bullet-proofing your rfps · the building blocks of the evaluation process 1. establishing...

Bullet-proofing Your RFPs

RFPs are not new!

There is a large body of common knowledge

Bullet-proofing Your RFPs

https://www.rfpmentor.com/pages/chapter11

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Inside the Evaluation

Process

The Building Blocks of the

Evaluation Process

Inside the Evaluation

Process

The Building Blocks of theEvaluation Process

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

Be precise, legalistic.

Establish the rules for rejecting proposals.

Definitions are important.

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.

Evaluation Factors

Weights

Scoring Systems

Evaluation Factors (Criteria)

Families of Criteria Technical

Management

Effective CriteriaObjective

Related to the requirements definition

Discriminating

Non-discriminatory

Measurable

Economical to use

Weights

Determining the Weights

Publishing the Weights

Scoring Systems

The Bar Can’t Get Any Lower!

An Excellent Approach #1

Scoring Systems

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

Scoring Systems

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".

Scoring Systems

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 experienced in 3 key areas

4. Extra (contingency) resources are available

5. Two or more specialists to assist team

6. Experience with a similar system

7. Commitment/dedication of resources

What are they?

When do you use them?

Best Practices

Evaluating Proposal Costs

What Works and What Doesn’t

Cost is Always Under the Microscope

For Political Reasons

o Some stakeholders want the band-aid

solution so they can fund another project

o Some stakeholders want the best (most

expensive) product or solution

For Practical Reasons

o You need to mitigate project risks

o You always need to justify the cost of the

award20

Agenda

1. Cost Evaluation Best Practice Fundamentals You Always Need to Consider

2. Arithmetic is Supreme: Numeric Scoring Strategies and How They Work

3. A Better Way: Non-Numeric Evaluation Strategies

4. The Nightmare Scenario: What to do When All the Proposals You Receive are Over Budget

PART 1

Cost Evaluation Best Practice Fundamentals You

Always Need To Consider

1. Life Cycle Costs

2. The Two-Envelope System

3. Finance, Negotiation and Contract Skills

4. Management/Stakeholder Buy-In

PART 2 Arithmetic is Supreme: Numeric Scoring Strategies & How They Work

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.

Standard Arithmetic Strategies

Strategy #1 - Cost is Just Another Evaluation Factor

Strategy #2 - Bang for the Buck

Strategy #3 - Two Steps: First Merit, Then Cost

Standard Arithmetic

Strategies

Strategy #1Cost Is Just Another Evaluation Factor

o Arguments against

this approach

o Assigning weights

o Determining the

Assigning Weights:

Results of an Informal Survey

All over the Map: No one ‘Best

Practice’ for Cost Emerged

Standard points are sometimes used

Survey Results (Cost is weighted from

20% to 80%)

Can’t be more than 30%

Must be more than 60%

How To Do It: Using Ratio of Costs

Proposal Cost Calculation of Points Points

A $300,000 (250,000/300,000) x 100 83

B $250,000 (250,000/250,000) x 100 100

C $275,000 (250,000/275,000) x 100 91

Strategy #1

Cost Is Just Another Evaluation Factor

Strategy #2

‘Bang’ for the Buck

Concept of value

Determine the score for

management and technical factors

Divide by dollars: points per dollar

Strategy #3

Two-Step Approach: First Merit, then Cost

STEP ONE – MERIT

Determine management and technical

scores. Eliminate all those that fail to get

some minimum established by

evaluators.

Proponent

Technical &

Management Score

Company A 86

Company B 75

Company C 70

Company D 82

Company E 65

Proponent

Technical &

Management Score Cost

Company A 86 $250,000

Company B 75 $225,000

Company C 70 xxx

Company D 82 $200,000

Company E 65 xxx

STEP TWO – COST

For those remaining, look at the cost

and select the minimum.

PART 3

Adopting a Non-Numerical Evaluation of Cost

Are numbers better? NO!

o There is no ‘best practice’ for cost

o Standard Points

o Survey Results (20% to 80%)

o Can’t be more than 30%

o Must be 60%

Adopting a Non-

Numerical

Evaluation of Cost

o Are numbers worse?

o Possibly!

o Probably!

