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The Request for Proposals and the Platypus: what do they have in common?
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Part A – RFPs
Part B – Winning Proposals
Welcome
Michael Asner Consulting Suite 21015233 Pacific AvenueWhite Rock, BC V4B 1P8 Canada
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Procurement is a Zoo!!!!
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Emergency!!
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Sole Source
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Tender
RFQ ITB ITQ
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RFPs……
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When to Use an RFP
Competition
Selection on more than price alone
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A World Wide Trend
FAIR OPEN TRANSPARENT BEST VALUE
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fair
• adjective 1 just or appropriate in the circumstances. 2 treating people equally.
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open
• adjective 1 allowing access, passage, or view; not closed, fastened, or restricted.
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transparent
• adjective 1 allowing light to pass through so that objects behind can be distinctly seen. 2 obvious or evident.
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best value
???????
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What the Courts Have Said
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DUTIES on OWNER
Duty to discloseDuty of Care to Prospective BidderDuty of FairnessDuty to Award as TenderedDuty of Fair CompetitionDuty to Reject Non-Compliant Tenders
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Canadian, eh?
Once you establish Contract A, Negotiations are Not Allowed!!!
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First, the Road Well Trodden: Contract A RFPs
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Our Message is Simple... Contract A does not apply to all RFPs You can negotiate within the RFP process,
provided you set it up that way Negotiations produce more value and reduce
the risk Many RFP problems can be avoided if you
avoid Contract A
Fairness is always something to strive for
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Contract A Doesn’t Always Work!
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The Contract A/B Legal Framework
The approach was defined in 1981 by the Supreme Court of Canada in its decision in R.(Ont.) v. Ron Engineering [1981] 1S.C.R. 111 Most RFPs in Canada introduce the Contract A - Contract B approach – this is not a legal requirement, but many people have assumed it is A key legal issue upfront when starting to draft an RFP is to decide if the procurement process will be legally binding or non-binding
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The Contract A/B Legal Framework Ways to introduce Contract A?
Through express language (as long as the substance of the RFP supports the language)
Through the RFPs’ requirements (hallmarks), such as: Is there a bid security? Are the bids irrevocable? Is the pricing submitted negotiable? Is a comprehensive draft agreement attached? Are the terms of the agreement negotiable or
not? Are there instructions about amending proposals?
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The RFP Process (5 Steps)
Step 1Creating the Statement of
Work
Step 2 Involving Procurement
Step 3From Issuing the RFP to
Closing
Step 4 Evaluating Proposals
Step 5 Finalizing the Contract
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Fatal Flaws with the Contract A/B Paradigm
1. While negotiations are not permitted, they often occur, except that pricing is rarely touched (when it should be) and the vendors’ price premium stays in
2. Often mediocre proposals are accepted since the only alternative is to start again
3. Change orders compensate for the inability to change the Statement of Work that is part of the contract.
4. So you award a contract for $1million and you know you will have change orders for $200K to account for the shortcomings of the rigid RFP process
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Negotiated RFPs
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The RFP Process (6 Steps)
Step 1Creating the Statement of
Work
Step 2 Involving Procurement
Step 3From Issuing the RFP to
Closing
Step 4 Evaluating Proposals
STEP 5 NEWNEWNegotiations
Best and Final Offers
Step 6 Finalizing the Contract
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STEP 5 NEW Negotiations
Best and Final Offers
1. What is BAFO?2. What is the law?3. How does it work?4. Who uses BAFO?5. Why is BAFO not used more often?6. What are the benefits of using BAFO?
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1. What is BAFO? It’s a technique designed to improve the
quality of parts of the proposals and the pricing, or just the pricing
In the world of Contract A, this would be called “bid repair” or “bid enhancement”, but we are purposefully not in a Contract A environment
Still, we want transparency and fairness
2. What is the Law?
1. Any legislation in your own jurisdiction?
2. At common law, the courts never made the use of Contract A/B mandatory?
3. Even in a Contract A/B context, you could reserve a right to conduct a BAFO
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3. How does BAFO work?
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A Specific Example from Alberta
Alberta’s Rules for BAFO1) Identify BAFO in the RFP2) No disclosure to vendors 3) Only one BAFO round4) Only short-listed, fully compliant vendors5) Standard invitation to BAFO6) Initiated by the Procurement Officer
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Montana’s RulesBest 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.
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Montana’s RulesBest 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.
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4. Who Uses BAFO in Canada? City of Surrey City of Toronto City of Winnipeg Government of Alberta Government of Ontario Ontario Hospital Association Government of British Columbia Humber River Regional Hospital
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The Negotiation Process
1. Preparation2. Fact Finding3. Bargaining
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5. Why isn’t BAFO used more often?
a) Some public agencies are not be aware they can do it
b) There is a perceived lack of legal authority for BAFO (the misconception that negotiations are always prohibited)
c) Sometimes management doesn’t want the agency to do it (for their own reasons)
d) Some procurement people prefer to avoid negotiations
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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.
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6. What are the Benefits in using BAFO?
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.
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Conclusion
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Negotiated RFPs
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Conclusions
What have we learned???
