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Overhauling The RFP Process
By Ray Wyman, Jr.

This article was ghost-written for a supporter of Marketect, Inc. - a now defunct company that built a specialized electronic clearinghouse of vendor/buyer information.


When most businesses need something they find a vendor and buy it. For public-funded agencies and some large institutions, purchasing the smallest and seemingly insignificant product requires a convoluted system of laws and a blizzard of paperwork.

If there is one thing that government bureaucracy does quite well, it is devising ways of ensuring that there is always enough paper work. But the reason there is so much paper work is that there are so many dishonest people. The laws were created to ensure the highest level of accountability and compliance; they are there for the benefit of the public trust - after all, it's our money.

Every so often, though, we hear a story that shakes that trust; like the one that the Arizona Republic reported just last month. Several Scottsdale school administrators illegally awarded more than $11 million in contracts over the past four years and accepted hundreds of thousands of dollars in kickbacks. The newspaper cited one particular case where an employee of a vendor helped the administrators write the bidding rules for a $6.5 million contract. When the vendor in question was later awarded the contract, one administrator wrote in an e-mail message to his cohorts that he hoped "no one raises a fuss about that."

Laws and Regulations

The Scottsdale bunch was caught tinkering with one of the basic components of state and federal purchasing law: the enigmatic RFP (request for proposal). An RFP is a document that is created by a purchasing agency; say a school or public office. They use the document to organize all the guidelines and rules that may affect a purchase; be it a year's supply of pencils for the elementary school or a new building for the university.

First, the agency reaches group consensus that they need something. After all the guidelines and the legal requirements for that purchase is sorted out in committee, the agency may add even more rules based upon other laws and regulations that are discovered during the initial sorting out process. There is no limit to the amount of rules that may be included for one acquisition; the more complicated the purchase, the more rules that may apply.

Once the RFP is completed, the agency makes it public by distributing it to a proscribed number of potential vendors. The vendors then respond to with a proposal that is written with the same care and deliberation as the RFP. The proposal is submitted by a deadline. In most cases, the drafting committee reviews all proposals, in some cases they submit their recommendation, and in other cases a higher body makes the selection. In all cases, there are checks and balances to ensure that the purchasing agency knows exactly what it wants and gets exactly what they ordered.

However, as well intentioned as this procedural tangle may be, corporations and entrepreneurs frequently find themselves lost in a thickening web of laws and bewildered by spiraling cost of writing proposals.

Jim Wolfston is president of Universal Algorithms, a software developer based in Portland, Oregon that designs workflow enhancement software for colleges and universities. "In our 20 year history, we have responded to many RFPs with so many requirements that it was difficult or nearly impossible to get a clear picture of what the college or university was looking for," he says. "There is something fundamentally wrong with a process that demands so much information that it tends to obfuscate more than it defines."

"It is not unusual to end up with a list of hundreds of requirements, especially for technology purchases," agrees Kenneth Perry, associate vice president of financial management at Diego State University, California. He acknowledges that for some financial software acquisitions, the RFP could contain hundreds of requirements that suppliers must demonstrate their capabilities.

While nearly everybody who has ever been involved with the RFP process acknowledges that the process is expensive, nobody has ever bothered to make a complete analysis. Is the process worthwhile? Is it cost effective? Various non-profit organizations and public interest groups have compiled some data, but none of it is comprehensive enough to offer a complete picture.

Costing the Process

Marketect, a marketing technology firm based in Phoenix, Arizona, has attempted to make such an analysis. Citing data from various education purchasing departments (the data is public), "public education spends more than $30 billion issuing RFPs and evaluating proposals."

Marketect's executive vice president, Jan Loomis, comments, "That's $30 billion, before a single dime is spent on bringing product or service into the campus." Based on a survey his company conducted recently, nearly all school administrators (from K12 to post secondary) agree that RFPs consume as much as 10 percent of the total acquisition budget in terms of staff time, and other direct expenses.

"That sounds about right," comments Perry. "Especially when you include building projects, high technology implementation, and facility infrastructure. I would not be too surprised if that figure is actually higher."

