The Request
                                           When local government staff take the time to carefully
Requests for Proposals                     proposal with good rates for most          This allows multiple vendors to be
T H E    R F P     P R O C E S S      I N   L O C A L     G O V E R N M E N T

about the local government, the          ...
T H E    R F P   P R O C E S S      I N    L O C A L      G O V E R N M E N T

to exceed. Then, those vendors that      ...
T H E    R F P     P R O C E S S      I N   L O C A L    G O V E R N M E N T

to the RFP as placed on a Web site        ...
T H E     R F P   P R O C E S S      I N    L O C A L        G O V E R N M E N T

scorers could then be invited to      ...
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The Request for Proposals Process in Local Government


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The Request for Proposals Process in Local Government

  1. 1. The Request When local government staff take the time to carefully craft an RFP, widely disburse it to potential service providers, and conduct an objective evaluation for Proposals of proposals, the end result can be very beneficial in terms of cost effectiveness and service quality. BY LEE LARSON Process in Local Government From police to parks and from bridges to sewers, local governments typically provide a full-range of services for their communities. In order to provide these services, vendors are often needed who have specific skills in a particular area where the local government is unable to directly provide the service. Local governments frequently use a request for proposal process for soliciting and selecting vendors, either because the local government is mandated to use this process or because it realizes the request for proposal process allows them to maximize value with a competitive and flexible procedure. About the Author LEE LARSON works for the city of Minneapolis Finance Department as the citywide contract administrator. She is a member of the Twin Cities Chapter. Send comments on this article to 34 s Contract Management / February 2004
  2. 2. Requests for Proposals proposal with good rates for most This allows multiple vendors to be According to Asner1, a request for of the services, but has fallen short evaluated and selected for use on proposal (RFP) is a written document on a few. specific projects as they come up. For that describes a problem, identifies For a project where some of the example, the city of Minneapolis has an organization’s requirements tasks are unknown, it may be helpful developed a panel of contractors who for solving the problem, asks for to do a general RFP (or a request for provide professional information tech- solutions, provides criteria to evaluate information, which simply solicits nology services. These panel members the proposals, and specifies general suggestions on what should be are allowed to provide proposals for contract terms and conditions. The included in a program), requesting the various information technology RFP should be very carefully written. methodologies for how the vendor projects as they are posted on the city As Asner states, most participants will provide the services. Since Web site. The knowledge that the agree that the best proposals result a local government administrator other panel members may also be from providing the vendors with is under no obligation to enter into providing proposals for the projects as much information as possible. a contract as the result of an RFP, helps ensure that the proposals However, the RFP should provide no the RFP may therefore be used to remain competitive. more detail about specific tasks than obtain free information. However, An RFP can promote competition is absolutely necessary. This allows because contractors know that RFPs and project understanding, transmit the local government administrator to are sometimes used for this purpose, background information, simplify have vendors describe the method by the contractors may try to be as gen- evaluation, avoid a biased selection, which they will provide the relevant eral as possible in their proposals to bring in new approaches by vendors service, possibly in a different manner avoid allowing the local government for resolving problems, and improve than previously considered. Once the administrator to learn enough from the quality of proposals. However, an RFP is written, an objective associate their proposals that contractors RFP can also take staff time to pre- should review it to ensure it is clear, are not needed. It is also possible pare and approve. This staff time is yet not too detailed. to recruit consultants (or other a direct cost. Also, the time needed An RFP should be used when a professionals) for professional for an RFP process may prevent the high-profile project is involved or services on an as-needed basis. project from beginning until the entire when expenditures are estimated This is often referred to as a panel RFP and contract execution process to exceed a particular level. For or retainer contract. The scope is complete. For a project that is on a example, the city of Minneapolis of service section of such an RFP tight timeline, this can be frustrating. requires a formal RFP with a proposal will request the qualifications, evaluation team whenever expenses experience, and pricing of various Sections of the RFP for a professional service are vendors without providing any The background information section estimated to exceed $50,000. For information about a specific project. should provide any needed information professional services that are less than $50,000, other methods of solicitation can be used. For example, a staff person might contact various qualified vendors by telephone and request a quote from each. If all parts of a project are known, it may be preferable to identify The World is Our Campus each service involved and then do Our DISTANCE LEARNING PROGRAMS a separate request for proposal for help you reach your career goals each service. Alternatively, it may and maintain your busy schedule. be preferable to do an RFP for the entire project, with a statement that MBA, MPA and Master of Science a proposer can include all services accredited degree programs and graduate certificates in: or just some services—but the cost • Acquisition and Contract Management • Materiel Acquisition Management proposal should separately price • Human Resources Management • Operations Research each service. A choice can be made OC-412-703 • Logistics Management • Project Management depending on the responses to each • Management • Systems Management service and then the responses overall. This technique also allows Florida Institute of Technology • Virtual Graduate Center more room for negotiation with a • (912) 634-6336 • (888) 225-2239 • E-mail: vendor that has provided a quality February 2004 / Contract Management s 35
