Wednesday, August 27, 2014

Advice to Public Agencies from a Business Perspective

I recently received an email from an individual who spent 35 years in business responding to government agency (city, county, state, and federal) Invitations to Bid (ITB).  The following is a summary, in my words, of this individual's advice to public agencies.

Be proactive in soliciting firms:  In order to obtain the most competitive prices, it is important for public agencies to be proactive in soliciting as many firms as possible to respond to the solicitation.  It's not enough to just publish the solicitation on a website or in a newspaper and hope that qualified firms will find the ITB and respond.  Public agencies need to research and understand the market and notify applicable firms of the opportunity.  This will result in more competition and therefore lower prices.

Understand the scope of services sought:  As technology changes, it is important for government agencies to keep up to date on these changes as it impacts the scope of work for an ITB.  Just because a public agency used a particular scope of work years ago doesn't necessarily means that it is still an accurate reflection of how the scope should be described today.  If the solicitation includes a bid form with specific line item bids, is it clear what work is included in each line item?  Meeting with firms in the industry prior to issuing the solicitation can help public agencies understand changes in the industry and shape the scope of work and bid form in a manner that will make it attractive and easy for businesses to respond to the ITB.  Many solicitations end up being embroiled in protests or are cancelled because bidders and proposers made different assumptions about what was needed due to a lack of clarity in the solicitation document.

Describe the basis of determining the low bidder:  If an ITB includes multiple line items for unit prices, the public agency should include estimated quantities so it can determine which firm is the low bidder.  Without estimated quantities and just unit prices, it is very difficult to determine what firm has the overall lowest price and should be awarded the project. 

Include accurate estimated quantities:  Public agencies should evaluate carefully whether the estimated quantities included on a bid form are a reasonable estimate based on historical data and projected needs.  Some public agencies end up using the same estimated quantities from year to year and decade to decade even though the actual quantities used have changed dramatically over time.  Unreasonably inaccurate estimated quantities can also result in bidders with knowledge of the agency's actual needs submitting unbalanced bids that may result in higher prices to the public agency.  For unit price contracts, public agencies should establish an internal process to begin to systematically collect actual quantities (or require the selected firm to help with such reporting) so that for future solicitations, more accurate estimated quantities can be used.

Be transparent about the process:  The bidding and award process for public agencies should be transparent and bidders should have easy access to bid tabulations and copies of bids submitted, without requiring that businesses submit elaborate requests for what is a matter of public record.
Mike Purdy's Public Contracting Blog
© 2014 by Michael E. Purdy Associates, LLC


Gary Fabrikant, Procurement Mgr. Miami Lakes, FL said...

this individuals comments are perfectly on target. Procurement professionals must understand and be current on the industries they handle as well as the operational needs of their client departments. For our last solicitation we notified 62 potential bidders. We use performance based contracting where possible and we also use bonus provision. It's easier to go through the motions than to stay current and revised requirements to meet the changes in the industry and new client parameters

SBE- Philadelphia said...

Upon receipt of an approved procurement requisition, and after reviewing the technical specifications or terms of reference for completeness, the procuring entity is in a position to begin preparing the solicitation documents; otherwise, the procuring entity needs to establish contact with the requesting entity in order to get any missing information to complete the technical specifications or terms of reference before they can begin preparing the solicitation documents.