Shop Smart:How A Formal Procurement Process Can Safeguard Your Investments

Peter CampbellCIO, LSCpcampbell@lsc.gov@peterscampbell

Procurement, A to Z

A. Identifying Products and

Vendors

B. Selection Strategies

C. Negotiating Contracts

D. En

gaging Yo

ur C

o-

Wo

rkers

Identifying Products and Vendors

Defining the Field

• Start with a needs assessment

• Users, Execs, IT and others all have input into

goals

• Needs assessment should be documented.

• Primary goals should be a mantra

• Use your networks for recommendations

(LSTech, NTEN, Idealware, ABA, etc.)

RFI’s for Smaller Projects

Consider an RFI (Request For Information)

when:

• Your project is important, but not so big or

expensive that an RFP (Request for Proposal)

is justified

RFI’s for Larger Projects

Consider an RFI (Request For Information)

when:

• Your project is BIG and you want to identify

worthy RFP participants

Selection Strategies

Proposals Should Be Formal

Responses Can Be Contractual

RFP Format

• Introduction and Key Objectives

• About the Organization

• Description of Current Status and Environment

• Questionnaire (includes pricing)

• Deliverables

• References

• Proposal Instructions

RFPs for Products

• Company history, size, stability

• Product functionality

• Data ownership and accessibility

– Getting Your Data Systems Talking

• Integration and compatibility

• Support (vendor and community)

• Cloud concerns

RFPs for Products

• Should ask very specific questions about all aspects of product functionality

• Can be a long questionnaire

• Should include key questions about support:

– Who provides it?

– Dedicated or random?

– What’s the support staff turnover rate?

• Should include cloud provisions, if applicable

Cloud Provisions

• Who has rights to use the data?

• How is the data backed up?

• Can it be backed up locally and how often?

• What happens to the data if the vendor goes out of business, or is sold?

• What does the vendor support and not support in the cloud environment?

• Do subcontractors honor vendor agreements?

Example – Company Details

1. Please provide the name and contact information for your company.

2. How many years has your company been in business?

3. What geographical area do you provide services for?

4. How many people are employed at your company?

5. What is the average rate of turnover for your company?

Example – Level of Detail

1. List the standard and maximum hard drive (HDD) space (for all models recommended)

2. List the standard and maximum Random Access Memory (RAM) (for all models recommended)

3. List all document formats that the scanner can save to.

4. Can the system send scans to email addresses?

5. If yes, do those addresses have to be pre-entered into the system, or can they be entered ad hoc (as part of the scan job setup)?

6. What mail protocols (POP, SMTP, etc.) are supported?

Example – Support Questions

1. What is your Service Level Agreement response time guarantee for solving issues that impede our ability to use the devices? Please breakdown by identifying business/non-business hours, if applicable.

2. How far away (in miles, feel free to specify location) is your support technician likely to be from our headquarters when we place a service call?

3. We are looking to lease this equipment, primarily in order to stay current with the technology should significant advances be incorporated in newer models. What is the average cost to upgrade three years from the lease start date?

RFPs for Services

• Vendor size, history, stability

• Demonstrated expertise

• Examples and references

• Standard hourly fees by role

• Shouldn’t be overly long

RFPs for Services

• Establishes goals and relationship

– Include detailed project goals

– Describe current situation

• Should gage expertise and compatibility

• More of an essay test than a questionnaire

• “Show your work”

– Case studies

– Work examples

Fixed Bids

• Don’t ask for fixed bids unless you know exactly what the project will entail.

• A vendor that underbids might under-deliver as they aren’t getting paid their hourly rate.

• Or you might pay too much.• Instead, compare hourly rates and check

sensitivity to budget with their references.

Example – Clearly Stated Goals

• The anticipated deliverables for this work will include advice and assistance with the configuration of Salesforce for our purposes; sharing of knowledge and best practices around Salesforce development and use; mentoring and training of technical staff, possible training of line staff; and documentation of any custom work performed. This is a long-term project, and our goal is to eventually become self-sufficient with Salesforce.

