Why the government’s model RFx Templates are brilliant! (And what you need to know to use them most effectively)

If you’ve trialled the government’s RFx templates over the past year or so, you probably already know that they provide an excellent resource for over-committed procurement managers who are putting Requests for Proposal, Requests for Quotation or Registrations of Interest out into the marketplace.

Maybe you have also provided feedback to the Procurement team at MBIE on how the trials have gone for you and your team. There may be some tweaks to the templates done following that consultation exercise, so keep an eye on MBIE’s procurement website for any updates. If you haven’t used them yet, or you’d like to know more about how some organisations are getting the most from these resources, then read on.

In due course, these templates will become mandatory for all the organisations who must follow the Government’s Rules of Sourcing. However, even if those rules are not mandatory for your organisation, you’d be wise to use these – they’ll save you and your suppliers time, make evaluation easier, and help to protect you against legal challenges from disgruntled bidders. That’s certainly worth having!

There are six sections in the RFP template, plus an accompanying Response Template that you can customise to the needs and drivers for value for money that are specific to your project. As most of the people we have talked to have used the RFP template, (and it provides the most in-depth resource) we’ll concentrate this article on how you can use it effectively for your procurement.

The first section ‘This opportunity in a nutshell’

This overview section gives you a useful structure and excellent guidance notes on how to summarise what you need and why suppliers should bid. To use it effectively,

  1. Use plain English,
  2. Try not to cut and paste from the last procurement exercise, and
  3. Consider what will drive value for money on this procurement.

The specific guidance you give to bidders should be encouraging (after all, you want to get the best suppliers to bid for this!); and should be tailored to the critical success factors for the project as well as the potential risks and opportunities that suppliers should cover off in their responses.

It should explain what minimum capacity or capability (e.g. certifications, experience or resources) will be needed. These will be reflected in the Preconditions which feature in Section 3 of the template.

Once unsuitable suppliers are eliminated (as early as you can, hence the preconditions), then Value for Money drivers usually relate to:

  1. How well the supplier will mitigate project-specific risks (e.g. safety risks? Going over budget or timelines? Managing stakeholders? Etc) and
  2. What opportunities they will bring to add value to project outcomes (e.g. a safer, more durable solution, accelerated delivery, etc).

The snapshot given in that first section will help your suppliers decide quickly if this is a tender that suits their company’s capabilities.

Section 1 – Key Information

This section gives useful information to the tenderers about the process and timelines for delivering your response, as well as contact details for the ‘point of contact’ (alias tenders secretary) from your organisation. Again, this information is particularly useful to your suppliers to quickly work out their programme for preparing their response.

When setting your timelines, you should check the Rules of Sourcing – in particular, Rules 27 – 31 which cover the time periods for responses. Remember that the standard minimum time periods (typically 20 or 25 business days) can be reduced only if the project is specifically listed in a prior annual procurement plan, and documents are available on GETs and electronic responses are allowed. The time periods are measured in clear business days (i.e. don’t include the day of release or the day of submission when you count).

Even if your organisation is not mandated to follow those rules, all prudent procurement managers should follow them. If you allow a short response period, suppliers will be rushed and therefore the quality of their responses will suffer, and this will make evaluation more difficult as well as compromising the value for money that you receive.

Section 2 – Our Requirements

Here’s where you include a detailed description of what you are purchasing. It may include specifications, drawings, scoping information, etc. There are useful headings included for your guidance, but naturally every procurement is different and you will probably want to customise these to suit.

Note that it is important not to use brand names or technical specifications that could unnecessarily exclude some suppliers – you’re better off to specify the performance outcomes that you are seeking rather than a particular product, where possible.

Section 3 – Our Evaluation Approach

This important section helps to guide your suppliers on how they will be evaluated, what information you need from them, and how it will be scored. It’s the ‘nuts and bolts’ of the procurement process for suppliers.

In many cases, it is wise to eliminate unsuitable suppliers as early as you can in the process. Using preconditions, using a prequalification process, a supplier panel or a Registration of Interest process as an initial stage to ‘weed out’ suppliers who simply don’t have the capability or capacity to deliver, will save both you and your suppliers time and costs.

If you use this approach, your RFT should clearly state what the criteria are for conformance (i.e. what would cause you to ‘fail’ a supplier on any attribute that you ask about). This should be expressed as a measurable and objective fact, not a subjective opinion or a score that has no clear definition of how it will be assessed.

Using a staged approach also means that in the second stage, your task can focus tightly on those factors that will differentiate the average supplier from the outstanding one, based on the value for money that their solution offers (rather than generic questions about whether or not they can deliver your solution.

For most complex procurements, there will be consideration of quality factors as well as price. The balance between the price and non-price weights is an area that you should analyse carefully.

