Marketing Your Requests for Bid

Associate Guest Post by Rusty Joerin of Woodsgift Enterprises

You have carefully prepared your RFP or Request for Tender document and consider it to be a great opportunity for a range of suppliers. You post it on a public bidding site such as BC Bid® or Civic Info® and wait for the responses to come rolling in.

If, as many do, you have a process that confirms receipt of the opportunity and you know that several good bidders have the documents – that is a good first step.

If you don’t have a process that confirms receipt of the request documents, you will not be able to gauge interest in your request. Even if you do confirm potential respondents, how do you know you have reached all qualified potential suppliers? There are plenty of excellent suppliers out there that do not log on to tendering sites looking for bidding opportunities.

You might be missing out on an opportunity as well. By doing some creative marketing of your request, you just might find the perfect supplier. Here’s an example: our facilities department was looking for someone to supply custom millwork. I prepared the request and then went looking for qualified responders. As a part of my search I called likely suppliers to millwork and cabinet shops. This led me to (among others) a small shop that did high quality work. He relied on word of mouth for business. I informed him and others of the posted bidding opportunity and how to get the documents. This shop became a valuable supplier to our facilities department providing excellent product for many years.

Creative marketing of your requests can include sending notice of your request to the likely suppliers of the type of supplier you are looking for. It is probable that they will know who the better suppliers are and pass along your information to them. Inform the local chamber of commerce and other pertinent associations that type of supplier may belong to as well.

Consider doing some supplier development in your community. A talk to the local Chamber of Commerce on how your organization sources its supply could provide you with an expanded range of competitive respondents to your next request.

More competitive responses to well constructed requests can mean greater value to organizations seeking the best available suppliers.

Rusty James Joerin, SCMP is a Supply Chain Management Professional and accredited by the Purchasing Management Association of Canada. He offers procurement services primarily to public sector organizations that do not have a professional supply manager on staff and provides additional capacity to assist with project related supply.

Information about his experience and qualifications may be found at:www.woodsgift.com

Finding Value in System Contracting

Image by NobMouse via FlickrAssociate Guest Post by Rusty Joerin of Woodsgift Enterprises

System contracts, also known as standing orders, open purchase orders or similar terms can add considerable value to your procurements. Reduced overhead, efficient use of staff time, standardization of product and volume discounts deliver value to the buyer.

System contracts are most frequently utilized for the supply of low cost items routinely and commonly used in the organization. Often referred to as Maintenance, Repair and Operating (MRO)category items, the value is delivered both on the price of the individual items and the processes surrounding and incorporated into the supply contract. System contracts can also apply to furnishings, fleet maintenance and software licensing amongst other goods and services.

System contracts provide great opportunities for co-operative procurements between several organizations. I managed the procurement of stationery and copy paper supplies on behalf of a number of public sector organizations that resulted in better volume discounts than could be obtained through separate contracts. With one organization leading the procurement process duplication of procurement effort across the group was eliminated.

Standardization adds value through reduction of inventory carrying costs, reduction of training costs in the use or installation of product and interchangeability of products throughout the organization.

System contracts can and should be longer term contracts. Three to five years with appropriate safeguards is reasonable. This provides a balance between competitive requirements and procurement process savings to be achieved.

Next time – some things to consider when writing contracts for system type procurements.

Rusty James Joerin, SCMP is a Supply Chain Management Professional and accredited by the Purchasing Management Association of Canada. He offers procurement services primarily to public sector organizations that do not have a professional supply manager on staff and provides additional capacity to assist with project related supply.

Information about his experience and qualifications may be found at:www.woodsgift.com

Yet Another Countdown...

Tuesday, January 3rd, 2012. Government offices are back to regular working hours again. In Procurement, its the calm before the storm. Just like the mad rush of shoppers on Christmas Eve, Government year-end spending comes just before March 31st every year. Returning from winter holidays means there are merely 12 weeks and 3 days for the public sector to commit (spend) any remaining budget funds they may have.

