I am often asked when speaking at an event, to review when and how government staff should be involved in the procurement process? As far as I am concerned the earlier the better. Critical review of a proposed solution begins very early in the process of approving a major capital project.
It should be identified through a series of questions or issues that should be addressed in structuring a proposed project. I would also say that equally important is the process of critical review to determine that the proper range of proposed solutions have been considered to the problem with which the capital project is intended to deal with.
If, for instance, the problem is that the present city hall is too small and in poor condition, there are a range of solutions that might be pursued as an alternative to building a new one. These include:
- Purchasing an existing newer and larger facility;
- Refurbishing and expanding the existing facility; or
- Considering some sort of public-private partnership, involving a commitment to rent a specified amount of space in a new private facility to accommodate staff who cannot be accommodated in the existing facility, with the balance to be rented to private sector tenants.
The senior management of a municipality must take reasonable steps to confirm that the proposed solution is the best solution in terms of the municipality’s long-term interests. There are a variety of methods that may be employed for this purpose. Generally, the more exacting the demands that a proposed project will place on the revenues and resources, the more rigorous the methods that should be employed to confirm that the right decision is being made.
A request for proposal is not ready to go merely because it is a complete document. All municipalities would be well-advised to red-team all RFPs that contemplate substantial expenditure, to subject them to proper reality testing. Such a red-team effort can uncover most of the drawbacks that can cause a proposal to fail. It is worth observing that for a capital project that has an expected annual cost of $5 million, even a one per cent savings is worth $50,000 per year to the municipality.
Thus, given the relatively low cost of such a review, it is possible to justify some effort to assess whether there are latent weaknesses in an RFP, even if it is 99 per cent perfect.
A red-team approach to the selection of a proponent may also be advised, as it affords a further protection against any dispute over the proponent selection process. In public procurement, an ounce of prevention is often found to be worth tons of cure. In critiquing the evaluation of the successful proponent’s capabilities, it is advisable to ask:
- Do the selected proponent have the required capabilities (including staff, support systems and experience) to deliver?
- Can the selected proponent meet the requirements and specifications set out in the RFP? Why is this considered to be the case?
- How does the proponent’s track record on delivery performance match the size, scope and complexity of the municipality’s requirements?
- How does the proponent’s track record on team-working, or partnering, relate to the cultural reality and aspirations of the department?
- Does the municipality have a prior working relationship with the selected proponent? Does that record support the award of the contract?
- Does the purchasing department concur in the evaluation of the successful proponent?
It is always sound advice to think through the method of decision making on these types of major capital projects. Municipalities are large organizations that spend millions per year. Yet few of them enter into transactions having a present value of $10 million per year, and even fewer spend in the $100 million plus range.
Stephen Bauld is a government procurement expert and can be reached at swbauld@purchasingci.com.
Some of his columns may contain excerpts from The Municipal Procurement Handbook published by Butterworths.
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