Cost of RFP’sCost of RFP’s(and the resulting (and the resulting

contracts)contracts)

Charles JohnsonCharles JohnsonPresidentPresident

Total Contract Solutions, Inc.Total Contract Solutions, Inc.Ground Transportation Consultants and TrainersGround Transportation Consultants and Trainers

888.827.8271888.827.8271www.totalcontractsolutions.comwww.totalcontractsolutions.com

T O T A L C O N T R A C T S O L U T IO N S , IN C .

Emphasis on Ground Emphasis on Ground TransportationTransportation• ConcessionsConcessions

– TaxiTaxi– ShuttleShuttle– LimoLimo– ParkingParking– Curbside Manager w/ FeesCurbside Manager w/ Fees

• ServicesServices– Curbside ManagementCurbside Management– Parking / Satellite ShuttlesParking / Satellite Shuttles– TrainingTraining– ConsultingConsulting – Contractor AuditsContractor Audits

• Specialty Systems Such asSpecialty Systems Such as– AVL, Traffic Control, etc. AVL, Traffic Control, etc.

Cost PerspectivesCost Perspectives

• Cost of the ProcessCost of the Process– Direct CostDirect Cost– Overhead CostOverhead Cost– Opportunity Cost (Inability to Respond)Opportunity Cost (Inability to Respond)– Impact of Contingency Costs and MistakesImpact of Contingency Costs and Mistakes

• Cost of the ResultsCost of the Results– Cost and Qualitatives of Reduced CompetitionCost and Qualitatives of Reduced Competition– Ongoing Administrative CostOngoing Administrative Cost

• AirportAirport• ContractorContractor

– Cost to PatronsCost to Patrons• Airport Pass-ThroughAirport Pass-Through• Contractor Pass-ThroughContractor Pass-Through• Non Cash or Qualitative Cost: Time, Convenience, Safety)Non Cash or Qualitative Cost: Time, Convenience, Safety)

– There is no such thing as a “free lunch”There is no such thing as a “free lunch”

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Lowering the Cost of RFP Lowering the Cost of RFP ProcessProcess• Organization / simplification of RFP and proposed Organization / simplification of RFP and proposed

response requiring. Don’t make the same mistake response requiring. Don’t make the same mistake twice.twice.

• Time to obtain clarifications, time to respond after Time to obtain clarifications, time to respond after clarifications receivedclarifications received

• Cost driver information w/ RFPCost driver information w/ RFP– Include reporting requirements in the RFPInclude reporting requirements in the RFP– Provide as much historical information to proposers as possibleProvide as much historical information to proposers as possible

• Post electronically (if not, advertise facts)Post electronically (if not, advertise facts)– Cheaper processCheaper process– Improves competitionImproves competition

• Reduce number of mandatory conferencesReduce number of mandatory conferences

Lowering the Cost of RFP Lowering the Cost of RFP ProcessProcess• Consider asking for summaries of systems rather Consider asking for summaries of systems rather

than copies of proceduresthan copies of procedures• Emphasis on meeting DBE’s after the contract Emphasis on meeting DBE’s after the contract

rather than beforerather than before• Flexible on minimumsFlexible on minimums

– Minimum experienceMinimum experience– Audited financialsAudited financials– Reasonable bondsReasonable bonds

• Flexibility for responses on operational details Flexibility for responses on operational details (don’t over-spec). Use language like “All (don’t over-spec). Use language like “All necessary, including but not limited to . . .” necessary, including but not limited to . . .”

• Simple yet valid and reliable scoring systemsSimple yet valid and reliable scoring systems

Lowering the Cost of RFP Lowering the Cost of RFP ProcessProcess

• Avoid cost reimbursement contractsAvoid cost reimbursement contracts– Administrative costsAdministrative costs– Lack of incentive to lower costsLack of incentive to lower costs

• Consider options pricingConsider options pricing– Dedicated versus non-dedicatedDedicated versus non-dedicated– One contractor versus multipleOne contractor versus multiple– Bundled versus unbundled servicesBundled versus unbundled services

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Reviewing an RFPReviewing an RFP

• After quick review for interest / green lightAfter quick review for interest / green light• Shoot for one complete reading, top to bottomShoot for one complete reading, top to bottom• Either markup or better yet a recorderEither markup or better yet a recorder• Action itemsAction items

– Proposal to-dos: “Go to the next proposal action item and Proposal to-dos: “Go to the next proposal action item and add…” add…”

– For cost to-dos “Go to the cost and pricing section and add …”For cost to-dos “Go to the cost and pricing section and add …”– For summary items “Go to the row for [fill-in] and say…”For summary items “Go to the row for [fill-in] and say…”

