I H E R FP R E PORT FEBRUARY, 2001

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Thenews/el/er offdeas, checklists, guidelines a/idinJbrrnationaboutthe RequestFor Proposal MichaelAstie,;Editor

Four critical elements...This issuecontainsfourarticles.Eachis theresult ofourcurrentresearchor consultingwork. Eachdealsdirectlywith an importantelementoftheRequestForProposalProcess.

Thefirst article,Evaluators’ Advice On How To Lose, is an attemptat humor. Thisarticlewasdevelopedinresponseto arequestfrom theAssociationofProposalManagementProfessionals(www.apmp.org).Theyaskedus for a submissionto theirjournal.Thearticle is basedon someinterestingdiscussionswith colleagueswhoofferedtheir“honorstories”aboutproposalsandmajorsuppliererrors.While public sectorbuyersfocuson RFPsandotherprocurementissues,suppliersexpendmuchenergyon proposalwriting. This articlecomplementstheresourcematerialprovidedonournewwebsite: www.proposalworks.com.

Best and Final Offers containsa surveyofthis practice.Requestingrevisedfinal proposalsfrom thosefewvendorsjudgedcapableofprovidingan acceptablesolutionis acommonpracticefoundin manystatesandpublicagenciesin theU.S. However,in Canadathispracticeis rarelyused.A shorterversionofthis articlewill appearas“In my opinion” in Summitmagazine(www.summitconnects.com)in Feb.

Forthe last 20 years,theAmericanBarAssociation’sModelProcurementCode(MPC) hasservedasthebasisfor legislationatthestateandlocalgovernmentlevel throughouttheU.S.A. TheNew, Improved, RevisedModelProcurement Codewas recentlyreleasedandintroducessomelong-overduerevisionsaswell asconfirmingpracticesfromtheoriginal code.ThisarticlereproducestheMPC text relatedto RFPsand,moreimportantly,thecommentaries.Thesecommentariesprovidevaluableinsightsinto thepublic policy argumentsrelatedto theuseof competitivesealedproposals(RFPs).

Thefinal articlein this issueis notan articlebut rathercopiesoftheslidesI usedrecentlyat a conferencein Austin,TX. The presentationis entitled Bullet-Proofing Your RFPProcessand theseslides deal with my overviewoftheRFPprocess.PreviousissuesofTheRFP Report havecontained theotherpartsofmy presentation.

And now a coupleof newsitems....

I’ve recently been invited to co-chair a conferenceentitled “Winning GovernmentBusinessin a NewlyRestructured,IncreasinglyCompetitiveGovernmentPurchasingEnvironment”.The two-day conferenceis inTorontoin April. I’ve enclosedaconferencebrochurewith thisnewsletter.

And finally.... As manyofyouknow, theNationalInstituteofGovernmentalPurchasershasrecentlyformed astrategicalliancewith theFloridaAtlantic UniversityandformedthePublicProcurementResearchCenter.Wecanexpectto seeseveral(longawaited)majorinitiativesemerging,including arenewedfocuson developmentanddeliveryofcoursesfor public purchasingprofessionals.FormoreinformationcontacttheDirector,Dr. Thai,atThai@fau.edu.

The RFP Report is published by

MichaelAsnerConsulting, Suite 203,15233 PacIfic Avenue, White Rock, B.C.

Canada V4B 1P8

Phone/ Fax (604) 530-7881

ISSN 1 192-392X

Printed in Canada.

Copyright © 2001 Michael Asner

Consulting. All rights including

translation into other languages,reserved by the publishers. No part of

this publication may be reproduced in

any form, by microfilm, xerography

or otherwise, or incorporated in anyinformation retrieval systems without

the written permission of the copy-right owner.

RFPs and the law of contracts

The process of issuing an REP and receiving

proposals does, by design or inadvertently

establish contractual rights and obligations. Each

REP and the associated process should be

reviewed by your lawyer or legal department

prior to issuing the REP The examples and

sample REPs used throughout this text have been

used in many differentjurisdictions in the past.

The author makes no claim about the

appropriateness, correctness, or legal

consequences of these examples or sample REPs.

Competent legal advice should be obtained to

reviewyour Request For Proposal an the

associated process.

Our ProductsReference Books

• The Request For Proposal Handbook• Handling Supplier Complaints and Protests• The REP Report

Video

• Creating A Winning Proposal (102 minutes)

Kit

• A Proposal Writers Start-Up Resource Kitfor winning (U.S.) Government Business

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How to Come In Last: Evaluators’ Advice for

Writing Losing Proposals

A tongue-in-cheektakeon hownotto succeed

Your firm’s been on a winning streak for too long and ft’s time for a change?Tired of scoring win after win in the million dollar contract race? Not sure whatto do? We can help.

This article draws on my experience as an evaluator as well as several of mycolleagues who have been or are currently evaluators of numerous large scalepublic contracts. Our collective experience in rejecting proposals is vast. Likeevaluators everywhere,we are busy, overworked and subject to the stresses andstrains from having to bend to our bosses’ political agendas. We spend publicmoney and have to makesure that the choices we makewon’t result in disasterswhich end up costing us our jobs. We want clean proposals which comply withour specifications, meetthe requirements, contain feasible project plans, doneby reliable, experienced companies for reasonable prices.

S

What we get isanother story. In order to help make the contract award decisioneasier (to help separate the chaff from the wheat), we have reached back into ourcollaborative memory and have identified a few pointers to help those of you whowant to lose, and lose big. The rules which follow will simplify our lives. They willlet us rejectyour proposals without much effort. And if we can reject all but oneor two proposals, our job issimplified, ourworkload is lighter, and the decision iseasier. (To be fair, we’ve included some advice from industry experts on how towin, not lose, how to avoid being eliminated, how to force us to take your proposalseriously. This advice is included in the shaded boxes.)

Use boilerplate with reckless abandon!

When you use “search and replace”, don’t verify each and every word for that’sthe job of the spell checker feature. One of my colleagues, Ted Nelson likes totell the story about a large IT firm’s multi-million dollar proposal. The proposaldeveloped for the State of Washington detailed how the proposed work wasspecifically developed for the State of Iowa! Dan Safford, one of the bestproposal writers I know, tells the same story but it was an Air Force proposal andit stated “we will keep NASA apprised of all program activities”.

We evaluators really appreciate ‘canned’solutions. It makes us question whetheryou actually looked at our detailed requirements. Boilerplate boffos make usquestion your ability to manage the details of the proposed project or solution.These mistakes save us lots of work by helping us eliminate you from thecompetition without any serious analysis of your solution.

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Expert, Opposing View:

2.

Don’t Use the Executive Summary.

Some proposal writers make it too easy for us - they omit the executive summary entirely. In doing this, they make it difficultforus to understand their proposal. Don’t give us any hints about the content. Don’t entice us. Don’t make us curious aboutyour solution. Let us put your story together by forcing us to read the entire proposal, all 200 pages. Some proposal writersstill don’t realize that an executive summary is not an option.

Some proposal writers are more sophisticated. They do include an executive summary - but still one designed to ensure thattheir proposal is not taken seriously. These writers, trying to impress their boss or the company owner, use the executivesummary to tell us aboutthe history of their firm. They think that it’s importantwe know that the firm was founded more than100 years ago by the current president’s grandfather. They think it’s important that we know the names of the founder’schildren and the schools his sons attended. There is no pretense oftrying to impress us with the firm’s experience, capabilities,track record, or the specifics of their solution. Family history is what they give us - not a short paragraph but two pages,complete with pictures.

Ome Almeda, of the Valley Medical Center in Renton, WA evaluates proposals for his organization and thinks that theExecutive Summary is “a very important part of the proposal . . . If I don’t get what you are offering in the first ten minutes, Iwill lose interest”.

~~•‘I pr~p~~~l\ult ~rite nced~an c~ecutivc~unnnarv. Thee~ccutivcsummary is morethan~vindowdres’~ing.lor at leastsomeofvuur readers ‘~er~1ikeI~includuiu the linal decision—makers— the e’~eeuti~esummary~I1 betheon!) partof’.’~urpra posal theyread.

‘b~‘ia and Ciutlti-e~lace 100.The PerfectPr’ ‘posal, 1 9M9. New York. lelecuinLibraiy

Ignore Costs.

Make sure your technical and management proposal is excellent and that your cost is 30% or 40% higher than my budgetoryour nearest competitor.

If you are a proposal manager, this is easy to do. Simply leave the costing to the accountants. Don’t investigate alternativeprogramdesigns and their costs. Don’t analyse the RFP to get clues about my budget or the type of solution I want. Ensurethat each of youur proposal writers on this project understands that cost is someone else’s concern.

By doing these things, you can ensure that your proposal exceeds my budget and can’t win.

Expert, Opposing View:

thea~eragePr~P~’~~1~~ritcrknewnothingol thecosts0! the programhe orshewasproposing ... hutwas led to inI~rthat COStswerenoneof hisor herConcern. that heor sheneededonly todesignandpresenta programibr the ,Icc(’untantsto Costt~rthe client

Siiiall WI Inder that ~om~nvproposalsh’seon cost alone!

I lerman I loltzAuthor (~irliTerry Schmidt)oft/ic classiconproposalwriting, TheWinninit Proposal,McGraw I liii, 1981Iroin Proposall.)iscussion Forum on ~~vw.proposa1works.com.Jan.05.2001

Avoid a detailed analysis and discussion of “our problem”.

We issue RFPs to obtain solutions. And most suppliers provide information to convince us that they truly understand ourproblem. Ws a house of cards. If we believe that you understand our problem, we might believe that your solution will work.So, make our jobs easy. Keep the proposed solution vague. Don’t show us that you actually understand why we have tochange. Don’t demonstrate your understanding of the issues we face. Simply assume that somehow the evaluators will knowintuitively what you mean.

3.

You can reinforce this approach by repeating the RFP’s definition of the problem. If I say on page one of the RFP “due to anexpansion in the number of transactions, and the age of our programs and technology, we are looking for a network-basedsolution, capable of handling five times our current volume”, then be sure to repeat my words in your proposal. The morewords that you copy from the RFP, the more I’m convinced you don’t care.

Don’t describe your views or insights or experiencewith this problem. Don’t explain how you’ve helped others. (One of yourcompetitors will.)

Expert, Opposing View:

Simply regurgitatingtheRiP buysyou absolutelynothing:it vill earntheevaJuator~sdiscustwith sour ineptnesS,orworsevet.hiseverlastinghatredIbr our iimult tohis iiiteliigencc.

I)onald V. I lelgesonPage99, I~ngineefsandManagersGuidelu Winning Proposals.I 90.!. Nor~~oud.MA.Arrech I k’usc

Be arrogant. Ignore our instructions.Turn your back on the work we’ve done.

There’s nothing we love more than to be told whatwe really want. Why should we know? We only spent the last six monthsin long gruelling committee meetings hammering out the details. Explain to us what we don’t know. Even if you are one ofthe ‘leaders in the industry’, we will be pleased to award the contract to your less arrogant competitor.

Tell us we’re stupid. We don’t mind. It helps us quickly determine those with whom we would prefer working with. Yourobviousdisdain for our approach reinforces ourdecision to score your proposal low in those areas where we have the mostdiscretion.

One of my favorite anecdotes comes from a colleague who was sitting in on an evaluation committee presentation. One ofthe bidding firm’shot-shot project leaders got up and said “I don’t know who wrote this technical section, but he doesn’t knowwhat he’s talking about.” It was predictable what would happen. Almost immediately, one of the evaluators, a woman, stoodup, and said “I did. Perhaps I can answer your questions”. Needless to say, the firm didn’t score lots of points in thepresentation.

The final word on this topic goes to Ted Nelson, a seasoned evaluator from the state of Washington. His favorite bidderstrategy iswhen the proposal makes it clear that “we really don’t understand our problem and that our requirements are notthe correct requirements.” Ted recalls that he once issued an RFP in which he asked the Vendor to describe the projectmanager’s experience in nine different areas. The response addressed only four or five of the areas and then described toTed and the other evaluators what was really important in a project manager. As Ted said: “It was certainly reassuring torealize that we didn’t understand what we needed in a project manager.”

Expert, Opposing View:

4.

Best and Final Offers

From a major systems integrator/consulting organization:

“.... (the buying organization) would probably have heart failure.”

From a lawyer speaking to vendors about this process:

“The suppliers in the room were aghast at the prospect..”

From a buyer who uses BAFO:

“The best and final offer step has produced some truly amazing results

over the years saving the State literally millions of dollars.”

The RFP process is highly flawed. Buyers issue documents that often provide a distorted, incomplete, or inaccuratedescription of the problem. This is not their intention but simply the result of many different people trying to describe a complexrequirement or a difficult problem. Suppliers then take this information and interpret it in the light of their own knowledge andproduct offerings and develop their proposals.

Our evaluation processes attempt to compensate for these systemic problems by basing the award on a number of factors:not simply the least cost, noronly the best project management plan, norjust the best technical solution. We combine all ofthese factors so that we often award the contract on the basis of LEAST APPARENT RISK. The winning proposal often doesnot represent the bestvalue but rather the proposal with the fewest “holes”, the fewest ambiguities, the fewest weaksections.In short, the proposal that seems to solve the problem and is most credible.

Thesystemic problem iseasy to define. Many of the critical details of a solution cannot be articulated by buyers until they havereviewed the suppliers’ proposals. Until this time, the buyers do not have sufficient insight or knowledge of potential solutionsto make an informed decision. But it is fundamental to our RFP process that suppliers can’t revise their proposals; evaluatorscan only evaluate the submitted material. And evaluators hate it! Of the 6 proposals received, only three are anywhere closeto the mark. They are o.k. but not great. One of the proposals lacks the depth of technical information which would inspireconfidence in the solution. The second, lacks project management depth. The third is simply too expensive.

Vendors hate it! Losing a major contract because one section of their proposal was rated a ‘6’ rather than an ‘8’. “If we hadonly known more details and understood the buyers’ reasons, then we would have proposed a different solution.”

There is a process - Best and Final Offer (known as “BAFO”) - designed to solve this problem. This procurement strategypermits buyers to get revised proposals from vendors. In the U.S., this process is defined in the procurement statutes of manystates and in the ordinances for many cities. In Canada, BAFO is rarely used. I haven’t see it used by the federal governmentorOntario. Nor by many of our largest cities. The Province of British Columbia used this technique a few times in the mid tolate 90s for IT procurements. And the City of Mississauga has used it but rarely. In the U.S., it is used in many jurisdictions,but always under rigid controls. The concern is that all suppliers be treated fairly, and that no information be transmitted fromone supplier about the other suppliers’ offers.

Here’s how it works. First, the RFP contains language that properly defines the rules and the process. Typically, theevaluators identify those proposals capable of delivering the required results. This evaluation isthe same as would normallybe done to develop the short-list of finalists. These finalists are then provided detailed questions related to their proposals,or informed of those parts of the proposals that are deficient. The suppliers are given the opportunity to redo their proposals.They are provided with the opportunity to improve their offering and to eliminate unacceptable conditions contained in theiroriginal proposal. The amended sections are then re-evaluated and re-scored according to the evaluation process definedin the RFP.

—_____________________________________ 5.

When is it used?

The American Bar Association is currently revising the Model Procurement Code. The June 1999 Re-Draft contains thefollowing information about BAFO:

(6) DiscussionwithResponsibleOfferorsandRevisionstoProposalsAsprovidedm theRequestforProposals,andunderregulationsdiscussionsmaybeconductedwith responsibleofferorswhosubmitproposalsdeterminedtobereasonablysusceptibleofbemgselectedforawardfor thepurposeofclarificationto assuref1111 understandingof,andresponsivenessto, thesolicitationrequirements Offerorsshallbeaccordedfair andequaltreatmentwith respectto anyopportunityfor discussionandrevisionofproposalsandsuchrevisionsmaybepermittedaftersubnussiansandprior toawardfor thepurposeofobtainingbestandfinaloffers In conductingdiscussionsthereshallbeno disclosureofanyinformationderivedfromproposalssubmittedby competingofferors

COMMENTARY(I) Subsection(6)providestheprocurementofficial anopportunitytomakecertainthatofferorsfullyunderstandthesolicitationrequirementsandprovidesofferorsanopportunitytoclarily proposalswherenecessaryso asto assureresponsivenesstothesobcitation Pricediscussionscanbestbeconductedwhenthereis amutualunderstandingofthe contractualrequirementsClarificationsareintendedtopromoteexchangesbetweenthe(State)andanofferorthatmayoccurwhenanawardiscontemplatedwithoutdiscussionsfor exampletoresolveminororclerical errorsor ambiguitiesinproposals

(2) Whendiscussionsornegotiationsarecontemplatedafterthereceiptof proposalswhichareexpectedto leadtotherevisionofproposalsor tobestandfinal offers fair andequitabletreatmentofcompetitorsdictatesthatnegotiationsbeconductedinaccordancewithethicalbusinessstandardsAuction techniquesshallbeprohibitedindiscussionswithofferorsunderthecompetitivesealedproposalmethod Theremustbea cut off for thesubmissionof revisedproposalsandfinal offers BothSubsection(4) andSubsection(6)areintendedtoprovidethatpnces.technicalsolutions;uniquetechnologiesinnovativeuseofcommercialitemsdesign,construction,oroperatingtechniquesoroiheraspectsofproposalssubmittedby oneofferormustnotbedisclosedto competingofferors Safeguardsagainstabusein theconduct ofnegotiationsmustbe strictlyobservedto maintaintheessentialmtegrityoftheprocessProceduresshouldbespecifiedin regulationsinordertoachievetheseobjectives

Montana...

Montana has produced an easy to read, logical description of the RFP process. This handbook, entitled Initiating andNavigating the Request for Proposal Process, can be downloaded from their web site at www.state.mt.us/doa/ppd. Here iswhat they say:

6.

New Mexico...

New Mexico’s RFP Guide provides some insight into the use of BAFO: “Tue best and linal oIler is (lie unIv step in the process wherethe prt’p sal can h.~amenkd. If ihe ‘lien r’s pn pt tsal c tutains itnacceptaNe e ‘ruract terms and Ct ‘ndit u ‘its, this is the step in the pn cess~~herethat proHeiriis resolved. Ifan otiert,rstaiiq’ed~ ~ of theproposal ‘Prt prletarv” or Cuntidetitial’, this is thestep in theprocessWhet-C thatpii.bkin iscorrected.Ifeostswerenot proposedonexactly the samebasisasthe otherolierors.this is thestep in the processtocorrectthat problem.’ (http:www.state nm .us/cUents/spd/spd .html)

A. NOTIFY FINALISTS

Thisstep is anextrenielyimportantpart iii theprocurement processasthis is thet.’nlv place in theprt~cesswhereotlerorscanatneriJtheir proposals. They may amend their proposedcostsaswell as other portions c’ftheir proposals. Offerors should he encouragedto improve their proposals he recununended tecliniqtie isto collect questions about the otl’erors proposalfrom the l:valuatitinCommittee.The Pr~,eurernentManager divides the questions into ti~Ogroups: I ) questionstoheaddressed in thebestand linal oller~and 2) questions t~rtheoral presentation.ltthc Procurement Manager tot,k good flutes during thee~aliiatioii,thenotes maysuthce;is the basist~‘i the nt u iticatit ‘ii letters.

The Procurement Manacer must provideeach finalist a written notilication letter that containsthekillowing:

• The date,time andlocation of the oral presentation or systeni demonstration, along with iflstflietiofls as ma he appropriate

Ibr the conduct of the sessionincluding art agenda.I Specific areasof the olleror’s prop~usal that the F~valuationCommittee may request to he addressed as part of tine

siibrnissioiir fbestandlinial otkrs. Forexaniple, the EvaluationCommittee may request that theotleror readdrcssimportantaspects of the proposal such as theimplementationschedule,level of support,typeor amountof resourcesproposed.orcontracttermsandconditions.

• Specilie areas &ii the ofleror’s proposal that the Evaluation Committee may reqUire to be addressed as part of thesubmission of’ bestand tinaloffers. t’or example, unacceptable terms tuid conditions marhaveto be amendedorwithdrawnaspart ota bestand final oiler. Confidential orproprietary designations on non—proprietary portions otan oderors proposal

must he removed.I. inacceptable licensing oroilier restrictions on the use of theproduct must he eliimiiatcd through a bestand final oIler amendment.

• I hedue dateand time iijr sul,missionof best and tinal oilers.• 1 he final paragraph should emphasizethe fact that the best and tinial otler is an opportunity for theolleror to improvethe

prt posalby submittingrevised proposed costs aswell as other amendments.

If the best and final oter contains rneaningfiul revisions to the original proposal. then till of the revi..~.il portions of theproposal firsthe reevaluated and points reassigned accordingly. The best and final oiler step has produced sonic truly amazing results over theyears saving the State literally millions of dollars. The step works best on single source awards.I lowever, it is valuable kr everyproettrernent as it is the only step in the process ~here the offeror is given au oppt.ulunity to amend the proposal.

The RFP document encourages the oflerors to respond to the contract with specific wording changes and additions. Some of thesechanges and additions could preclude the signing of a contract. That is why they tire required to he surltmitted up front as part of theproposal asopposed to the more traditional negotiation process that corporate attorneys thrive upon. For example. otlerors haverequired that the contract be governed under laws of sonic other state than New Mexico. That requirement is not acceptable. Theotlerors were given theopportiulity to amend their proposals eliminating the requirement. in some casestheproposals wereutnended, in othersthey werenotarid theofterorwaseliminated front theprocess, deemednon-responsive. In othercasesofferurshave required payments in advance, ~~hichis prohibited by statute. There have been ainuiost endless nations. That is why theProcurement Manager is responsible for reviewing the otleror’s changes and additions with in-housecounsel beftire this step in theprocess. Anotherarea that causesserious problems is workmanship or other wart-antics that impact theolleror’s proposed costs. Forexample, thecontractmay require that the contractor beboundand honor a six—month workmanshipwarrantywhereerrorswill hefixed during the warranty period at no additional cost to the agency. if one finalist agrees to the requirement and anotherdoes not,what does that do to the points awarded fir cost by the formula. Obviously, the cost tbrmula works only when thecosts areproposedon an identical basis. Since, in this case, proposed costs are not on the same basis, the Procurement Manager has an obligation to getthe inequity fixed as partof the bestandfinal process.The Proetit-ementManagermaydemand that the second ot’Ierorresubmit costsanda writtenamendmenteliminating objectionsto thesix-month contractual workmanship warranty. ‘rite ProcurementManagermayask both ollerors to proposecosts ona newbasis, e.g. a three-month workmanship warranty. ‘Ihe key point of this discussion is thatthe model RFP bestand final paragraph usesthephrase“oi’fcrors maybe required to submitrevisions...”, and this stepin the processis where proposal inequities and unacceptable conditions are eliminated.

DON’T ACcEPT RESPONSESSUCH AS “SUBJECT TO NEGOTIATIONS” AS AN ANSWER.

If the bestandfinal oiler requestcontainsinstructionsfor reproposingtheofl’eror coston abasisotherthanwhat~as containedin theREPdocument.then thechangeshouldhetreatedusanRl~Pamendmentandidentifiedas such.

After theawardtheProcurementManagerisresponsiblefor preparingtheproposalsfor public inspection.liuis simply means thatoneor moreof theCompetingoilèrorsmarrequestcopiesofone ormoreof theproposalssubmittedby theotherofferors. 01 course,the wrnningproposalis theonemostoftenrequested.Public disclosurehasto be timely. IheproblemariseswhentheofTh~rorhasdesignatedall orsectionsof theproposalas“proprietary’ or “confidential” whentheydo notmeettherequirementsfor suchdesignations.Thebestaridfinal offer stepinn theprocessshouldheusedto correctthis typeof problem.The ProcurementManagershouldrequire thattheextraneousdesignationsheremovedfrom the proposalasaconditionof’ award. Allen the nwardit is generallydiflicult to geteventhewinning oIl’eror to cooperatewith thepublicdisclosurerequiremnents.This situationcanextendtheprotestperiodanddelay contractinitiation. Finalist notification lettersshouldbesentvia facsimileor e-mailand11.5.Mail.

B. NOTIFY NON-FINALISTS

Nun—finalistsneedto be notified too. Theyprobablyhavea procumrcunentresponse team on standby awaiting notification of theselection.Therefore.proituptnotificationof thenon—finalistisrequiredsothat the proeLiremnentteamsma) bereleasedfur otherduties.‘Ihe recommendednotification procedureisa telephonecall from the ProcurementManagerJ~llowedh a written letterof’notification. “This letteris notification that yourcompanY’sproposalin responseto Rl’P # wasnot selectedasa finalist. On behalfof’Secretaryandthemembersof theE~’aItiatioiiCcnnmittee,I want toexpressour sincereappreciation fur the time andef1~rtyouandyour stafi’ havetakentorespondto ourRequestfor Proposals.”If thecompanyrepresentativerequestsa critiqueof theproposal.schedulethecritiqueafter tine expirationof theprotestj,criod. The

nutificationi letter shouldhe sentvia facsiinnile and U.S.Mail.