A Better Way

o Determine the score for each proposal for the Technical and Management Factors.

o Calculate the cost of each proposal.

o Analyze the difference in points and the difference in price to see which proposal is ‘best value’.

o Write a narrative discussing the strengths and weaknesses of each proposal, ‘best value’ and why the recommended proposal represents ‘best value’.

A Few Best Practices Approaches from

Real Agencies

o Federal Transit Administration

o State of Alaska

o John Adler

U.S. Department of TransportationFederal Transit Administration

Best Practices Procurement Manual

http://www.fta.dot.gov/grants/13054_6037.html

Best Practices Procurement Manual

‘Highlights’

o Scores, without substantive explanations of the relative strengths and

weaknesses of the competitive proposals, including the perceived

benefits to the agency, are an insufficient basis for paying a higher

price.

o No one is smart enough to predict in advance how much more should

be paid for certain incremental improvements in technical scores or

rankings.

o Price is evaluated and considered alongside technical merit in a

tradeoff fashion using good business judgment to choose the proposal

that represents the best value to the agency. 36

State of Alaska

RFP Evaluators’ Guide

www.alaska.gov/admin/dgs/docs/rfpguide.doc

Alaska RFP Evaluators’ Guide ‘Highlights’

NUMERICAL SCORING SYSTEMS

. . . you are not required to provide a written explanation of your individual scores, however, this does not open the door to arbitrary or capricious scoring. . . . You should always have a reasonable, rational, and consistent basis for your scores, as you might be required to explain them to a hearing officer or judge in the event of a protest.

NON-NUMERICAL SCORING SYSTEMS

Sometimes the evaluation criteria can be too difficult to categorize into specific questions or is too subjective to use a numerical rating system; making it necessary to use a non-numerical scoring system. This type of evaluation requires you to provide written documentation about how you came to your conclusions and how you ranked each proposal. Your explanation must be rational and consistently applied from proposal to proposal.

What To Do When ALL

the Proposals Come

In OVER Budget?

A challenging situation

What can you do before creating your RFP to

avoid this problem?

Do your homework to establish a realistic budget.

During marketing research talk to vendors; invite them in

for presentations.

Hire an expert to establish a budgetary range.

What Can You Put in your RFP to Avoid this

Problem?

Publish the budget.

Use appropriate language.

Let the weights and scoring calculations reflect the

budget.

Summary

o Cost is always an issue.

o Stakeholders’ input is critical for success.

o Points are NOT better than the non-numerical approach.

o There is no reason for proposals to exceed your budget.

Consider these scores:

6. Interviewing the Suppliers

Clarification meetings

Oral Presentations

Demonstrations

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.48

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.

The Negotiation Process

1. Preparation

2. Fact Finding

3. Bargaining

Best and Final Offers

What is BAFO?

Why do it?

How does BAFO work?

What are the benefits?

Examples

Why isn’t BAFO used more often?

What is BAFO?

ABA Model Procurement Code

ND Ch 54-44.4.10-3 State Purchasing Practices

ND RFP Evaluators Guide

American Bar

Association

American Bar Association

Model Procurement Code

For Competitive Sealed Proposals (3-203)

Discussions with responsible offerors

Revisions to proposals

Fair and equal treatment

No disclosure of information from competitors

(Commentary)

Negotiations based on ethical business standards

Auction techniques prohibited

Safeguards against abuse in negotiations55

ND Ch 54-44.4.10-3

State Purchasing

Practices

Discussions may be conducted with responsible offerors who submit proposals

determined to be reasonably susceptible of being selected for award for the purpose

of clarification to assure full understanding of, and responsiveness to, the solicitation

requirements. Offerors must be accorded fair and equal treatment with respect to any

opportunity for discussion and revision of proposals, and revisions may be permitted

after submissions and before award for the purpose of obtaining best and final offers. In

conducting discussions, there may be no disclosure of any information derived from

proposals submitted by competing offerors.56

ND RFP Evaluators

o Discussions are optional

o Initiated by State

o Some or all vendors

o Letter with terms & issues

o Only one (maybe)

o Revise scores using same team, criteria and process

Why use BAFO?

