Obtaining Professional Services
Donald L. Woods, J.D., C.P.M.
Donald L. Woods, J.D., C.P.M., C.E.O., International Consulting & Contracting, www.donwoods.com, Las Vegas, NV 89117, 702/254-6606, email@example.com.
83rd Annual International Conference Proceedings - 1998
Abstract. Obtaining professional services by the utilization of a Request for Proposals (RFP) is probably the best solicitation method for today's business world. Purchasing professionals must be able to write the document, conduct the process, lead the negotiations, and administer the resulting agreement.
Types of Solicitations. [See Overhead No. 1 - at end of article] Acquisition of professional services by utilization of an RFP or competitive negotiation, sometimes called a Request for Qualifications (RFQ), is similar to the utilization of an Invitation for Bids (IFB) which is awarded to the lowest responsive and responsible bidder. Both methods are competitive procedures, should be given public notice, and both require sealed submissions. The underlying distinction between the two is that competitive sealed bidding, through an IFB, does not allow changes or negotiation to occur after the bids are opened; whereas, an RFP permits such negotiation, both to the nature of the offer and the price. Whenever negotiation is permitted, an RFP should be the standard solicitation document.
Please note that there is a two-step RFP solicitation procedure that combines certain advantages of competitive negotiation and competitive sealed bidding. This method prescribes that the technical or performance aspects of the proposed project be submitted in a sealed envelope separately from the sealed envelope with the pricing. The qualifications and performance methods of the proposer can then be evaluated and negotiated individually with each offeror whose work proposal is within the range of acceptability. Subsequently, the pricing envelope for the potential awardee is opened, but cannot be negotiated. Two issues are created by this type of solicitation: (1) If negotiations change the SOW, then the price should be adjusted; but that arguably alters the original solicitation. (2) Some individuals in the organization are too curious about the unopened pricing envelopes.
Any of these methods: conventional competitive bidding, competitive negotiations, or two-step solicitations, can be preceded by a Request for Information (RFI), or by an RFQ.
When preparing an RFP, the purchasing professional should pay particular attention to the following:
Solicitation Document. [See Overhead No. 2] Do not use the terms "bid" or "bidder". Use "proposer" or "proponent". If a signed document is required, request a signed cover letter that incorporates the proposal, or provide an "official signature form". When an award could be made on the basis of the proposals as first submitted, without any discussion or changes, then explain that possibility in the solicitation document.
Expect the solicitation document to be larger than a normal bid because of the Statement of Work (SOW) description and the more detailed terms and conditions in the ultimate contract. I recommend that a boilerplate agreement be developed, then attached to a solicitation document that includes the submittal instructions and an SOW.
Drafting a Scope of Work. [See Overhead No. 3] When you write the SOW for an RFP, you describe the work or services you want the proponent to perform. It is important to draft provisions that are clear and definite so that progress under the contract can be measured and the services are completed in the appropriate manner. Clear standards and other terms are also essential to enforcement. Here are suggestions of some ways to assure that your SOW provisions are clear and complete:
- State the objective clearly. Be concise wherever possible, but give adequate information to show what work or service is expected.
- Do not leave anything to assumption. State, for example, whether you expect preliminary research, meetings with specific people before or while performing the work, training for your staff, or any testimony/presentations before officials or a local committee.
- If documents are to be delivered under the contract, identify them clearly. For example, state whether you expect a preliminary draft or a final report, a training manual, or an instruction manual. If the awardee is to use or to provide technical data or statistical information, say so.
- It is a good idea to require a draft for your review before a final product is submitted. This insures the contractor is on the right track in terms of understanding and completing the scope of the final product.
- Be careful not to lead consultants into believing there is a pre-ordained result desired when requesting studies, evaluations or audits. Give them the opportunity to express their opinions, creativeness or professional knowledge.
- Detail the contents and the requirements for progress reports, including content, dates, and decision structure. Lay out invoicing and payment procedures with applicable forms.
- Express all available standards generically, clearly and concisely.
- Articulate mandatory requirements, including any government- or company-required methodology.
- Set forth your understanding of the phases or stages of required work in a clear, logical progression. Include, if possible, a sample work plan and/or time frames. Describe conditions that must be fulfilled before another phase is begun. Describe fully the consequences of failing to meet time frame conditions.
- Specify procedures for breach and termination of the agreement that includes partial payment for work completed, ownership of work to date, and the return of all documents and assets provided to the contractor. (Note: This can also be referenced to the contract document, but the formula for applying the partial payments should be in the SOW.)
