Because a feasibility study is usually a time-consuming effort that requires particular expertise, the user typically chooses to bring in a contractor. (Sometimes the contrac- tor is brought in as early as the initial investigation.) The user notifies one or more contractors, internal or external, by sending them a document called an RFP—a re- quest for proposal (or a request for quotation, invitation to bid, or similar term).7The dual purpose of the RFP is to outline the user’s idea (problem, need, etc.) and to solicit sug- gestions (proposals) for solutions—usually with the intent of awarding a contract for the best one. RFP’s are sent to companies on the user’s bidders list. Contractors not on the bidders list can learn about upcoming jobs in newsletters and bulletins. For example, the Commerce Business Daily is a daily publication that gives a synopsis of all federal jobs over $10,000. Many smaller contractors scan these and ask for RFP’s about jobs they might be interested in bidding on.
The user describes his problems, objectives, and any requirements in the RFP. Con- tractors choosing to respond send in proposals, and the user assesses and awards a con- tract to one of them to perform the work. Figure 4-4 shows the contents of a typical RFP. The user gets just what he asks for, and foul-ups later can often be traced to a poor RFP. The RFP must be clear, concise, and complete; when it is, the user can expect proposals that are clear, concise, and complete. Ultimately, the ability of con- tractors to develop good solutions uniquely tailored to fit the user’s needs will de- pend, in part, on their understanding of the user’s requirements (as specified in the RFP). Similarly, the ability of the user to select between contractors will depend on the information the contractors provide (again, as specified in the RFP). The appearance of an RFP is illustrated in Example 2.
Statement of Work
a. Description of problem, need, or general type of solutions to be investigated.
b. Scope of work to be performed by contractor, work to be included, work excluded, and work restrictions; criteria of acceptance for results or end-items.
c. Requirements for the solution, results, or end-item, including specifications and stan- dards; description of how work will be measured; expected relationship between user and contractor; expected completion date; constraints on cost of work to be performed.
Proposal Requirements
Conditions placed on the proposal such as proposal contents and format, data requirements, sample forms to include, and submission location and deadline.
Contractual Provisions
Type of contract to be awarded, sample contract, and nondisclosure provisions. Technical Information or Data
Any additional data, or name of a contact person for requesting additional data, necessary to develop a solution and prepare the proposal or price quote.
Figure 4-4
Example 2: RFP for Midwest Parcel Distribution Company
Following is the RFP for the LOGON system that Midwest Parcel Distribution Company sent to contractors chosen as most capable of meeting the require- ments. (Only partial entries are shown in each section below to minimize the length of the example. Reference to “Appendix” is for a hypothetical appendix at- tached to RFP, not to appendices of this book.)
Introduction
After a 4-month search, you have been selected by Midwest Parcel Distribu- tion Company (MPD) as a company capable of meeting our requirements for a new system. You are invited to present a proposal to supply the hardware, software, and support services for the system described in this request for pro- posal (RFP).
RFP Table of Contents Section 1. Background Section 2. Statement of Work Section 3. Proposal Contents and Format
Section 4. Proposal Submittal Section 5. Selection Date and Criteria
Section 6. Technical Information Section 1. Background
MPD seeks to award a contract for the design, fabrication, installation, test, and checkout of a transport, storage, and database system for the automatic place- ment, storage, and retrieval of standardized shipping containers. The system, re- ferred to as the logistical online system, hereafter referred to as LOGON, will be installed at MPD’s main Chicago distribution facility. . . .
(Additional discussion of current environment at the Chicago distribution fa- cility, projected future needs, and purpose and objectives of the new LOGON system).
Section 2. Statement of Work
The contractor’s responsibility shall be for furnishing expertise, labor, material, tools, supervision, and services for the complete design, development, installa- tion, check-out, and related services for full operational capability for the LOGON system. All necessary testing of systems and subsystems designed and installed by the contractor, as well as of current facilities, to ensure compatibility with the new system and with local, state, and federal requirements, will be performed by the contractor.
The LOGON system must meet minimal performance requirements, be com- patible with existing structural and utility limitations of the facility, and be com- pliant with packaging and logistical standards and codes, all as specified in Section 6: Technical Information. . . .
(Additional discussion of services, equipment, and material to be provided by the contractor, and a list of specific end-items).
Exclusions
Removal of existing storage, placement, and retrieval equipment will be per- formed under separate contract and is the responsibility of MPD. The current op- eration is largely manual, and removal will be completed in time for the new system to be installed. . . . (Discussion of services, equipment, and material provided
Scheduled Delivery Date
LOGON system to be fully operational on or before April 30, 2006. All necessary hardware, software, and support services necessary for full system operation will be supplied and/or completed by April 30, 2006.
