Writing an RFP For Tax Stamps and Traceability Systems

Writing a Request for Proposal (RFP) for a new public sector tax stamp programme, or even to update an existing programme, can be a daunting prospect. Where does one start? What has to go into this RFP? How comprehensive does it need to be, and how does one avoid any hint of corruption in the process?

This already daunting process has been made even more so by the addition of traceability requirements and the possibility that what is being requested is not just a physical stamp but the design, supply, implementation and management of a traceability system for that stamp.

Fortunately, help is at hand for the daunted RFP writer. Because public sector procurement is such a significant part of trade – domestic, regional and international – several international agencies provide guidance on what should – and should not – be included in a public sector RFP.

These agencies include the United Nations Commission on International Trade (UNCITRAL), the World Trade Organisation (WTO), and the Organisation for Economic Co-operation and Development (OECD). These organisations have between them published a number of documents on the content of a public sector RFP, some more prescriptive than others, depending to an extent on the organisation’s degree of authority.

The WTO, for example, is responsible for treaties covering the conduct of international trade, so its Revised Agreement on Government Procurement refers to ‘WTO related legal instruments’ (my italics), while the OECD’s equivalent is the Recommendation of the Council on Public Procurement. Whether legal agreement or recommendation, both set out the parameters for best practice in the procurement process and the concomitant drafting of an RFP which is an essential component of that process.

Additionally, the OECD has drawn up a toolbox of 12 integrated principles which are key to establishing a fair and transparent process. These principles are of course no different from the requirements in the UN and WTO documents, but are more clearly expounded on the OECD website (http://www.oecd.org/governance/procurement/toolbox/principlestools/).

The principles are: transparency, integrity, access, balance, participation, efficiency, e-procurement, capacity, evaluation, risk management, accountability and integration.

In the context of a tax stamp and traceability RFP these principles translate into the need to consult with stakeholders, including potential suppliers – and to ensure that the description of what is required does not include any proprietary security or traceability feature. So the use of words or phrases taken from a possible supplier’s marketing materials or other description of their features and processes should be avoided, using instead neutral phraseology to describe what is wanted. In other words, in writing a tax stamp system RFP, one should be diligent enough to ensure that no favouritism or other bias creeps in.

This requirement is expanded in the OECD’s publication titled Preventing Corruption in Public Procurement, which explains the importance of fairness, transparency and equality while also providing guidance on how to achieve this.

Refer to ISO 22382

The publications I’ve referred to above run to many pages, so while someone writing an RFP should read them – or at least the authority issuing the RFP should ensure that its procedures comply with these publications – it is unlikely that the RFP writer will have them at their side as they draft this important document. Fortunately, ISO 22382:2018, the international standard for tax stamps, distils the requirements in these publications into a more manageable, readable and shorter form.

ISO 22382 identifies the procurement process as a key issue in introducing or updating a tax stamp programme, to the extent that it has its own chapter and is also covered in the first annex in the standard. The chapter opens with the statement that ‘the tax authority or agency purchasing tax stamps should ensure that the procurement process is open, transparent and meets the sustainability objectives in ISO 20400’, underlining the importance of openness and transparency.

The standard then explains that an RFP should ‘clearly explain the tax authority’s goals’. This leads to a discussion of the options open to the authority in writing the RFP: does it set out in detail the specifications for its stamps and the supporting issuance, monitoring and tracing systems, or does it state its objectives and invite responding organisations to set out how they would propose to meet these objectives? Either is a legitimate approach, but the latter is more open-ended, so that the authority might be pleasantly surprised by the systems that are offered.

It is important that the RFP is written in a way that favours no particular company or proprietary feature; this takes us back to describing required features neutrally, without using language associated with one company or proprietary feature.

It is also important that the RFP is specific where it needs to be, including with regard to:

• How many stamps are required;

• The products the stamps are to go on and whether different designs are required for different products – eg. alcoholic drinks or tobacco products;

• For how many years the contract will run and what is required of the supplier in the event that another company then wins the contract;

• Whether there are any constraints on where the stamps can be produced;

• Whether the proposal is for stamps only or for the supporting issuance and traceability system.

This is not an exhaustive list, because every authority issuing an RFP will have different requirements, but it points to the level of detail that should be in the RFP.