclosure obligations.  If confidentiality is an issue, then NDA's should be negotiated and executed with each of the pre-qualified bidders.


  • Virtual Data Room.  We will establish and manage a virtual data room for our clients, where the draft project agreements, the tender document package, the bid evaluation form model and all other available legal, technical and commercial due diligence information will be provided to the pre-qualified bidders.


  • Q&A and Site Visits.  Over the duration of the bidders' due diligence processes, it will be necessary to maintain an anonymous list of question received form bidders and responses to those questions which will be circulated to all pre-qualified bidders.  Generally, it is not recommendable (if not prohibited under procurement law and regulations) to allow for individual meetings with bidders at this stage as there will be a significant risk of non-uniformity of information shared to all bidders.  As part of their due diligence process it is typical for bidders to have access to site visits (where equal opportunity exists for all bidders to access the same information).


  • Exceptions Negotiation Process.  Bidders will identify certain contractual terms and conditions in the project agreements and certain procedural requirements in the tender document package and/or the bid form model that they may take exceptions to.  We will orchestrate a process where all bidders are able to submit their exceptions, and with our advice our client will take decisions as to whether they accept, reject or accept with modifications or conditions each proposed exception.  We will then publish a list of the exceptions, the client team's responses and the rationale.  This exceptions resolution process may take several iterations to finalize.  The objective will be implement the agreed amendments into the project agreements, tender documents and bid form model.  This finalized set of documents will allow a basis for all bidder to bid on a "level playing field" where there is no chance of the winning bidder having any ability to re-open negotiations of any material terms after the award.


  • Request for Proposals (RFP).  The RFP is essentially the "final binding bid document".  The RFP package will contain all instructions to bidders, finalized tender document package and materially final project agreements.  The RFP shall be the basis for pre-qualified bidders to provide their final binding bid offers.  The RFP may be a one-envelope or two-envelope process.  Under one-envelope process, all technical/qualitative and pricing/quantitative bid parameters may be combined and evaluated together.  Under a two-envelope process the technical bid parameters are provided in the first envelope and the pricing/quantitative bid parameters are provided in the second envelope.  The first envelope is opened first to determine whether the minimum technical criteria is met (typically pass/fail evaluation, but may be scored/ranked). Subsequently, the second envelopes are opened only from the bidders who met the technical criteria in envelope one process.  The  scored and ranked evaluation of the bid pricing/quantitative criteria from the second envelope is then used to determine the preferred bidder.


  • Award and Negotiations.  The contract award is then made to the preferred bidder from the RFP process.  Negotiations of any outstanding items in the project agreements is then completed (without modifying any of the material terms and conditions which are frozen in the agreements).  In the case the client and the preferred bidder cannot agree, then the client team will have the right to begin negotiations with the next best ranked bidder.


  • Closing (Commercial / Financial).  Depending on the type of contract there may be a single closing or a "commercial closing" followed by a "financial closing" (typically when lenders are counterparties to the transaction, and generally coincide with the  notice to proceed date "NTP").  In any case, certain conditions precedent will be required by both our client and the successful bidder in order to close.  We will assist our client in coordinating all activities required to affect a successful closing.

 

DCS advisors are able to provide Tender Structuring & Management services on a stand-alone basis on behalf of public and private sector clients who are pursuing a PPP/P3, Project Financing or M&A/privatization transaction.  In certain cases, as Transaction Structuring advisory will be only one element of a larger project delivery program, DCS will also be providing other complementary transaction advisory services in relation to other transaction elements.  Our preference is always to provide such comprehensive Transaction Advisory Services and coordinate all elements of the transaction, including project financing on behalf of our clients.

Under any Tender Structuring & Management advisory mandate, DCS will draw from our vast global network of veteran industry expert advisor affiliates and our relationship consultants in order to assemble the most appropriate team to match the specific needs of the transaction at hand.  This will always include leadership of DCS affiliate experts who possess decades of global public and private sector experience related to the specific sector and transaction type.  In any Tender Structuring & Management advisory service mandate, our preferred role is always to serve as the lead project/program manager.  Within this role we are also able to assist in the selection and procurement (or subcontracting) and management of other advisors, including local and international legal, tax, technical, commercial advisors or other specialized advisors, as the specific transaction may require.  To the extent that other third-party advisors are required, there are many value added advantages of allowing DCS to assist in the procurement of these advisors.  First, DCS expert affiliates themselves possess many of the legal, commercial skill sets and we are best positioned to determine which additional outside third-party skill sets are required and which firms or individuals should be hired in these roles.  Secondly, competitive tender processes are often very complex undertakings, requiring the management and coordination of many simultaneous workstreams.  DCS advisors are experts in project and program management services and are ideally suited to manage and coordinate a multi-dimensional advisory team most efficiently and effectively.


Complementing our Tender Structuring and Management advisory services, DCS advisors offer the following complementary advisory services that may be applicable, dependent on the specific transaction situation.



DCS experts provide Tender Structuring and Management advisory services in the following sectors that we specialize in.  Please click on the below links to learn more about the sectors that we cover:







DCS experts provide comprehensive Tender Structuring and Management advisory services to the following categories of clients: