It is always a good idea to test the market when you are trying to procure goods or services that you don’t buy on a regular basis.
Specifically, when dealing with technical or otherwise complex forms of procurement, it is wise to discuss proposed specifications with a cross-section of prospective suppliers before issuing the invitation to bid on an RFP.
For instance, unless the client or purchasing department staff really know something about software design, it is wise to consult with a number of software designers before sending out specifications for the provision of some custom software solution.
Very often, for RFP specifications, to retain a law firm as general counsel will read like they were drawn up by people who know little more about the practice of law than that which could be gleaned by watching a few episodes of Law and Order.
Generally, suppliers are more than willing to discuss the kinds of services and features that a prospective customer should consider when retaining a supplier. By consulting with three or more suppliers in regard to those services and features, a cross-section is necessary, to avoid the risk of biasing the specifications to the products of a particular supplier, the final specifications will be more comprehensible, sensible and focused on what the market can provide.
It is not difficult to give an example of the kind of problem that such an approach can help to avoid.
In one tender that I reviewed years ago, bidders were asked to quote for the supply of a given product with a particular kind of battery pack. One bidder provided this information but pointed out that using the product in question with the power pack specified would void the manufacturer’s warranty. This information proved to be correct and it required the entire tender to be carried out a second time.
Service procurement well illustrates the need to consider total value as well as price when awarding a municipal contract. It will often be found that the increased value of a more costly service provider is more than sufficient to offset the cost.
For example, a lawyer who is an expert in the field of environmental law and who charges $650 per hour, may be able to win what appears to be a losing case; in contrast, a lawyer who is fresh out of the bar admission course may lack the experience and subject matter expertise to win a strong case.
Experience is not always better when it comes to services, but hourly rates are often a good reflection of the quality of service that is on offer through market testing. In general, rates are volatile during the pandemic depending on the service.
For these reasons, professional services, (e.g., legal and accounting services) are often excluded from the general requirements to seek competitive sources of supply.
I would also suggest that the need to pay attention to full-life costing when comparing alternative sources of supply or items of different design or manufacture is important.
The life expectancy of competing products and the different warranty rights offered by alternate suppliers may have an important bearing in determining full-life cost.
Moreover, because it can often be difficult to quantify the benefit derived from longer life and enhanced warranty, differences of this sort can complicate the evaluation of complex bids.
Consider, for instance, the cost of three comparable products, which have different life expectancies and different periods of warranty coverage.
All these factors should be considered during the evaluations to hire the supplier that provides the best value for money over time.
It is always best to review your procurement process looking at various options that are available for taking a possible contract for supply of goods or services to market, prior to sending out the RFP.
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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