RFP 101

Imagine soliciting legal services on price alone or contracting with an architectural firm to design a high-rise building without considering the firm’s qualifications. Issuing bids and awarding public contracts based on the lowest price is not always the best way to begin complex projects. Considering price alone could create additional expenses and risks that local governments could avoid simply by using a different procurement method.

A request for proposal (RFP) is a competitive procurement process that allows cities and counties to consider factors other than price, such as qualifications, experience, innovations, creativity, value-added services and project approach. To be effective, it must clearly explain the variables to be addressed in the proposal and how the proposal will be evaluated.

Elements of an RFP

The goal of an RFP is to solicit comparable proposals from several companies. If an RFP is unclear, few companies will submit proposals or all of the proposals will contain vastly different information. Effective RFPs generally consist of eight sections.

• Project overview

  The first section of an RFP describes the government agency, the history of the project and the reason for issuing the RFP. The overview indicates the purpose of the project, what the completed project will be and when the work will be due.

• Proposal submittal instructions

  The RFP should include information about how to submit proposals. Proposers need to know items such as the number of copies to submit, the required format, the protocol for questions about the RFP and the deadline (date and time) for submitting proposals.

• Terms and conditions

  The third section of an RFP includes the government agency’s contractual requirements. The requirements define the agency’s expectations for working with private companies and the relationship between the project participants. Generally, government agencies have contractual requirements that are included in all solicitations. The section may include information such as governing law, limitation of liability, remedies and indemnification.

  In addition to those contractual requirements, local governments may include project-specific contract provisions. For example, RFPs for long-term service contracts should include a clause that describes how price increases will be handled.

  Ideally, all contractual provisions are non-negotiable. However, if a city or county will allow negotiations on certain clauses, it should identify them in the RFP. For example, the RFP might include a negotiable clause defining ownership of work. If a vendor will use a proprietary business model to complete a portion of the project, it might propose that only the final reports may be owned and used by the government agency. Vendors should be instructed to include all suggested language for negotiated clauses in their proposals.

• Mandatory requirements

  The RFP has to clearly define the work the vendor will be required to provide; where and when the work will occur; and the extent of the work. Those items, sometimes called deliverables, must be measurable, and the RFP must identify the minimum acceptable limits of each requirement. For example, if a city or county needs a technician to respond quickly to photocopier maintenance requests, its RFP might state, “Proposer must have a local office within a 30-mile radius of the city’s main office.” While the distance from the government office to a contractor’s office would be measurable, it would not guarantee that the technician would respond quickly. A better requirement would state, “Proposer must provide evidence of the ability to respond to service calls within two hours of initial call.”

  Detail is the hallmark of a well-written mandatory requirement. For example, the statement “The scanning system must be able to capture and edit high resolution for output to a laser image setter for all documents” is vague. The requirement would be clearer if it stated, “The scanning system must capture and edit high resolution (up to 1,200 dots per inch) for output to a laser image setter and must accommodate image areas up to 11 inches by 17 inches. Proposer shall include any published literature verifying the proposed system meets this requirement.” Mandatory requirements that are not well written and well planned may result in an unacceptable project, cancellation of the RFP and/or legal problems.

• Scorable mandatory requirements

  In addition to providing evidence that they meet the mandatory requirements, vendors should submit information to demonstrate their ability to complete a project. References, qualifications and experience are examples of scorable mandatory requirements, each of which has defined point values assigned to it.

  For example, a government agency could require that companies have a minimum number of years’ experience providing the service identified in the RFP. However, if the agency would like to give additional weight to a company with more experience, the scorable mandatory requirement might state, “Up to XX points will be awarded to a proposer who has experience that exceeds the required XX years.”

• Desirables

  In RFPs, local governments can request features, services or products that exceed the mandatory requirements. Desirables have defined point values assigned based on their value to the project. Vendors are not required to provide responses to desirables, but, if they can, they will earn extra points in the evaluation process.

  For the evaluation committee to fairly assign points, the scoring process should be clear in the RFP. For example, a well-written value system might explain, “Up to XX points will be awarded if the proposer demonstrates that the proposed system supports more than 250 active users.”

• Pricing

  The RFP needs to define how pricing information should be submitted. Providing a pricing form will ensure that companies provide their cost information uniformly. Conversely, if all companies submit different pricing structures, the evaluation committee will have difficulty comparing costs. For example, if a city or county is soliciting a monthly service, it might want the proposals to provide a monthly price that only reflects the services indicated in the mandatory requirements.

  Vendors should use a separate form to state pricing for desirables. If a city or county is looking for a vendor to provide computer maintenance services Monday through Friday, 8 a.m. to 5 p.m., a company might quote one price. If 24-hour-a-day, 7-day-a-week service is a desirable item, a company might quote another price. With the mandatory and desirable prices separated on different forms, the evaluation committee can easily compare costs.

  Like the scorable mandatories and desirables, the pricing section is rated using a point system. Usually, the proposal with the lowest cost receives the maximum number of points. All other proposals receive a percentage of the points based on how their costs compare to the lowest priced proposal.

  Pricing proposals should be submitted separately from the mandatory and desirable sections. That will ensure that the evaluation committee is unbiased when judging those sections.

• Evaluation

  Finally, RFPs should identify the criteria the local government will use to determine which of the proposals will best meet its needs. The city or county must state the factors relevant to its selection of a company and then weigh those factors according to their importance. The scoring methodology should be included in the evaluation section. Proposals can be evaluated only using the criteria identified in the RFP. Stating the award criteria in the RFP and then following the criteria during the evaluation process makes the selection process easy to defend.

• Evaluating proposals

  After issuing an RFP and receiving proposals, the government agency should assemble a committee to evaluate the proposals. The evaluation committee should meet prior to reading the proposals to discuss the scoring process so everyone understands how to judge proposals. Each member of the evaluation committee needs a copy of the RFP and an evaluation worksheet that lists all the mandatory requirements, scorable mandatory requirements, desirables and pricing information along with the maximum points available for each item.

  The first phase of the evaluation process involves judging the proposals’ mandatory requirements. They are evaluated on a pass or fail basis. If a vendor does not meet the minimum requirements, its proposal is rejected and is not evaluated further.

  In the second phase, committee members assign points to the scorable mandatory requirements and desirables based on how well they meet the government agency’s needs. In the third phase, committee members assign points to the pricing proposal.

  After the scorable mandatory requirements, desirables and pricing sections are evaluated, committee members add up the points awarded in those sections. Evaluation committee members should score the proposals independently and then meet as a group to discuss their decisions. When meeting as a group, the committee may assign a consensus score to each proposal.

  Writing an effective RFP is not an easy task. The process forces local governments to seriously consider their project goals and to explain them in sufficient detail to solicit solutions at competitive prices. While writing and evaluating RFPs may take more work than finding contractors through a traditional bid process, it allows local governments the flexibility to consider factors — other than price — that are important to completing a project successfully. A well-written RFP also makes the evaluation of proposals easier and the selection process defensible.

  The author is the purchasing coordinator for the Eugene (Ore.) Water & Electric Board.