"Each responding vendor will spend about $6,000 responding to the RFP," Loomis continues. "Each proposal must be gone over by every member of the evaluation panel, which could be 10 or 100 people. In addition, there are lawyers, consultants, and dozens of others who must put their stamp on everything - by the time the school is ready to buy, it could be months, even a year down the road, adding hundreds of thousands of dollars to the cost of the project."

Barbara Horgan, the IT director at University of Washington, is sympathetic to the vendors. She notes that the most inefficient parts of the process is the span of time from issuance of the RFP to submission of the proposals. "During this period there may be time for vendor questions, but often it's not clear how complete and coherent the responses will be," she says.

"Nothing can move on the project or with vendor negotiation until all the questions are heard. For both vendor and client, it's a frustrating time. Vendors are uncertain about how serious the university is, and the university personnel wonder how much of their requirements will be addressed in the vendor's proposal."

Best Value

What will it take to make the process more effective? Short of an act of Congress, what can we do to straighten out this mess? The answer is neither clear-cut nor easy. Theoretically the award of any contract will be to the vendor that offers the best product or service with the best value. In this case, "best value" is most often defined as one that meets the specifications at the lowest price.

Best value, however, does not always mean the least expensive or having the best system, comments Larry Jorgensen, president of Proposal Resources, Inc. a proposal writing consulting firm based in Fort Walton Beach, Florida.

"These days, you can't get by with just technical superiority, or the smoothest approach to production. 'Best' means proving you have a combination of all aspects of the product as they relate to an evaluation standard set by the procuring agency. Therefore, determining best value is nearly as convoluted as figuring out what to ask from the vendors. Just the thought of coordinating these different requirements can be mind-boggling for both sides."

Comments Perry, "Many universities have concluded that they cannot do this in-house anyhow. Outsourcing the RFP… using consultants and other resources… can be a 'step though' process. We've gone through several RFPs this way; got our vendors, did the background checks and evaluation. It was a 4 to 6 month process. [The consultants] seem to have the tools to really cut this down in a short amount of time."

Through the use of 'boiler plate' documents and other time-saving methodologies, consultants can help the institution analyze their needs and draw a clearer picture of what they are looking for thereby avoiding, in the case of the private university mentioned earlier, an RFP that bears little relevance to what the industry can realistically provide.

Consultants, however, only help with disparate parts of the whole picture such as the functional aspects and specifications that go into the RFP. The real puzzle begins when it is time to research the vendor proposals and reach an agreement with everybody in both organizations. "There's a process which can take even more months in the doing," adds Perry. "And this only compounds with groups of campuses, trying to decide on the acquisition of a universal resource."

Some responding vendors add to the confusion by submitting proposals even though they do not meet the basic RFP requirements. Says Harry Gunther, director of material and risk management at University of California, Irvine, "This is an inefficient use of time for everyone involved. I believe this phenomena is being perpetuated by two factors: a poor pre-qualification process, and firms using participation in an RFP process as some measure the effectiveness for sales people."

Gunther adds that the quality of proposals, like many things, falls along a bell curve. "A top quality response is one that follows the established format, provides the requested information in clear unambiguous terms, and offers a solution that meets of the required need."

"There is little inherent in the RFP process -- other than the voodoo associated with formatting and delivery -- to encourage quality vendor responses, let alone assure them," asserts John Sears, vice president of institutional development for the University of Phoenix. "Much that passes for quality assessment in vendor response is really the buyer's perception that an acceptable vendor was willing to participate in the ritual."

He adds that a significant factor during the review process is the initial congruence -- or degree of fit -- between what the buyer wants and what the vendor offers. "Beyond that, the RFP process is just a protracted series of negotiated adjustments."

Same Time, Same Place

Certain technology intensive government agencies are now looking into ways breaking down information barriers by bringing industry involvement into their RFP development cycle. By enlisting industry input, they hope to streamline the process, produce clearly written RFPs thereby encouraging more responsive proposals and shorter selection times. Industry involvement may also help prevent a major 'miss' in an RFP, mid-track amendments while facilitating more successful awards at less expense.

