4As calls for GLCs to reexamine Tender Fee requirement and apply fair treatment to all Advertising Agencies

Over the last 18 months, the 4As has noted several large Government Linked Companies or GLCs demanding Tender Fees from Agencies at the Request for Information (RFI) stage or Request for Proposals (RFP) stage.

The Tender 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.

It appears to the 4As that these GLCs have been using the might of their dominant position to impose this unfair requirement upon 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.

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.”

This may well apply to other types of tenders but surely not for Advertising Agencies (and even other professional service providers like Audit Firms and Management Consultancies). After all, the criteria for this type of selection is no longer solely based on price and other traditional quantitative measures.

Instead it should be based on the Agency’s ability to demonstrate in their proposal the following:

  • 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 and can be clearly delivered through most media and communication channels;
  • that the creative work can be delivered within the required timescale and is affordable.

The 4As is appealing for GLCs that practise this unfair tender fee requirement to cease and desist. They should stop bundling all professionals and commodity suppliers together, into a one-size-fits-all tender system.

Agencies by their very nature are absolutely serious whenever they make a decision to pitch. When an Advertising Agency decides to pitch, they pitch to win on merit.

If a GLC is concerned about seriousness of bids, or the ability of Agencies to deliver and execute campaigns, there are other qualifying criteria that could be applied as a prerequisite. In addition, a simple review of the Agencies portfolio or work, case studies, client lists, and client testimonials would also provide a clear indication.

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. Agencies do not participate in pitches just to ‘test the waters’. Far, far from it!

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.

Issued by the 4As Malaysia through Milk PR.

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