Writing a Good RFP-RFQ

8/3/2019 Writing a Good RFP-RFQ

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ISM International ConferenceNashville, Tennessee

May 20,2003Presenter:Elaine Whittington, C.P.M., A.P.P., CPCM

G & E [email protected]


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You Paid How Much? Writing A Good RFP/RFQAGENDA

! Working With The Requestor

! Choosing A Qualified Bidder

!What About A Bidders Conference

! Solicitation Methods! What To Include

! Maintenance & Service Contracts

! Is The Proposal Binding?

G & E Enterprises


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You Paid How Much? Writing A Good RFP/RFQ

" Working With The Requestor When??? Request Needs Clarification

1. Minimum Quantity

2. Other Material & Services Are Available3. Shipping Relief or Supplier Stocking Available4. Packaging And Marking Problems

5. Tooling6. Future Needs7. Confusion Over Requirements

8. End Usage Is Questioned

DO YOU KNOW WHAT YOU ARE BUYING?DO YOU KNOW WHERE IT WILL BE USED?

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" Working With The Requestor MissingData Pitfalls:

More work to clarify issues

Increased costs to fix

Increased purchase price

Increased contract risk

Lost time Reduces number of bidders

Might cause a poor supplier selection

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" Choosing A Qualified BidderThings To Check:

# Financial Standing#Adequacy Of The Facility# Purchasing Department# Quality Procedures# Manufacturing/Engineering/Sales#

Management# Material And Paper Flow

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" What About A Bidders Conference?1. When?2. How?

3. Advantages:o All Bidders Have Same Informationo Questions Can Be Asked And Answered

By Expertso Level Playing Field

o Better Ideas Can Be Explored By All

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" SOLICITATION METHODS

$ Request For Information (RFI)$ Verbal Quote$

Request For Proposal (RFP)$ Request For Quotation (RFQ)$ Invitation To Bid

$ Reverse Auction

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Request For Information (RFI)% Used To Obtain General Information% Informal% Not Binding% Quick% ROM Pricing (Rough Order of Magnitude)

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You Paid How Much? Writing A Good RFP/RFQ"

SOLICITATION METHODSVerbal Quote% When To Use

% What To Include1. Quantity2. Description3. Delivery (Date/Address)4. Price5. F.O.B.6. Extraneous Charges

% Can Be Confirmed:1. PO Acknowledgement2. FAX

3. E-Mail4. Supplier Shipment

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Request For Proposal (RFP)% Requirement Is Not Clearly Defined% Often Stated As A Statement Of Work (SOW)% Might Be A Special Drawing% Used To Locate Solutions And Sources% Purchaser And Support Personnel Can

Choose The Best Solution% Purchaser Can Pay For The Proposal

And Then Get Competitive BidsG & E Enterprises


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Request For Quote (RFQ)% Supplier Commitment For Specific Terms% Price, Quantity, Delivery, Services

% Does Not Obligate The Purchaser% Supplier Holds Requirements Firm For

A Specific Time Period% Used When Requirements Are Clearly

Identifiable

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Invitation To Bid% Binding On Both Supplier And Purchaser% Usually Used For $1000 +% Strict Control# How Many Bidders# When The Bid Is Opened# Who Is Asked To Bid# Basis For Award

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Reverse Auction% Binding On Both Supplier And Purchaser% Up Front Work Includes Qualifying

Suppliers And Preparing The Bid% Web Controls Must Be In Place% Strict Control

# Auction Is Viewed By All Bidders# Time Open Can Be Extended# Works Well For MRO

# Losing Suppliers Are Aware Of All BidsG & E Enterprises


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Reverse Auction% Web Facilitators:

Purchase Pro

ArribaFree MarketsExostar

Commerce OneSorcity

% Listing: http://www.sourceguides.com

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Perfect Commerce


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"Guidelines to Ethical e-Auctions

1. Post only purchases you intend to make.2. Dont accept quotes outside of the e-auction.3. Set a realistic price expectation.