According to a feasibility study submitted by the office of the Assistant Secretary of the United States Air Force earlier this year, group authoring techniques, the Internet, and other new technologies are now being considered to create "same time, same place" synergy between buyers and vendors.

"The concept of involving industry early in the acquisition process can include allowing industry to make input to the development of the request for proposal," the study reads. Prospective vendors can make suggestions for requirements definition, acquisition strategy, source selection criteria, and contract requirements and, develop a better understanding of the "requestors" requirements.

However, "same time, same place" authoring sessions can actually create unwieldy number of individual vendors wishing to participate. One solution could be found by using industry associations as intermediaries to obtain vendor input. A Web-based solution could also be effective, using an 'on-line' RFP as a basis against which contractors could propose changes, recommend additions, and ask questions. Such an approach would provide the additional advantage of being available to a broader base of prospective vendors without becoming buried by them.

It should also be noted that some software tools, like online "facilitators," can handle polling, whiteboard functions, and other 'groupware' functions. Some programs allow anonymous interaction that can open channels for frank dialog over major discussion points.

Back in 1996, Marketect Corp. launched a web-based RFP service aptly called "WebRFP." Nearly all its services was accessed from the web, including many described in the Air Force study. While the company went out of business a few years ago, it had produced at least one happy customer.

According to David Proudfoot, director of information technology at Lourdes College in Sylvania, Ohio, the WebRFP program provided valuable information that helped the school create a good quality RFP in less time than was originally expected. "There was some hand-holding while we learned the new technology, but the upside was that we were able to publish our final draft within three months, instead of the projected 12 months."

Through the Marketect program, Proudfoot and his staff accessed to a vendor capabilities database and a repository of similar RFPs produced by other schools. From the information supplied, they "were able to quickly separate the wheat from the chafe and go directly to the remaining vendors that had more promising proposals. In a sense, the program eliminated the smoke and mirrors so we could spend more time on important issues," he says.

Loomis points out that by providing a neutral service to both vendor and buyer, his company was able to filter out the hype and facilitate real fact finding. "The offset was that vendors gained more access and involvement in the brainstorming process, because buyers were able to condense the time it takes for them to evaluate and reach consensus. In effect, we had moved the focus of the RFP process forward - towards real solutions and realistic goals."

Another interesting tool from the Marketect web-gadget bag was something they called the 'Vendor Gap Analysis Report'. Essentially a grading program, the report rated statements contained in each vendor proposal against the values that were set in the buyers RFP. Says Loomis, "Gap analysis also gave vendors a chance to work on their weak areas and advance warning to consider possible negotiating strategies before they submitted their proposals. It could have also created real-time 'best case' models that would have compared trending consumer needs with industry capabilities."

Doing without the RFP

One possibility for improving the RFP is doing without it. Once again the Air Force is reaching out into the wild blue yonder, proposing that the government use an "integrated product team" composed of both vendors and buyers as its replacement. The team, according to the same feasibility study, defines all requirements and creates a model contract right down to prices for the acquisition and implementation services.

Recognizing that existing procedures "generates a considerable amount of scrap and rework" the report suggests that by using an integrated product team" buyers receive a reasonable cost analysis for the project and buyers facilitate timely and efficient resolution of issues.

"The focus of the IPT must be to satisfy user requirements at a cost/price which is fair and reasonable to both government and industry. The ability to recognize the motivation and needs of all [members of the team] and to derive an optimum solution requires trust and teamwork which typically exists in direct proportion to the maturity and stability of the Government/contractor relationship"

The Air Forces' concept may also bear significant savings reducing acquisition lead-time because it eliminates the need to request, submit, and evaluate proposals. Trial runs have produced "an 80 percent reduction in contractor and government costs."

On paper, the idea sounds interesting, especially for contract work involving long-term standardized manufacturing processes. However, in markets such as education, not only would it likely require major statutory and regulatory changes to implement, it may also create an entire new class of documents to determine who gets to participate.

