Post on 16-Feb-2020
The “Dialogue RFP” in Action
City of Lethbridge &
The Road to Procurement Change
Overview
Part I ► Lethbridge Story Part II ► Overview of Dialogue RFP ► Understanding of Methodology ► Results/Outcomes ► Lessons Learned ► Questions
Common Problems?
► Non- Compliant bids ► Over-budget bids ► “If I knew that before I put my bid in” ► Scope creep ► Constant Change Orders/Amendments ► Poor performing contractors ► Payment/Performance disputes
Opportunity
Lethbridge Story
Lethbridge Story
Lethbridge Story
Roles of Procurement Dept.
► Corporate Role Manage Competitive Bidding Process Guide Approval Process Communicate with Vendors Document & Report to Council
► Advisory Role Market Conditions, Procurement Strategy, Potential
Sources, Interpretation of rules, Risk Analysis
► Operational Role Inventory, Warehousing, Courier & Mail
Lethbridge Story
► Role of City Manager Council-Manager Bylaw #2915 Designates City Manager as “Chief
Purchasing Agent”
► City Council authorizes all procurements over $500,000
Lethbridge Story
Opportunity
Lethbridge Story
June 2010 ► Sought Advice from Paul Emanuelli
City of Calgary in the news New Trade Agreement July 2010
► Review of Sole Source provisions in our policy
October 2010 ► Webinar with Financial Services Team
Included Controller and Internal Audit Legal Considerations in Public Procurement
Lethbridge Story May 2011 ► Corporate -wide Training with Paul Emanuelli
Senior Management Team – Institutional Governance & Procurement
Business Units – The Foundations of Public Procurement Business Units – Contract Management
June 2011 ► Retained Procurement Law Office
Institutional Procurement Review ► Stage 1 – Snapshot Review ► Stage 2 – Field Study ► Stage 3 – Final RADAR Report (Risk Assessment, Diagnosis &
Recommendations)
Lethbridge Story
Snapshot Review Methodology ► Applicable Policies & Bylaws ► Tender, Quotation, RFP Templates. ► Sample Tenders, Quotations and
RFPs ► Resulting contracts
► Examples of approval process ► Historical spending data
Summary – Snapshot
Score Description
Total #
% Of Total
A Exceptional 0 0%B Excellent 14 4%C Good 47 13%D Marginal 72 20%E Inadequate 211 60%F Potential Rules Breach 6 2%X Apparent Rules Breach 0 0%TBD No Score Yet 3 1%
353 100%
Lethbridge Story Common Theme
“ …as a whole the policy and procedure
framework is insufficiently detailed”. Snapshot Review Summary, July 19, 2011; Procurement Law Office
Opportunity
Path to Today ► Policy Development: Aug. – Dec. 2011
► Policy Implementation: Jan. – April 2012
► New Bid Documents – Flexible Formats
► Developed Procurement Planning Process
► Revamped Drafting Process
► Protocols, Tools & Training
Summary of Snapshot II
Score Descrip+on Total # % Of Total
A Excep+onal 17 15%
B Excellent 34 29%
C Good 47 41%
D Marginal 11 9%
E Inadequate 7 6%
F Poten+al Rules Breach 0 0%
X Apparent Rules Breach 0 0%
TBD No Score Yet 0 0%
116 100%
Lethbridge Story Use of Flexible Formats
Dialogue RFP
Project #1 ► $40M Community center
twin ice hockey arenas + 10 sheet curling facility
► $35M Funding from Feds & Prov. Must be designed, built, paid by Mar. 2017
► $1.2M already spent on design for twin ice arena
Opportunity
Procurement Strategy
► April 16 - Steering Committee Meeting Discussed options for retaining design team
► April 17-30 - Research & Consultation Peers/contacts in other organizations Searched electronic tendering sites Discussed options with Paul Emanuelli
► May 1- Recommendation to Steer. Comm.
