2. 1 Bullet-Proofing Your RFPs

3. 2 Welcome Michael Asner Consulting Suite 2003 1028 Barclay St. Vancouver, BC Canada V6E 0B1

4. 3 Handout Material  Notes  michael@rfpmentor.com michael@rfpmentor.com

5. 4

6. 5 Agenda 1 – Procurement is a zoo! 2 – What can go wrong? 3 – The view from 30,000 feet (world wide issues) 4 – The view from 20,000 feet (RFP issues) 5 – The view from 10,000 feet (The Evaluation Process) 6 – My five favorite problems 7 - Conclusions

7. 6 Procurement is a Zoo!!!! 1.

8. 7 Emergency!!

9. 8 Sole Source

10. 9

11. 10

12. 11 Tender  RFQ  ITB  ITQ

13. 12 RFPs……

14. 13

15. 14 When to Use an RFP Types of Procurements

16. 15 What can go wrong? 2.

17. 16 Procurement IS the news at 6 p.m.

18. 17

19. 18 There are NO valid proposals!

20. 19 Management INTIMIDATES the Evaluators!

21. 20 The view from 30,000 feet 3.

22. 21

23. 22 A World Wide Trend  FAIR  OPEN  TRANSPARENT  BEST VALUE

24. 23 fair adjective 1 just or appropriate in the circumstances. 2 treating people equally.

25. 24 open adjective 1 allowing access, passage, or view; not closed, fastened, or restricted.

26. 25 transparent adjective 1 allowing light to pass through so that objects behind can be distinctly seen. 2 obvious or evident.

27. 26 best value ???????

28. 27 The view from 20,000 feet 4.

29. 28 The RFP Document

30. 29 The RFP Process  Developing Specifications  Forming an Evaluation Team  Issuing the RFP  Vendors’ Meeting  Evaluating Proposals  Finalizing the Contract  Preparing for Public Inspection

31. 30 Choices in Selecting an Evaluation Methodology  Do we compare proposals only with the defined requirements, or do we compare them directly with each other? Approach #1: A Comparison With Requirements Approach #2: Comparing Proposals Directly

32. 31 Choices in Selecting an Evaluation Methodology (cont’d)  Which rating method do we use? ► color coding ► adjectival rating ► ranking ► numerical scores and weights ► non-numerical scoring

33. 32 Real World Examples State of Montana: Evaluation Process  Review all proposals.  Determine status.  Score proposals.  Discuss proposals.  Interview.  Conduct discussions/negotiations.  Obtain best and final offers.  Prepare recommendation.  Review documents.

34. 33 The view from 10,000 feet 5.

35. 34 The Building Blocks of The Evaluation Process Inside the Evaluation Process

36. 35 What the Courts Have Said

37. 36 DUTIES on OWNER Duty to disclose Duty of Fairness Duty to Award as Tendered Duty of Fair Competition Duty to Reject Non-Compliant Tenders

38. 37 Constructing the Evaluation The Building Blocks of The Evaluation Process 1.Establishing Compliance With Mandatory Requirements 2.Scoring the Proposals 3.Imposing Upset Levels 4.Evaluating the Cost 5.Developing a Short List 6.Interviewing Suppliers 7.Negotiating the Contract 8.Requesting Best and Final Offers 9.Using References/Past Performance

39. 38 1. Establishing Compliance With Mandatory Requirements  Be precise, legalistic.  Establish the rules for rejecting proposals.  Definitions are important.

40. 39 1.Establishing Compliance With Mandatory Requirements (cont’d) Best Practices 1.Put Definitions in the RFP. 2.Provide a Table of Mandatory Requirements in the RFP. 3.Publish the Rules for Rejecting a Proposal in the RFP. 4.Restrict the number of Mandatory Requirements.

41. 40 2. Scoring the Proposals  Evaluation Factors  Weights  Scoring Systems

42. 41 Evaluation Factors (Criteria)  Families of criteria Technical Management Cost  Effective Criteria Objective Related to the requirements definition Discriminating Non-discriminatory Measurable Economical to use

43. 42 Weights  Determining the Weights  Publishing the Weights

44. 43 Scoring Systems  The Bar Can’t Get Any Lower!  An Excellent Approach #1  An Excellent Approach #2

45. 44 The Bar Can’t Get Any Lower! 10 - Excellent - meets all requirements/very desirable 7 - Good - most requirements met, it is good enough 4 - Satisfactory - some requirements met, not sufficient 1 - Unsatisfactory - requirements essentially not met

46. 45 An Excellent Approach #1 Air Force Regulation 70-15 If the majority of the (sub)factors evaluated meets standards, the requirement is not overly difficult to meet, and the (sub)factors which are deficient are of a very minor nature or are susceptible to easy correction, the item should be scored "5".

