Getting the best value out of the bidding process
While bid processes are guided by law, regulation and sometimes policy, the smaller the entity the less likely it is the municipality will have codified its procurement process — and certainly the less likely it will put out any sort of bid request on its own.
In many cities and towns in the state of Alabama, for example, a widespread preference for avoiding having to wade through complicated and time-consuming bid contracts manifests itself in extensive piggybacking on state government or department of transportation contracts for everything from infrastructure to street signs.
Although entities with populations larger than around 50,000 will usually have a procurement structure in place, it’s not all that unusual for cities with smaller populations to operate in an ad-hoc manner when it comes to purchasing practices. Because how a city handles procurement derives from either legislation or policy, in the absence of legislation an entity is permitted to structure this authority as it wishes and via any number of distinct processes.
For service and product providers, the great differences in procurement practices generates confusion. How procurement is handled, by whom and whether or not bids are let — and how those calls are advertised — varies not only from state to state by city to city, creating an overwhelmingly dense thicket the supplier must traverse in order to let the municipality know there’s an efficient, quality product available, possibly at a lower price than is being paid currently. So how do you streamline the process and make a city’s project and needs stand out to potential providers?
Have a game plan
“It starts with a high level of planning,” Brent Maas, executive director of business strategy and relationships with NIGP: The Institute for Public Procurement, said. “It’s ideal in the procurement process to make sure whoever is the chief or single procurement officer has the opportunity to sit with the agency management to discuss goals before the coming year.”
Some of this discussion, according to Maas, should include what major projects are in the works and what the organization’s overall priorities are. By having procurement folks involved from the beginning, everyone is on the same page, streamlining the process while also allowing procurement officers the chance to relay procurement climates and what suppliers might be available for a specific service or product in addition to any state or federal contracts that might be accessible. They will also know the proper rules of engagement.
“It is important to know your rules,” Maas said, noting requirements and legislature will dictate how agencies proceed.
Be specific, but remain inclusive
Once everyone is on the same page, Maas said, “Know what it is you need and clearly identify that in your list. That is critical because it will influence who out there can provide it.”
The more unique an item is, the more likely it will narrow down perspective providers or suppliers. In some cases, a city might find itself faced with single sourcing, which, of course, might limit its ability to get the most bang for its buck. The pool of potential bidders will also be impacted by geography, with more remote localities already faced with a limited pool of potential bidders. For this reason, Maas recommended not going too specific when other similar products will work just as well.
“It can make a huge difference,” Maas said of being too specific. “You can restrict the field. The more broader the field, the more competitive it is.”
While naming specific brands can be done, Maas suggested cities instead use language open to a variety of bidders, rather than exclusive. It might also be beneficial to look at similar contracts from other agencies or local governments to either learn from them and their language, or even borrow from them while modifying wording to fit your agency’s specific needs.
Broadcast wide and maintain transparency
When placing notifications of requests for proposals, be as inclusive and transparent as possible to keep the pool of providers as large as possible. While newspapers have been a staple for notices in the past, Maas said they are becoming a third choice, especially in areas where it is not a requirement. Rather, the two most commonly used means are opportunity notification systems or the city’s own website.
“The real point is you want to broadcast to as many (providers) as you can,” Maas said, adding cities will then want to be consistent during future RFPs so providers know what to expect.
Additionally, be active during the process rather than passively placing a RFP on the city or town website where, Maas said, each provider will have “equal opportunity to not become aware.” The passive approach can leave cities open to complaints they didn’t create a level playing field. “You want to be open to as many relevant players as you can,” Maas said.
Suppliers should not be expected to have an extra level of awareness, such as having to constantly track a city’s Twitter feed for RFPs. “It’s not a good practice,” Maas said. “You could do it as supplemental, but don’t rely on it as a single mode.” Several methods of notification might prove the key to rounding up a larger number of relevant suppliers, thus getting the best deal.
A transparent process also builds trust and will see suppliers and providers return since they view the organization as being fair. It is also a chance to show citizens the city is indeed operating fairly and impartially — in addition to assuring them the city is pursuing the best value for its tax dollars. “It’s a powerful platform to be able to say and demonstrate that your operation is fair and equal,” Maas said.
Sometimes, the lowest bid submitted is not always the one awarded the contract, and a clearly outlined process — including specific rules or requirements — and transparency can show each step of the process and why the lowest bid wasn’t selected since it did not completely meet laid out requirements. Having each step documented with paperwork then allows the city to answer complainants by explaining “this is why we did this, and this is how this came about.”
“People feel much more comfortable and trusting of the process,” Maas said, adding, “They don’t come away with the sense that they are having to fight city hall.”
Don’t have to go it alone
Cooperative purchasing can be another route, as Maas noted, “You don’t have to go it alone. All small and mid-size cities can benefit from working together.”
This could mean timing road improvement projects, or other similar projects, to coincide with each other. Or perhaps piggybacking on another nearby agency’s contract for fire equipment. In some cases, different agencies are also consolidating support services. Maas said pooling together to create contracts makes the opportunity more attractive to potential bidders — allowing agencies to get the best value back.
“It’s not shrinking,” Maas added of cooperative purchasing. “We are continuing to see growth.”