• ““Go to the questions and add . . . Or “Pull from stock Go to the questions and add . . . Or “Pull from stock question” question”

• ““Copy and paste the proposal outline . . .” then “Go to Copy and paste the proposal outline . . .” then “Go to the proposal outline and note in brackets”the proposal outline and note in brackets”

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Systems Concepts for Systems Concepts for ModulesModules• The system concept: proposal and The system concept: proposal and

advertising modules, procedures and advertising modules, procedures and training materials, all ready for training materials, all ready for proposalsproposals

• Constantly improving these documents Constantly improving these documents for multiple recipients and usesfor multiple recipients and uses

• Master and subdocument conceptsMaster and subdocument concepts• Systematize so never lose previous Systematize so never lose previous

improvementsimprovements

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Naming ConventionsNaming Conventions

Proposal for:Proposal for:

[Customer Long] (“[Customer]”)[Customer Long] (“[Customer]”)

[Project Long] (“[Project”])[Project Long] (“[Project”])

RFP # [Project #]RFP # [Project #]

Submitted by:Submitted by:

• [Company Long], ([“Company”])[Company Long], ([“Company”])

1010

Workgroups and NetworksWorkgroups and Networks

• Librarian: shared access, human, both or Librarian: shared access, human, both or software controlled?software controlled?– Proposal modulesProposal modules– Sales presentationsSales presentations– ProceduresProcedures– TrainingTraining– Advertising / Marketing PresentationsAdvertising / Marketing Presentations– Web SiteWeb Site

• Network rights (“read only, create, etc.)Network rights (“read only, create, etc.)• New software systems for file sharingNew software systems for file sharing

1111

The ProposalThe Proposal

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Firm “Qualifications”Firm “Qualifications”

• HistoryHistory

• Financial HealthFinancial Health

• ReferencesReferences

• Accounting SystemsAccounting Systems

• MembershipsMemberships

• PhilosophyPhilosophy

1313

PersonnelPersonnel

• The Staffing Plan / Role NarrativeThe Staffing Plan / Role Narrative– Discussion of roles and talents. Photos? Discussion of roles and talents. Photos? – Include some personnel oriented text, programs, etc.? Photos? Include some personnel oriented text, programs, etc.? Photos? – Job descriptions (exhibit?) or just the role outlines? Job descriptions (exhibit?) or just the role outlines?

• Organizational charts (a must)Organizational charts (a must)– Organization overall (and combine project?)Organization overall (and combine project?)– Project version (unless generic RFP)Project version (unless generic RFP)– Can include support by outside entitiesCan include support by outside entities– Option for more detailed “reference chart” especially if incumbent and Option for more detailed “reference chart” especially if incumbent and

include contact information, photos, even basic duties descriptions, include contact information, photos, even basic duties descriptions, etc.etc.

– SoftwareSoftware• BiosBios• Resumes (exhibit?)Resumes (exhibit?)• Staffing chartsStaffing charts• Newsletters exhibit? Newsletters exhibit?

1414

Your Organization, Inc.Your Organization, Inc.

Ihav NamoProject Mgr.

Lettuce FixitMaintenance Mgr.

Monty PythonAsst. Project Mgr.

Ima SafetySafety & Tng. Dir.

Maintenance ShopWill Bendit

Body Shop Mgr.1,742

Ind. Contractors342

Employee Drivers

Project Organizational Chart

Reggie BossReg. Mgr.

METROClients

Karen RingCall Center Mgr.

Dispatchers /Routers

Asst. Dispatchers /Routers

Customer ServiceRepresentatives

AccountingCommunicationsData ProcessingDriver Services

FinanceLogistics

MaintenancePersonnel

Quality ControlRisk ManagementSafety & Training

Corporate Rescouces

Body RepairTechnicians

Red SkeltonChief Painter

Mechanics

Service Attendants

Accounting Dept.

QualityAssurance& Audit

MIS

Total Contract Solutions Inc.Consultants

Painters

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Facilities & EquipmentFacilities & Equipment

• Glowing TermsGlowing Terms

• Color Photos - People too!Color Photos - People too!

• Equipment ListsEquipment Lists

• Subcontractor Facilities OK Here!Subcontractor Facilities OK Here!

