The Importance of a 2 Envelope System
In the ongoing effort to deter corruption, ensure corporate governance and promote objective evaluation, the 2 Envelope System is devised to help teams review each supplier’s bid with fairness and objectivity.
The Two Envelope System is a tender process where suppliers’ bid proposals are submitted and evaluated separately. This system separates the technical and pricing proposals.
The first envelope is usually reviewed by the technical team to ensure these suppliers are able to provide the product or service required. The second team then reviews pricing to recommend a supplier for the project.
With this system, any potential biases (judging technical specifications based on the pricing proposed pricing) or manipulation of scoring (scoring expensive systems in a way that still gives them the advantage) is removed and avoided.
Challenges of a 2 Envelope System
While a good tool to help ensure corporate governance, many organisations are not doing it as often because this system is exceptionally tedious when performed manually.
And because some eProcurement platforms do not have this capability, procurement teams would need to run 2 separate tenders in these systems, which makes it still tedious to perform.
With a manual process, additional man effort is required at every step – multiple staff members must be present during the retrieval, opening and evaluating of the tender proposals. This may not only delay the evaluation of tenders, but also cost organisations in manpower.
How to Pull off A Success 2 Envelope System
1. Refine the Process
A manual process will be tedious, but there are ways to help reduce time spent on ensuring a successful tender with a 2 Envelope System. As multiple people are involved in the tender, minimise manpower deployed when you can. Could you do with having two people present when retrieving tender proposals from tender boxes or shared folders?
With meetings that involve multiple staff members, plan ahead where possible so any evaluation or tender meetings are already scheduled into team members’ calendars, and delays can be avoided.
2. Take Advantage of Technology
Software systems such as an eProcurement Platform can help to digitalise and automate your procurement processes, including the 2 Envelope System.
eProcurement Platforms with automation-driven processes, like TenderBoard, allow the 2 Envelope System to run as one tender, while ensuring that only necessary specifications are shown to the intended evaluator. Users’ activities are also logged in audit trails for future audits, and users can also track the progress of these tenders to ensure evaluation is completed in a timely manner.
Whether it is to ensure corporate governance or deter corruption, procurement processes can help strengthen organisations.
While many may still have manual processes or have just digitised, organisations can take the opportunity to leapfrog and provide their team a complete eProcurement Platform that offers both digitalisation and automation so they have access to tools like the 2 Envelope System.
With digital transformation, everyone wins.