  3. 3. T H E R F P P R O C E S S I N L O C A L G O V E R N M E N T about the local government, the allotted to allow vendors to read the Evaluative Standards operating department, and the overall RFP before the conference. This section should provide an project, so the recipients understand A more common approach to overview of the “evaluative standards” the local government environment as questions is to state that all communi- (i.e., measures) to be used to select it relates to the request for proposal. cations, including questions, must only the contractor. It is important to be sent in writing to a specific person, establish a base level if a particular Scope of Service and that the questions, along with the standard is required. Limit the This section should identify the answers, will also be sent in writing number of measures to allow a services to be provided by stating the to all parties who received the RFP. meaningful comparison of proposals, end result of the services. For example, This becomes more difficult when and be sure that the standards are an organization may state that it wants RFPs are posted on the Internet. consistent. Some examples of evalua- a new software system that accurately However, a statement may be added tive standards are past performance, reflects building inspections tracking. to the RFP that the questions must reasonable approach to accomplishing The vendors will then be able be provided by a specific date and the the service, and relevant references. to describe how they can help the answers will be posted on the Internet Weights can be included for each organization meet the stated goal. by another specific date. standard, but it is sometimes preferable to determine these after Mandatory Features The Facility the evaluation committee first meets, This section should outline any If appropriate for the RFP, this section which typically occurs after all the mandatory features that the contrac- should provide information on when proposals have been submitted. tor must provide. For example, if it is the tour will occur and how to make necessary to provide reports to the arrangements to attend. General Information local government administrator This section should provide general because grant funds are being used Government Assistance information such as: that have a reporting requirement, If appropriate for the RFP, this section then the general format of the reports should identify any assistance that the (1) whether there will be verbal pre- and how often they are to be submit- local government is willing to provide sentations to the local government ted should be identified. If a proposed the contractor, such as clerical by the vendors before selection; software system needs to contain support, data, or documents. components for tracking building (2) any timeline as to vendor permits, housing violations, and Format for Proposals selection and service delivery environmental problem conditions, This section should stipulate the (including starting date, ending then this should be specified. If the format for the proposal. For example, date, and report deadlines); software system must be compatible “the proposal must provide the follow- with Windows 2000, then that ing information in the following format: (3) any general conditions that will requirement should be stated. be attached to the contract, once However, only the mandatory (1) the method the vendor will use written, including any insurance requirements should be identified. to provide the service; and bond (payment or If there are items that will be performance) requirements; desirable, such as customized training (2) timeline of availability for the service; and documentation, then those items (4) the name of the RFP manager, who should be included in a separate (3) cost/fees and expenses, with detail will become the contract manager; section on desirable components. as to what expenses are included; (5) a date and time by which Questions from Vendors (4) the desired means of payment, proposals must be submitted; and A process should be described for how whether a lump sum, hourly rate, questions will be addressed. A pre- or time and materials basis; (6) the address to which proposals proposal conference may be held in will be sent. order to address all the questions at (5) resumes of individuals who will the same time. If such a conference is provide the service; Optional Items desired, then the time and place for First, according to Asner2, there are the conference should be identified in (6) names and telephone numbers differing opinions about whether the RFP. Also, information should be of references; and to provide budget information. Some provided as to whether attendance at jurisdictions believe that a budget the conference is mandatory or (7) a list of prior experience with this should be provided, so vendors have optional. Sufficient time should be type of service.” an idea what dollar amount not 36 s Contract Management / February 2004