Although the budget approval process starts in September the year before (ie the business plans for capital and programs are submitted in the Fall prior to the start of the new budget year) you will find procurement is only 'called' at the moment the program area is ready to go to RFP.

Timelines will be short, as the RFP needs to be "on the street" from 2- 5 weeks, depending upon the complexity and value. Evaluations will take another 2-3 weeks depending upon the schedules of the evaluators, and the number of responses required. In order to commit the funds, the contract needs to be signed before the year-end and delivery made.

So, dear vendor, at this time of year, when you send in a request to extend the closing date of the RFP - don't be offended, when the request is summarily refused. What I would suggest, rather than stating you need more time, explain WHY it is necessary that the marketplace has more time to provide complete materials that will shorten contract negotiations and expedite delivery, in a manner that would 'save time, money & scope creep' for the buying organization.

Issues That Bind

Associate Guest Post by Rusty Joerin of Woodsgift Enterprises

This is the third in our series entitled Find, Bind and Mind Your Suppliers.

The first thing to remember is that as you bind your supplier, so you bindyourself (or more properly your organization). As a result of some recent court decisions concerning the formation of contracts resulting from the solicitation of offers to supply, procurement professionals have explicitly stated in their requests that no contract will be formed until such time as an agreement to supply is reached with the best respondent. This statement will also apply to the respondents who also will be under no obligation to contract with you, although there is a presumption they will because they responded. I suggest that this clause be used with care and not be attached to every request. This issue is complex, still evolving and well beyond the scope of this message. Be aware of this issue, monitor the latest legal developments and seek expert advice.

There are situations where you definitely want to bind all respondents to a request to supply. Bid bonds have long been used as a tool to ensure that the preferred bidder will contract with you, even if they have second thoughts after bid closing.

I once experienced a situation where after a prequalification process one of the shortlisted firms backed out midway into the second phase of a high value, complex RFP which decreased competition by a third. For subsequent projects and with expert advice, we extended the bid bond process to ensure that all short-listed proponents to similar high value complex procurements were compelled to submit a viable proposal. In short the binding process was advanced a step.

Depending on the procurement, suppliers can be bound by the request document, contract terms presented in the request to be included in any subsequent contract or by reference to an industry standard document with supplementary conditions given in the request document.
The joy in all of this is that you, the buying organization, get to decide what the terms of engagement will be. My advice is to ensure that the terms are fair, which encourages competition and so that a resulting contract becomes a beneficial relationship for both parties.

Rusty James Joerin, SCMP is a Supply Chain Management Professional and accredited by the Purchasing Management Association of Canada. He offers procurement services primarily to public sector organizations that do not have a professional supply manager on staff and provides additional capacity to assist with project related supply.

Information about his experience and qualifications may be found at:www.woodsgift.com

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Supply Strategy in the Public Sector

Image via WikipediaGuest Post by Rusty Joerin of Woodsgift Enterprises

Public sector supply is a tool used to advance the goals of public institutions. A municipality planning to increase downtown density by permitting taller buildings may wish to upgrade fire protection equipment. Construction of roads, bridges and the purchase of new jet fighters are all the result of strategic decisions designed to advance the goals of the governments of the day. Supply professionals will adopt strategies that support goals set by policy makers.

Public supply operates in a fish bowl. It matters not if a village or national government all supply strategy will have as its foundation transparency and the highest ethical behaviour. This is essential to receive the best value from your suppliers.

Public supply may be used for local community and economic development even in the context of national and international trade agreements. A small town wishing to increase local employment in tourism may partner with a resort developer; a province wishing to nurture secondary manufacturing may mandate inclusion of manufactured products from its natural resources in the buildings it contributes payments for. Supply managers will adopt strategies compatible with the policy goals set by government.

A critical function of government is preparation for emergencies. These range from a broken water main or house fire to a war and everything natural or human made between. The supply manager’s strategy is to prepare and plan for the expeditious supply of goods and services as may be required yet respectful of constraints placed on the public purse. Strategies that build relationships and trust with key suppliers of emergency supplies are essential.

