Call for GLCS to stop tender fee requirement

Advertising association says practice is unreasonable

PETALING JAYA: Over the last 18 months, the Association of Accredited Advertising Agents Malaysia (4As) has noted that several large government-linked companies (GLCS) have been demanding tender fees from agencies at the request for information (RFI) or request for proposals (RFP) stage.

The fee amounts have ranged from a fixed lump sum to a percentage of the tenderer’s bid amount, a procurement practice historically developed for commodity type suppliers.

An RFP is a document from a company interested to procure a commodity, service, or valuable asset and issued to potential suppliers for them to submit their business and pricing proposals based on the specifications outlined in this document.

While RFI is a standard process used by a company to request and collect written information regarding the capabilities of various suppliers, which will better inform the company’s buying decisions and shortlist qualified potential suppliers.

Commenting on the unreasonable practice of demanding tender fees, 4As CEO Khairudin Rahim (pic) told Starbiz that it appears to the association that these GLCS have been using the might of their dominant position to impose this unfair requirement on agencies, who otherwise face exclusion from the pitch or tender.

While this practice might be relevant for commodity, product, or building construction purchases, the senior management of these companies do not appear to be asking whether it is actually needed or useful in the context of searching for professional services from an advertising agency, he added.

“Upon probing, the standard reply given by these companies is: ‘We want to encourage only serious bidders and not waste the time of the evaluation panel,’” Khairudin noted.

This may well apply to other types of tenders, he said but surely not for advertising agencies and even other professional service providers like audit firms and management consultancies.

After all, he said the criteria for this type of selection is no longer solely based on price and other traditional quantitative measures.

Instead, he added that it should be based on the agency’s ability to demonstrate in their proposal certain salient factors.

These include a good understanding of the advertiser’s business and consumers, a strong consumer insight that is the basis for powerful brand communications, strategic recommendations that clearly address the specific issues of the advertiser’s brief, a strong link between the agency’s strategic thinking and creative idea, a “big idea” for the brand that anchors a campaign that can be clearly delivered via most media and communication channels and that the creative work can be delivered within the required timescale and is affordable.

The 4As is appealing for GLCS that practice this unfair tender fee requirement to cease and desist, he said, adding that they should stop bundling all professionals and commodity suppliers together, into a one-size-fits-all tender system.

Furthermore, he said agencies by their very nature are absolutely serious whenever they make a decision to pitch. When an ad agency decides to pitch, they pitch to win on merit, he stressed.

If a GLC is concerned about seriousness of bids, or the ability of agencies to deliver and execute campaigns, Khairudin said there are other qualifying criteria that could be applied as a prerequisite.

In addition, he added that a simple review of the agencies portfolio or work, case studies, client lists, and client testimonials would also provide a clear indication.

He noted: “Every decision to pitch is a vital commercial decision made by the head of the agency as they too cannot afford to waste time and manpower while pursuing new business.

“The time and cost of laboriously preparing for each tender/pitch (aiming for the better strategy and the better ideas) has to be carefully considered and balanced against ongoing commitments to all existing clients.

“Agencies also value time. They do not participate in pitches just to ‘test the waters’. Far, far from it!,” he said.

“Once again, the 4As urges CEOS and other leaders of GLCS to give due recognition to professional service providers by removing this unreasonable tender fee requirement from their procurement procedures,” he said.