The Dialogue RFP in Action. City of Lethbridge & The Road to Procurement Change

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Crystal Sutton
5 years ago
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1 The Dialogue RFP in Action City of Lethbridge & The Road to Procurement Change

2 Overview Part I Lethbridge Story Part II Overview of Dialogue RFP Understanding of Methodology Results/Outcomes Lessons Learned Questions

3 Common Problems? Non- Compliant bids Over-budget bids If I knew that before I put my bid in Scope creep Constant Change Orders/Amendments Poor performing contractors Payment/Performance disputes

4 Opportunity

5 Lethbridge Story

6 Lethbridge Story

7 Lethbridge Story

8 Roles of Procurement Dept. Corporate Role Manage Competitive Bidding Process Guide Approval Process Communicate with Vendors Document & Report to Council Advisory Role Market Conditions, Procurement Strategy, Potential Sources, Interpretation of rules, Risk Analysis Operational Role Inventory, Warehousing, Courier & Mail

9 Lethbridge Story Role of City Manager Council-Manager Bylaw #2915 Designates City Manager as Chief Purchasing Agent City Council authorizes all procurements over $500,000

10 Lethbridge Story

11 Opportunity

12 Lethbridge Story June 2010 Sought Advice from Paul Emanuelli City of Calgary in the news New Trade Agreement July 2010 Review of Sole Source provisions in our policy October 2010 Webinar with Financial Services Team Included Controller and Internal Audit Legal Considerations in Public Procurement

13 May 2011 Lethbridge Story Corporate -wide Training with Paul Emanuelli Senior Management Team Institutional Governance & Procurement Business Units The Foundations of Public Procurement Business Units Contract Management June 2011 Retained Procurement Law Office Institutional Procurement Review Stage 1 Snapshot Review Stage 2 Field Study Stage 3 Final RADAR Report (Risk Assessment, Diagnosis & Recommendations)

14 Lethbridge Story Snapshot Review Methodology Applicable Policies & Bylaws Tender, Quotation, RFP Templates. Sample Tenders, Quotations and RFPs Resulting contracts Examples of approval process Historical spending data

15 Summary Snapshot Score Description Total # % Of Total A Exceptional 0 0% B Excellent 14 4% C Good 47 13% D Marginal 72 20% E Inadequate % F Potential Rules Breach 6 2% X Apparent Rules Breach 0 0% TBD No Score Yet 3 1% %

16 Lethbridge Story Common Theme as a whole the policy and procedure framework is insufficiently detailed. Snapshot Review Summary, July 19, 2011; Procurement Law Office

17 Opportunity

18 Path to Today Policy Development: Aug. Dec Policy Implementation: Jan. April 2012 New Bid Documents Flexible Formats Developed Procurement Planning Process Revamped Drafting Process Protocols, Tools & Training

19 Summary of Snapshot II Score Descrip+on Total # % Of Total A Excep+onal 17 15% B Excellent 34 29% C Good 47 41% D Marginal 11 9% E Inadequate 7 6% F Poten+al Rules Breach 0 0% X Apparent Rules Breach 0 0% TBD No Score Yet 0 0% %

20 Lethbridge Story Use of Flexible Formats

21 Dialogue RFP Project #1 $40M Community center twin ice hockey arenas + 10 sheet curling facility $35M Funding from Feds & Prov. Must be designed, built, paid by Mar $1.2M already spent on design for twin ice arena

22 Opportunity

23 Procurement Strategy April 16 - Steering Committee Meeting Discussed options for retaining design team April Research & Consultation Peers/contacts in other organizations Searched electronic tendering sites Discussed options with Paul Emanuelli May 1- Recommendation to Steer. Comm.

