This is the fifth of an eight-part series on procurement practices in information technology. This series is authored by Bob Shumate, a Member Emeritus of the IJIS Institute and the chair of the IJIS Institute’s Procurement Innovation Task Force. The material in these articles covers the findings of the Procurement Innovation Task Force and offers some insight into the problems and solutions in procurement evident in today’s information technology markets.
Once you reach the stage of issuing a formal RFP, you are likely to be governed by legal requirements or at the least by established administrative procedures that define how the formal RFP process must be handled. Use the both the legal and the procurement representatives on the governance committee to outline the boundaries of what you are allowed to do within the formal RFP process. Decide how you will proceed within the legal and procedural requirements governing this stage of the procurement and agree whether you want to seek any exemptions particularly to administrative rules.
Preparing the RFP document. The content of the RFP document will be dictated to some extent by existing legal and administrative requirements. In most cases, you will have some latitude in how the document may be structured and often you may find you have more latitude than you thought. Use the work that you completed during the preplanning and problem definition stage to prepare a document that describes the results you want to achieve and ask the suppliers to propose the best and most cost-effective way to achieve the results. Describe how the enterprise operates, how you want to change the business processes within the enterprise, and what you want the business process to look like. Examples of language that asks for a solution might be, “Currently applicants fill out a form that is subsequently entered to the system by a clerk using a computer terminal. The proposed system must allow applicants to enter their application data directly to the system via personal computers, mobile devices, and public kiosks supplied by the agency. The system currently processes 5000 incoming applications per day which is projected to grow to 8000 per day during the next five years.” In this example, you have stated a requirement of the system and are asking the supplier to propose a solution.
What should be included in the RFP? There is a wide difference between individual jurisdictions as to what should be included in the solicitation document. Provide your potential bidders with as much information as allowed by legal or regulatory requirements permit. Doing so will likely result in a more realistic response. Here are some of the items you should consider including:
- The problem statement already referenced in the previous paragraph. If local regulations require a prescriptive RFP approach, allow as much flexibility in response for alternate solutions as local custom or regulation permit.
- Include the contract terms and conditions you expect the provider to agree to. If local rules permit, state that the supplier may propose alternative terms as part of the pre-submittal communications and be prepared either to agree to such alternative procedures or to reject them as part of the communications process. It serves no one’s interest for a supplier to be selected and then for both parties to find that agreement to the terms and conditions cannot be reached.
- Be as transparent as local rules and customs permit regarding your budget for the process. The argument that allowing suppliers to know the budget will encourage bids to the maximum available has been advanced as a reason for opaqueness in the procurement process. Responsible suppliers want your business and as part of the competitive process and are going to offer the lowest price consistent with the solution you require. Nobody ends up the winner when suppliers offer $10M solutions when you have a $5M budget.
- Equipment, operating systems, and support tools represent a significant part of ongoing costs so you should include within the solicitation document a requirement that responders offer alternative approaches to you purchasing and maintaining the support infrastructure.
- All RFPs require interpretation of some sort so make it clear how interested suppliers can seek responses to their questions in a timely manner. If possible, a highly-responsive system that allows questions to be entered online with interactive response (available to all bidders) would be the ideal method. If you do not have those facilities available, at least provide for responses within 24 hours of receipt of the question.
- Require that the provider supply you with information about the company. Always request audited financial statements (both P&Ls and balance sheets for the three most recent years) since financial stability can be a serious risk factor. Require that the bidder provide a list of all organizations to which the provider has supplied similar solutions during the past five years and permission for you to contact the organizations so you can decide which organizations to contact. Ask for any litigation that the supplier has or is engaged in that relates to contract performance.
Specifying interoperability standards required by system. Interoperability is generally defined as the ability of heterogeneous networks, applications, or components to exchange and use information. Unless you plan on living in isolation in an otherwise connected world, it is essential that you specify a set of interoperability standards that must be part of the solution that you are seeking. This is even more important if you do not have a well-defined Enterprise Architecture in place since this will provide a structure for you to participate in exchanging data with other systems in the future.
There currently are no widely endorsed templates for how you should word such requirements in your RFP but based upon ideas presented at the abstract level let us look at some practical approaches to defining interoperability standards. Continue with the concept of stating the problem or result you want to achieve and ask the solution provider to specify their proposed approach to a solution.
It is important that you specify that the standards you are requiring are Open Industry Standards. Be sure you understand the difference between Open Source and Open Standards. In general, terms Open Source refers to software and Open Standards refers to documents (that may then be implemented by software). There is no single global definition for either term; however, while most agree on the value of open standards for helping achieve interoperability, there continues to be some debate about how best to define Open Standards.
There are three general areas that you want standards to be addressed.
- The ability to exchange or receive data from any external system in a common format even though the internal data may be kept in a proprietary format. Require that the IT system you are seeking be able to send and receive data to or from other system using any schema that conforms to XML recommendation from the World Wide Web Consortium (W3C) using a Service Interface that will translate internal data elements to any XML-conforming schema and, similarly, expose available incoming XML schema’s to internal data formats. The Service Interface should be self-provisioning in respect to the inclusion of different schemas.
- The solution should include a public accessible repository called Service Interaction Profile* that defines the web services required to access the services available to a consumer It should include the ability to use the Web Services Descriptive Language (WSDL) to specify what web services you employ to exchange data between your system and other systems whose identity is unknown at present. Using WSDL lets you tell other users what web services you employ and how you will accept data. (*A service interaction profile defines a family of industry standards or other technologies or techniques that together demonstrate implementation or satisfaction of: service interaction requirements, interface description requirements, message exchange patterns, and message definition mechanisms.)
- The solution must provide a common identification and privilege management system to provide security for multiple users who have access to the system. This addresses the need for security in a framework that permits the exchange of information between different consumers and provides a framework for identity management by addressing the issue of authorization, or privilege management, within systems and applications in a federated environment.
The availability of these standards and the cost of their inclusion within your solution will be affected by whether you are seeking a COTS solution as opposed to a custom solution and also what type of cloud solution you are willing to accept.
Locating the appropriate solution providers. An important part of the RFP process is locating solution providers that have the expertise and experience to deal successfully with your problem. If, as suggested, you used the preplanning process to hold informal discussions with solution providers you may already have a list of providers who you feel have the capabilities you are seeking. If you do not as yet have a list of several solution providers with expertise relevant to the problem you are, trying to solve you has several options to seek such expertise.
- Turn to the procurement professional on your Governance committee to seek suppliers with the appropriate expertise.
- Use your website or a procurement website to announce the availability of the RFP and the desire for qualified solution providers to respond. Also, several private and public not for profit advocacy groups will supply you with a list of companies that have the type of expertise you are seeking if you are able to provide a definition of your business and the problem for which you are seeking a solution. Some of these groups are: the IJIS Institute, TechAmerica, and NASCIO.
- There are companies that specialize in providing procurement information to companies for a fee that will be happy to list your RFP if you supply them with the necessary information.
In soliciting suppliers to respond, try to strike a balance between larger companies who have a large pool of resources and smaller companies who may be more nimble in their ability to suggest innovative solutions to your problem.
How much time should be allowed for responses? Provide sufficient time for solution providers to take the same care in developing and proposing a solution that you took in preparing the procurement document.
Comments welcome on this topic!
Next: Evaluating Responses to the RFP and Selecting a Supplier
For further reading:http://www.ijis.org/?page=Procurement_Resource
- Negotiating a Contractual Agreement with the Selected Supplier
- Contract Oversight and Management