Draft RFPs: A Ton of Cure
by Chris Duggan
The concept of issuing draft Requests for Proposals (RFPs) prior to the official release seems strange to many procurement professionals, as some may believe that the practice will lengthen the time needed to complete the procurement process. But used strategically and thoughtfully in complex procurements, draft RFPs can be a powerful, effective tool an ounce of prevention that results in a ton of cure.
The Big Benefits
Draft RFPs can dramatically improve the odds that your procurement process will succeed. They:
- send a signal to the market that your organization is serious about moving forward with the work,
- invite your supply market to identify in advance and without the pressure of an official closing date structural deficiencies and other problems that may exist in the bid documents,
- give the market a head start on assembling the resources it needs to prepare a proposal,
- avoid costly and time-consuming addenda during the official RFP release period,
- create a firm footing on which all bidders know that they are being treated fairly and equally, and
- strengthen the value of the resulting agreement.
The Big Risks
If your organization doesn’t use draft RFPs for complex procurements, you may have faced some (or all) of the risks associated with complex procurement documents that do not consider advance input from potential vendors.
For instance, your organization may not have, nor necessarily should have, the in-house expertise required to put together a business model and statement of work that fits with what the industry is able to provide. If this plays out while your official procurement process is open, the cost of bidding will be high and may not yield sound proposals. Ultimately, the process may be delayed or cancelled or, worse, the contract may not deliver the intended results and may lead to poor-quality vendor relationships.
Some of the other risks of insufficient consideration of market expertise include:
- reduced market participation,
- higher costs in running the procurement process,
- non-compliant bids,
- loss of credibility for the procuring organization,
- vendor complaints of unfairness about the process,
- litigation by losing/disgruntled bidders who may feel that your RFP process was unfair or inequitable,
- delays in implementing a desired program or project,
- inferior program design, and
- sub-optimal value for money.
B.C.’s Commercial Card Services
B.C.’s Purchasing Services Branch recently ran a competitive procurement process for commercial card services which demonstrates the benefits of issuing the RFP in draft form prior to the official release.
The province needed to replace its expiring, 10-year-old agreements for purchasing cards, travel cards, and business-travel accounts. The new program would replace more than 12,000 cards used to process in excess of $85 million in low-dollarvalue transactions each year. The length of the new agreement would be up to 10 years, so getting it right was critical. In this case, issuing a draft RFP as part of the procurement strategy helped ensure that the market could respond with high-quality and timely proposals at a reasonable cost.
For almost a year, the branch researched best practices in modern commercial card programs and engaged in extensive consultation across all ministries to fully understand their business needs.
The branch issued a Request for Expressions of Interest and Information. It then used responses to this to develop the bid documents.
According to Richard Gellor, Procurement Specialist with the branch, “When crafting highly complex procurement documents, it is critical to involve the experts, and that includes the bidders.”
When the RFP was ready, it was posted on BC Bid, the province’s electronic sourcing system, in draft form. The branch had notified potential vendors in advance that the draft RFP would be issued, and that they would be given two weeks in which to review and comment.
The response from the market was enthusiastic, and there was a significant amount of feedback. The branch received and considered many questions and comments, amending the RFP before its official release the following week.
Since the volume of RFP documentation was substantial, the branch posted two versions: one with all of the changes incorporated, and one showing the changes that were made based on feedback to the draft document.
The RFP was open for just under four weeks, which is a relatively short time for a procurement this complex. However, there were only a few minor questions submitted by potential proponents, none of which required changes to the content of the RFP. And none of the potential proponents requested an extension to the closing date, which is usually inevitable in large, complex procurement processes. Again, according to Gellor, “This is likely due to the fact that even though the potential proponents were advised that the draft was not an official RFP, they were able to get started on their proposals well in advance of the official release.”
In this case, the draft RFP helped ensure that the market could respond with high-quality and timely proposals at a reasonable cost. Feedback indicated a genuine appreciation of the collaborative RFP-development process: the draft RFP allowed vendors to suggest improvements that considered the reality of the business environment.
The branch conducted a smooth procurement process and reached a successful agreement with the selected vendor. The new agreement will drive cost efficiencies and effectiveness within ministries and among other public-sector organizations in B.C. for up to 10 years.
© 2007 National Education Consulting Inc. Reprinted by permission.
This article originally appeared in The Legal Edge, Issue 73, June-July.
Chris Duggan is the CEO of NECI and Publisher and Procurement Editor of The Legal Edge.