• Existing / Proposed Equipment Existing / Proposed Equipment

• Technology / DispatchingTechnology / Dispatching

• Driver AreasDriver Areas

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VehiclesVehicles

• Vehicle Analysis Spread-SheetsVehicle Analysis Spread-Sheets

• Make Capacity Assumptions ExplicitMake Capacity Assumptions Explicit

• Vehicle Options & ChartsVehicle Options & Charts

• Capacity Cost ModelingCapacity Cost Modeling

• Vehicle Vendor SelectionVehicle Vendor Selection– Long Term CostLong Term Cost

1717

Vehicle SpecsVehicle Specs

• Layman’s Terms or “Performance Layman’s Terms or “Performance Specs” in Proposals Typically, Details Specs” in Proposals Typically, Details to Exhibitto Exhibit

• Provider Prepares ExhibitProvider Prepares Exhibit

• Purchase Order / Specs Performance Purchase Order / Specs Performance BasedBased

• Spare Parts in BidSpare Parts in Bid

1818

The Startup PlanThe Startup Plan

• Provide, Discuss, Finalize, Purchase, Provide, Discuss, Finalize, Purchase, Execute, Revise, Develop, Install, Execute, Revise, Develop, Install, Receive, Communicate, Brief, Train, Receive, Communicate, Brief, Train, Attend, Prepare, Hire, Issue, Monitor, Attend, Prepare, Hire, Issue, Monitor, Assign, Perform ...Assign, Perform ...

• Methods for PresentationMethods for Presentation

1919

The Start-up PlanThe Start-up Plan

• PhilosophyPhilosophy

• Start Out Right (consultant?)Start Out Right (consultant?)

• Startup ResourcesStartup Resources

• Communicate ProgressCommunicate Progress

• Cross ReferencingCross Referencing

2020

The Startup PlanThe Startup Plan

• Target Dates (Now / Later)Target Dates (Now / Later)

• Achieving the ImpossibleAchieving the Impossible

• The Gantt ChartThe Gantt Chart

• Milestone ChartsMilestone Charts

• Tracking ChartsTracking Charts

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The Operating PlanThe Operating Plan

• Using the RFP as the GuideUsing the RFP as the Guide

• RFP Outline in SkeletonRFP Outline in Skeleton

• Parroting Text: Pros and ConsParroting Text: Pros and Cons

• ““Exceed” Exceed”

• Operating ProceduresOperating Procedures

• Innovations (Backup Service, Service Innovations (Backup Service, Service Options)Options)– The Operating PlanThe Operating Plan

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The Operating PlanThe Operating Plan

• Importance of Committee Make-UpImportance of Committee Make-Up

• Experience is the Best TeacherExperience is the Best Teacher

• Pre-bid Conference NotesPre-bid Conference Notes

• Emphasis for EachEmphasis for Each

• Incumbent IssuesIncumbent Issues

• Flexibility on DetailsFlexibility on Details

2323

The Operating PlanThe Operating Plan

• Procedure ManualsProcedure Manuals

• Internal Reference ListsInternal Reference Lists

• Diagrams / Flow ChartsDiagrams / Flow Charts

• Job DescriptionsJob Descriptions

• Prop Photos = Tng SlidesProp Photos = Tng Slides

• MarketingMarketing

2424

Communications and Reporting Communications and Reporting PlanPlan

• StatisticsStatistics

• Performance ReportingPerformance Reporting– The Open BookThe Open Book– Over-Reporting (slightly)Over-Reporting (slightly)– Graphing & Quality ControlGraphing & Quality Control

• Availability / Acting OnAvailability / Acting On

• Technology & CommunicationsTechnology & Communications

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Regulatory ComplianceRegulatory Compliance

• The Easiest Text to ObtainThe Easiest Text to Obtain

• The Hardest Text to UnderstandThe Hardest Text to Understand

• The Outline Summary MethodThe Outline Summary Method

• The Procedure System / TrainingThe Procedure System / Training

• Who Ya Gonna Call?Who Ya Gonna Call?

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Regulatory Compliance Regulatory Compliance ExamplesExamples

• ADAADA

• Clean Air / Alternative FuelsClean Air / Alternative Fuels

• CDL RequirementsCDL Requirements

• Drug TestingDrug Testing

• Facility IssuesFacility Issues

• FTA RegulationsFTA Regulations

• Health and Human Service RegulationsHealth and Human Service Regulations

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Serving the DisabledServing the Disabled

