Welcome to Gatekeeper’s sixth article on RFPs and the fourth in the “RFP Guide” series.
Previous articles have covered:
- How to prepare a clear set of requirements for your CMS using a CMS Requirements Template
- How to turn your Contract Management System requirements specification into an RFP
- RFP Guide 1 - How to set up an RFP scoring system and release the RFP
- RFP Guide 2 - How to conduct a preliminary review of supplier proposals
- RFP Guide 3 - How to evaluate and score supplier proposals
In this article, we'll outline the key concepts and activities in the final two stages:
- Identifying proposals of interest
- Evaluating final supplier proposals and concluding the RFP
Identifying proposals of interest.
At the conclusion of the general evaluation effort, the good, the bad and the ugly about each supplier proposal should be apparent by way of the assigned scores.
If any viable proposals can be found, the focus should shift to seeking improved offers from the applicable suppliers that address at least the low-scored areas of their proposals as well as any other worrying issues.
Proposals that don't make the grade can be ignored for the time being.
Some fairly focused work is required to:
1. Consider what the scores reveal.
The consolidated totals scoresheet will reveal the final weighted and averaged score assigned to each supplier's proposal for:
- Each scorable RFP element
- Each group of scorable RFP elements
- All groups of scorable RFP elements, representing the total score.
Typically and justifiably, the proposal or proposals with the highest total score would be most favoured for progression to the next stage of the RFP process. Other proposals scoring quite near to the highest score may also be candidates for progression. Having a few candidates available provides an element of choice right until the end.
The total score is a good comparative measure of proposal versus proposal, but not sufficient in its own right as an indicator of a suitable proposal. There are two additional influential measures to be considered:
- Showstopper count. Even though the initial review should have detected any apparent showstoppers, the more detailed and comprehensive evaluation may reveal others.
Every showstopper found should be raised with the supplier for clarification as it may lead to a 'No, we can't do it the way you asked, but we can do it this other way if that's ok' type of response.
This could well be sufficient for the situation to no longer be considered as a showstopper. The presence of any post-clarification showstoppers is usually cause for a proposal's exclusion from further consideration
- Proximity index. This index measures the nearness of a proposal's total score to a theoretical perfect score.
It is calculated as the ratio of each proposal's total weighted score against the total possible weighted score, expressed as a percentage. The higher the percentage, the higher the likelihood that implementation of the proposal will deliver the outcomes and therefore the value desired.
A proximity index value below 65% probably means there is no point in continuing to consider a proposal, but that's strictly a matter for the team to decide themselves or to recommend to senior management for a decision.
The final candidate or group of candidates to go through to the next stage move from the original long-list of invited suppliers to the short-list.
2. Summarise all concerns with each short-listed proposal.
Every short-listed proposal is likely to have issues remaining, some more concerning than others, often despite discussions with suppliers during the evaluation exercise.
The reason for this is that no supplier is going to start making concessions and giving a little bit more on the first pass. They will generally keep something in reserve, a few sweeteners to make their proposal more attractive should they be invited to improve their offer.
This is usually understood by both sides to be how the game is played.
For just the proposals still under consideration, the team should:
- Identify and list the key issues in each short-listed proposal that are deemed to really need attention
- Discern and state the implications and any consequences of each issue to the organisation
- Assign an importance level to each issue
- Suggest a remediation approach for each issue.
3. Request a best-and-final-offer from each short-listed supplier.
With all key outstanding issues documented for each short-listed proposal, the team can provide the applicable suppliers with directions for providing a more acceptable functional and pricing proposal as their best-and-final-offer (BAFO).
In preparation for issuing the BAFO request, the team should:
- Discuss the current status of the RFP with senior management, to:
- Identify the short-listed suppliers
- Reveal the ball-park costs received to-date
- Establish a must-not-exceed price to facilitate negotiations with suppliers
- Obtain approval to proceed to contract execution
- Establish the BAFO submission deadline if it needs to change from the date stated in the RFP
- Advise the evaluation team members about the BAFO submission deadline and the BAFO evaluation period, and book their time for the evaluation
- Draft the BAFO request email for each short-listed supplier, and attach all the pertinent issue information. DO NOT advise the suppliers that their proposals have been short-listed. DO advise the suppliers that their failure to submit a BAFO by the deadline will result in their existing proposal being considered as their BAFO
- Provide the Designated Contact with all the pre-prepared emails for distribution to the relevant suppliers.