Procurement Strategy
Types of RFPs Negotiable vs. non-negotiable
Negotiable RFPs Consecutive vs. concurrent
Procurement Strategy
► Consecutive Negotiable RFP “rank & run” evaluate & negotiate only with highest ranked If negotiations fail move to 2nd ranked….
► Concurrent Negotiable RFP “dialogue” evaluate & negotiate concurrently with up to (3)
highest ranked maintains “competitive tension” w/ Top (3)
Procurement Strategy
► Why Concurrent Negotiable RFP? 1. Preserve $1.2M investment in existing
design 2. Maximum flexibility 3. Political climate & culture 4. Keep “competitive tension” throughout 5. Use “dialogue” to mitigate risk $$$ 6. Legacy project - Get It Right
Methodology
1. Retained expertise - Procurement Office 2. Obtained & customized bid document template 3. Created small cross-functional drafting team
Procurement “held the pen” 4. Identified & trained Evaluation & Negotiating
Teams 5. Developed tools & protocols to support evaluators
Methodology Stage 1: Mandatory requirements check
Stage 2: Technical Proposals scored
Stage 3: Top (3) Financial proposals opened/scored
Stage 2 + 3 = Initial Scores
Stage 4A: Negotiate Proposals (3)
4B: Best and Final Offer (BAFO)
Repeat Stage 2 & 3 = Final Scores > Frontrunner
4C: Finalize Contractual Terms w/Frontrunner
Award Contract
Outcomes
Risks/assumptions identified and treated Competitive tension maintained Preserved value from initial design Confidentiality upheld Increased understanding of Project
Outcome on Project #1
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
Previous Investment + Original Estimate
Average Initial Offer Average BAFO Offer Winning Bid Previous Investment + Winning Bid
Outcome on Project #1
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
Previous Investment + Original Estimate
Average Initial Offer Average BAFO Offer Winning Bid Previous Investment + Winning Bid
Outcome on Project #1
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
Previous Investment + Original Estimate
Average Initial Offer Average BAFO Offer Winning Bid Previous Investment + Winning Bid
Outcome on Project #1
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
Previous Investment + Original Estimate
Average Initial Offer Average BAFO Offer Winning Bid Previous Investment + Winning Bid
Outcome on Project #1
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
Previous Investment + Original Estimate
Average Initial Offer Average BAFO Offer Winning Bid Previous Investment + Winning Bid
Outcomes to date
► Used on 6 different types of procurement Architectural Services Construction Management Services Technology - Software Mobile Library Design/Build Environmental Engineering Services
► Contract Values $220,000 - $2,162,000
Outcomes to date
Reduction in “risk premium” (Average Initial Offer minus Average BAFO)
► $442,530
► 7%
Outcomes to date
Actual Savings Achieved (Winner’s Initial Offer minus Winner’s BAFO)
► $460,081
► 8%
Timelines to date
Feedback
Client Bidders
Senior Management
Negotiation Tips
► Keep the clock ticking ► Use the invitation to “manage” venue, attendees & agenda ► Procurement acts as Chair ► Small negotiating team with designated Spokesperson ► Note taker and digital recording of proceedings ► Agenda – Keep it simple
Chair Opening Statement – Ground Rules City Lead Negotiator – Project Overview Proponent Rep – Presentation Formal questions and issue discussion
Lessons Learned 1. Retain expertise at the outset 2. Invest upfront to prevent/minimize downstream issues 3. Build the necessary infrastructure 4. Get support from senior management & key stakeholders 5. Focus on strategic objective(s) 6. Share the risks 7. Face-to-face works best 8. Don’t underestimate power of dialogue
Questions
Future Events
May 1, Edmonton Canadian Institute’s Business & Operations Guide to Public Procurement http://www.canadianinstitute.com/westprocurement
June 3, Regina June 9, Toronto June 12, Halifax Lexpert ‘s New Procurement – Critical Developments from Process to Practice http://media.thomsonreuters.ca/Docs/Lex/Spring-2014/Procurement/NewProcurement-2014-Brochure.pdf