Example – Expertise Queries

Task 4.0 – Development of Community/Portal Sites

Describe your experience setting up custom web sites that expose Salesforce functionality to constituents outside of the company. Provide examples of portals that you have developed.

Task 5.0 – Workflow Automation

Describe and cite examples of workflow automation projects that you’ve implemented. In particular, forms, routing and process automation.

Task 6.0 – Training

Indicate whether training is a service that you provide and, if so, describe the types of training that you offer (e.g. administrative, end-user, train-the-trainer).

RFP Process

• Set dates in RFP for questions and responses due

• Verify receipt and participation

• Send RFP to identified vendors and/or post publicly (appropriate forums, RFP websites, your website)

• Answer questions

• Collect responses

RFP Process

• RFPs should present a level playing field to vendors

• Set a deadline for questions (2 weeks is good)

• Collect by email and send replies to all questions to all participating vendors (anonymizing vendors)

• Alternatively, schedule a conference call for vendors to discuss RFP (Bidder’s Conference)

Compare/Weigh Responses

Interact

• Schedule demos or meetings (Invite staff!)

• Request that you meet with the people that would be assigned to your project

• Answer questions that RFPs can’t

– Is the demo/meetup consistent with the RFP response?

– Is the product intuitive to use?

– Do you have a rapport with the vendor or consultants?

Decision Making

• Have key decision makers involved

• Use polling and/or scorecards (documents decision)

• Document the rationale for the decision

• Notify vendors

• For services, be open to providing candid feedback to those not selected

Negotiating Contracts

Why Negotiate?

• The purpose of a contract is to protect both parties, not one party

• All terms should be equitable

• A good contract is a safety net that you will, hopefully, never have to land on, but, if you do, will not have any sizeable gaps.

When to Negotiate

• Whenever you can! But, with very large vendors and shrink-wrap software EULAs, it can be tilting at windmills

• When the methodology might have serious budget implications

• When roles aren’t clearly defined• When the vendor stacks the deck in their

favor

How to Negotiate

• Work with your General Counsel (or closest equivalent)

• Know what the deal-breakers are

• Keep tone friendly, explain your rationale for changes

• Make sure that the contracts signed are the negotiated copies

• Save the executed contracts where you won’t lose them

What to Negotiate

• Scope/Statement of Work. Vet that this is the project that you need done, and the services you are seeking

• Roles and responsibilities, particularly with cloud services

• Termination fees

• Jurisdictions

• Automatic renewals

• What else?

Scope of Work

• A scope of work should detail the actions that will be taken, the deliverables, and the implementation methodology.

• Biggest dangers:

– Work not addressed (which will be tacked on later at greater cost)

– Open-ended consulting (taking as much time as needed to get it right will be costly)

Roles and Responsibilities

• With cloud contracts, who is responsible for what should be contractually stated.

• Add RACI Matrixes:

• “Cloud contracts should include a lot of tabular data” - Michael O’Brien

Termination Fees

• Telephone and Internet services will include clauses holding you accountable for the contract term fees if you cancel.

• These should be negotiated (way down).

• They should be removed if not tied to strong SLAs.

• SLAs should include contract out.

Jurisdictions

• Best: Your state laws

• Acceptable: their state laws

• Unacceptable: some other jurisdiction that they have cherry-picked because the laws favor them (e.g., Virginia)

• Arbitration is not necessarily a good thing!

Automatic Renewals

• Unless you are really, really organized, you should ask them to remove these and just have them invoice you for a new term at the end of the old one.

• Be very careful. You don’t want to automatically renew a five year contract for a new five year term.

Don’t Forget the RFP!

• As mentioned earlier, the RFP can and should be attached to the contract, particularly for IT system purchases (CMS’s, Phone systems, etc.)

• Companies should be accountable for what they tell you their products can do.

Memorialize This

• Your RFIs, RFPs, Responses, Evaluations and contracts all represent a contextual history of a significant purchase.

• Save these for your successors!

• Procurement at LSC (Trello)

Image http://www.flickr.com/photos/slr/

Questions?