4. Specify all your terms and conditions.5. Minimize abuse.6. Give all the players the same information.

7. Outl ine steps to award and follow the plan.


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" The Request Should Reflect All AspectsOf The Pending Contract

" The Following Things Should Be Included (As A Minimum)For A Complicated Procurement:

# Date Of Request# Request Number# Name, Phone Number, E-Mail and Fax Number For Contact

For Questions# Proposal Due Date# Number Of Copies Required# Required Time Of Validity For The Proposal

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" Included Items (Continued):

# Note That Award Will Be Made Without FurtherDiscussion, Therefore Should Be Best And Final Offer

# Copy Of Your Terms And Conditions And NoteThese Will Apply

Special Attention To Where Disputes Will BeLitigated

Termination

Purchase Of Supporting Materials Care Of Tooling Care Of Customer Supplied Manufacturing Aids

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# Clear Instructions Concerning Technical And PricingFormat

1. Price Breakdown Required2. Non-Recurring Cost Submitted Separately

3. Statement That The Statement Of Work Is AcceptableAnd Assurance Of The Suppliers Understanding OfSame

4. Instructions As To Organization Of The Submittal(ie Two Parts, 1. Technical and 2. Pricing No CostData In Part 1)

5. Detail Of Required Payment TermsG & E Enterprises


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# List of Documents Included With The Proposal# Note Declarations Or Certif ications Required# Special Note That No Costs For Preparation Will Be

Covered

# Quality Requirements (Source Inspections Prior ToShipment, ISO 9000)

# FOB Requirements

# Warranty# After Delivery Support

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" Maintenance And Service Contracts Might Require:

# A List of Hardware Or Systems To Be Serviced

# Costs Of Special Software# Times When Regular Maintenance Can Be Performed# When Service Commences And How It Is Extended# Response Time Parameters# Out Of Contract Rates And Descriptions

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" Maintenance And Service Contracts Might Require:

# Maintenance Log Requirements# Storage Space, Security And Access# Spare Parts Agreements

# Statement of Work# Proprietary Information Agreement# Secondary Damages Indemnification

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" Mistakes to avoid:

# Inflexible Terms & Conditions

# Building the RFP/RFQ Around a ParticularRespondents Hardware/Software

# Failing to Look at The Total Price# Worthless and Confusing Attachments# Confusing Terminology#

Unrealistic Schedules# Conflicting Data# Promises You Cant Keep

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" Handling The Solicitation# Bid Control Desk

1. Clerk Prepares And Mails Bids/E-Mails Bid- Bids Can Be Posted On An Extranet Connection

2. Bid Log Is Prepared And Maintained

3. Bids Are Received And Opened By Bid ClerkOn Designated Date And Time4. Bid Clerk Gives All Responses To The

Responsible Purchaser

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" Is The Proposal Binding?

& MAYBE!!!1. Underestimated Costs Of Labor And Material

- Usually Enforceable Unless The Supplier

Can Demonstrate Mechanical Or ClericalTranscribing Errors

EXAMPLE: Elsinore Union High SchoolDistrict vs. Kastoff 1960 (PlumbingWas $11,306 Short) Customer

Was Informed ImmediatelyG & E Enterprises


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& MAYBE!!!2. Not If The Purchaser Knows Or Should Have

Known The Bid Was Incorrect3. However, It Is Enforceable If The Purchaser

Could Not Have Known The Market PriceEXAMPLE: Drennan vs Star Paving (Paving

Bids Can Vary 160%)Subcontractor Bid $7,131 ButWanted $15,000-Drennan Got

It Done For $10,948 and RecoveredThe DifferenceG & E Enterprises


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& MAYBE!!!4. If The Error Is Found Before Bid Award

Chances Are Better For ReliefEXAMPLE: Kemper Const. vs. Los Angeles$301,769 Omission Discovered HoursAfter Bid Was Opened Allowed To

Rescind

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Y P id H M h?


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You Paid How Much?

" The Secret To Controlling Costs Starts WithThe Bidding Activity

" You Must Have: A GOOD RFP/RFQ

A GOOD CONTRACT

CONTROL OF THE BID AND

AFTER AWARD COSTS ARETHE SECRET TO SUCCESS!!!

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&

QUESTIONS???

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