  4. 4. T H E R F P P R O C E S S I N L O C A L G O V E R N M E N T to exceed. Then, those vendors that A fourth option is to request The following are some options come up with much higher prices will the qualifications and experience for selecting recipients of the RFP. either not submit proposals or of the specific vendor individuals who reconsider their methods of providing will work on the contract. Known Vendors the service. Other jurisdictions The local government administrator believe that providing the budget Recipients of the RFP may be able to come up with a leads to the inflation of costs that It is crucial to send the RFP to reasonable list of known vendors might have been much less, and that multiple vendors to ensure a varied based on experience, or may choose budget information is a barrier to the group of responses and to provide the to survey other government agencies usefulness of the RFP process. local government more flexibility and or firms to identify names of vendors A second optional item is a require- negotiation power. In general, it is far who have provided the same ment for a project management plan. better to send an RFP to a broader or similar service in a satisfactory This is particularly important when a audience than to a narrower one. manner. Known vendors may also project has many phases or will What is being sought is not one include all vendors who have involve multiple parties. A project perfect vendor, but a group of perfect previously indicated an interest management plan will help to evaluate vendors. Having viable alternatives in performing this or similar work. if the vendor has considered how to allows a stronger position in the coordinate the entire project. negotiation relationship. The postage Unknown Vendors A third optional item is a expenses are minor compared to the Unknown vendors may include all requirement that the vendor not value of multiple options when vendors in the local area who are supply multiple options for providing negotiating. However, a short letter licensed to do the work; all vendors the service. It is sometimes very could be sent to many vendors stating listed in the Yellow Pages who are difficult to evaluate proposals when that an RFP has been developed for identified as performing that function; the same vendor presents multiple a certain service and that they should all vendors listed as able to perform options. Language can be included call if they have any interest in the that function from a list of certified that the vendor should select and RFP. Other ways to save postage are small businesses, women-owned present only the option that best to send the RFP out by e-mail or fax, businesses and/or minority-owned addresses the RFP objectives. or by posting it on a Web site. businesses; all vendors who respond February 2004 / Contract Management s 37
  5. 5. T H E R F P P R O C E S S I N L O C A L G O V E R N M E N T to the RFP as placed on a Web site that only one vendor can provide the to be selected in an RFP process. (a requirement could be established service as identified. The solution for The proposal that best meets the in the RFP criteria that the vendor both of these situations is to help the needs and the budget of the local be within some specific distance from department draft or redraft an RFP, government is the one that should the local government to avoid long- so the service can be provided in be selected. Price is only one factor distance telecommunication costs and alternative ways by more than one in this analysis. high-travel expenses); or all vendors vendor. The department should also Unless the service and the proposals who respond to an ad placed in the be coached as to methods of are so simple as to allow an easy paper announcing the RFP. identifying additional vendors. selection of the best proposal, a committee should be formed to Employees Review and Approval review the proposals and help in the If employees currently provide the Once the list of recipients, any selection process. Using a committee service, the RFP could be provided solicitation letters, advertisements, also helps ensure an objective choice to staff or union officials to allow for and Web site releases have been of vendor. The committee should managed competition. As mentioned prepared, the RFP and the vendor list include people who have varied in a GAO report3, the city of are ready for formal review and experiences and responsibilities to allow a broad base of knowledge. Some examples are persons who are technically familiar with the service; managerial level people who can help review the managerial capacity of vendors; outside specialists to provide input; contract compliance specialists; and lower-level staff who will interact frequently with the selected vendor. For the city of Minneapolis, Indianapolis provides its relevant approval by the local governing body no procurement office staff may be managers and union members with or designee. The local government included on the evaluation committee training to identify inefficiencies, administrator should determine the to avoid a conflict of interest. conduct workflow analyses, and correct process, which may be found In contrast, according to Asner4, the reduce costs. It also provides in a city clerk’s office, a city county state of Alaska requires that a staff consultants to help its employees manager’s office, a policy and proce- person of the procurement office prepare competitive proposals. dure document for local government be on every evaluation panel. If a local administration, or the local govern- government administrator is interested Sole-Source Providers ment purchasing division procedure in procurement office participation, If a department staff person claims manual. For a large RFP and/or one then the administrator should check that only one source is available and that will have public policy implica- with the office that provides purchas- that therefore no RFP need be done tions, it is generally appropriate to ing services to determine if there is an or that it need only be provided to have the governing body approve the internal policy relating to such partici- one vendor, it is important to release of the RFP. Even if the specific pation. It is probably best to do a first ascertain whether this is indeed true. local government process does not cut through the proposals to eliminate Occasionally, there is only one source require review and approval, it is very those vendors who did not respond that can provide a service. In that important to get someone else’s per- appropriately. (Not responding appro- case, an RFP should still be used in spective on the RFP to ensure that it priately includes not understanding the order to clearly identify the service is clear, yet not overly restrictive in service to be provided, not submitting that is needed and allow for the telling the vendor how to provide the a proposal on time if a set time for vendor to identify how they will pro- service. It is also helpful to have some- responses was required, or not vide the service and for what price. one review the vendor list to help providing all required items.) From time to time, a department determine if a viable service provider An option is to then have the may claim a sole source exists has not been included. Also, there may remaining vendors provide a verbal because it has established a be some vendors that may need to be presentation to the committee. If relationship with a particular vendor included soley for political reasons. there are too many proposals to do or has not done any research in so, then the committee could instead locating additional vendors capable of Response and Selection review the proposals and rate them providing the service. In addition, an It is important to remember that the against the evaluation standards RFP may be drafted in such a way lowest-priced proposal does not have as identified in the RFP. The top five 38 s Contract Management / February 2004