Strategic Supply Management is a learned skill. Two organizations I am familiar with and can recommend as providers of supply management training are:

BC Institute PMAC http://www.bcipmac.ca/ and
NECI http://www.neci-legaledge.com/

Enjoy your Summer, see you in September.

Rusty James Joerin, SCMP is a Supply Chain Management Professional and accredited by the Purchasing Management Association of Canada. He offers procurement services primarily to public sector organizations that do not have a professional supply manager on staff and provides additional capacity to assist with project related supply.
Information about his experience and qualifications may be found at:www.woodsgift.com

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Better Value Procurements: Supply Stability

Guest Post by Rusty Joerin of Woodsgift Enterprises

Planning and effective contract management will ensure supply stability and avoid supply complacency. Things change, are you prepared?

Long term system contracts for the supply of standard products and services are a common method to achieve stable supply for a set period of time. Progressive organizations will incorporate in these contracts process for semi or annual review. A review will consider service level conformity to contract as well as price administration. Changes in volume may trigger negotiation of some terms as may be allowed for in the original contract. A spend analysis may identify opportunities for savings and greater supply stability.

Disruptive events will occur that may precipitate a supply crisis to the unprepared. Contingency plans to cover labour disruption, the loss of a key relationship manager or natural disaster that interrupts the chain of supply should be made. Even with our best efforts, not every situation will be anticipated, nor should it be. What is important is that an agreed process to manage disruptive events be addressed in any long term supply contract.

Time is your enemy, time is your friend.

Plan to make time your friend. Organizations that had “shovel ready” projects benefited from the recent time limited stimulus spending on infrastructure projects.

I am all too familiar with end of budget year spending that may not provide the best value to the organization. Annual needs analysis at budget time followed by early consultation with your procurement professional will deliver better value and supply stability – every time.

Complacency with supply contracts is not an option. When knowledge is shared between buyer and supplier, balance of power is maintained. Always know what you buy and when. This knowledge is critical when managing changes in long term supply contracts.

Supply stability is the result of planning, effective contract management and is in everyone’s best interest.

Rusty James Joerin, SCMP is a Supply Chain Management Professional and accredited by the Purchasing Management Association of Canada. He offers procurement services primarily to public sector organizations that do not have a professional supply manager on staff and provides additional capacity to assist with project related supply.
Information about his experience and qualifications may be found at:www.woodsgift.com

Fairness in the Process - Now or Later?

In the aftermath of the Gomery report, many organizations have started using a "fairness" role with their large complex or politically sensitive procurements. The primary objective of involving fairness resources is to provide objective evidence that the process has been run in a fair, open and transparent manner. Having the role start with the process keeps the process ontrack and saves time later, versus the standard waiting for complaints and having someone audit the process 'after the fact'. I've done both roles a number of times, partly to deal with the perception of bias towards incumbents; alleviate union concerns of outsourcing, ongoing vendor relations issues, etc. Thanks to close contact with National Education Consulting Inc & the Legal Edge publication means keeping up-to-date with the latest/greatest court decisions.

Even in cases where RFPs are better developed (in terms of how evaluations would occur) with an incumbent in place, it might be useful to request a fairness advisor/monitor/auditor play a role. Generally, the procurement department itself doesn't hire the fairness role (as it is reporting on their conduct/process!) Personally, I believe a fairness role needs to be appointed by an assurance department or a higher authority. There are even 'little things' that should be considered in the course of 'fairness' such as having all the evaluators sign a disclosure agreement (much like how the vendors are to provide within their proposals). I sat in on an evaluation process where the chair did NOT request this, and the evaluators went through a dozen grant application proposals and it wasn't until they faced the last proposal, one evaluator disclosed his son worked for the firm and would recuse himself from that evaluation - which was good to do, HOWEVER, he was involved in the scoring/discussions on all the competitive proposals up until that point! That is still a conflict of interest, even if he wasn't going to play any role in the scoring of that last proposal, he influenced the other scores. The organization changed their practices for future evaluations, and dealt with the issue by awarding to 'all' grant applications received - eliminating the risk of breach of process. I've been in other processes where the evaluations had to be 'tossed' and a second evaluation had to occur.

