RFP 101Cara Kaufman, Partner, Kaufman-Wills GroupALPSP Seminar: Art of Contract Negotiation

28 October 2010

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Overview

• Preparing an RFP to meet your needs Often the first step toward a successful

negotiation

• The role of consultants in the RFP and negotiation process

• Negotiating to and through the initial contract and contract renewals

What is an RFP?• A request for proposal (RFP) is an invitation for

vendors to submit a proposal to provide your organization with one or more goods or services Details the organization’s specific requirements for

the proposed goods or services in strategic context Dictates or allows suppliers freedom to propose the

methods, timetable, and budget for the work Leverages an organization’s negotiating ability and

purchasing power with suppliers via the bid process

RFQ (quote) | RFI (information) | RFQ (qualifications)

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RFP examples

• Contract publishing Commercial

publishers University presses |

nonprofits• Editorial and

production services Copyediting Composition Print | digital

• Sales and marketing Industry sales Content aggregators Institutional sales

• Licensing / buying technology Peer review systems Semantic tagging Data conversion Content management

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The process at-a-glance

RFP2-4 weeks

• Need assessment• Suppliers selected• Data gathered• RFP prepared• RFP distributed• Q&A from suppliers

Proposals4-6 weeks

• Proposals received • Proposals analyzed• Review with stakeholders• Finalists selected• Q&A with remaining

suppliers

Presentations4-6 weeks

• Agenda / invitations• Hold presentations• Discussion / decision• Inform suppliers• Contract negotiations• Transition

Steps to creating an RFP

Assess needs and gather relevant data

Determine info needed; set reasonable timetable

Identify recipients, prepare and distribute RFP

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Elements of an RFP• Organizational overview • Business problem (opportunity)

prompting RFP• Results of any needs assessment

conducted• Schedule of important dates

RFP response due Presentations/demos Decision expected Sale / transition

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• Contact names, sources/protocol for Q&A• Instructions for organizing, formatting proposal• Requirements

Specific product/service/technical requirements Other assumptions and agreements

Budget parameters, use of subcontractors, ownership, point of contact

• Documents required as attachments Sample reports, standard contract language, transition

plan, references

• Basis of award of contract Lowest price, greatest financial return, highest quality

Contin

ued

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RFP questions

Capabilities

Customization | depth of response | innovation

ExperienceCustomer profile | core competencies | staffing |

subcontractors | customer satisfaction

Supplier profileThe organization | location | size | market

position | future vision

Terms of agreement

Deliverables | ownership | post-termination rights | termination | financial offer

InfrastructureSystem | security | redundancy |

warranty | training

ManagementContacts | reporting | meetings

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Packaging the RFP• Print and/or eonly• Cover letter/invitation

Pre-qualify NDA

• Single document MS Word or PDF Linkable table of contents Tables to show history/trends

• Excel file for apples-to-apples comparison• Concise and proofread

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What happens after vendors receive an RFP?

Read RFP

Ask questions

Do homework

Determine fit, rough numbers

Submit proposal?

Gather information

Brainstorm

Prepare projections

Determine offer

Write proposal

Evaluating proposals

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Points of differentiation

Supplier knowledge

Supplier resources

Customer support

Supplier personnel

Supplier capabilities

The financial

offer

Reputation/culture

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Top 3 blunders

1Supplier fails to address key element of RFP, respond to questions about proposal, or correct error

2Supplier insists on different approach or bases proposal on different assumptions than those expressed in RFP

3Proposal indicates supplier knows little about customer, product/service, or market

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Evaluating presentations/site visits

• The supplier Do you believe that the supplier’s mission is aligned with

your mission? Will the supplier’s market position be helpful to you? Are the supplier’s office locations around the world well

situated?• The people

Are the individuals with whom you will be working knowledgeable?

Did the presenters work as a team? Can you envision yourself working with them? Do you think they would be communicative and responsive?

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Continued

• Quality Will the supplier uphold your high quality standards? Is their vision for the deliverable/s aligned with yours? Are the supplier’s products/services state-of-the-art?

• Capabilities Did the supplier provide a convincing plan? Does the supplier have the necessary expertise / control

over subcontractors? Are you satisfied with how you will be treated vis-à-vis

other customers? Can they deliver?

• The Financial Offer Will you receive complete and regular financial

reporting? Are the costs/royalties/financial terms easy to

understand? Are appropriate rights retained during and after the

agreement period? Are there business terms that you would like to negotiate

before entering into contract discussions?

Why do organizations use consultants for RFPs?

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Objectivity

Time

Experience

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Consultant’s role in RFP

• Prepare and distribute the RFP Introduce structure and method to process Help identify appropriate recipients Gather information for RFP Prepare documents for approval Develop and monitor timeline

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• Evaluate supplier proposals Respond to suppliers’ questions Compare proposals Prepare narrative, tables, and spreadsheets Discuss with client, identify remaining issues Questions, revised offers

• Arrange for presentations, site visits Set expectations for client Moderate discussion following presentations

• Inform suppliers Provide feedback

• Negotiate agreement Review and comment Brainstorm solutions

Contin

ued

Steps in negotiation

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Predetermine essential, fall-back/ trade-off, ideal positions

Settle all business terms pre-contract

Read and mark up agreement; ensure contract reflects proposal, agreed on terms; lastly, legal review

Negotiation styles

• Collaborative : negotiating for win-win Detached problem-solving where each party gains something of value

• Competitive (zero-sum) negotiating for win-lose Substance (eg, financial) is what matters; relationship unimportant

• Concession: negotiating for lose-win Avoidance, desperation, or not knowing what’s possible lead to loss

» www.changingminds.org 20

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Contract negotiating tips

Reducing the stress levels• “Approve” (revised) proposal• Agree on all business terms

before negotiating contract• Communicate any truly

nonnegotiable clauses before contract (good faith)

• Convert individual wants into shared problems

• Don’t rewrite unless you need to eliminate ambiguity or change the meaning

• Work with an attorney experienced in publishing

Questions to bypass an impasse• What is at the heart of your/my

concern? What is the purpose of this clause?

• Can I explain to you the situation I’m worried about and can we put our heads together to think about how this situation could be avoided?

• If we removed the clause, would or could another clause come into play if we found ourselves in this (unlikely) situation?

• Is it time to brainstorm with some colleagues?

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Case report 1: contract publishing

(what not to do)• Huge manuscript backlog muddying financial waters• Displeasure with incumbent publisher’s new contract offer, not

communicated• New publisher submits unsolicited bid; no established RFP or

bidding process• Incumbent publisher submits counter offer but still with terms not

as positive as new publisher• Announces change in publishers before business terms finalized• New publisher reneges on offer• Crawls back to incumbent publisher• Incumbent publisher graciously honors • Asks for additional concessions during contract negotiation

Case report 2: contract publishing

(dealing with the typically tricky clauses)• Reuse of content

• Sublicensing rights• New publications• Satisfactory staffing• Excess page costs• Copyediting quality• Online feature equity• E-publishing formats• Peer review system

• Transition costs (pre and post)

• Reporting• Proposed “efforts”• Mid-term changes• Unprofitability clause• Post-termination

rights

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Thank you!

cara@kaufmanwills.com

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