C. COLLECT BEST AND FINAL OFFERS

The model R]’P language states that the best andfinal offermustbesubmittedona givendateand time. Thisdeadlineistreatedexactlylike theproposalsubmission.iest andfinal otli~rssubmittedtiller thedeadlinearc nor accepted.Thereisno reasontohearanoral presentationt’rom anofli.~rorwho is goingtohedeemednon—responsivefor liuilure to adequatelyaddressrequired‘bestandfinal”oiler requirements.‘l’he bestandfimual oilersmust heverified fur compliance with the requirements.

I)isqualitication decisionsaremadeby the EvaluationCommitteeanddisqualificationlettersmustbepromptlysentaswell.

Bestand final offersmayneedto heclarified which isanothergoodreasonfor havingthemearly for reviewprior to theoralpresentation.‘l’he ProcurementManagermay requesta written clarificationor theoffer may beamendedvia handwritten noteswhich aredated and signed by a qualifiedrepresentativeot’the otl’eror’s organization.Since the amendedof1~ris binding, it must hesignedbysomeonewhohasthe powerto contractuallyobligatetheorganiLation.

Best and final offers, a_samended,areacceptedonly once. ‘l’hcv arediscussedandclarified at theoral presentationwhich concludesthecontactwith theofTerors’ organizations.For sonicunknownreason,somejurisdictionsrequirea sealedbestand final otTer that isopenedsometimeaftertheoral presentationhasbeenconcluded.That is nottheway thisprocessis conducted.Thebestandfinaloffermustbesubmittedby thespecifiedduedateand time. ‘l’he bestandfinal ofi~rshouldhediscussedarid clarified,if necessary,helhrctheoral Prese1]tati0tilLlL~no1ustrationhas beenconcluded.

British Columbia (www.pc.gov.bc.ca)

According to Julian lsitt of BC Purchasing Commission, they have only used this approach for four Information Technologyand telecommunicalions projects in the mid t late 1 990s. “... the process is very intensive for both suppliers and owners”. “Itis vital that any information communicated between receipt of the initial and final offers be reduced to writing and made partof the procurement record and, further, that any such information flow in accordance with a protocol incorporated within the(RFP)”. And “The success of the model depends on high degrees of expertise in all of the following: the business area thatis the subject of the solicitation; the law of competitive bidding... and the procurement process”.

8.

3.4 BEST AND FINAL PROPOSALS

3.4.1 Discussion With Short-Listed Proponents

If a decision is made to proceedwith an external model, the Province may engage in discussions with one or more ofthe short-listed Proponents to:

a) promote the understanding of the Province’s requirements and content of the Proposals;

b) determine in greater detail the qualifications of the Proponent or the Proponents;

c) explore with the Proponent or the Proponents the scope and nature of the required contractual services, proposedmethod of performance, ongoing evaluation of performance and the relative utility of alternative methods of approach,in order to facilitate arriving at a solution that will be most advantageous to the Province.

3.4.2 Submission Of Best And Final Proposals

The Province may establish a closing date and time for the submission of the best and final Proposals. The best andfinal Proposals will be submitted only once; however, the Province may make a determination, in its sole discretion,that it is in the Province’s best interest to conduct additional discussions or clarifications of the best and final Proposals.Otherwise, no discussion of or changes to the best and final Proposals will be allowed prior to selection of the Proposalor Proposals deemed to be the most advantageous to the Province.

3.4.3 Evaluation Of Best And Final Proposals

The Evaluation Committee will evaluate the best and final Proposals based on the evaluation criteria set forth in thisRequest for Proposal. The Evaluation Committee will select th~Proposal or Proposals deemed by the Province to bethe most advantageous to the Province.

Massachusetts.

According to Richard Mordaunt of the State of Massachusetts, they have used Best and Final Offers when (a) the pricing wastoo high (b) when the prices offered by bidders were difficult to compare and they therefore wanted a different pricepresentation; (c) to clarify confusing proposals; and (d) to assist the decision making process by providing more informationto differentiate between bidders.

They also use BAFO rather than cancelling a procurement. Here iswhat there ProcurementManual says about this subject:

If all theresponsesreceivedarepricedtoohighfor thedepartmentaavailablefundmn&a departmenthasthechoiceofcancellingtheprocurement,amendingtheprocurementorrequestingaBestandFinal Offerto obtainmorereasonablepncmg

According to one Procurement Director, BAFO use has been limited but considered many times. In five years of doingprocurements there were two instances where BAFO was used: (1) Dental commodities and (2) Cylinder and Bulk Gasesfor Medical and Laboratory applications.

Here is how they decide about BAFO. Bid responses are reviewed and the procurement manager then decides on the nextcourse of action. Market prices are reviewed as well as any existing contract for comparison. When determined there arebetter prices available on the market each bidder is notified indMdually and in writing of the need to resubmit their responsewithin the specified time. In both instances the bids were re-posted offering a two-week time for responses. Only those biddersthat had already submitted a bid were eligible.

According to the director, they used BAFO because the responses were either less than competitive and some furtherclarification was needed by the issuing department, or the initial prices were simply too high.

A second Procurement Director indicated that BAFO have been used in the following situations:

1. When price could/should be better.

2. When the prices offered by the bidders were difficult to compare so we asked for a different price presentation in the

BAFO from the original proposal.

3. To clarify confusing proposals.

4. To help assist the decision making process and provide a larger point differential between bidders.

Here is the description from their policies and procedures manual: (www.state.ma.us/osd/phand/phand.pdf)

Best anti Final Offer (BAFO)

Pu.r-suantto 801 CMR 21.06(11).al’rocurementManagementFemunmay pro~iL1ebidderswith an opportunity tc.,providea l~estandFinal Offer (II3AF(.)). The13A1’() processrepresentsanoptionalstepin thebidderselectionprocessand isnotpartof thecontractnegotiationprocess.UAFOs mayheusefulwhen no single responseaddressesall thespecilieatiomns.whenthe costssubmittedby allbiddersaretoohigh, whentwo or morebiddersarevirtually tied atkrtheevaluationimmi ‘cessorwhen all bidderssulirnittedresp‘risesthatare unclearor deficient inoneormore areas.

