ISM International Conference Nashville, Tennessee May 20,2003

Presenter: Elaine Whittington, C.P.M., A.P.P., CPCM G & E Enterprises e_whitt@prodigy.net

You Paid How Much? Writing A Good RFP/RFQ AGENDA ! Working With The Requestor ! Choosing A Qualified Bidder ! What About A Bidders Conference ! Solicitation Methods ! What To Include ! Maintenance & Service Contracts ! Is The Proposal Binding?

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You Paid How Much? Writing A Good RFP/RFQ

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Working With The Requestor When???

Request Needs Clarification 1. Minimum Quantity 2. Other Material & Services Are Available 3. Shipping Relief or Supplier Stocking Available 4. Packaging And Marking Problems 5. Tooling 6. Future Needs 7. Confusion Over Requirements 8. End Usage Is Questioned

DO YOU KNOW WHAT YOU ARE BUYING? DO YOU KNOW WHERE IT WILL BE USED?
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You Paid How Much? Writing A Good RFP/RFQ

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Working With The Requestor Missing Data Pitfalls: More work to clarify issues Increased costs to fix Increased purchase price Increased contract risk Lost time Reduces number of bidders Might cause a poor supplier selection

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You Paid How Much? Writing A Good RFP/RFQ

" Choosing A Qualified Bidder

Things To Check: # Financial Standing # Adequacy Of The Facility # Purchasing Department # Quality Procedures # Manufacturing/Engineering/Sales # Management # Material And Paper Flow

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You Paid How Much? Writing A Good RFP/RFQ " What About A Bidders Conference?
1. When? 2. How? 3. Advantages: o All Bidders Have Same Information o Questions Can Be Asked And Answered By Experts o Level Playing Field o Better Ideas Can Be Explored By All

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You Paid How Much? Writing A Good RFP/RFQ

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SOLICITATION METHODS

$ Request For Information (RFI)

$ $ $ $ $
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Verbal Quote Request For Proposal (RFP) Request For Quotation (RFQ) Invitation To Bid Reverse Auction

You Paid How Much? Writing A Good RFP/RFQ

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SOLICITATION METHODS Request For Information (RFI)

% % % % %

Used To Obtain General Information Informal Not Binding Quick ROM Pricing (Rough Order of Magnitude)

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You Paid How Much? Writing A Good RFP/RFQ " SOLICITATION METHODS Verbal Quote
% %

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When To Use What To Include 1. Quantity 2. Description 3. Delivery (Date/Address) 4. Price 5. F.O.B. 6. Extraneous Charges Can Be Confirmed: 1. PO Acknowledgement 2. FAX 3. E-Mail 4. Supplier Shipment

You Paid How Much? Writing A Good RFP/RFQ

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SOLICITATION METHODS Request For Proposal (RFP)

% % % % % %

Requirement Is Not Clearly Defined Often Stated As A Statement Of Work (SOW) Might Be A Special Drawing Used To Locate Solutions And Sources Purchaser And Support Personnel Can Choose The Best Solution Purchaser Can Pay For The Proposal And Then Get Competitive Bids
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You Paid How Much? Writing A Good RFP/RFQ

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SOLICITATION METHODS Request For Quote (RFQ)

% % % % %

Supplier Commitment For Specific Terms Price, Quantity, Delivery, Services Does Not Obligate The Purchaser Supplier Holds Requirements Firm For A Specific Time Period Used When Requirements Are Clearly Identifiable
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You Paid How Much? Writing A Good RFP/RFQ

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SOLICITATION METHODS Invitation To Bid

% % %

Binding On Both Supplier And Purchaser Usually Used For $1000 + Strict Control # How Many Bidders # When The Bid Is Opened # Who Is Asked To Bid # Basis For Award
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You Paid How Much? Writing A Good RFP/RFQ " SOLICITATION METHODS Reverse Auction
% % % %

Binding On Both Supplier And Purchaser Up Front Work Includes Qualifying Suppliers And Preparing The Bid Web Controls Must Be In Place Strict Control # Auction Is Viewed By All Bidders # Time Open Can Be Extended # Works Well For MRO # Losing Suppliers Are Aware Of All Bids
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You Paid How Much? Writing A Good RFP/RFQ " SOLICITATION METHODS Reverse Auction
%

%
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Web Facilitators: Purchase Pro Perfect Commerce Arriba Free Markets Exostar Commerce One Sorcity Listing: http://www.sourceguides.com
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You Paid How Much? Writing A Good RFP/RFQ

"Guidelines to Ethical e-Auctions

1. Post only purchases you intend to make.

2. Dont accept quotes outside of the e-auction. 3. Set a realistic price expectation. 4. Specify all your terms and conditions. 5. Minimize abuse. 6. Give all the players the same information. 7. Outline steps to award and follow the plan.

