The crux of a meaningful tender evaluation for fund administration services is the tender specification. If the tender specification does not explicitly provide for all services currently provided by the fund’s incumbent administrator, trustees are unlikely to arrive at an objective conclusion and may feel mislead when they eventually find that the savings they had expected never realised.

The incumbent administrator will have a handicap as it will never be able to offer the argument that certain services were not costed for because they were not specified while prospective service providers will not be aware that certain services are required unless they were specified in the tender.

A while ago we had to accept defeat on two of our prime clients who we had served with an impeccable record for more than 10 years, after we had inherited them in a dire state of affairs as far as their administration was concerned. As we learnt unofficially trustees believed that our tender was more expensive than the successful bidder’s tender.

It has now been proven once again that the proof of the pudding lies in eating it. The savings trustees hoped for through the appointment of another administrator in recent instances never materialised. The tender evaluation was evidently either done improperly or the full facts were not brought to the trustees’ attention.  In the long run this can prove to have been an expensive decision based on a deficient tender specification.