• Staff Training Before ProposalStaff Training Before Proposal

• Describing ProceduresDescribing Procedures

• Describing PhilosophyDescribing Philosophy

• Sensitivity TrainingSensitivity Training

• Driver TrainingDriver Training

• A Very Important AreaA Very Important Area

2828

MaintenanceMaintenance

• Describing the ProcessesDescribing the Processes

• Preventative MaintenancePreventative Maintenance

• CommitmentCommitment

• Management Info & ControlManagement Info & Control

• RFP LanguageRFP Language

2929

Operating SystemsOperating Systems

• Claims and AccidentsClaims and Accidents

• Routing and SchedulingRouting and Scheduling

• Run CuttingRun Cutting

• PersonnelPersonnel

• Operator Scheduling, TimekeepingOperator Scheduling, Timekeeping

• Dispatching and TurnoutDispatching and Turnout

3030

Operating SystemsOperating Systems

• CommunicationsCommunications

• ReportingReporting

• Vehicle MaintenanceVehicle Maintenance

• BillingBilling

• Call Center ManagementCall Center Management

• Telephone EquipmentTelephone Equipment

• Call DistributionCall Distribution

• Statistical AnalysisStatistical Analysis

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Alternative FuelsAlternative Fuels

• Fuel Type OptionsFuel Type Options

• Dual FuelingDual Fueling

• Fuel Station DecisionFuel Station Decision

• Pros and ConsPros and Cons

• Local RegulationLocal Regulation

• Cost FactorsCost Factors

3232

Quality ControlQuality Control

• Mutual SpecsMutual Specs

• MeasurementMeasurement

• Employee InvolvementEmployee Involvement

• ProceduresProcedures

• Total QualityTotal Quality

3333

Quality ControlQuality Control

• Vehicular MaintenanceVehicular Maintenance

• Cost of Poor QualityCost of Poor Quality

• Purchasing and QualityPurchasing and Quality

• Procedures & TrainingProcedures & Training

3434

Adding Proposal SectionsAdding Proposal Sections

• Innovative ItemsInnovative Items– Service OptionsService Options– Backup ServiceBackup Service

• Communications & ReportingCommunications & Reporting

• Operating Procedures?Operating Procedures?

3535

The Price The Price ProposalProposal• Explanatory TextExplanatory Text

• Assumptions (Understanding but Assumptions (Understanding but may help protect also)may help protect also)

• Reasonableness and ValueReasonableness and Value

• Highlight Driver Benefits, TechnologyHighlight Driver Benefits, Technology

• Increases in Hours or TripsIncreases in Hours or Trips

3636

The Price ProposalThe Price Proposal

• Development RolesDevelopment Roles• Price SchedulesPrice Schedules• Cost DataCost Data

– Review ClausesReview Clauses– Importing / OrganizingImporting / Organizing

•Fixed, Operating, Startup, Overhead Fixed, Operating, Startup, Overhead AllocationAllocation

• Someone on Committee Probably Someone on Committee Probably Loves This!Loves This!

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Pricing OptionsPricing Options

• PurposesPurposes– Competitor’s Pricing & ItemsCompetitor’s Pricing & Items– In-house Pricing & ItemsIn-house Pricing & Items– Win-Win OptionsWin-Win Options

•Fuel Inflator / DeflatorFuel Inflator / Deflator•Capital CostCapital Cost•Technology GainsTechnology Gains•ETC.ETC.

• Other Options - “Integral”Other Options - “Integral”

3838

Contract Cost Primer (More Contract Cost Primer (More later)later)

• Cost Ranges (Hi, Med, Low)Cost Ranges (Hi, Med, Low)

• Naming VariablesNaming Variables

• Year Zero CostsYear Zero Costs

• Cash Flow ScheduleCash Flow Schedule

• Interest CostsInterest Costs

• Profit Determination based on riskProfit Determination based on risk

• Sensitivity AnalysisSensitivity Analysis

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ExhibitsExhibits

• List of Exhibits: Volume 2List of Exhibits: Volume 2

• # Exhibit# Exhibit

• 1 Documents to Be ...1 Documents to Be ...

• Insurance....Insurance....

• 2 Vehicle Specifications2 Vehicle Specifications

• 3 Manuals / Forms3 Manuals / Forms

• 4,5,6... Consultants / Subs / Tech4,5,6... Consultants / Subs / Tech

4040

Final Touches: Very Important / Final Touches: Very Important / Need Time to Work TheseNeed Time to Work These

• Cover LetterCover Letter– IncumbentIncumbent– Emphasizing Evaluation CriteriaEmphasizing Evaluation Criteria

• Executive SummaryExecutive Summary

• Table of Contents, Detailed (or Amplified): Table of Contents, Detailed (or Amplified): More important than you thinkMore important than you think

• Compliance MatrixCompliance Matrix

• Table of Figures (once you have enough Table of Figures (once you have enough figures)figures)

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What’s Next: What’s Next: Negotiating, Negotiating, Contract Law, Contract Law, Startup and Startup and ProblemsProblems

Thank youThank you

© Total Contract Solutions, Inc.© Total Contract Solutions, Inc.

www.totalcontractsolutions.comwww.totalcontractsolutions.com

888.827.8271888.827.8271