ThePMTmayrestrict thenumber of biddersinvitedto submit a BAFO,or mar otTertheoptionto all bidders.In eithercase,thePM1’ shouldprovidetine sameimutbnnatiomiandthesamesubmissionrequirementstin all bidderschosentosubmit a BAR).L)epartruentsarerequiredtodevelopanddistributetoselectedbiddersthewritten termsfor a BAI•(.:) with specificinformationonwhatis beingrequested.submissionrequirementswith timelinnesandinfbrmutiori on thebasisforevaluatingresponsesanddeterminingthesucccssfinlbidder(s).Biddersmay beaskedtoreducecostsorprovideadditionalclarificationto specific sectionsoftheRFR.

Selectedbiddersarcnot requiredto submita BAF(.) andmar submit awritten responsenotiMng thePMl’ that their responseremainsasoriginally submitted.The termsof the13AF() mmiv not identity eitherthecunTentrank of anyof thebiddersscicciedtör aBAF() or the lowestcostseunTemitlypitipused. TheProcurennentleani Leaderwill ha~efull discretionto acceptor rn_~iCCtamlV

informationsubmittediTI a l~AlO.051)recommendsthat departmentsconsiderhow the I3AR) option will heevaluated.Departmentsmar evaluatethesubmissuonsoI’HAR)s as anadditiontothe scoresalreadyreceivedlw bidderson their original RI Rresponsesor may developa newevaluationprocesshascdentirelyon the RA1() submission.Deparimemusshouldariicnlatein theevaluationcriteria (lie processto heusedin evaluatingthe I3AF(.).

More Information

The Model Procurement Code

Copiesofthe revisedcodecanbepurchasedfrom theAmericanBar Association(www.abanet.org)for $29.95.

To order call 1-800-285-2221andrequestproduct539-0200. Unfortunately,theofficial, approveddocumentisnot available on their web site. I do havea copyofthe SteeringCommitteeFinal Draft in Word formatwhich Iwill email to you, upon request.

10.

Steering Committee Final DraftThe Model Procurement Code Revision Project

Sponsoredby

The American Bar Association’sSectionof Public Contract Law

andSectionof State and Local Government LawIn Feb., 1979, more than 20 years ago, the American Bar Association published the Model Procurement Code. Since thattime, more than 17 states and hundreds of cities and counties have based their laws, regulations, and ordinances on thatdocument. In July, 2000, a revised Model Procurement Code was adopted by the ABA House of Delegates. The reviseddocument introduced needed revisions in areas such as the use of electronic signatures, and the commentaries reflectingcurrent thinking in public procurement policy.

There is much value in this document. Its Table of Contents identifies the elements to be dealt with in describing andprescribing the procurement function. Its Commentary sections are interesting reading, identifying approaches, reasons, andfundamental principles.

In this article, we have reproduced the section of the revised Code dealing with RFPs and the associated commentaries.

Section 3-203 deals with RFPs (Competitive Sealed Proposals) and is reproduced in its entirety.

§3-203 CompetitiveSealedProposals.

(1) CQnditionsfor Use.(a) A contractmaybeenteredintoby competitivesealedproposalswhentheChiefProcurementOfficer, theheadof aPurchasingAgency,or adesigneeofeitherofficer abovethelevelof theProcurementOfficer determinesin writing,pursuantto regulations,that theuseofcompetitivesealedbiddingis eithernotpracticableor not advantageousto the[State].(b) Regulations may provide that it is either not practicable or notadvantageousto the [State] to procurespecifiedtypesof supplies,services,orconstructionby competitivesealedbidding.(c) Contractsfor thedesign-build,design-build-operate-maintain,or design-build-finance-operate-maintainprojectdelivery methodsspecifiedin Article 5shallbe enteredinto by competitivesealedproposals,exceptas otherwiseprovidedin subsections(c), (d), (e),and(f) of Section3-201(Methodsof SourceSelection),

COMMENTARY:

(1) The competitive sealed proposal method (similar to competitive negotiation) is available for use when competitive scaledbidding is either not practicable or not advantageous. The competitive sealed proposal method is mandated for the projectdelivery methods described in Article 5: design-build, design-build-operate-maintain, and design-build-finance-operate-maintain.

(2) The competitive sealed bidding and competitive sealed proposal methods assure price and product competition. Theuse of functional or performance specifications is allowed under both methods to facilitate consideration of alternative meansof meeting [State] needs, with evaluation, where appropriate, on the basis of total or life cycle costs. The criteria to be usedin the evaluation process under either method must be fully disclosed in the solicitation. Only criteria disclosed in thesolicitation may be used to evaluate the items bid or proposed.

(3) These two methods of source selection differ in the following ways:(a) Under competitive sealed bidding, judgmental factors may be used only to determine if the supply, service, or

construction item bid meets the purchase description. Under competitive sealed proposals, judgmental factors may be usedto determine not only if the items being offered meet the purchase description but may also be used to evaluate the relative

11.

merits of competing proposals. The effect of this different use of judgmental evaluation factors is that under competitivesealed bidding, once the judgmental evaluation is completed, award is made on a purely objective basis to the lowestresponsive and responsible bidder. Under competitive sealed proposals, the quality of competing products or services maybe compared and trade-offs made between price and quality of the products or services offered (all as set forth in thesolicitation). Award under competitive sealed proposals is then made to the responsible offeror whose proposal is mostadvantageous to the [State].

(b) Competitive sealed bidding and competitive sealed proposals also differ in that, under competitive sealed bidding,no change in bids is allowed once they have been opened, except for correction of errors in limited circumstances. Thecompetitive sealed proposal method, on the other hand, permits discussions after proposals have been opened to allowclarification and changes in proposals provided that adequate precautions are taken to treat each offeror fairly and to ensurethat information gleaned from competing proposals is not disclosed to other offerors.