Site installation will initiate no later than Nov. 30, 2005. Subcontractors
Contractor shall submit with the proposal a list of subcontractors and the work to be assigned to each. Subcontractors shall be subject to MPD approval prior to placement of a contract.
Cost and Contract
Price of contract will not exceed $1.5 million.
Contract will be fixed price with a penalty charge of $1,000 per day for failure of the system to meet the target operational completion date of April 30, 2006. Section 3. Proposal Content and Format
Proposal will include the following sections and conform to the instructions as follows:
Proposal Table of Contents
1. Cover sheet (use Form I provided in Appendix A) 2. Executive summary
3. Statement of work
a. Background statement
b. Technical approach, distinguishing features
c. Project plan and schedule (use Forms II–V provided in Appendix A) 4. Budget (use Form VI provided in Appendix A)
5. Project organization and management plan 6. Prior experience and key personnel
7. Attachments
a. Signed statement of confidentiality (use Form VII in Appendix A) b. MPD supplied confidential information
c. Letters of commitment for work contracted to third parties. Specific Instructions
(Details about the purpose, specific content, specific format, and approximate length for each of the sections listed above.)
Section 4. Proposal Submittal Submittal
Contractor will submit two (2) copies of the completed proposal along with all MPD confidential information to:
Lynn Joffrey
Administrative Assistant (LOGON) Midwest Parcel Distribution Company 13257 N. Wavelength Ave.
Chicago, IL 60699 (773)773-7733 Deadline
Section 5. Selection Date and Criteria Selection and award date
September 5, 2004 Selection Criteria
Completed proposals received by the deadline will be evaluated by the follow- ing criteria:
1. Technical ability:
a. Ability of system to meet performance requirements within the limita- tions of the existing facility, standards, and codes.
b. User-friendliness of the system with respect to operation, reliability, and maintenance.
c. Use of state-of-the-art technology to ensure system remains current into the next decade.
d. System support services during contract period and available afterward. 2. Contractor’s bid price.
3. Contractor experience and qualifications. 4. Project management and project plan. Section 6. Technical Information
Confidentiality
The attached technical data and any additional requested drawings, specifica- tions, requirements, and addenda shall be treated as confidential and the prop- erty of MPD. Information provided in this RFP or requested from MPD will not be duplicated beyond that necessary to prepare the proposal. The original and all du- plicates will be returned with the proposal. (See Form VII, Appendix A)
Supporting Technical Data
1. Technical data attached in Appendix C to this RFP:
a. Technical performance requirements and standards for LOGON system b. Facility structural and utility specifications
c. Facility floor plan
2. For clarification and additional information, contact: Mr. Ed Demerest
Project Director, Facilities
Midwest Parcel Distribution Company 13257 N. Wavelength Ave.
Chicago, IL 60699 (773) 773-7733
(Attached to the RFP are Appendices A, B, and C containing forms, agreements, and supporting technical data, standards, and performance requirements neces- sary for preparing and submitting a proposal.)
Each competing contractor must determine if it is capable of preparing a winning proposal and then, should it win, of performing the proposed work. The amount a contractor spends on preparing proposals and the proportion of contracts it wins sig- nificantly affect its company overhead because expenses for lost proposals must be charged to overhead. It is only in rare cases, such as major defense contracts, that win- ning contractors are reimbursed for their proposal expense. The feasibility of winning and concluding a project depend upon numerous factors, including
• Whether competitors have gotten a head start.
• Whether the contractor has sufficient money, facilities, and resources to invest in the project.
• Whether performance on the project is likely to be good for (or damaging to) the contractor’s reputation.
• Other criteria, similar to those which the user employed in the initiation stage. Sometimes contractors will respond to an RFP knowing that they cannot possibly win the project, doing so just to maintain a relationship with the solicitor, remain on the user’s bidders list, or keep the field competitive. Sometimes users send out an RFP with no intent of ever signing with a contractor; they do it simply to gather ideas. Ob- viously this is a situation of which respondent contractors must be wary.
Sometimes proposals are submitted to potential users without an RFP. When a project group believes it has a system or solution to satisfy a need or solve a problem, the project manager works with his marketing department to identify prospective customers and then notifies them with an unsolicited proposal. Other times the project manager identifies follow-up work related to a current project and submits an unso- licited proposal to the current customer.