How Do You Contract Based on Vague Answers?

Recently a vendor asked for a copy of a winning proposal.  I've learned this is normal for US vendors to do, but in Canada, not so much.  In our discussion they came to realize there are two main reasons for this: Canadian protection of privacy legislation, and the RFP is a contract!

1) FOIPPA/PIPA/PIPEDA - these are the overriding privacy law in various parts of Canada - FOIPPA in the province of BC being the one I'm most familiar with.  To release an RFP would require a Freedom of Information request; a timeframe for a response; and a great deal of time and effort on the part of an FOI officer to redact the information.
The flipside of this legislation is the proponent doesn't get to mark 'everything' as confidential and a proponent doesn't necessarily get notified if an FOI request has been made. Although many organizations do the courtesy of giving them a heads up, by law the information is to be released and the proponent cannot stop it.  The information would have to be proven to be proprietary and marked as such before submission....and no, marking the proposal as 'confidential & not to be released without permission' does NOT override the law.

2) RFP Contract - in the US, the RFP is an advertisement; in Canada, the RFP is an offer. In responding to the RFP, proponents accept the terms/conditions of the RFP and form a contract with the buying organization.  This means the buying organization has to play by the rules as set out in its document.  That means the buying organization must score/evaluate the proposal against the weightings & criteria contained in the RFP. What some US vendors don't realize is their proposal is the 'final offer'; what is contained in their written proposal forms their evaluation score.  There's no new information submitted 'later'.

In our vendor debriefing discussion, the US-based vendor admitted they keep their proposals 'vague' because of the number of times their proposals are released to their competition (in the US). As a result they scored much lower.  It causes me to wonder: How does a buying organization make a procurement decision on a vague proposal?  How does one evaluate if the response to the written criteria has no details?

Associate Guest Post by Rusty Joerin of Woodsgift Enterprises

Buying from local goods and services suppliers has many advantages, politically and economically. Senior Government legislation has mandated that public sector organizations must publically tender most procurement and not exclude suppliers from across Canada based on geographic location. We (too) often hear examples of tender awards to “out of town” vendors offering goods and services a little bit cheaper than the “local” supplier where all other factors are equal.

Or were all other factors considered? Let’s explore this sensitive issue.

Sr. Government Legislation – Agreement on Internal Trade (AIT) and New West Partnership Agreement (NWPA) are intended to reduce interprovincial trade barriers and enhance competiveness. Legislative goals are articulated and can be read here: http://www.newwestpartnershiptrade.ca/pdf/NewWestPartnershipTradeAgreement.pdf

School Districts, Post-Secondary Institutions and Municipalities have deep roots in their local economies and social networks. It’s a tough call to award business to “away” supplier when “local” supplier is equally competent but a bit more expensive.

Competition, however, is a good thing. If local supplier is complacent, away supplier will take their business. Local supplier can also expand its market by bidding goods and services in away supplier’s trading area.

The request to supply document will determine the process for selecting which supplier your organization will contract with. The tendering organization can state legitimate criteria (to the goods or services requested) additional to price for consideration when evaluating responses to their supply requests. The relative weighting of each criterion must be disclosed and the evaluation process should be quantifiable and defensible. Public sector buyers are often required to demonstrate that they are obtaining the best value from their selected suppliers to both taxpayers and losing bidders.

The development of a 100 km supply chain will require careful procurement planning, knowledge of the local marketplace and may be assisted through the provision of supplier development workshops. While not everything can be locally sourced, local suppliers of many goods and services can be every bit as competitive as the away suppliers when all legitimate factors are considered in the supplier selection process.

Rusty James Joerin, SCMP is a Supply Chain Management Professional and accredited by the Purchasing Management Association of Canada. He offers procurement services primarily to public sector organizations that do not have a professional supply manager on staff and provides additional capacity to assist with project related supply.

Information about his experience and qualifications may be found at:www.woodsgift.com

We'll have what they're having...

An article popped up in my news readers this morning that scared me.  An RFP was issued to privatize (outsource) a university health centre without sufficient investigation!  The reason this scared me is the procurement/purchasing department had an amazing opportunity to provide value to the organization by facilitating research into the feasibility.  In 2002-2003, my MBA consulting project was to investigate the feasibility of outsourcing the inventory management at a hospital.  Part of my literature research indicated that outsourcing decisions needs a baseline and the best place to facilitate this is with the purchasing department... here's an excerpt of what I had found in my literature reviews:

Regardless of where the outsourcing idea originated, someone needs to conduct an in-house feasibility study, and solicit outside information before approaching an outsourcing decision. (McKillop, Barry, Outsourcing: Seminar Participant Notes, Purchasing Management Association of Canada, January 1996. pg 28).  The feasibility study will include identifying what activities to outsource, assessing the current operations, identifying customer requirements, assessing human resources impacts, setting/evaluation of metrics, then taking that internal information and comparing to business process alternatives. (McKillop: pg32).

A comprehensive book on outsourcing recommended by the Institute for Supply Management, is “Strategic Outsourcing” by Maurice Greaver.  Greaver provides a detailed process to approach outsourcing.  Both McKillop and Greaver’s processes begin with identifying the area to be examined, proper planning, study and analysis.  Within McKillop’s process, he identifies the key steps in the feasibility study as follows:

• Obtain sponsorship from the top
• Set objectives and deliverables to be met by the project
• Define which function/process/activity to examine
• Chart current situation using process mapping
• Conduct financial cost analysis of the above process map
• Interview users of the service
• Benchmark the process
• Define barriers/risks to outsourcing
• Obtain outside information from suppliers/others who have outsourced

The two authors’ approaches differ on the point where the multi-functional team involvement begins. With McKillop, the preliminary work is done within the purchasing department, and a team is developed when the process mapping stage begins. A multi-functional team of customer representatives, process experts, functional, financial, legal and human resources representatives are required for the analysis stage.

What do you think? How did this RFP get issued without sufficient stakeholder involvement/feasibility/research conducted? Did the University officials push for the RFP to be issued? Did Purchasing not offer expertise to suggest further research?  

OR is it better to have the marketplace tell you what you need when others have already done it (ie we'll have what they're having)?