This is the sixth 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.
Perhaps the most significant provision is one that defines how the responding solutions provider may obtain information regarding both the RFP and the problem that they are being asked to solve. The nature of governmental private sector relationships are such that the procedure is usually restrictive and seeks to ensure that any information that is supplied to one entity must be made available to all entities who have submitted their intent to respond. Usually a limited period of time is designated during which responding solution providers may seek clarification of descriptions contained in the RFP. Responding solution providers are usually not allowed to talk directly to any individuals within the procuring entity who have knowledge regarding matters that relate to business or technical issues related to the solution being sought.
In the past, the process usually provided for a bidders meeting in which bidders were encouraged to ask questions regarding the RFP in front of the entire bidder group. Today, most procurement provides a means to electronically present question from the supplier to the buyer either via email or directly via a website. Questions are visible to all the invited participants as well as the answers to the questions. While the use of this type of approach has improved the communications process, it is hard to replace the interaction of face-to-face communications where one answer often leads to another question.
This approach provides the kind of integrity that governments seek in the way their employees comport themselves and ensures a sense of fairness for the solution providers responding to the RFP. On the down side it limits communication to such an extent that in many cases there is a disconnect between what the procuring entity thinks it asked for and what the responding solutions provider thinks they want. One improvement is to speed up the response to submitted questions by having a more interactive environment where electronic responses are provided in real time similar to what many help desk provide on a regular basis. Within the limitations imposed by law, administrative procedures, and customs, seek to provide the most open method of communication available to you.
It is probably no accident that Business-to-Business (B2B) procurements have a better performance record (although certainly a far from perfect one) than public procurements. In B2B procurement, the procuring entity encourages as much direct communications between the procuring entity and the solution provider including direct contacts to ensure that there is a mutual understanding of the problem to be solved.
Evaluating the Responses
The evaluation of responses and selection of the solution provider that will provide the services tends to be a complex process. The evaluation and selection process should be kept to the shortest possible time consistent with the need to ensure the best possible outcome. In a technological world where changes frequently occur in months it is not unusual to find that by the time of an award is made to a solutions provider new technological advances have made the proposed solution less desirable than a solution supported by new technological advances or even obsolete.
There are two major areas that the evaluation should focus on.
Evaluation of the solution provider’s capabilities. If you are to have a successful result from your procurement, as part of the evaluation you must decide whether the responding company has the ability to provide the solution it is proposing. While there is no perfect template for assessing the ability of a company to perform there are some areas that you should take the time to assess.
Take the time to ascertain what the organizations past experience in providing solutions to similar problems been. Has the organization been successfully in completing similar projects in the past on schedule and within the original cost estimates? Contact previous customers and get their candid assessment of the strengths and weaknesses of the organization in completing similar projects. This is why it is important to request that the solution provider to supply a list of all customers for the past three years rather than references the suppler selects.
Consider what level of resources the supplier has available within his or her organization to develop, install, and support the solution. Inquire as to what current commitments the organization has and how the commitments will affect the ability of the supplier to complete your project on within the proposed schedule. Key questions involve the number and type of personnel the supplier employs and particularly their availability for your project. If you are seeking a COTS solution, what type of support facilities does the proposer have for ongoing maintenance support?
Does the company have sufficient financial resources to implement the proposed solution if unexpected difficulties arise? Take the time to examine current financial statements and pose questions where appropriate regarding the suppliers ability to undertake the proposed solution.
Evaluation of the Proposed Solution. While it is important to insure that Solution Provider has the capability to deliver the proposed solution the more difficult part of the evaluation is to select among several proposed solutions the one that will best meet your needs. While each case is different, there are certain general principles that should be followed.
If you have asked the solution provider to present a solution to your problem rather than having attempted to specify the solution yourself this is where you have a chance to consider different approaches to solving your problem. This will require that you have sufficient technical expertise available to your evaluation team to be able to assess the technical foundations of each solution offered.
