The RFP Process WILL NOT Replace Good Contract Management

Most common question I'm asked of end-users when conducting a bid process:

Can we choose not to accept a vendors bid if the Vendor has provided poor service in the past or has poor references?

So, obviously the department has had this issue before...I need some background before I can answer:

- Did you document the performance issue(s)?
- Did you notify the vendor? (usually this is a condition within the contract)
- Did the vendor respond to the issue?  Did it resolve the issue(s)? What happened as a result?
- Is all of this documented?  Did it cause additional administration of the contract, additional expenses to hire someone else to rectify, etc?

Generally, the answer is "no, it wasn't documented; no, the vendor was never told", so obviously the vendor didn't have a chance to rectify the issue.

So my response is no, you can't disqualify the vendor as you have nothing to substantiate it and we could be sued for treating them unfairly.

Purchasing gets a bad rap from end-users who complain the process doesn't get them the best qualified vendor and are stuck with a low bid, poor performing vendor.  As with anything, garbage in/garbage out - if we don't ask the right questions, specify the correct requirements, we don't get the right thing. BUT, at the end of the day, the RFP does not manage the contract, the contract manager does.  This is a circular process, if a contract manager does not document/manage poor performance, then the next competitive process has no legal means to disqualify a poor performer.  And to be fair, does one bad experience mean they aren't any good EVER? How often are we 'perfect'?

As for bad references, there's a whole host of legal cases related to subjectivity of disqualifying a vendor based upon a reference...best to seek legal counsel on that!

Finding Value in System Contracting

Image by NobMouse via FlickrAssociate Guest Post by Rusty Joerin of Woodsgift Enterprises

System contracts, also known as standing orders, open purchase orders or similar terms can add considerable value to your procurements. Reduced overhead, efficient use of staff time, standardization of product and volume discounts deliver value to the buyer.

System contracts are most frequently utilized for the supply of low cost items routinely and commonly used in the organization. Often referred to as Maintenance, Repair and Operating (MRO)category items, the value is delivered both on the price of the individual items and the processes surrounding and incorporated into the supply contract. System contracts can also apply to furnishings, fleet maintenance and software licensing amongst other goods and services.

System contracts provide great opportunities for co-operative procurements between several organizations. I managed the procurement of stationery and copy paper supplies on behalf of a number of public sector organizations that resulted in better volume discounts than could be obtained through separate contracts. With one organization leading the procurement process duplication of procurement effort across the group was eliminated.

Standardization adds value through reduction of inventory carrying costs, reduction of training costs in the use or installation of product and interchangeability of products throughout the organization.

System contracts can and should be longer term contracts. Three to five years with appropriate safeguards is reasonable. This provides a balance between competitive requirements and procurement process savings to be achieved.

Next time – some things to consider when writing contracts for system type procurements.

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

Yet Another Countdown...

Tuesday, January 3rd, 2012. Government offices are back to regular working hours again. In Procurement, its the calm before the storm. Just like the mad rush of shoppers on Christmas Eve, Government year-end spending comes just before March 31st every year. Returning from winter holidays means there are merely 12 weeks and 3 days for the public sector to commit (spend) any remaining budget funds they may have.

Although the budget approval process starts in September the year before (ie the business plans for capital and programs are submitted in the Fall prior to the start of the new budget year) you will find procurement is only 'called' at the moment the program area is ready to go to RFP.

Timelines will be short, as the RFP needs to be "on the street" from 2- 5 weeks, depending upon the complexity and value. Evaluations will take another 2-3 weeks depending upon the schedules of the evaluators, and the number of responses required. In order to commit the funds, the contract needs to be signed before the year-end and delivery made.

So, dear vendor, at this time of year, when you send in a request to extend the closing date of the RFP - don't be offended, when the request is summarily refused. What I would suggest, rather than stating you need more time, explain WHY it is necessary that the marketplace has more time to provide complete materials that will shorten contract negotiations and expedite delivery, in a manner that would 'save time, money & scope creep' for the buying organization.