The Price Quality Method used by the NZ Transport Agency provides an excellent adjunct to the more traditional weighted attributes method. Essentially both these methods place weightings on both price and quality, but the Price Quality Method provides tools for procurement professionals to work out what premium is appropriate to pay for additional quality, before the weightings are finalised.

In general, price weightings should be less than 70% (at which level it’s far faster and less costly for you to use Lowest Price Conforming evaluation – in which you open and rank the prices, and evaluate only the lowest bidder for conformance to set standards outlined in the RFx document. This method delivers the lowest price bidder almost all the time (as does 70:30 Price:Non Price weights) however it takes a fraction of the time that either weighted attributes or Price Quality Methods take.

Price weightings should also be more than 20% (less than that, and you may be better to look at the Purchaser Nominated or Target Price method.

Where Price and Quality are both evaluated, it’s important to specify that the information provided by the suppliers should be split, so that they are evaluated separately and one doesn’t influence the scoring for the other.

Section 3.3 provides a template for you to describe the evaluation criteria and their weightings. Although the current version provides some suggested headings, to be effective, you should tailor these criteria to the factors that you have determined will differentiate your suppliers – every time! Consideration of the project-specific risks and the opportunities that suppliers could leverage added value on, should inform your specification of the evaluation criteria. Don’t forget that these also should align directly with the questions that you pose for bidders to respond to, in the Response templates.

Section 3.4 on scoring provides a scale for scoring which is helpful as a generic tool. However, you will get far greater value from this if you extend the approach so that you define, for each attribute, what will satisfy the criterion and what a non-conformance would be. This definition should be factual and objective (e.g. cannot meet three-hour repair response time). Examples of the other bands on the scale (e.g. minor additional benefits, exceeds the criterion, minor and major reservations) should also be agreed with the evaluation team before the responses are opened and scored.

You can choose whether or not to put those definitions in your RFx document, but it’s important for your protection against potential legal challenge, that you agree an objective scoring scale before your Tender Evaluation Team reads (and can be influenced by) the responses.

Section 3.7 is an incredibly useful catch-net which allows you to undertake further due diligence on the preferred bidder. This could, for example, include reference checks, credit or Police checks, etc. It gives you the ability to use information outside the tender process in a structured manner to validate the tender responses.

Section 4: Pricing Information

Generally, this section provides suppliers with background information to guide their pricing. There are some useful conditions that you may use included in the template. It will usually be accompanied with an Excel Spreadsheet for more complex procurements where prices over a large number of scheduled items can be compared.

Section 5: Our Proposed Contract

You will no doubt have a general contract that your legal team has prepared. However, it’s worth looking at the Government’s Model Contract Formats as these provide well designed, extensively reviewed and legally water-tight models suitable for many procurements.

Section 6: RFP Process, Terms and Conditions

This section provides a complete and compliant list of the terms and conditions that will apply to your procurement, which is simply excellent news for procurement professionals. Not only can you be reassured that everything important to your procurement has been covered, you can also be confident that using these Terms and Conditions closes any likely loopholes that could expose you to legal challenge.

It’s important to check through your rights and your obligations under these terms and conditions, including, for example, the right to collect additional information (excluding price information) from relevant third parties to use as part of the evaluation process. What this means in practice is that if you consider, for example, that the information provided in the submission document is not true, you may seek further information to establish its validity or otherwise.

The Response Templates

Accompanying the RFP Template is a Response Template, which has been designed to make it easy for suppliers to supply the information that you will be evaluating them on. The bonus is that the response templates will also make it easier for your evaluation team to assess and score the responses.

As we commented above, using these effectively means customising them so that the questions asked are tightly aligned to the factors that will differentiate the bidders. There is no point in asking for information that is likely to be fairly uniform across all your suppliers (for example, ‘provide your health and safety policy’).

Designing a cost-effective procurement process means asking the least number of questions you can, in order to score the factors that will differentiate the bidders based on the value for money they will deliver on the project.

In our opinion, you should allow some flexibility in the colours and branding that suppliers are allowed to use in their responses. They should be allowed to format their responses by inserting headings and subheadings, graphical content, diagrams, case studies, etc.

This simply makes your job as an evaluator easier – the more interesting the format of the response is, usually the easier it is for your evaluators to understand the bidder’s key messages and what makes their offer stand out from the others.

The current tabular format and embedded styles have created some difficulties for respondents, but we are hopeful that these teething problems will be ironed out soon.

Summing it up….

Overall, these new templates provide procurement professionals with an excellent resource for delivering an RFx document to the market. We caution that they should be used after a comprehensive procurement planning exercise has been completed. That process should identify the factors that will truly differentiate the bidders, set (and test) appropriate weightings, and describe the scoring mechanisms in objective terms.

If that process is done thoroughly, preparation of RFx documents and evaluation of responses will become far faster, easier, and deliver better decisions than ever before.