(4) The words “practicable” and “advantageous” are to be given ordinary dictionary meanings. In general, “practicable”denotes a situation which justifies a determination that a given factual result can occur. A typical determination would bewhether there is sufficient time or information to prepare a specification suitable for competitive sealed bidding.“Advantageous” connotes a judgmental assessment of what is in the [State’s] best interest. Illustrations include determining:

(a) whether to utilize a fixed-price or cost-type contract under the circumstances;(b) whether quality, availability, or capability is overriding in relation to price in procurements for research and

development, technical supplies, or services (for example, developing a traffic management system);(c) whether the initial installation needs to be evaluated together with subsequent maintenance and service capabilities

and what priority should be given these requirements in the best interests of the [State]: or(d) whether the marketplace will respond better to a solicitation permitting not only a range of alternative proposals but

evaluation and discussion of them before making the award (for example, computersoftware programs).What is practicable (that is possible) may not necessanly be beneficial to the [State]. Consequently, both terms are used

in this Section to avoid a possibly restrictive interpretation of the authority to use competitive sealed proposals. If localconditions require an enacting jurisdiction to reduce the proposed flexibility in choosing between competitive sealed biddingand competitive sealed proposals, the statutory determination under Subsection (1)(b) to use competitive sealed proposalsshould be confined to a determination that use of competitive sealed bidding is “not practicable”.

5) Whenever it is determined that it is practicable but not advantageous to use competitive seated bidding, the basis for thedetermination should be specified with particularity.

(2) Requestfor Proposals.Proposalsshallbesolicitedthrougha Requestfor Proposals.

(3) Public Notice. Adequatepublicnoticeof theRequestfor Proposalsshallbegivenin thesamemannerasprovidedin Section3-202(3)(CompetitiveSealedBidding,PublicNotice).

(4) Receiptof Proposals. Proposalsshall be openedso as to avoid disclosureof contentstocompetingofferorsduringtheprocessofnegotiation.A Registerof Proposalsshallbepreparedin accordancewith regulations,andshallbeopenforpublic inspectionaftercontractaward.

(5) EvaluationFactors. TheRequestfor Proposalsshallstatetherelativeimportanceof priceandotherfactorsandsubfactors,if any.

COMMENTARY:Subsection (5) requires that the Request for Proposals ç’RFP’~set forth the relative importance of the factors and anysubfactors, in addition to price, that will be considered in awarding the contract. A statement in the RFP of the specificweighting to be used by the jurisdiction for each factor and subfactor, while not required, is recommended so that all offerorswill have sufficient guidance to prepare their proposals. This subsection serves two purposes. First, a fair competitionnecessitates an understanding on the part of all competitors of the basis upon which award will be made. Second, astatement of the basis for award is also essential to assure that the proposals will be as responsive as possible so that thejurisdiction can obtain the optimum benefits of the competitive solicitation. The requirement for disclosure of the relativeimportance of all evaluation factors and subfactors applies to the areas or items that will be separately evaluated and scored,e.g., the items listed on evaluation score sheets. The requirement does not extend to advance disclosure of the separateitems or emphasis that are considered in the mental process of the evaluators in formulating their scores for the factors andsubfactors that are described in the solicitation.

(6) Discussionwith ResponsibleOfferorsandRevisionsto Proposals.As providedin theRequestforProposals,andunderregulations,discussionsmaybeconductedwith responsibleofferorswhosubmitproposalsdeterminedtobe reasonablysusceptibleofbeingselectedforawardfor the

12.

purposeof clarificationto assurefull understandingof,andresponsivenessto, thesolicitationrequirements. Offerors shall be accordedfair and equaltreatmentwith respectto anyopportunityfordiscussionandrevisionof proposals,andsuchrevisionsmaybe permittedaftersubmissionsandpriorto awardforthepurposeof obtainingbestandfinal offers.In conductingdiscussions,thereshallbeno disclosureof anyinformationderivedfrom proposalssubmittedbycompetingofferors.

COMMENTARY:

(1) Subsection (6) provides the procurement official an opportunity to make certain that offerors fully understand thesolicitation requirements and provides offerors an opportunity to clarify proposals where necessary so as to assureresponsiveness to the solicitation. Price discussions can best be conducted when there is a mutual understanding of thecontractual requirements. Clarifications are intended to promote exchanges between the [State] and an offeror that may occurwhen an award is contemplated without discussions, for example, to resolve minor or clerical errors or ambiguities inproposals.

(2) When discussions or negotiations are contemplated after the receipt of proposals which are expected to lead to therevision of proposals or to best and final offers, fair and equitable treatment of competitors dictates that negotiations beconducted in accordancewith ethical business standards. Auction techniques shall be prohibited in discussions with offerorsunder the competitive sealed proposal method. There must be a cut-off for the submission of revised proposals and finaloffers. Both Subsection (4) and Subsection (6) are intended to provide that prices; technical solutions; unique technologies;innovative use of commercial items, design, construction, or operating techniques; or other aspects of proposals submittedby one offeror must not be disclosed to competing offerors. Safeguards against abuse in the conduct of negotiations mustbe strictly observed to maintain the essential integrity of the process. Procedures should be specified in regulations in orderto achieve these objectives.

(7) Award. Award shallbemadeto the responsibleofferor whoseproposalconforms to thesolicitationandis determinedin writing to be themostadvantageousto the [State]takingintoconsiderationpriceandtheevaluationfactorssetforth in theRequestfor Proposals.Nootherfactorsorcriteriashallbe usedin theevaluation.Thecontractifie shallcontainthebasisonwhich theawardis made.Writtennoticeof theawardof acontractto thesuccessfulofferorshallbepromptly givento all offerors.

COMMENTARY:The file should show with particularity how the pertinent factors and criteria were applied in determining that the successfulproposal is most advantageous to the [State] to assure offerors that their proposals were evaluated fairly and to minimizeprotests or litigation.

(8) Debriefings. TheProcurementOfficerisauthorizedto providedebriefingsthatfurnish thebasisforthesourceselectiondecisionandcontractaward.

COMMENTARY:Debriefings may be given orally, in writing, or by any other method acceptable to the Procurement Official. A post-awarddebriefing may include — (a) the [State’s}evaluation of significant weaknesses or deficiencies in the proposal, if applicable;(b) the overall evaluated cost or price (including unit prices) and technical rating, if applicable, of the successful offeror andthe debriefed offeror; (c) the overall ranking of all proposals, when any such ranking was developed during the sourceselection; (d) a summary of the rationale foraward; (e) reasonable responses to relevant questions about whether sourceselection procedures contained in the Request For Proposal and applicable law were followed. Post-award debriefingsshould not include point-by-point comparisons of the debriefed proposal with those of other offerors. Any debriefing shouldnot reveal any information prohibited from disclosure by law, or exempt from release under the [applicable public recordslaws], including trade secrets, or privileged or confidential commercial or manufacturing information. A summary of anydebriefing should be included in the contract file.