- Include a statement of how the continuing evaluation criteria will be applied to the SOW and to the awardee's performance of the contract.
- Clearly describe the role of your firm or entity, if any, in furnishing assistance such as in-house meetings, coordination, equipment, typing, research, or existing documents. Provide detailed instructions for disposing of or returning these items upon completion of the project.
- List any performance warranties that you expect of the awardee and explain why you need them.
- Determine if liquidated damages will be requested. If so, evaluate the reasonableness of the figure to be applied to determine that it is not a penalty.
Criteria for Evaluation. The types of services usually contracted pursuant to an RFP tend to place lesser emphasis on price as a criterion for award than is the case with IFBs. The particular evaluation and award factors that are to be applied, such as managerial and technical capabilities, comparative feasibility of the methods or plans, overall cost, etc., need to be easily understood. This can be facilitated by weighting the factors as to importance, or by using a numerical rating system in the evaluation process.
Pre-submission Conferences. A meeting of all potential proponents is advisable, but may not be necessary. However, on large or complex projects, it is a good idea for making sure the SOW, the method of evaluation, and the solicitation procedures are thoroughly discussed and stipulated among the competitors, especially if liquidated damages clauses appear in the contract.
Opening. Buyers for private firms are only governed by internal processes or procedures, but state and local governments normally require that offers, and hence RFPs, be opened publicly. If an official record is necessary, limit it to only the names of the offerors and whether it was received on time. Any other information should not be made public or be provided to all participants and outsiders until after award of the contract.
Evaluation Team. [See Evaluation Form] Each evaluator should prepare their scores individually. Then the team should meet to discuss their individual rankings and why specific proponents received very low or extremely high scores. These meetings should be governed by some type of confidentiality so that the evaluators' comments do not leave the room. Final scores should be reached by a consensus, rather than a majority vote, so that a unanimous decision can be asserted. All evaluators must have an opportunity to contribute so that they will adjourn with the idea there was complete agreement among the participants.
Notify proponents at each stage of the process utilizing standard form letters. [See Overheard No. 4]
Negotiation. When negotiations actually take place, impartiality is essential. Discussions with offerors are conducted individually. Information in a proposal is not disclosed to another offeror. The principles of not allowing an advantage to one competitor over another, and of not permitting the use of auction practices, also applies to competitive proposals. If a "best and final offer" is expected, then the time frame for submittal of offers should apply to all, or an addendum extending the time must be issued to all participants.
Administration of the Agreement. Once a professional service contract is awarded, the purchasing official should participate in the administration of the agreement. This includes monitoring the services, payments, modifying the SOW, and terminating the agreement. Maybe even more importantly, Purchasing should be involved in evaluating the services provided in order to make future improvements to the contract language and the SOWs.
Conclusion. Obtaining most professional services does not lend itself to the "award to the low bid" concept because the services requested lack sufficient description or specificity for determining if the proposer is the lowest responsive and responsible firm. Quality of service, customer service, and the ability to perform are much more important. Therefore, the RFP should be utilized to ferret out the weak firms and award to the best firm for your particular project.
Overhead No. 1 - Types of Solicitations
- Request for Information (RFI)
- Request for Proposals (RFP)
- Request for Qualifications (RFQ)
- Request for Bid (RFB)
- Invitation for Bid (IFB)
- Standard Boilerplates
- Instructions to Proponents
- Evaluation Standards: Subjective vs. Objective
Overhead No. 2
- Instructions to Proponents
- Standard Agreement
Overhead No. 3 - RFP Statements of Work
- State object clearly
- No assumptions
- ID documents to be delivered
- No leading of consultants
- Progress reports - invoicing
- Generic standards
- Organization required methodology
- Phases or stages
- Breach or termination procedures
- Evaluating performance
- Your organization's role or duties
- Liquidated damages
Overhead No. 4 - Sample Form Letters (RFP Process)
- Memo to evaluation committee with RFP
- Instructions to evaluating committee with proposal
- Rejection of a firm's proposal
- Notification that a firm is ont he "short list"
- Notification that a firm did not make the "short list"
- Notification to make an oral presentation before the selection committee
- Notification that a firm has been selected for the project
- Notification of award (after negotiations)
- Notification of non-award
Overhead 5 (sample evaluation form) is unavailable in text-only format of this paper.