RFP’s that Lead to Great Contracts Russell S. Subjinske CRFP

Wendy’s QSCC

Objective of this session: To make an impact on setting vendor and restaurateurs expectations and standards across the restaurant facilities industry regarding the execution of RFP’s, defining a scope of work and contract writing. There are many best practices to improve RFP’s. We will discuss items such as the lack of detail in the scope of work, differences in expectations in the scope of work between the vendor, restaurant operations, the facilities team and corporate procurement, evaluation criteria for vendor selection and the lack of complete service level requirements in the RFP. Many contracts are standardized master service documents that can be enhanced by more clearly defining reasonable insurance levels, damage clause and related loss of income requirements, cancelation for convenience sections and the contract term with its impact on price increases. We will provide handouts with conceptual guidelines for the process from RFP to contract. A checklist for items to include in your contracts will be available. This session will not provide all the answers to solve the problem, but will be the starting point for RFMA members to begin the evolution of industry practices in RFP’s that Lead to Great Contracts. This session will introduce starting concepts and then require audience participation to enhance the initial guidelines and checklist. Documents will be posted to the RFMA Web site after the conference and hopefully continue to be improved by the valued input of all RFMA members.

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• The Process

• Need – total vendor engagement (theme)

• Service Level Agreement’s (SLA’s)

• Basics

• Insurance

• Contracts

• T&C Checklist

• Exhibit Checklist

• Vendor Evaluation

• RFMA Form

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• Result of RFMA Board Benchmarking Session

– Board pre-read with questions to answer

– Reviewed and discussed in person on 2nd day of Board meeting

– Updated after Board meeting

– Volunteer Maintenance, KFC, LaMadeline, Carlson, Brinker, Target, Pizza Hut,

Taco Bell, Starbucks, Pei Wei, Luby’s Fuddruckers, Ruby Tuesday, Qdoba,

Wendy’s, Darden

• Presentation developed from results

• Board member review and comment on presentation

• Vendor review of Presentation

– Dunwell, Summit Energy, Roto Rooter, RiverRoad Waste Solutions, HME,

Volunteer Maintenance, Corrigo, Partstown, One Stop Maintenance

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Let’s Get Started

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• Research, Measurements and Metrics – Performance (who and what needs to be satisfied)

– Financial (set expectations inside and out)

– Vendor (national, regional, local)

• Identify all pros and cons – Customer (operations, facilities, customer)

– Vendor (self performing, broker, mix)

• What is the Organizational Impact – Operations

– Maintenance (technology)

– Accounting (invoicing)

– Other Cross-functional Teams

– Vendor

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• Who administers work after the contract

– Procurement, Operations, Facilities, Other, Combination

– Are all escalation levels administered by the same group

– All involved parties must be engaged during the entire process

– All from vendor side as well

• A plan to mitigate or minimize negative impacts

• Vendor involvement (pre issuing of RFP)

• Checklist of RFP contents (living document)

• Something definitive to bid

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• The research and measurement & metric

• Assistance in developing initial RFP

– Suggest at least 3 (2 incumbent's and new)

– At least one draft

– Will remove proprietary obstacles

• Assistance in developing SLA’s

• The RFP will be where the terms, conditions and final contract come from

(included)

– You will have at least 3 vendors in agreement

– Response should include objections

• Involve all parts of vendor organization – not just sales!

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Successful RFP & Contract = Vendor Relationship and Involvement

Face-to-face meetings • Before, during and after RFP • Establishes roles and expectations • Communication • Wear each others hat • Flexibility • Discuss business review expectations and reporting • Listen • Only a collaborative RFP effort will lead to a Great Contract and

exceptional execution

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Don’t Jump Past Opportunity Pressure and Speed is the enemy of RFP’s that Lead to Great Contracts

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Service-Level Agreements

Benefits of Service-Level Agreements • Most important benefit, SLA is communications tool:

– The value of an agreement is not just in the final product - the very process of establishing an SLA helps to open up communications.

• A conflict-prevention tool: – An agreement helps to avoid or alleviate disputes by providing a shared

understanding of needs and priorities. If conflicts do occur, they tend to be resolved more readily and with less gnashing of teeth.

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Service-Level Agreements

Benefits of Service-Level Agreements (cont.)

• A living document – Business Review Meetings – This is one of its most important benefits. The agreement isn't a dead-

end document consigned to the “Forget Forever” file. On a predetermined frequency, the parties to the SLA review the agreement to assess service adequacy and negotiate adjustments.

• An objective basis for gauging service effectiveness. – An SLA ensures that both parties use the same criteria to evaluate service

quality.