Revise proposals to better fit the requirements

Reduce costs

Increase the spread between proposals

How does it work?

RFP without BAFO

RFP with BAFO

The RFP Process (Without BAFO)

Step 1 - Creating the Statement of Work

Step 2 – Involving Procurement

Step 3 – From Issuing the RFP to Closing

Step 4 - Evaluating Proposals

Step 5 - Finalizing the Contract

Problems without BAFO?

Accept a mediocre proposal

Unofficial negotiations occur

Change orders are commonplace

Vendor’s contract prevails

Negotiate contract with ‘winner’ – no leverage

Next, the Road Less Travelled: BAFO

The RFP Process (With BAFO)

Step 1 - Creating the Statement of Work

Step 2 - Involving Procurement

Step 3 - From Issuing the RFP to Closing

Step 4 - Evaluating Proposals

Step 5 - Negotiating Best & Final Offers - NEW!

Step 6 - Finalizing the Contract

How does BAFO work?

Negotiate before BAFO

Then Request BAFO

What are the Benefits in Negotiating and

then using BAFO?

o Increase the number of high-scoring proposals (providing greater competition).

o Reduce risk to both parties.

o Eliminate unnecessary costs.

o Reduce costs.

o Improve benefits (better quality, performance, delivery etc.).

o Identify alternative solutions not initially apparent.

o Clarify requirements and proposals.

o Create better understanding and relationships between the parties.

o Improve the contract.

o Improve the proposal.66

Go Directly to BAFO

New Mexico’s RFP Guide

provides some insight into

the use of BAFO

The best and final offer is the only step in the process where the proposal can be amended. If the offeror’s proposal contains unacceptable contract terms and conditions, this is the step in the process where that problem is resolved. If an offeror stamped every page of the proposal “proprietary” or “confidential”, this is the step in the process where that problem is corrected. If costs were not proposed on exactly the same basis as the other offerors, this is the step in the process to correct that problem.

Montana’s RulesBest and Final Offers

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.

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.

Some specific

examples

From Oregon

o An overview of BAFO

From Wisconsin

o BAFO Process and

Procedures

From Oregon

An overview of BAFO

o A request for BAFO

may be used during

the evaluation

process for any of the

following reasons:

o To clarify or amend

the RFP.

o To request revised

cost proposals from

the proposers.

o To allow proposers to

submit clarifications.

http://www.oregon.gov/das/OPM/Pages/proposal.aspx

From Wisconsin

BAFO Process and

Procedures

PRO-C-39

I. Definition

II. When used

III. Procedures

IV. Content and structure

of solicitations

V. Scoring

vendornet.state.wi.us/vendornet/procman/proc39.pdf

From Federal Transit

Administration

fta-best-practices-procurement-and-lessons-learned-manual-2016.pdf

Discussion with Offerors, Request for Revised Proposals, Request for BAFO

4.3 Competitive Proposals Evaluation Process

4.3.6 Discussions with Offerors

4.3.7 Request for Revised Proposals

4.3.8 Request Best and Final Offer

From NC

BAFO Letter

https://files.nc.gov/ncdit/documents/files/BAFO-

Request-Form.docx

From ND

BAFO Letter

https://www.nd.gov/omb/sites/omb/files/documen

ts/agency/purchasing/best-and-final-offer.docx

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

As a prequalification condition

To confirm your selection

As an evaluation factor

Inside the Evaluation Process

Establishing Compliance

Scoring the Proposals

Imposing Upset Levels

Evaluating the Cost

Developing a Short List

Communicating with Suppliers

Negotiating the Contract

Requesting Best and Final Offers

Checking References/Past Performance

Two Other Important Considerations

o Gaming the Evaluation Process

o Constructing the Recommendation Memo

Critical Success Factors

A well constructed RFP

A tested evaluation process

An empowered Evaluation Committee

Documentation and probity

A knowledgeable, experienced, ethical procurement officer

Conclusions

What have we learned???

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