The Dialogue RFP in Action City of Lethbridge & The Road to - - PowerPoint PPT Presentation

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The Dialogue RFP in Action City of Lethbridge & The Road to - - PowerPoint PPT Presentation

Sep 09, 2022 378 likes •816 views

The Dialogue RFP in Action City of Lethbridge & The Road to Procurement Change Overview Part I Lethbridge Story Part II Overview of Dialogue RFP Understanding of Methodology Results/Outcomes Lessons Learned

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SLIDE 1

The “Dialogue RFP” in Action

City of Lethbridge & The Road to Procurement Change

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SLIDE 2

Overview

Part I

► Lethbridge Story

Part II

► Overview of Dialogue RFP ► Understanding of Methodology ► Results/Outcomes ► Lessons Learned ► Questions

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SLIDE 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

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SLIDE 4

Opportunity

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SLIDE 5

Lethbridge Story

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SLIDE 6

Lethbridge Story

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SLIDE 7

Lethbridge Story

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SLIDE 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
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SLIDE 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

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SLIDE 10

Lethbridge Story

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SLIDE 11

Opportunity

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SLIDE 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
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SLIDE 13

Lethbridge Story

May 2011

► 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)

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SLIDE 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

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SLIDE 15

Summary – Snapshot

Score Description Total ¡ # % ¡Of ¡ Total A Exceptional ¡ 0% B Excellent 14 4% C Good 47 13% D Marginal 72 20% E Inadequate 211 60% F Potential ¡Rules ¡Breach 6 2% X Apparent ¡Rules ¡Breach 0% TBD No ¡Score ¡Yet 3 1% 353 100%

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SLIDE 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

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SLIDE 17

Opportunity

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SLIDE 18

Path to Today

► Policy Development: Aug. – Dec. 2011 ► Policy Implementation: Jan. – April 2012 ► New Bid Documents – Flexible Formats ► Developed Procurement Planning Process ► Revamped Drafting Process ► Protocols, Tools & Training

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SLIDE 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% ¡ ¡ ¡ ¡ ¡ 116 ¡ 100% ¡

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SLIDE 20

Lethbridge Story

Use of Flexible Formats

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SLIDE 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. 2017

► $1.2M already spent on design for twin

ice arena

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SLIDE 22

Opportunity

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SLIDE 23

Procurement Strategy

► April 16 - Steering Committee Meeting

  • Discussed options for retaining design team

► April 17-30 - Research & Consultation

  • Peers/contacts in other organizations
  • Searched electronic tendering sites
  • Discussed options with Paul Emanuelli

► May 1- Recommendation to Steer. Comm.

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SLIDE 24

Procurement Strategy

Types of RFPs

  • Negotiable vs. non-negotiable

Negotiable RFPs

  • Consecutive vs. concurrent
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SLIDE 25

Procurement Strategy

► Consecutive Negotiable RFP

  • “rank & run”
  • evaluate & negotiate only with highest ranked
  • If negotiations fail move to 2nd ranked….

► Concurrent Negotiable RFP

  • “dialogue”
  • evaluate & negotiate concurrently with up to (3)

highest ranked

  • maintains “competitive tension” w/ Top (3)
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SLIDE 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
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SLIDE 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
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SLIDE 28

Methodology

Stage 1: Mandatory requirements check Stage 2: Technical Proposals scored Stage 3: Top (3) Financial proposals opened/scored  Stage 2 + 3 = 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

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SLIDE 29

Outcomes

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

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SLIDE 30

Outcome on Project #1

  • 500,000

1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 4,500,000 Previous Investment + Original Estimate Average Initial Offer Average BAFO Offer Winning Bid Previous Investment + Winning Bid

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SLIDE 31

Outcome on Project #1

  • 500,000

1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 4,500,000 Previous Investment + Original Estimate Average Initial Offer Average BAFO Offer Winning Bid Previous Investment + Winning Bid

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SLIDE 32

Outcome on Project #1

  • 500,000

1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 4,500,000 Previous Investment + Original Estimate Average Initial Offer Average BAFO Offer Winning Bid Previous Investment + Winning Bid

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SLIDE 33

Outcome on Project #1

  • 500,000

1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 4,500,000 Previous Investment + Original Estimate Average Initial Offer Average BAFO Offer Winning Bid Previous Investment + Winning Bid

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SLIDE 34

Outcome on Project #1

  • 500,000

1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 4,500,000 Previous Investment + Original Estimate Average Initial Offer Average BAFO Offer Winning Bid Previous Investment + Winning Bid

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SLIDE 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

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SLIDE 36

Outcomes to date

Reduction in “risk premium”

(Average Initial Offer minus Average BAFO)

► $442,530 ► 7%

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SLIDE 37

Outcomes to date

Actual Savings Achieved

(Winner’s Initial Offer minus Winner’s BAFO)

► $460,081 ► 8%

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SLIDE 38

Timelines to date

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SLIDE 39

Feedback

 Client  Bidders  Senior Management

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SLIDE 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
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SLIDE 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
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SLIDE 42

Questions

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SLIDE 43

Future Events

May 1, Edmonton Canadian Institute’s Business & Operations Guide to Public Procurement

http://www.canadianinstitute.com/westprocurement

June 3, Regina June 9, Toronto June 12, Halifax Lexpert ‘s New Procurement – Critical Developments from Process to Practice

http://media.thomsonreuters.ca/Docs/Lex/Spring-2014/Procurement/NewProcurement-2014-Brochure.pdf