24 Procurement Strategy Types of RFPs Negotiable vs. non-negotiable Negotiable RFPs Consecutive vs. concurrent

25 Procurement Strategy Consecutive Negotiable RFP rank & run evaluate & negotiate only with highest ranked If negotiations fail move to 2 nd ranked. Concurrent Negotiable RFP dialogue evaluate & negotiate concurrently with up to (3) highest ranked maintains competitive tension w/ Top (3)

26 Procurement Strategy Why Concurrent Negotiable RFP? 1. Preserve $1.2M investment in existing design 2. Maximum flexibility 3. Political climate & culture 4. Keep competitive tension throughout 5. Use dialogue to mitigate risk $$$ 6. Legacy project - Get It Right

27 Methodology 1. Retained expertise - Procurement Office 2. Obtained & customized bid document template 3. Created small cross-functional drafting team Procurement held the pen 4. Identified & trained Evaluation & Negotiating Teams 5. Developed tools & protocols to support evaluators

28 Methodology Stage 1: Mandatory requirements check Stage 2: Technical Proposals scored Stage 3: Top (3) Financial proposals opened/scored Stage = Initial Scores Stage 4A: Negotiate Proposals (3) 4B: Best and Final Offer (BAFO) Repeat Stage 2 & 3 = Final Scores > Frontrunner 4C: Finalize Contractual Terms w/frontrunner Award Contract

29 Outcomes Risks/assumptions identified and treated Competitive tension maintained Preserved value from initial design Confidentiality upheld Increased understanding of Project

30 Outcome on Project #1 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000, ,000 - Previous Investment + Original Estimate Average Initial Offer Average BAFO Offer Winning Bid Previous Investment + Winning Bid

31 Outcome on Project #1 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000, ,000 - Previous Investment + Original Estimate Average Initial Offer Average BAFO Offer Winning Bid Previous Investment + Winning Bid

32 Outcome on Project #1 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000, ,000 - Previous Investment + Original Estimate Average Initial Offer Average BAFO Offer Winning Bid Previous Investment + Winning Bid

33 Outcome on Project #1 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000, ,000 - Previous Investment + Original Estimate Average Initial Offer Average BAFO Offer Winning Bid Previous Investment + Winning Bid

34 Outcome on Project #1 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000, ,000 - Previous Investment + Original Estimate Average Initial Offer Average BAFO Offer Winning Bid Previous Investment + Winning Bid

35 Outcomes to date Used on 6 different types of procurement Architectural Services Construction Management Services Technology - Software Mobile Library Design/Build Environmental Engineering Services Contract Values $220,000 - $2,162,000

36 Outcomes to date Reduction in risk premium (Average Initial Offer minus Average BAFO) $442,530 7 %

37 Outcomes to date Actual Savings Achieved (Winner s Initial Offer minus Winner s BAFO) $460,081 8 %

38 Timelines to date

39 Feedback Client Bidders Senior Management

40 Negotiation Tips Keep the clock ticking Use the invitation to manage venue, attendees & agenda Procurement acts as Chair Small negotiating team with designated Spokesperson Note taker and digital recording of proceedings Agenda Keep it simple Chair Opening Statement Ground Rules City Lead Negotiator Project Overview Proponent Rep Presentation Formal questions and issue discussion

41 Lessons Learned 1. Retain expertise at the outset 2. Invest upfront to prevent/minimize downstream issues 3. Build the necessary infrastructure 4. Get support from senior management & key stakeholders 5. Focus on strategic objective(s) 6. Share the risks 7. Face-to-face works best 8. Don t underestimate power of dialogue

42 Questions

43 Future Events May 1, Edmonton Canadian Institute s Business & Operations Guide to Public Procurement June 3, Regina June 9, Toronto June 12, Halifax Lexpert s New Procurement Critical Developments from Process to Practice

Strategic Sourcing Guidelines on Requests for Proposals and Invitations for Bid

Strategic Sourcing Guidelines on Requests for Proposals and Invitations for Bid Table of Contents Request for Proposal Overview Slide 3 RFP Timeline estimates Slide 4 Business Owner tasks (RFP) Slide 5