47. 46 An Excellent Approach #2 Ontario Government Factor 2: Project Team (Weight = 40) 1. Project Manager is experienced in all 3 key areas 2. Project Manager has managed large, similar projects 3. Key assistants (2 or 3) are experience in 3 key areas 4. Extra (contingency) resources are available 5. Two or more specialist to assist team 6. Experience with a similar system 7. Commitment/dedication of resources

48. 47 3. Imposing Upset Levels  What are they?  When do you use them?  Best Practices

49. 48 4. Evaluating the Cost COST IS ALWAYS AN ISSUE.

50. 49 Different Ways of Handling Cost  Best solution (within budget)  Cost is just another evaluation factor  ‘Bang’ for the buck  Two steps: first, merit; then cost

51. 50 Best Solution (Within Budget) 1. Score the proposals on technical and management evaluation factors combined. 2. Select the proposal with the highest score, regardless of price or within budget.

52. 51 Cost Is Just Another Evaluation Factor  Arguments against this approach  Assigning weights  Determining the score

53. 52 Ratio of Costs ProposalCostCalculation of PointsPoints A$300,000(250,000/300,000) x 100 83 B$250,000(250,000/250,000) x 100100 C$275,000(250,000/275,000) x 100 91

54. 53 ‘Bang’ for the Buck  Concept of value  Determine the score for management and technical factors  Divide by dollars: points per dollar

55. 54 Two Steps: First, Merit; Then Cost MERIT: Determine management and technical scores. Eliminate all those that fail to get some minimum established by evaluators. ProponentTechnical & Management Score Company A86 Company B75 Company C70 Company D82 Company E 65

56. 55 COST: For those remaining, look at the cost and select the minimum. ProponentTechnical & Management Score Cost Company A86$250,000 Company B75$225,000 Company C70xxx Company D82$200,000 Company E 65xxx

57. 56 5. Developing a Short List Consider these scores: 82 80 78 72 65 63 50 48

58. 57 6. Interviewing the Suppliers  Clarification meetings  Oral Presentations  Demonstrations

59. 58 7. Negotiating the Contract Solid reasons for negotiating:  Increase the number of high-scoring proposals (providing greater competition).  Reduce risk to both parties.  Eliminate unnecessary costs.  Reduce costs.  Improve benefits (better quality, performance, delivery etc.).  Identify alternative solutions not initially apparent.  Clarify requirements and proposals.  Create better understanding and relationships between the parties.  Improve the contract.  Improve the proposal.  Identify/explore opportunities for partnership.

60. 59 Negotiations Can Be Scary!  Many procurement people receive little if any training.  The supplier is better prepared.  Roles and responsibilities are poorly defined.  Many people find negotiations awkward.

61. 60 The Negotiation Process 1. Preparation 2. Fact Finding 3. Bargaining

62. 61 PRICE IS ALWAYS AN ISSUE!

63. 62 8. Requesting Best and Final Offers  What is BAFO?  How does it work?  Montana’s rules

64. 63 Montana’s Rules Best and Final Offers (Optional Step)  The committee may decide to seek best and final offers from one or more offerors if additional information is necessary or responses will be altered in order to make a final decision.  The committee may request only one best and final offer.  Offerors may not request an opportunity to submit a best and final offer. The procurement officer must be notified of the offerors who are provided the opportunity to submit best and final offers and the areas to be addressed.

65. 64 Montana’s Rules Best and Final Offers (Cont’d.)  The procurement officer will send out the request for best and final offers in a letter stating the areas to be covered and the date and time in which the best and final offer must be returned.  Proposal scores are adjusted in light of the new information received in the best and final offer.  A best and final offer cannot be requested on price/cost alone unless so stated in the RFP.

66. 65 9. Using References/Past Performance  To confirm your selection  As an evaluation factor

67. 66 Inside the Evaluation Process The Building Blocks of The Evaluation Process  Establishing Compliance  Scoring the Proposals  Imposing Upset Levels  Evaluating the Cost  Developing a Short List  Interviewing Suppliers  Negotiating the Contract  Requesting Best and Final Offers  Using References/Past Performance

68. 67 My Five Favorite Problems 6.

69. 68 Favorite Problem #1 The process is politicized.

70. 69 Favorite Problem#2 Senior management/ politicians want to be involved.

71. 70 Favorite Problem #3 INFORMATION TECHNOLOGY!!!

72. 71 Favorite Problem #4 Specifications are biased.

73. 72 Favorite Problem #5 All proposals are over budget.

74. 73 Critical Success Factors A well constructed RFP A tested evaluation process An empowered Evaluation Committee Documentation and probity A knowledgeable, experienced, ethical procurement officer

75. 74 Conclusions What have we learned??? 7.

76. 75 Thank you. Michael Asner 604/530-7881 michael@rfpmentor.com