Monday, June 10, 2013

Convenience, Competition, and Compliance in Selecting Consultants

In procuring professional consultant services for the public sector, there is a natural tension between convenience, competition, and compliance.  

Convenience:  The argument for convenience and picking a firm a public agency is already familiar with may be summarized by the response of a mayor to a recent audit:  "If you're happy with a professional's work, and their pricing is competitive with the industry, you continue to use that professional."  That's the opinion of Mayor Joe DeStefano of Middletown, New York in response to an audit finding issued by the New York State Comptroller's Office about Middletown's procurement practices.

Competition:  The audit criticized Middletown for not soliciting competitive proposals from five of the eight professional service providers covered by the audit, totaling $164,613.   The audit noted that the city had used the same law firm for 17 years for assisting with labor and labor contract law issues without going through a competitive solicitation process, or justifying the firm as a sole source.  In the city's response to the audit, they wrote that the law firm's "years of experience make them far more efficient than breaking in a new firm."  While that may be true to a certain extent, the best practices in public procurement dictates that the selection process be transparent and that other firms be offered the opportunity to compete.  In addition, somewhat ironically, the audit noted that the city did not have a written contract with the law firm to provide the services. 

Compliance:  Many public agencies have either state or local laws or policies that require a competitive process in selecting consultants.  In selecting consultants, it is important for agencies to comply with the applicable laws and policies.  In the case of Middleton, the auditor criticized the city for not having adequate procurement policies in place to ensure services are procured at the most favorable terms and without favoritism:
The City uses a decentralized purchasing system in which department heads are responsible for procuring goods and services for their respective departments.  The City's procurement policy is not comprehensive enough to ensure that individual departments procure goods and services at the best price possible.  For example, the policy does not provide guidance on using request for proposals for obtaining professional services, evaluating proposals, and determining if purchases are emergency in nature or if a vendor is a sole source for a specific procurement.
Decentralized procurement processes without strong guidelines and policies can often lead to a wide variety of inconsistent practices within an agency.

Lessons Learned:  In selecting consultants, it is important to balance the competing interests of convenience, competition, and compliance.  
  1. State laws:  Does your agency have adopted procurement policies that are consistent with applicable state laws and your current practices?  
  2. Federal requirements:  When you receive federal funding, are your procurement policies consistent with federal grant requirements?
  3. Competition:  Are your agency's procurement policies comprehensive in describing the competitive selection process for obtaining consultant services?
  4. Knowledge of employees:  Do your agency's employee's understand the applicable procurement process, and are they regularly provided with training on the procurement policies?
  5. Standard RFP:  Does your agency have a template RFP that is consistent with the required process?
  6. Evaluation criteria:  Do your agency's RFPs contain appropriate evaluation criteria for ensuring competition for services?
  7. Sole source:  Does your agency have a process for justifying and documenting sole source procurements?
  8. What is most important?  Are your procurement selection decisions based on compliance and competition, or does the convenience of selecting the same firm trump compliance and competition?
More information:
  • Click here for reading the audit finding and the city's response to it. 
  • Click here for a summary news article on the audit from the Times Herald-Record.
Mike Purdy's Public Contracting Blog 
© 2013 by Michael E. Purdy Associates, LLC

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