Is this more bureaucracy? Red tape to an already onerous process? How do you think the fairness can be 'above reproach'?

Comments/discussion appreciated

Breaking Down Compliance w Procurement Policy Directives

Image via Wikipedia

Last week I posted a link to the Ontario Broader Public Sector Procurement Directive/Accountability Act. With an implementation date of April 1, 2011, smaller, independent public organizations are finding themselves having to implement corporate-sized procurement rules ‘off the side of their desks’.

How do you approach implementing something this complex without a corporate procurement department? Break it down into smaller components:

1) Understand the rules – make sure you are aware of what you can/cannot do, what your dollar thresholds are. Single page “cheat sheets” are helpful reminders to staff as to what path to take when they determine a need for a good or service.

2) Explain your process – both internally and externally. It is easier to be transparent, when everyone understands what you are procuring, how you will be doing it, what will be evaluated, and when.

3) Disclose your evaluation criteria – one of the keys to the trade agreements is disclosing the high level criteria for evaluation, and the weightings. Some organizations go further to disclose it on ALL procurements to be clear to all potential vendors (and to eliminate the internal confusion of ‘when do I need to disclose this?”)

4) Ensure all potential vendors have the same information – another key trademark to transparency and fairness. Make sure that any information that an incumbent may have is available to other bidders in order to level the playing field. As well, disclosing whether there is/is not an incumbent gives the vendor community the ability to decide whether it is worth their time to respond.

5) Keep an audit trail – in the name of transparency, and to withstand an audit of the process – keep documenting every step of the process, maintain a complete file from specification building through to contract award. This includes drafts (leading to a decision), email communications, faxes, proposals, evaluation books, signed declarations, letters/notifications of award. It may seem bureaucratic, but it makes life much easier at the end of a process to have a complete file in one place. Maintaining notes during the evaluation also helps for debriefing unsuccessful vendors without having to go back and re-read their proposal and evaluation score sheets.

6) Posting time – The minimum solicitation posting time of 15days is read by the vendor community as “you already have made your choice & are just doing a process to meet policy requirements”. Consider how much time it took you to build your specifications/statement of work and process? If the good/service is highly complex and your project document was built over a number of months – better quality responses will take longer than 15 days.

7) Be consistent – Ensure your processes follow the same path each time. There’s nothing worse than changing the rules, and then changing the way you do things at every turn.

8) Form of agreement w RFP – posting a copy of your resulting contract with your solicitation will greatly reduce the negotiation time as it will form part of your process. Depending upon the wording of your solicitation document (most Canadian public sector templates are based upon the non-negotiated RFP), vendors, by responding with a proposal, have accepted the terms and conditions of your contract attached.

9) Contract management tools – policy changes will affect your existing suppliers as well as smaller companies that haven’t bid on large contracts in past. Providing a sample invoice, contract documentation checklist, and monitoring reports will assist both your internal contract management efforts and compliance on the part of your vendors/contractors.

10) Debriefing - consider this a means to educate and build a stronger vendor community. The more vendors understand your process & how you evaluate proposals, the better the proposals & competition. PLUS, ask for feedback from the vendors as to how well you communicated your requirements; what additional information would they have wanted/needed. Improving the procurement process for future in addition to improving vendor proposals is a win/win for everyone.

June Pre-Submission Proposal Review Special

A colleague recently posted a June special from her business coach due to unexpected 'free time'. Strangely enough, I have a similar situation, I have clients on holiday until end of June, and two projects winding down this week, so I thought "why not?".

So I'm offering a Pre-Submission Proposal Review (see the Legal Edge issue #89 for details of what I do) for ONLY $200 - I'm only offering this to 10 firms, and the RFP MUST be a Canadian public sector RFP with a due date between now and end of July.

