The Request for Proposals and the Platypus: what do they have in common?

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• The Request for Proposals and the Platypus what
  do they have in common?

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Welcome

• Part A RFPs
• Part B Winning Proposals

Michael Asner Consulting Suite 210 15233 Pacific
Avenue White Rock, BC V4B 1P8 Canada
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Procurement is a Zoo!!!!
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Emergency!!
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Sole Source
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Tender

• RFQ
• ITB
• ITQ

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RFPs
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When to Use an RFP

• Competition
• Selection on more than price alone

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A World Wide Trend

• FAIR
• OPEN
• TRANSPARENT
• BEST VALUE

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• fair
•   adjective 1 just or appropriate in the
  circumstances. 2 treating people equally.

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• open
• adjective 1 allowing access, passage, or view
  not closed, fastened, or restricted.

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• transparent
• adjective 1 allowing light to pass through so
  that objects behind can be distinctly seen. 2
  obvious or evident.

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• best value
• ???????

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What the Courts Have Said
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DUTIES on OWNER

• Duty to disclose
• Duty of Care to Prospective Bidder
• Duty of Fairness
• Duty to Award as Tendered
• Duty of Fair Competition
• Duty to Reject Non-Compliant Tenders

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Canadian, eh? Once you establish
Contract A, Negotiations are Not Allowed!!!
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First, the Road Well Trodden Contract A RFPs
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Our Message is Simple...

• Contract A does not apply to all RFPs
• You can negotiate within the RFP process,
  provided you set it up that way
• Negotiations produce more value and reduce the
  risk
• Many RFP problems can be avoided if you avoid
  Contract A
• Fairness is always something to strive for

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• Contract A Doesnt Always Work!

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The Contract A/B Legal Framework

• The approach was defined in 1981 by the Supreme
  Court of Canada in its decision in R.(Ont.) v.
  Ron Engineering 1981 1S.C.R. 111
• Most RFPs in Canada introduce the Contract A -
  Contract B approach this is not a legal
  requirement, but many people have assumed it is
• A key legal issue upfront when starting to draft
  an RFP is to decide if the procurement process
  will be legally binding or non-binding

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The Contract A/B Legal Framework

• Ways to introduce Contract A?
• Through express language (as long as the
  substance of the RFP supports the language)
• Through the RFPs requirements (hallmarks), such
  as
• Is there a bid security?
• Are the bids irrevocable?
• Is the pricing submitted negotiable?
• Is a comprehensive draft agreement attached?
• Are the terms of the agreement negotiable or
  not?
• Are there instructions about amending proposals?
  

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The RFP Process (5 Steps)
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Fatal Flaws with the Contract A/B Paradigm

• While negotiations are not permitted, they often
  occur, except that pricing is rarely touched
  (when it should be) and the vendors price
  premium stays in
• Often mediocre proposals are accepted since the
  only alternative is to start again
• Change orders compensate for the inability to
  change the Statement of Work that is part of the
  contract.
• So you award a contract for 1million and you
  know you will have change orders for 200K to
  account for the shortcomings of the rigid RFP
  process

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• Negotiated RFPs

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The RFP Process (6 Steps)
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1. What is BAFO?
2. What is the law?
3. How does it work?
4. Who uses BAFO?
5. Why is BAFO not used more often?
6. What are the benefits of using BAFO?

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1. What is BAFO?

• Its a technique designed to improve the quality
  of parts of the proposals and the pricing, or
  just the pricing
• In the world of Contract A, this would be called
  bid repair or bid enhancement, but we are
  purposefully not in a Contract A environment
• Still, we want transparency and fairness

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2. What is the Law?

1. Any legislation in your own jurisdiction?
2. At common law, the courts never made the use of
   Contract A/B mandatory?
3. Even in a Contract A/B context, you could reserve
   a right to conduct a BAFO

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3. How does BAFO work?

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A Specific Example from Alberta

• Albertas Rules for BAFO
• Identify BAFO in the RFP
• No disclosure to vendors
• Only one BAFO round
• Only short-listed, fully compliant vendors
• Standard invitation to BAFO
• Initiated by the Procurement Officer

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Montanas RulesBest and Final Offers (Optional
Step)

• 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.

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Montanas RulesBest and Final Offers (Contd.)

• 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.

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4. Who Uses BAFO in Canada?

• City of Surrey
• City of Toronto
• City of Winnipeg
• Government of Alberta
• Government of Ontario
• Ontario Hospital Association
• Government of British Columbia
• Humber River Regional Hospital

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The Negotiation Process

• 1. Preparation
• 2. Fact Finding
• 3. Bargaining

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5. Why isnt BAFO used more often?

• Some public agencies are not be aware they can do
  it
• There is a perceived lack of legal authority for
  BAFO (the misconception that negotiations are
  always prohibited)
• Sometimes management doesnt want the agency to
  do it (for their own reasons)
• Some procurement people prefer to avoid
  negotiations

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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.

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6. What are the Benefits in using BAFO?

• 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.

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Conclusion

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Negotiated RFPs
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Conclusions

• What have we learned???

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Thank you. Michael Asner 604/530-7881 michael_at_r
fpmentor.com