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You Paid How Much? Writing A Good RFP/RFQ

" The Request Should Reflect All Aspects Of The Pending Contract

" The Following Things Should Be Included (As A Minimum) For A Complicated Procurement: # Date Of Request # Request Number # Name, Phone Number, E-Mail and Fax Number For Contact For Questions # Proposal Due Date # Number Of Copies Required # Required Time Of Validity For The Proposal
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You Paid How Much? Writing A Good RFP/RFQ

" Included Items (Continued): # Note That Award Will Be Made Without Further Discussion, Therefore Should Be Best And Final Offer # Copy Of Your Terms And Conditions And Note These Will Apply Special Attention To Where Disputes Will Be Litigated Termination Purchase Of Supporting Materials Care Of Tooling Care Of Customer Supplied Manufacturing Aids
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You Paid How Much? Writing A Good RFP/RFQ

" Included Items (Continued): # Clear Instructions Concerning Technical And Pricing Format 1. Price Breakdown Required 2. Non-Recurring Cost Submitted Separately 3. Statement That The Statement Of Work Is Acceptable And Assurance Of The Suppliers Understanding Of Same 4. Instructions As To Organization Of The Submittal (ie Two Parts, 1. Technical and 2. Pricing No Cost Data In Part 1) 5. Detail Of Required Payment Terms
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You Paid How Much? Writing A Good RFP/RFQ

" Included Items (Continued): # List of Documents Included With The Proposal # Note Declarations Or Certifications Required # Special Note That No Costs For Preparation Will Be Covered # Quality Requirements (Source Inspections Prior To Shipment, ISO 9000) # FOB Requirements # Warranty # After Delivery Support

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You Paid How Much? Writing A Good RFP/RFQ

" Maintenance And Service Contracts Might Require: # # # # # # A List of Hardware Or Systems To Be Serviced Costs Of Special Software Times When Regular Maintenance Can Be Performed When Service Commences And How It Is Extended Response Time Parameters Out Of Contract Rates And Descriptions

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You Paid How Much? Writing A Good RFP/RFQ

" Maintenance And Service Contracts Might Require:

# # # # # #

Maintenance Log Requirements Storage Space, Security And Access Spare Parts Agreements Statement of Work Proprietary Information Agreement Secondary Damages Indemnification

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You Paid How Much? Writing A Good RFP/RFQ

" Mistakes to avoid: # Inflexible Terms & Conditions # Building the RFP/RFQ Around a Particular Respondents Hardware/Software # Failing to Look at The Total Price # Worthless and Confusing Attachments # Confusing Terminology # Unrealistic Schedules # Conflicting Data # Promises You Cant Keep
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You Paid How Much? Writing A Good RFP/RFQ

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Handling The Solicitation

# Bid Control Desk
1. Clerk Prepares And Mails Bids/E-Mails Bid - Bids Can Be Posted On An Extranet Connection 2. Bid Log Is Prepared And Maintained 3. Bids Are Received And Opened By Bid Clerk On Designated Date And Time 4. Bid Clerk Gives All Responses To The Responsible Purchaser

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You Paid How Much? Writing A Good RFP/RFQ

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Is The Proposal Binding?

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MAYBE!!! 1. Underestimated Costs Of Labor And Material - Usually Enforceable Unless The Supplier Can Demonstrate Mechanical Or Clerical Transcribing Errors EXAMPLE: Elsinore Union High School District vs. Kastoff 1960 (Plumbing Was $11,306 Short) Customer Was Informed Immediately
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You Paid How Much? Writing A Good RFP/RFQ

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Is The Proposal Binding?

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MAYBE!!! 2. Not If The Purchaser Knows Or Should Have Known The Bid Was Incorrect 3. However, It Is Enforceable If The Purchaser Could Not Have Known The Market Price EXAMPLE: Drennan vs Star Paving (Paving Bids Can Vary 160%) Subcontractor Bid $7,131 But Wanted $15,000-Drennan Got It Done For $10,948 and Recovered 25 G & E Enterprises The Difference

You Paid How Much? Writing A Good RFP/RFQ

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Is The Proposal Binding?

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MAYBE!!! 4. If The Error Is Found Before Bid Award Chances Are Better For Relief EXAMPLE: Kemper Const. vs. Los Angeles $301,769 Omission Discovered Hours After Bid Was Opened Allowed To Rescind

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You Paid How Much?

" The Secret To Controlling Costs Starts With
The Bidding Activity

" You Must Have:

A GOOD RFP/RFQ A GOOD CONTRACT

CONTROL OF THE BID AND AFTER AWARD COSTS ARE THE SECRET TO SUCCESS!!!
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You Paid How Much? Writing A Good RFP/RFQ

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QUESTIONS???

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