By Ray Wyman,
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
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
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
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,"
"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."
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,
"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
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
"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
"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
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
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
"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
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