Evaluating final supplier proposals and concluding the RFP
For the purpose of review and evaluation, each individual element of a BAFO received from a short-listed supplier needs to be treated as a replacement of the equivalent element in the applicable short-listed proposal.
This approach allows the relevant scores to be adjusted in the scoresheets used to determine the short-list.
Even though the likelihood is small, the short-listed proposals may have to be considered as BAFOs and proceedings should continue from step 2 below if no suppliers were asked to submit a BAFO or they declined to submit one when requested.
The steps required to conclude the RFP are:
- Evaluate and negotiate the BAFOs. Separate the BAFO into scoring components according to the RFP's original allocation of scoring responsibilities. Send relevant scoring components and advice on the score submission deadline to the applicable evaluation team members.
Review and score the BAFO components. Identify any aspects requiring clarification or finessing, and conduct negotiations with the relevant supplier to reach a final position on the BAFO. Summarise and rank the final deals offered. With the preferred supplier identified, clearly document the agreed deal and obtain sign-off from both sides.
Prepare a recommendation for senior management, obtain approval to proceed with the preferred supplier and set a time limit for achieving contract execution.
- Negotiate the contract. Likely with the assistance of the Legal team, negotiate with the preferred supplier on all identified issues in either the organisation's or the supplier's contract until agreement is reached or the pre-set time limit expires and discussions are suspended.
When contract negotiations have stalled:
- If alternative preferred suppliers exist, repeat this step with the first alternative supplier and each remaining alternative supplier in turn as necessary, otherwise
- If no or no more alternative preferred suppliers exist, declare the RFP terminated without award, and advise all participating suppliers accordingly.
- Execute the contract. On successful conclusion of any contract negotiations, confirm that the contract accurately reflects the agreed deal, obtain approval for and signature of the contract, announce the outcome of the RFP if legally required or desired, then declare the RFP as concluded.
If so stated in the contract, remind the supplier of any restrictions on publicity that names the organisation as a new customer.
- Debrief suppliers. Whether the RFP is concluded or terminated without award, all participating suppliers should be offered the opportunity to receive a debriefing about how well their proposal was received.
Whether or not a proposal was successful, advise every supplier who desires it about the strengths and weaknesses of their proposals. Preferred methods are face-to-face or web / phone conference call, which allows interactive engagement with the suppliers.
No other participating suppliers should ever be named in any supplier's debrief.
There should be no direct comparison between the debriefed supplier's scores and those of the other suppliers. Each supplier should be made aware of its total scores, rank and proximity index by evaluation category, plus an outline of the strengths and weaknesses of their proposal.
- Finalise the RFP. At the conclusion of the RFP process:
- The RFP documents, supplier proposals, scoresheets, contracts and all other associated physical and electronic documents created during the process should be securely stored for future reference if needed
- The new contract should be handed to the CLM team to kick-off the CLM process for that contract
- A debrief of the RFP management team and the evaluation team should be conducted to determine what worked well during the RFP process and what didn't, to generate ideas for improvement, and to create a lessons-learned document
- The evaluation team, their managers and other key stakeholders should be publicly thanked for their participation in the RFP, regardless of the outcome
- If execution of the contract requires termination of an existing contract, the established termination and disengagement processes in the existing contract should be activated.
Identifying proposals of interest covers:
- How to determine which proposals might warrant further consideration
- Identification and prioritisation of the key issues to be addressed in each viable proposal
- The need to seek management approval to execute a contract with one of the preferred suppliers
- Requesting a best-and-final offer from each preferred supplier.
Evaluating final supplier proposals and concluding the RFP covers:
- Review of the final proposals to hopefully reveal at least one preferred supplier
- Negotiation of a deal and execution of a contract with one of the preferred suppliers
- Debriefing of all unsuccessful suppliers when requested
- Various administrative activities needed to wind up the RFP process.
You should now be able to plan and prepare for, and conduct when ready, the RFP stage activities outlined in this article.