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Procurement Perspectives: Inherent difficulties appear in every proposal

0 198 Government

by Stephen Bauld

One of the difficulties inherent in any RFP where there are significant differences among the competing proposals received, is to ensure that all of them are given fair consideration.
Stephen Bauld
Stephen Bauld

Offers that are widely different will almost certainly vary significantly in price. In such a case, it is clearly unrealistic to accept the "lowest" price without reconciling the prices with the terms of the offer to generate a common base comparator.

To illustrate this point, here is a hypothetical example relating to an RFP for the construction of a building. When the RFP was issued, the municipality wished to encourage a wide range of offers, exploiting the available land sites, design and other expertise that a range of developers could bring to the table.

Therefore, while the specifications provided an indication of an optimal solution, the municipality indicated that all offers brought forward would be given fair consideration, even if they could not meet the optimal target in one or more critical respects.

When the RFP closes, the municipality faces a complex range of proposals. One is priced at $6.5 million. While the facility would meet at least some aspect of the city's requirements, it does not fully meet the functional specification in several respects.

In particular, it includes little parking and is largely built around the refit of an existing structure.

A second is priced at $13 million, but provides for a new state-of-the-art facility with more parking than indicated in the original specification. This offer has a potential to generate at least some P3 income, which could reduce the overall cost of the project.

The other two offers received occupy a middle ground between these two extremes.

After a review of the offers, the evaluation team discovers that when the common elements of the proposal are ignored, the offers vary on different criteria.

A critical question is how to compare each of the offers received. Such variations in the different proposals make it difficult to carry out a direct comparison of the raw information provided by each proponent respectively.

To compare only the cost of the different designs would be inherently unrealistic, since it obviously costs less to build a smaller building than a larger one, whereas the utility offer by the larger amount of useable square footage is greater than that offered by a smaller area.

Similar disparities also exist with respect to each of the identified critical aspects of functionality.

To allow a sensible comparison to be made, it is necessary to harmonize the prices quoted by the proponents to reflect the value (benefit) and cost per feature of the proposals that each was bringing forward.

Given the radically different solutions that each proponent is recommending, the first step in this process was to generate a common base comparator for each proponent, so that their respective proposals can be compared in a meaningful way.

Only by doing so, is it possible to make an "apples to apples" comparison.

For example, the different range of parking options provided may be used to illustrate the process. Proponent 1 has offered a design which allows 50 more parking spaces than called for in the specification. In contrast, Proponent 4 has offered 230 fewer parking spaces.

To compare the two offers, Proponent 1 would be asked to offer a credit price for reducing the number of parking spaces to the 350 provided for in the specification.

At the same time, Proponent 4 would be asked to offer a price for increasing parking to the required level of 350 places.

After these amounts are taken into account, it is possible to generate a common base comparator price for each of the proposals if they offer the same level of parking.

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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