If you are seeking a COTS solution, approach to your problem either have the solution provider set up a demonstration of his or her product(s) or, even better, arrange a visit to a site where a similar solution is in operation to get feedback as to how well the system meets the needs of the user.
Evaluate in detail how the solution provider has responded to your hardware and operating system requirements set forth in the procurement document. Consider whether they will be providing the service levels, you requested through their own facilities or whether they will be using a third party to provide the services.
Evaluate carefully how the solution provider proposes to handle data exchange, interoperability and Identity Credential and Access Management within the proposed solution. You should be assured that facilities for data exchanges with as yet unknown entities would be available through a standard service interface, which is an integral part of the solution being proposed.
Consider payment approaches being offered. Among the different approaches are a license where the buyer pays a license at the time of system acceptance and enters into a maintenance agreement for maintenance support services, a subscription approach where payment for the service is on a monthly or quarterly basis and includes both license fee and maintenance support, a per use basis in which the Buyer pays usually a fixed amount per transaction processed by the system.
Making the Selection
The selection is usually made by the Governance Group consisting of the major stakeholders in the work that is to be performed by the selected solution provider. Procedures vary from location to location but usually the list of solution providers is reduced to a small number, usually no more than three, by the group reviewing the submissions, eliminating those that have not met the requirements set forth in the RFP and others whose response clearly do not meet the requirements specified in the RFP.
In most but not all cases when the non-compliant responses and those that clearly do not meet the perceived need are eliminated, the submitting solution providers are asked to make oral presentations. This may range in complexity from a single half-day presentation to a multiple day demonstration if software products are involved. This is an important part of the selection process and provides the opportunity to determine whether you have successfully communicated your needs to the seller. This is the point at which you need both your technical experts and your business process experts involved to insure that you fully understand what is being offered as a solution.
It is usual to defer cost analysis to the later stages of the selection process under the theory that it is important to insure that bids are compliant and that the best solutions are selected for final decision-making. In most cases (but not all) responding Solutions Providers are provided an opportunity to provide a best and final price after oral presentations are complete. This works best if you have been transparent regarding your budget since all bidders will be aware of the cost framework within which they must provide the desired solution.
Do not confuse final negotiations regarding the proposed solution with negotiating the contractual the agreement between the buyer and the solution provider. Final negotiations are detailed discussions between the buyer and the solution provider regarding the proposed solution, how it might be amended, and the impact such amendments would have on the price. Contract negotiations, which will be discussed in the next section, relate to the responsibilities that each party will assume under the effort.
This is an area that is highly controversial within the public sector. The issue that is the most difficult is the extent to which the procurement group should be allowed to negotiate simultaneously with multiple qualified bidders. This often presents difficult problems since the bidders may have different technical solutions and whether each party has been provided the same opportunity may be difficult to determine in any rational way.
Your jurisdiction may be subject to legal limitations that either prohibit or restrict the ability of the procurement body to negotiate with bidders regarding their proposed solutions. There is some evidence that the ability to negotiate the final conditions of the proposed solutions does result in improved outcomes. A recent article by Robert Metzger and Lauren Kramer highlights the importance of competitive negotiations and compares jurisdictions that permit such negotiations with those who prohibit such negotiations. Jurisdictions have been slow to change both legal restrictions and administrative regulations that either restrict or prohibit such negotiations.
Completing the Selection
The final step in this process is to complete the decision, obtain whatever sign offs may be required and notify the solution provider of their selection. Selections are always subject to the negotiation of a final signed contractual agreement and in some cases may be subject to a best and final price offering (BAFO).
The process suffers from some of the same limitations noted in previous sectors the most significant being the availability of technological knowledge within the selection group to be able to evaluate what are often competing complex solutions involving technologies that are difficult for laymen to understand. Again as in the previous sections, the procuring entity sometimes may have to resort to employing outside expertise to assist them in making rational decisions concerning the best-proposed solution.
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Next: Negotiating a Contractual Agreement with the Selected Supplier
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- Contract Oversight and Management