I am often asked why the procurement process related to government contracts is using such a complicated system. The primary differences in evaluation approach relate to whether one is using a one, two, or three envelope approach to the submissions of proposals.
In a one-envelope evaluation, all aspects of the bid are evaluated simultaneously. In a two-envelope system, separate envelopes are submitted, one of which contains pricing information and the other contains the rest of the details of the bid which will address all other evaluation criteria.
The non-price criteria are first evaluated and scored. After this exercised is completed, the second “price” envelope is opened and the prices are then evaluated. The goal is to prevent the competitive price of a particular proposal contaminating the evaluation of the non-price aspects of the submission.
Section 17 of the City of Windsor “Purchasing By-law” provides as follows with the respect to the use of the two envelope system:
— The two-envelope system may be used when the city of Windsor chooses to evaluate the technical and qualitative information of a given Proposal without being influenced by prior knowledge of the corresponding pricing information. The City of Windsor shall advise all bidders when the two-envelope system is to be used.
— The chair of the Evaluation Committee as defined in Section 16(8) shall prepare a clear plan/outline for evaluation of submissions in advance of receipt of the proposals’ submissions. The evaluation plan is to include a plan for the evaluation of various qualitative factors deemed relevant, as outlined in this by-law, and pricing factors, with a weighting of the relative importance of these factors determined in advance.
— In a two-envelope system, each proposal must submit qualitative and technical information in a sealed envelope (envelope one) and pricing information in a second sealed envelope (envelope two). The contents of envelope one shall be opened and evaluated by the Evaluation Committee. Only the second envelope of those bids meeting the Specifications of the Request for Proposal shall be opened and evaluated. If a proposal is not eligible to proceed to price evaluation, the proponent shall be disqualified from further consideration and envelope two shall be returned to the proponent unopened.
— A significantly higher point ranking of the top proponent above the others is not deemed to be sufficient rationale for the decision to open one pricing envelope. The decision to open only one pricing envelope must be made after determination that only ONE proponent is qualified and capable to perform the project or service.
— Subject to approval authorities provide in Schedule “A” where only one pricing envelope is opened, the pricing envelopes of the other proponents are to remain sealed and shall be retained by the Manager of Purchasing and Risk Management until such time as the Council has reviewed and provided approval for the Award and shall be returned to the proponent unopened.
— The Evaluation Committee will review the qualifications and pricing information and make a recommendation to the approving authority representing, in the judgment of the Evaluation Committee, an Award of the Request for Proposal to the firm whose proposal represents the Best Value for money to the City of Windsor.
In the three envelope system (which is rare), the first two envelopes again relate to the price and non-price portions of the proposal. The third envelope contains information which is submitted to evaluate whether each proponent has the required qualifications to bid for the contract. Since the evaluation of the non-price component of the proposal can be lengthy and labour intensive, it is best to evaluate qualifications before proceeding to an evaluation of the proposal itself. Generally, the three envelope RFP is not encouraged.
Stephen Bauld, a leading Canadian government procurement expert, is a member of the Daily Commercial News editorial advisory board. He can be reached at stephenbauld@bell.blackberry.net.
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