Getting it Right

The barriers for systemic change in the RFP process are substantial. Gunther points out that many institutions are reluctant to use the Internet to advertise their RFPs and pre-qualification surveys because of the potential for a deluge of responses from firms that are not qualified.

"Evaluating and responding to these submissions would just increase the inefficiency," he remarks. "When an adequate filtering process is developed, that helps both buyers and suppliers, this fear can be set aside and significant advances in the use of the Internet will take place."

Administrators like Proudfoot and Sears are emboldened by the developments offered from companies like Marketect. "[Marketect] offers an interesting concept, using templates to replace the buyer's development infrastructure and improve the vendor's response capability," says Sears. "The application of technology accelerates the process and reduces the expense involved for both buyers and sellers."

In the meantime, Jim Koenig, the IT director for the College of Saint Benedict and Saint John's University in Collegeville, Minnesota, is actually looking forward to a day when the RFP is as much a relic as the manual typewriter.

"We're less nervous about making major purchases without an RFP. More information about products and vendors is freely available today from reliable sources therefore better decisions can be made without the expense. Some of this is due to the Internet; some is due to the free exchange of information in professional associations and professional journals."

Koenig adds that while it is true that more people are working smarter with newer and newer technologies, the Internet itself cannot be singled out as a single solution for higher productivity and efficiency.

While the mindset in all of us is to do more, faster, and at a lower cost, perhaps there is enough of an impetus to create tools that will actually help us work smarter. Then again, there's always the hope that we'll go back to the mindset where a good handshake is all you need to close an honest deal. -HP

"There is something fundamentally wrong with a process that demands so much information that it tends to obfuscate more than it defines."

Jim Wolfston, Universal Algorithms


"Public education spends more than $30 billion issuing RFPs and evaluating proposals. That's $30 billion, before a single dime is spent on bringing product or service into the campus."

Jan Loomis, Marketect, Inc.


"...determining best value is nearly as convoluted as figuring out what to ask from the vendors. Just the thought of coordinating these different requirements can be mind-boggling for both sides."

Larry Jorgensen, Proposal Resources


"There is little inherent in the RFP process -- other than the voodoo associated with formatting and delivery -- to encourage quality vendor responses, let alone assure them. Much that passes for quality assessment in vendor response is really the buyer's perception that an acceptable vendor was willing to participate in the ritual."

John Sears, University of Phoenix


"The concept of involving industry early in the acquisition process can include allowing industry to make input to the development of the request for proposal."

Purchasing Feasibility Report,
Assistant Secretary of the United States Air Force


The Air Forces' concept may also bear significant savings reducing acquisition lead-time because it eliminates the need to request, submit, and evaluate proposals. Trial runs have produced "an 80 percent reduction in contractor and government costs."


While it is true that more people are working smarter with newer and newer technologies, the Internet itself cannot be singled out as a single solution for higher productivity and efficiency.

Jim Koenig, Saint John's University

 

 

 

 

 

 

 

 

 


Suggested Browsing

Thinq Learning Solutions
RFP Exchange is a matching service for corporate training buyers and providers in the strategy and technology divisions of companies.

Defense: Air Force Procurement
Provides current information on US air force procurements processes, and access to draft as well as final RFP documents.

telezoo.com
Telecom industry marketplace featuring product vendors, service providers and system integrators. Make side by side comparisons and RFP's.

Pragmatech
Creators of "The RFP Machine" - software that generates proposal responses. Their software reportedly reads questions directly from proposal documents. I have not personally seen this program in action, but associates of mine have commented that it works very well.

RFP Market.com
Pay a fee and post an RFP this site when you want to find a seller. Your RFP is sent automatically over email to potential vendors.

Philanthropy News Digest -- RFP Bulletin
The RFP (Request for Proposals) Bulletin is published weekly in conjunction with the posting of Philanthropy News Digest to the Web.

Put it in Writing
An article written in 1998, but it is still relevant today for those who are stuck with the paper RFP. The article goes into detail on preparing an effective request for proposal, evaluating responses, and finding the best outsourcing deal.

 

 

 

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