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Service-Level Agreements

Effective Service-Level Agreement must have

two sets of elements:

• Service Elements

• Management Elements

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Service-Level Agreements

Service Elements: • Clarify what services are provided • Clarify services not provided (if customers might reasonably

assume availability of such services) • Clarify conditions of service availability • Establish service standards, such as the timeframes in which

services will be provided • Define the responsibilities of both parties • Establish cost vs. service trade-offs • Describe escalation procedures

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Service-Level Agreements

Management Elements: • How service effectiveness will be tracked (scorecard elements)

• How information about service effectiveness will be reported and addressed (reporting)

• How customer service will be evaluated (scorecard elements)

• How service-related disagreements will be resolved tracked and improved

• How the parties will review and revise the agreement (monthly or quarterly business reviews)

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Service-Level Agreements

Periodic meetings with vendor • Scorecard Review

• Collaborative effort

– Customer surveys

– Vendor technician surveys

• Establish monthly reporting required

• Follow-up on goals and / or concerns (monthly or quarterly reviews)

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Service-Level Agreements

Process of establishing an SLA: • Even with attention to both sets of elements, a successful agreement

requires much more than simply plugging the elements into an SLA template.

• The process of planning, establishing, and implementing an agreement is typically a many-month process of information-gathering, analyzing, documenting, presenting, educating, negotiating, and consensus-building.

• Internal (corporate and field) and external (sales and technician)

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Service-Level Agreements

When is an agreement NOT an agreement?

If customer and vendor are not 100% involved and engaged in the RFP & contract process, it is NOT an agreement!

The process must not involve only what the customers wants and needs.

It must involve what both parties need!!!!

Time is the worst enemy of RFP’s that Lead to Great Contracts

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Getting up to Speed with Success

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• Does the work require a formal RFP

– Based on value (cost and quality)

– Based on complexity

– Based on industry knowledge (networking)

• What type vendors do you want to use

– Self-performing, brokers, both

• Who controls the R&M budget

– This is who everyone really answers to

– How does it affect the RFP and contract

• Who purchases the services

– Are they involved in day to day operations

– What impact will their knowledge have on resolving issues 21

• How does the perspective of procurement, operations and facilities differ in

– RFP

– Contract

– Problem resolution

– Scorecarding

– Reporting

• Does the perspective change per trade

– Landscape

– HVAC and Refrigeration

– Trap pumping

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• What is the correct insurance requirement

– How should you determine

– Restaurant perspective

– Vendor perspective

• What is the correct claim limit for lost revenue

– How should you determine

– Restaurant perspective

– Vendor perspective

• What else is important when dealing with insurance?

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• Execute a Mutual Non Disclosure document before vendor receives RFP

• Include request for company and financial information in RFP reply (RFI)

• Terms and conditions (contract) should be included in RFP

– Ask for objections in RFP reply

• Detail is the key

– Capital restrictions and requirements

– Who controls the budget

• This is who they really answer to which may not be the same as the group executing the RFP

– Who does the vendor selection (the audience)

• Helps when presenting information

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• SLA information

– Scorecard criteria

– Report requirements

– Business reviews

– Frequency

• Escalation process for problems

– Who

– How

– Timeframe

• Insurance requirements

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• Ask for objections

– If not stated in reply, there will be few in negotiations

• Have legal review before including in RFP – speeds up final process

– Restaurateur

– Vendor

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• What criteria is important – define in RFP and contract

– Who is it important to

• Store, corporate, finance, facilities, purchasing, vendor corporate,

vendor branch, vendor technician

– Why is it important – define in RFP and contract

• Predetermine what success is to each party at each level

• Reporting - define in RFP and contract

– Who needs to know what information (level of reporting to each party)

– How often do they need to know

– Proactive or reactive

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• Ranking to obtain best in class - define in RFP and contract

– At what level (important when dealing with national or large regional

vendors)

• As a company

• As a branch of the company

• Technician level

– Do you throw out the baby with the bath water?

• How often to you conduct reviews and what is the format - define in RFP and

contract

• How long to fix problems - define in RFP and contract

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• How do you continually raise the bar - define in RFP and contract

– Based on grades

– Based on average scores

• Replace both 10% of all vendors - define in RFP and contract

– Time frame

• Each year

• Each RFP

• When problems occur

• What would help and what are you willing to share

– Presentations

– RFP’s

– Contracts

– Scorecards

– Checklists

– Best practices

• How should RFMA make this information available

• Would you participate in a blog

• Workshops or Webinars

• A RFMA committee to monitor, evaluate and update information

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Contact Information

Russell S. Subjinske CRFP – Sr. Director

russell.subjinske@wqscc.com

614 764-3128

Credits:

RFMA Board, John Webster – Director, Salt Lake County Fleet Management

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Finished Q&A

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