  6. 6. T H E R F P P R O C E S S I N L O C A L G O V E R N M E N T scorers could then be invited to Sole Responses It is also wise to require a reasonable provide verbal presentations. The If only one response is received, fee for copying the various documents presentations will then be a further the local government administrator to avoid frivolous requests. factor in the evaluation. However the should conduct research to determine scoring occurs, the committee will if it is because there is only one Record Retention determine the ranking of vendors, and provider or if there is another reason. A local government should establish negotiations will then proceed with It is very difficult to negotiate with a record retention schedule to identify the top vendor, unless the local gov- only one respondent because the a standardized time for retaining the ernment administrator (presumably primary leverage, the ability to go materials, involved in the contracting with the approval of a higher-level elsewhere, has been eliminated. process. For the city of Minneapolis, manager) decides to go against the The local government administrator a schedule has been established for committee recommendation and should also contact vendors who were the materials, with time periods select an alternative vendor. provided the RFP but did not respond, determined by the type of contract and ask why they did not respond. involved. For example, a construction Scoring Methods Any information received may then contract must be retained The simplest method is to assign be used to revise the RFP, and the permanently, while a professional criteria and then give each criterion RFP should be re-released, if possible. service contract need only be retained stated in the RFP a specified weight. For example, a vendor may point out for three years after contract closeout. Then, each proposal is rated and that the way an RFP was written Having set retention periods, and the best-scoring proposal is awarded restricted eligibility to only one firm following them, allows administrators the contract. Mack5 has described by requiring a specific type of to easily determine if the materials some alternative scoring options, such equipment, even though the RFP are available for public access. as using mandatory and weighted could have easily been written to criteria with a best overall value allow flexibility in equipment choice. Conclusion calculation. This method involves As another example, the non- Local governments often discover that doing the weighting and rating evalua- submitting vendors may provide the regular use of request for propos- tions separately from considering the helpful information about problems at als provides for a competitive process cost factor. Then, the rating for each the local government that have that allows for the flexibility frequent- proposal is divided by the cost for caused them to lose interest in ly needed in a procurement system. each proposal. The award goes to the submitting proposals. Perhaps the When local government staff take the lowest cost per rating point. Another local government is perceived as being time to carefully craft an RFP, widely method mentioned by Mack involves slow at bill paying, or as having a very disburse the RFP to potential service comparing technical values of close relationship with a particular providers, and conduct an objective proposals. This is used when the vendor. If possible, these problems evaluation of proposals, the end result budget has been provided in the RFP, should be resolved to avoid a lack can be very beneficial in terms of cost and there is the assumption that the of competitive responses. effectiveness and service quality. CM proposals will all fall around the same Regardless, if only one proposal dollar amount. Yet another method is received and the proposal meets Endnotes involves requiring two envelopes: one the needs of the local government at 1. M. Asner, Request for Proposal for the proposal itself and one for the an acceptable price, then that Handbook (Sacramento: Government price. The proposals are evaluated proposal may be accepted. Technology Press, 1997). and the second envelope is only 2. Ibid. opened for the best proposals. Then, Freedom of Information Laws the lowest-priced of the best proposals In general, these laws require a local 3. House Republican Task Force on is selected for subsequent negotiation. government to provide access to the Privatization, Privatization Lessons Also, if circumstances allow, a local Learned by State and Local RFP, the evaluation and weighting Governments, Report to the chairman government administrator could sheets, evaluator notes, and subse- (Washington, DC: United States General consider contracting with more than quent contracts if they are requested. Accounting Office, 1997). one preferred vendor. When specific Sometimes, access to the various 4. M. Asner, Request for Proposal needs arise, the contracted vendors proposals may also be requested. To Handbook (Sacramento: Government could be contacted for competitive ensure that the local government is Technology Press, 1997). proposals. In addition, multiple not perceived as having made a biased vendors on an as-needed basis provide choice of vendor, it is best to retain 5. A. Mack, “Purchaser Step up to Best Value Challenge,” Government insurance for a situation where the these documents for a standardized Procurement (February 2000): 7-10. most preferred vendor is not available time period to allow them to be used for a specific contract need. to defend a fair and open process. February 2004 / Contract Management s 39