RFPs: State versus Vendor Perspectives Richard Joy, Gordon-Darby, Inc. I/M Solutions Conference 2016 Pittsburgh, Pennsylvania

Summary It’s all about the money Risk versus reward Show me the goods What you want when you want Final thoughts

It’s All About the Money States want the best quality program at the best price –Which best is more important? –You cannot buy a Cadillac program at a Yugo cost Vendors want reasonable returns on investments and happy customers –Without a reasonable return, a Vendor will not survive –Some Vendors can survive for a surprisingly long time with unhappy customers It always comes down to being about the money –Choosing price over quality increases the chances of unhappy customers (State agencies and/or motorists)

It’s All About the Money (#2) Cadillac program RFPs: –You get what you pay for –Proposals that promise a Cadillac at a Yugo cost should be viewed with suspicion Yugo program RFPs: –You get what you pay for –Don’t be surprised after implementation that the Yugo Vendor isn’t delivering Cadillac features –The public may complain about I/M program costs but do they really want Yugo features (performance and service)?

Risk versus Reward Vendors have different levels of risk tolerance –Greater rewards (higher rates of return on investment) may cause some Vendors to go after a Project which would involve greater risk for them and the State customer –Some Vendors may intentionally take on greater risk (e.g., through low cost bidding involving a lower level of assigned resources) to increase their rewards –Neither of these are typically in the State’s best interest

Risk versus Reward (#2) States try to minimize Project risk by incorporating very detailed RFP requirements –But Project risk may be more related to RFP cost structure and Vendor selection Does a low cost project involving higher risk provide enough reward to a State to justify this approach? –States don’t typically think in this manner

Show Me the Goods Many vendors’ proposals sound really good – It is often difficult to distinguish true differences in performance versus promises How then do States figure out which solutions are best? –Carefully talk to Vendor references and ask specific questions about vendor/solution performance –Have Vendors demonstrate existing solutions to show actual performance

Show Me the Goods (#2) Vendor references: –Have Vendors indicate which existing project is most like yours and why; ask for State org chart for that project –Ask detailed questions of multiple personnel on State org chart regarding the performance of the Vendor and their solutions –Preferably have State personnel demonstrate performance of the Vendor’s solutions for their program via online conferencing Vendor demonstrations: –Have Vendors demonstrate existing solutions even if they are proposing new or improved technology for your program –Factor Vendor Demonstrations into the scoring matrix up front

What You Want When You Want States set Project timelines to meet their needs and requirements – Expiring contract, impending EPA, legislative or other deadline Vendors must meet these timelines, but… –Some Vendors will accept more risk regarding whether they think they can actually deliver everything on time –Some may accept only delivering the most critical Project components on time –Some may not truly know whether they can deliver everything on time

What You Want When You Want (#2) The Project Schedule may be the most important part of a Vendor’s proposal but is often: –Not scrutinized in sufficient detail during Proposal reviews –Not properly used during implementations to manage the Project States should: –Carefully study and evaluate Project Schedules as part of Proposal reviews –Ensure Contract negotiations include agreement on when each set of Project components will be delivered –Don’t believe unsupported promises of quick implementations with no delays…you may pay later for trusting in them –Actively use the Project Schedule as a key Project Management tool

Final Thoughts A low cost I/M program may be both less acceptable to motorists and involve greater implementation risk States should consider and weight Vendor risk as a key item in evaluating submitted Proposals Have Vendors (and preferably the State reference program) demonstrate existing performance as part of the procurement selection process Evaluate Project Schedules carefully as part of the selection process, and use this Schedule to closely monitor Project implementation