Want more details? Send me a message klc at psbdelegation dot com

Proposal Evaluations: Scoring

Image via Wikipedia

One of the most often misunderstood measures of the Request for Proposals process is the proposal evaluation scoring matrix. Scoring a proposal is not like marking a school assignment, giving an A, B, C or 90%, 80%, 70% based upon the content. Instead each criterion in the Request for Proposals is weighted according to importance/relevance and each individual question is scored on a scale. Sometimes that scale is 0-4, or 0-5 or 0-10...in some cases the scale is A-D or A-F so evaluation committee members can't 'calculate' the score ahead of the consensus meeting. For example a 0 (or F) usually means "no information provided", on the 0-5 scale the scoring would typically be:
0 = No information provided
1 = Meets few requirements
2 = Meets most, but not all requirements
3 = Meets all requirements
4 = Meets and exceeds some requirements
5 = Meets and exceeds all requirements

You can find publicly available examples in the BC Ministry Guide to the RFP Process. There are similar guides in other public sector organizations (you just need to know where to look!)

The first step as an evaluator is to score each proposal on your own (individually). At this point it's just the individual stakeholder/end-user/subject matter expert reading/scoring without discussion with anyone else - I find it easier to read a proposal once, then score it on my second reading, but everyone has their own way of doing this. They can print the evaluation sheets and score by hand, or enter their scores into an evaluation spreadsheet, and save each as a separate file.

For the public sector, anything written down in the proposal or evaluation sheets IS FOI-able (it is deemed to be leading to a decision). Now on the other hand, I advise evaluators to not hold back from writing notes! I beg them to PLEASE, keep notes on why they scored things a certain way or if information is missing or unclear in the proposals. I also ask them to reference proposal page numbers in the comments so that our consensus discussion will move along more quickly, and we can easily find the information if ever asked to review the evaluations later.

As well, I advise evaluators that to keep things in context, when scoring, always consider how we will explain this score to the proponent in a debriefing? It's much easier to do debriefings if we have diligent notes in the scorebooks eg. "On pg 19, the vendor stated they did X but didn't demonstrate it" "On pg 24-27 they provide a case study of similar development work and the outcomes of the learning" (demonstration is done through action statements, and/or case studies).

As noted in a separate blog post, after the individuals finish scoring, we meet for consensus scoring.

Sitting Across the Table

My father is a salesman. In my eyes, he was very successful and HONEST. He never played games, wasn't a schmoozer, and for a really shy guy, he did extremely well - winning awards, keeping family afloat during the aftermath of Black Monday (87), and eventually buying the company he worked for.

I chose a career in purchasing, basically sitting across the table from my father :) Strangely enough, I never felt we were at 'odds' with each others goals. My father, as a salesperson, sought to solve his customer's problems. I was most amazed at the fact some would want the latest, greatest machine; he'd look at their operations and tell them why they didn't need that, and how a different model (smaller, less expensive) would suit their needs including meeting their growth projections over the life of the machine.

So, never did I see sales and purchasing 'at odds', both were looking to solve a problem, build a relationship. However, in light of LinkedIn group conversations, I'm seeing a difference between sales and public sector buyers in the 'timing' of that relationship! Sales people want to build the relationship to 'win' the contract. Public Sector buyers need to run an open, fair, transparent competition, be completely objective, have no perceived conflicts, then build a relationship AFTER the contract is awarded. (there is a fear a relationship before/during a competitive process gives the perception the buyer has bias towards/against particular vendors).

That appears to be the issue regarding vendors hating the RFP process (no relationship building), and public sector buyers needing an arm's length approach to spending taxpayers' money. In light of Gomery enquiry and Ontario's E-Health scandals, public sector buyers are even more aware of keeping at arm's length from the vendor community when competing a contract.

So, how do we resolve the relationship timing, get the problem solved with the best solution, and avoid perception that public sector buyers are giving contracts to their 'friends' (Gomery, Ontario e-health scandals, etc)?

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