RFPs: Best Practices Presented by: Patrick Pearson, Government Banking David Bass, Consultant

Enhancement Template 2 2 Reasons Not to Issue a RFP Don’t know where to start. Don’t have the time or staff. It’s a lot of work. We’ve been with our bank for 20 years, and we’re happy. We don’t get charged any service charges

Enhancement Template 3 3 Why Go Out To Bid? Mandated Services Available Pricing Comparison New Products Available in the Marketplace

Enhancement Template 4 4 Questions For You Why issue a full blown RFP? How about a pricing RFP?

Enhancement Template 5 5 Bank Considerations Is a local branch within City limits important? To you? To City Council? Why? Do you consider a banking office the same as an office in a grocery store? Why or why not? Is it important that the Bank have a separate Government Banking Division? Why or why not?

Enhancement Template 6 6 State/Bank Relationship Is it important that the Bank under consideration be able to make LAIF transfers directly? Why? Is there an advantage to working with a Bank that has a relationship with the State? Why?

Enhancement Template 7 7 Seven Primary Steps 1)Set Objectives 2)Establish Review Team 3)Determine Scoring Methodology 4)Write and Issue RFP 5)Evaluate, Score, Award 6)Implementation Process

Enhancement Template 8 8 Set Objectives Background on entity – history, size, current services Define current processes and procedures –Include sample volumes –Include analysis statements Identify challenges and hot buttons –E.g., security, fraud, efficiency Clearly specify objectives –E.g., enhance or add controls to check issuance; improve investment return; consolidate accounts, reduce costs, new technology - Duration of contract

Enhancement Template 9 9 Set Objectives Whether you are focused on improving your efficiency, saving money, preventing fraud or finding the best vendor with the best services, the process of writing and evaluating proposals starts with a picture of your current process and a clear view of your objectives.

Enhancement Template 10 Establish Review Team Outside Consultant Internal Team Number on team will vary Select early in process Let them participate in entire process Agree upon scoring tools and values

Enhancement Template 11 Determine Scoring Methodology Create a Scoring Template or Matrix based upon the objectives you set Assign values or weights to the objectives in line with their importance to you –If primary objective is to maximize amount of funds available for investing, assign this highest value Determine your scoring methodology before evaluating responses –Criteria for awarding points to non-optimal answers Mandatory criteria

Enhancement Template 12 Determine Scoring Methodology Sample Scoring Sheet:

Enhancement Template 13 Gather Information Gather latest information about bank services and processes, matching relevant services with your needs and objectives prior to issuing RFP –Meetings with banks –Industry functions –Speak with peers Provide information about your processes, challenges, and objectives that vendors can use to create a proposal that is easier to evaluate

Enhancement Template 14 Write & Issue RFP Writing the RFP –Many elements of the RFP can be boilerplate –Customize RFP based upon your current servicing needs and objectives –Include a pricing sheet Pre-Bid Conference Include RFP response guidelines –Establish dues dates and timeline –Questions and clarification process and time frame –How do you want the response to be ordered State Conditions for Termination and Contract Requirements Paper versus electronic Request For Proposal Request For Proposal

Enhancement Template 15 You’ve Issued the RFP, now what? Have you considered.... –Having each Banker visit your office and See your operation Analyze your operation Work with you You/banker ask each other questions

Enhancement Template 16 Services Lockbox Utilities Business License Bill Consolidator Remote Deposit Eliminate trips to bank (employee liability) Reduce/eliminate armored car costs

Enhancement Template 17 Bank Products Are you aware that your Bank offers: Remote Deposit Sweep Controlled Disbursement Merchant Services “Pay” Button for your web site

Enhancement Template 18 Evaluate – Score - Award Evaluate Proposal Responses –Independent evaluations versus group versus outside consultant –Involve peers Separate pricing from proposal responses –Ability to perform –Cost Contact references –Inquire on relevant issues –In RFP ask for lost customers

Enhancement Template 19 Evaluate – Score - Award Pricing Review –DO NOT attempt line by line price comparison Complex due to technology and methodology “Best Price” is not necessarily the lowest price.

Enhancement Template 20 Evaluate – Score - Award Post bid presentations –Provides opportunity for hands-on demonstrations and clarification –Allows vendors to highlight proposal Timeframe Decision and Notification –Making decision –Announcing decision

Enhancement Template 21 How Pay For Services Soft dollars? Hard dollars?

Enhancement Template 22 Implementation Process Schedule meeting with new vendor soon after awarding –Discuss contract at this time –Obtain any required paperwork Designate key contact(s) Hold periodic meetings during implementation –How often? –In person or conference call? –Follow up/through –Who will deal with LAIF, County, State? Establish basis for on-going meetings –Quarterly, semi-annual or annual What are your expectations?

Enhancement Template 23 After Implementation Establishment of Relationship Banker Visits How often? Discussion of new products? Review analysis statement?

Enhancement Template 24 Questions