1. Procurement Process Request for Proposal, Proposal & Evaluation and Selection

2. Request for Proposal & Proposal
Two parties involved: 1. Customer – buyer\requestor 2. Contractor – seller\ provider

3. Procurement Process Customer determines need
Customer creates and issues an Request for Proposal (RFP)
Contractors review RFP and decide whether to bid
Contractors respond (bid) with a proposal
Customer evaluates the various proposals received
Customer selects optimal proposal
Customer awards contract to contractor

4. Request for proposal
Request for proposal (RFP) - Customer issued solicitation to attract interested contractors to develop and submit proposed solutions. It is a formal document outlining:
Specific requirements for the project or service
Bidding process: submission, evaluation and selection

5. Request for quote
Request for quote (RFQ) - Customer issued solicitation for contractor/vendor to supply specific products or services. In addition to quantity and price, the RFQ typically includes information about:
Product or services specifics
Payment terms
Type / length of contract
Bidding process: submission, evaluation and selection

6. Request for Proposal: The Customer’s View

7. Prior to preparing an RFP
Recognize a need, problem, or opportunity
Clearly define the need, problem, or opportunity
Quantify the need, problem, or opportunity
Determine preliminary budget
Determine preliminary schedule

8. Preparing a RFP
State, comprehensively and in detail, what is required, from the customer’s point of view
Enable contractors or a project team to understand what the customer expects so that they can prepare a thorough proposal
Usually formally in written format
Sometimes may be communicated informally and sometimes only orally

9. Preparing a RFP (Cont.)
Guidelines for drafting RFP for external contractors:
Statement of work (SOW)
Customer requirements
Deliverables
Customer-supplied items
Approvals required by the customer
Type of contract
Payment terms
Required schedule for completion
Instructions for format and content of proposals
Due date for proposals
Evaluation criteria
Sometimes customer will indicate funds available

10. Soliciting Proposals Methods for soliciting proposals:
Identify a selected group of contractors in advance and send each an RFP
Advertise in certain industry publications / websites
Process considered a competitive situation
Don’t provide information that is not provided to all contractors
May hold a bidders’ meeting to explain the RFP and answer questions

11. Proposal: The Contractor’s View

12. Bid/No-Bid Decision
A lot of non-winning proposals can hurt a contractor’s reputation
Need to be realistic about probability of winning the contract
Factors to consider:
Competition
Risk
Mission
Extension of capabilities
Reputation
Customer funds
Proposal resources
Project resources

13. Developing a Winning Proposal
A selling document – not a technical report
Convince the customer that you are the best one to solve the problem
Highlight the unique factors that differentiate you from competing contractors
Emphasize the benefits to the customer
Write in a simple, concise manner
Address requirements as laid out in the RFP
Be realistic in scope, cost, and schedule

14. Proposal Preparation
Can be a straightforward task performed by one person or a resource-intensive effort requiring a team
Schedule must allow time for review and approval by management
Can be a few pages or few hundred pages
Customers do not pay contractors to prepare proposals

15. Proposal Contents Proposals are organized into three sections:
Technical Section
Management Section
Cost Section

16. Proposal Contents (Cont.)
Technical Section
Understanding of the problem
Proposed approach or solution
Exception – variation from specified requirements
Benefits to the customer

17. Proposal Contents (Cont.)
Management Section
Description of work tasks
Deliverables
Project schedule
Project organization
Related experience
Equipment and facilities

18. Proposal Contents (Cont.)
Cost Section
Labor
Materials
Subcontractors and consultants
Equipment and facilities rental
Travel
Documentation
Overhead
Escalation (cost increases)
Contingency or management reserve
Fee or profit

19. Pricing Considerations
Be careful not to overprice or underprice the proposed project
Consider:
Reliability of the cost estimates
Risk
Value of the project to the contractor
Customer’s budget
Competition

20. Proposal Submission and Follow-Up
Submit proposals on time
Follow submission requirements
Some customers require hardcopy submission
Some customers require electronic submission
Continue to be proactive even after submission
Follow-up needs to be done in a professional manner

21. Proposal Evaluation, Selection and Contract (By the Customer)

22. Customer Evaluation of Proposals
Some look at the prices and select only from the three lowest-priced proposals
Some screen out prices above budget or whose technical section doesn’t meet all the requirements
Some create a proposal review team that uses a scorecard

23. Customer Evaluation of Proposals (Cont.)
Criteria that might be used in evaluating:
Compliance with SOW
Understanding of the problem or need
Soundness of the proposed approach
Contractor’s experience and past success
Experience of key individuals
Management capability
Realism of the schedule
Price – reasonableness, realism, and completeness

24. Types of Contracts A contract is:
A vehicle for establishing customer-contractor communications and arriving at a mutual understanding and clear expectations
An agreement between the contractor, who agrees to provide a product or service, and the customer, who agrees to pay
It must clearly spell out the deliverables
Two types of contracts: fixed price and cost reimbursement

25. Types of Contracts (Cont.)
Fixed-price contract
Price remains fixed unless the customer and contractor agree
Provides low risk for the customer
Provides high risk for the contractor
Is most appropriate for projects that are well defined and entail little risk

26. Types of Contracts (Cont.)
Cost-reimbursement contract
Contractor is reimbursed for all expenditures
Provides high risk for the customer
Provides low risk for the contractor
Is most appropriate for projects that involve risk
Customer often requires that the contractor regularly compare actual expenditures with the proposed budget and reforecast cost-at- completion

27. Contract Provisions
Miscellaneous provisions that may be included in project contracts:
Misrepresentation of costs
Notice of cost overruns or schedule delays
Approval of subcontractor
Customer-furnished equipment or information
Patents
Disclosure of proprietary information
Termination
Terms of payment
Bonus/penalty payments
Changes