_______________________________________________ 13.

Bullet-Proofing Your RFP ProcessThis workshop was presented at Government Technology Conference (GCT) Southwest in Austin, TX in Feb. The day isdivided into three sessions. The first sessionexamines the entire RFP process and provides numerous examples of bestpractices from jurisdictions throughout North America. The second session deals with the design of the actual evaluationprocedure. The third session focuses on best practices which reduce the potential for protests and litigation and includes areview of case law.

The slides, reproduced below, deal with the RFP process.

Critical SuccessFactors

1. Thesolutionis satisfactory

2. Seenassuccessful3. Consistentwith policy & law

4. Documentedprocess

5. Noobjections(complaints)!!

Policy IssuesCommonProblems

1. No Policy

2. Notconsistentlyapplied

3. Noteffective

[~Whenis anRFPused?

1. By Default

2. NegativeRules

3. PositiveRules

Why issueanRFP?

I. To satisfS’ law, regulation or policy

2. To foster competition

3. To simplify the selectionprocess

4. To resolveinternal problems

5. To obtain ideas

Whatis anEffectivePolicy?

I. Itisreasonable.

2. It is clearly stated.

3. It isUP-TO-DATEandavailablein ~iiting

4. It is known throughout the organization andbythep..

5. It is consistentlyappliedin all appropriatesituations.

6. It is legal.

POLICY INSTRUMENTS

• Laws• Regulations• Directives• AdministrativeManuals

• Policy Manuals• StandardizedDocuments

• Handbooks

14.

TheRFP Process

1. Initiate theproject.2. Establishtherequirements.

3. IssuetheRFP.4. Selectthevendor.5. Negotiatean agreement.

6. Implementthesystem.

RFPDocumentCommonProblems

1. Too much effort

2. Fatal errors

3. Proposalsare inadequate

Fatal ErrorsSpecificationsare restrictive ~

2. Specificationsare incomplete

3. Information is inconsistent.

4. Contract strategyproduces gridlock.

5. Political Interference.

Whatis a winningproposal?

1. Full understandingof the pro

3. Well-qualified supplier

4. Price is reasonable

2. Suitable plan

ProposalsareInadequate

& Failureto~’h~usuponsive

9. Poormanage~

10.Poorproblem delh

11. Failureto discussto

12. Failureto discusspast

perfonnance

1. Over budget

2. High risk3. Poorly stuffed

4. Incomplete5. Lackconvincingevidence

6. Lackappropriateresearch

7. Insufficientexpertise

Announcingthe Competition

CommonProblems

1. Bidderslists

2. Limited announcement

3. Too manysuppliers

4. Too fewsuppliers

15.

SuppliersandContracts J I EvaluatingProposals

L~ CommonProblems

1. Theevaluation doesn’twork asintended.

2. Theprocessis flawed-missingsteps.

3. “Winner” is rejectedby management.

A GOOD IDEAThe state of New Mexico has published a 230 page RFP guide. It’s full of good ideas, suggestion, and examples. Iparticularly like their idea of a procurement library. Here is part of what they say:

E. PROCUREMENT LIBRARY

Oneof the most usefulprocurementtechniqllesis to establisha procurementlibrIlrv that may containa ~vidcvarietyof documentsft,rusc1w the potcIltial ollerors.SincedoClinlents containedin the library do not haveto hereproducedanddistrIbutedwith theRIP,much morebackgroundandothermaterialmay bemadeavailableto theputelli ial otTeroj-s. Such materials~nayin~ltidetheGSl)rule1NMAC5.2or appropriatepnx.alrementregulations.ageflcvorganJzatii.tn.systemsdescriptions,needs(Lfl~ll)SiS.designdocumentation,programlistings,flow charts.floor plansetc.

Accessto the library is controlledby the l’roetirenientManager.Placeapproprlaleinstmcnu’lls ill theRFP. ThePrtlcurelnentManagerina~alsospeeil\ whatmaterialsmaybereproducedas well asthecostfor reproductIons.Someiiiatenal maybe subjecttonon—disclosureagrcemcnLs.It is essentialthat theProcurementManagero1fl~tiflappropriate~~ritteTlauthorri.ationsfrom themanufactureror ownerof thematerialsprior to their availability in the library. Documentsma~beadiedto the libraryvj~tRIP amendments.

SomeProcurementManagershavemademultiple setsof thedocumentsso tilat potentialoticrorsmaycheckacompletesetfor as1,ecifiedperiodoftime. Thepotential ol1~rormay reproducethedoeunuellts.ATlotheroption is to icquestthat thepotential ofThrorsbring a personalcopierwith tilelil for rejtix.liietictii of sdcclcdmaterialsfroul tile library.

Potentialollerorsarc given equalaccessLo the library, for the very large.complexprocurementstheProcurementI .ibrar is createdfirst andmadeavailablefor reviewby potential ollerors helorethe R}’i’ documentis issued.Thenotification procedureisidentical to tile iSSWfllCC procedureexceptthe contentof the olle—pagenoticeis diflerent. This techniqueis usedto providethepotentialoflerorsanadequatetime to study thesystemsdocumentationandmaten:llscontainediii the library in ane1I~rtto keeptheproposalresponseperiodat a reasonablelength.

OERFEP)TEntermy 1-yearsubscription(4 issues)to TheRFPReportIn US $60.00 In Canada$79.18 I

I El PaymentEnclosed:IJ VISA ~ MC. IJ AMEX ICard#: ____________________________Exp. Date________________

I EJ PleaseInvoiceme.My purchaseorder numberis:_____________________II Name______________________________________Mail to: MichaelAsner Consulting Title_______________________________________________________Suite203-15233Pacific Avenue Company________________________________________________ I

I White Rock, BC Canada V4B 1P8 Address__________________________________________________To order immediately please ________________________________________________________

Phone / Fax (604) 530-7881 Phone Fax Email__________________IL — asner@compuserve.com— I understandimaycancelatanytim~fI~ no athfiedandreceiverefundforthema11édpor~ I

I. Mandatorytermsin theRFP ~

2. Finalizingtermsbeforefmalproposals

3. Negotiateacontractwith theselectedvendor