The Request for Proposals and the Platypus: what do they have in common? 1

2 Part A – RFPs Part B – Winning Proposals Welcome Michael Asner Consulting Suite Pacific Avenue White Rock, BC V4B 1P8 Canada

3 Procurement is a Zoo!!!!

4 Emergency!!

5 Sole Source

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8 8 Tender  RFQ  ITB  ITQ

9 RFPs……

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11 When to Use an RFP  Competition  Selection on more than price alone

12 A World Wide Trend  FAIR  OPEN  TRANSPARENT  BEST VALUE

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14 fair adjective 1 just or appropriate in the circumstances. 2 treating people equally.

15 open adjective 1 allowing access, passage, or view; not closed, fastened, or restricted.

16 transparent adjective 1 allowing light to pass through so that objects behind can be distinctly seen. 2 obvious or evident.

17 best value ???????

18 What the Courts Have Said

19 DUTIES on OWNER Duty to disclose Duty of Care to Prospective Bidder Duty of Fairness Duty to Award as Tendered Duty of Fair Competition Duty to Reject Non-Compliant Tenders

20 Canadian, eh? Once you establish Contract A, Negotiations are Not Allowed!!!

21 First, the Road Well Trodden: Contract A RFPs

22 Our Message is Simple...   Contract A does not apply to all RFPs  You can negotiate within the RFP process, provided you set it up that way  Negotiations produce more value and reduce the risk  Many RFP problems can be avoided if you avoid Contract A  Fairness is always something to strive for

23 Contract A Doesn’t Always Work!

24 The Contract A/B Legal Framework  The approach was defined in 1981 by the Supreme Court of Canada in its decision in R.(Ont.) v. Ron Engineering [1981] 1S.C.R. 111  Most RFPs in Canada introduce the Contract A - Contract B approach – this is not a legal requirement, but many people have assumed it is  A key legal issue upfront when starting to draft an RFP is to decide if the procurement process will be legally binding or non-binding

25 The Contract A/B Legal Framework  Ways to introduce Contract A?  Through express language (as long as the substance of the RFP supports the language)  Through the RFPs’ requirements (hallmarks), such as:  Is there a bid security?  Are the bids irrevocable?  Is the pricing submitted negotiable?  Is a comprehensive draft agreement attached?  Are the terms of the agreement negotiable or not?  Are there instructions about amending proposals?

26 The RFP Process (5 Steps) Step 1 Creating the Statement of Work Step 2 Involving Procurement Step 3 From Issuing the RFP to Closing Step 4 Evaluating Proposals Step 5 Finalizing the Contract

27 Fatal Flaws with the Contract A/B Paradigm 1.While negotiations are not permitted, they often occur, except that pricing is rarely touched (when it should be) and the vendors’ price premium stays in 2.Often mediocre proposals are accepted since the only alternative is to start again 3.Change orders compensate for the inability to change the Statement of Work that is part of the contract. 4.So you award a contract for $1million and you know you will have change orders for $200K to account for the shortcomings of the rigid RFP process

28 Negotiated RFPs

29 The RFP Process (6 Steps) Step 1 Creating the Statement of Work Step 2 Involving Procurement Step 3 From Issuing the RFP to Closing Step 4 Evaluating Proposals NEW STEP 5 NEW Negotiations Best and Final Offers Step 6 Finalizing the Contract

30 STEP 5 NEW Negotiations Best and Final Offers 1.What is BAFO? 2.What is the law? 3.How does it work? 4.Who uses BAFO? 5.Why is BAFO not used more often? 6.What are the benefits of using BAFO?

31 1. What is BAFO?  It’s a technique designed to improve the quality of parts of the proposals and the pricing, or just the pricing  In the world of Contract A, this would be called “bid repair” or “bid enhancement”, but we are purposefully not in a Contract A environment  Still, we want transparency and fairness

2. What is the Law? 1.Any legislation in your own jurisdiction? 2.At common law, the courts never made the use of Contract A/B mandatory? 3.Even in a Contract A/B context, you could reserve a right to conduct a BAFO 32

33 3. How does BAFO work?

34 A Specific Example from Alberta  Alberta’s Rules for BAFO 1)Identify BAFO in the RFP 2)No disclosure to vendors 3)Only one BAFO round 4)Only short-listed, fully compliant vendors 5)Standard invitation to BAFO 6)Initiated by the Procurement Officer

35 Montana’s Rules Best and Final Offers (Optional Step)  The committee may decide to seek best and final offers from one or more offerors if additional information is necessary or responses will be altered in order to make a final decision.  The committee may request only one best and final offer.  Offerors may not request an opportunity to submit a best and final offer. The procurement officer must be notified of the offerors who are provided the opportunity to submit best and final offers and the areas to be addressed.

36 Montana’s Rules Best and Final Offers (Cont’d.)  The procurement officer will send out the request for best and final offers in a letter stating the areas to be covered and the date and time in which the best and final offer must be returned.  Proposal scores are adjusted in light of the new information received in the best and final offer.  A best and final offer cannot be requested on price/cost alone unless so stated in the RFP.

37 4. Who Uses BAFO in Canada?  City of Surrey  City of Toronto  City of Winnipeg  Government of Alberta  Government of Ontario  Ontario Hospital Association  Government of British Columbia  Humber River Regional Hospital

38 The Negotiation Process 1. Preparation 2. Fact Finding 3. Bargaining

39 5. Why isn’t BAFO used more often? a)Some public agencies are not be aware they can do it b)There is a perceived lack of legal authority for BAFO (the misconception that negotiations are always prohibited) c)Sometimes management doesn’t want the agency to do it (for their own reasons) d)Some procurement people prefer to avoid negotiations

40 Negotiations Can Be Scary!  Many procurement people receive little if any training.  The supplier is better prepared.  Roles and responsibilities are poorly defined.  Many people find negotiations awkward.

41 6. What are the Benefits in using BAFO?  Increase the number of high-scoring proposals (providing greater competition).  Reduce risk to both parties.  Eliminate unnecessary costs.  Reduce costs.  Improve benefits (better quality, performance, delivery etc.).  Identify alternative solutions not initially apparent.  Clarify requirements and proposals.  Create better understanding and relationships between the parties.  Improve the contract.  Improve the proposal.

42 Conclusion

43 Negotiated RFPs

44 Conclusions What have we learned???

45 Thank you. Michael Asner 604/