The RFP Process: The beginning of a new business partnership

The RFP Process: The beginning of a new business partnershipBob Yecke2004-03-0143The Centrefalse

The request for proposal (RFP) is a process that more and more college union administrators are utilizing to provide a broad array of services to students, faculty, staff, and guests. This process is neither new to the college market nor is it new to the college union, but as institutions seek to offer a greater variety of services at the most reasonable cost, the RFP is often used to select business partners.

A request for proposal is "a formal invitation to potential contractors to present their ideas, recommendations, conditions, terms, and capabilities for performing specified services which a client seeks a competent organization or individual to perform in exchange for certain consideration" (NACUFS, 1999, p. 113). It is used widely even beyond higher education, in the business world at large, "to purchase equipment and services by promoting competitive proposals among suppliers" (Porter-Roth, 2002, p. 1). In most instances the process involves working with a variety of groups and individuals on campus to ensure the involvement of a broad constituency group and a variety of departments so that the proper steps are followed and the appropriate language is included. RFPs are used when the following conditions apply (Porter-Roth, 2002, p. 2):

•   Multiple solutions are available that will fit the need.
•   Multiple suppliers can provide the same solution.
•   Buyers seek to determine the "best value" of suppliers' solutions.
•   Products for the project cannot be clearly specified.
•   The product requires suppliers to combine and subcontract products and services.
•   Lowest pricing is not the determining criterion for awarding the contract.
•   Final pricing is negotiated with the supplier.

In the college union environment RFPs may be used to seek contracts for food service operations, bookstores, convenience stores, point-of-sale systems, vending (food and amusement), consultant services, and many other auxiliary operations. On the other hand, the RFP process would not be used when simply purchasing a quantity of a product that has been specified and no deviations are allowed (e.g., 300 chairs of a certain model). This process is often referred to as a request for quotation or a "bid."

The more effort you put into the RFP process, the greater potential success of the outcome. This article will provide some how-to's for developing an RFP that will work for your union and then navigating the RFP process.

The RFP committee

Mick Jagger once wrote, "You can't always get what you want. But if you try, sometimes you might find, you get what you need" (in Meyer, 2003, slide 2). Herein lies the beginning of the process. Often there is a difference between wants and needs. Those differences can be flushed out in the early stages of the process. The college union administrator must bring together the appropriate individuals to form the RFP committee. By bringing together the appropriate students, faculty, and staff, this group will work together to assure that the needs of the campus will be met once the process is completed. The nature of the RFP will determine the complexity of the committee. If the RFP is for a campus-wide bookstore, a broad range of students, faculty, and staff should be on the RFP committee. However, if the process is to select a new point-of-sale system for the college union, the key administrative staff of the college union along with a representative(s) of the technology support division would be included on the committee.

Like any other team, this group of campus constituents must understand their roles and responsibilities. An orientation should take place so that each person understands the group's role, time requirements, authority, operational structure of the group and how the final decision will be determined (NACUFS, 1999). By carefully selecting and properly orienting the committee members, this group will be a tremendous asset during the process as well as once the business partner begins operating on campus. But, if the wrong people are selected or if the expectations are not properly laid out, group members may end up working against each other or may drift from the intended goal. If available, sharing a past RFP document and the process that was used can be an effective means to help the committee better understand the task at hand.

Establishing the timeline

Many times an RFP process is undertaken because of the expiration of an existing contract. This contract may be for a food service operation, bookstore, or other retail operation. It is often critical that the establishment of the new contract and the opening of the business coincide with the expiration and move out of the existing business to ensure that service to the campus community continues in a seamless manner. As a result, a realistic timeline must be established to complete the following steps:

•   Define the need.
•   Garner administrative approval to proceed.
•   Select and orient RFP committee members.
•   Establish potential business partner mailing list.
•   Write the RFP.
•   Mail the RFP.
•   Hold a pre-proposal meeting with potential partners.
•   Establish a deadline for follow-up questions from potential partners.
•   Proposals are due from potential partners.
•   Review and evaluate proposals.
•   Select finalists to make on-campus presentations.
•   Conduct reference reviews and site visits.
•   Select business partner.
•   Negotiate and sign agreement.
•   Carry out move-in process.
•   Begin operation by new business partner.

Although these steps may vary depending on the nature of the RFP and the needs of the particular campus, they will serve as a guide to establishing a realistic timeline. RFPs can take anywhere from four months to two years to complete. The time allotted for each step of the process must be realistic. The RFP administrator must pay close attention to keeping the process on track to assure a timely completion.

The assessment process

To assure that you end up with the type of service that the campus needs, the committee may want to complete a series of assessments. "It should come as no surprise that preparing a thorough RFP requires research and lots of time and meetings. Before you put an RFP on paper, you need to have a crystal clear understanding of your objectives and capabilities/service requirements" (Kenny, 2000, ¶ 2).

Three stages in the assessment process will help gather complete information, so it is important to know exactly what the RFP should include. First, look at what is currently available to the campus community. Will the selected business partner be in competition with others on and off campus or will the service fill a campus void? Next, if there is a currently operating business partner, the committee will want to analyze the effectiveness of the services offered. A critical look at the strengths and the weaknesses of the current operator will give the committee an excellent understanding of the realities of service levels on campus. Finally, it is critical to get feedback from the campus community as to how it rates the current services and what it would like to see in the future. This feedback can take place in the form of focus groups, surveys, and informal discussions. All of these methods will allow the committee to get a broad view of where the campus community stands and what they believe their needs will be in the future.

The RFP document

Once the assessment process is complete, the request for proposal document must be developed. According to Kenny (2000), "The more detailed and complete this document, the better the chances that the whole project will be successfully completed" (¶ 2). Therefore, the writing of the RFP can be a laborious project. Often a campus has established a boilerplate that can be used. An RFP boilerplate is a document incorporating "legal requirements or clauses that are included in all contracts issued by an institution as a matter of policy" (NACUFS, 1999, p. 112). Another source of sample RFPs is from professional associations or colleagues.

The RFP document should include the following (NACUFS, 1999):

INTRODUCTION

This section defines the who, what, where, when, why, and how. The introduction should clearly state that the institution is seeking a partner to work cooperatively to provide a specific service for the campus.

OPERATING STANDARDS

This section includes the operational expectations the institution has established. These standards may include how the institution will evaluate the operator's performance, campus demographics, human resource issues including collective bargaining agreements, staffing levels, and expected operating hours.

FINANCIAL

This section must include the institution's financial objectives. Is there an expectation that the institution receive a financial return from the business partner, or is the institution looking for a service at the lowest cost to the campus community? Obligations of the operator to the institution must be clearly defined so that the prospective business partner may develop an accurate proforma, or a list of expected revenues and expenses. These obligations may include investments, the buy-out of current inventories, utilities, trash removal, marketing, custodial services, or other expenses that the institution will be passing on to the business partner. All of the financial specifics must be covered in this section so that all parties clearly understand their financial opportunities and obligations.

PROPOSAL REQUIREMENTS AND AWARD CRITERIA

This section should define the structure of the proposals. Without clearly defining this structure, it will be difficult for the committee to analyze the various proposals. The criteria that the committee will utilize in analyzing the proposals should also be explained.

ATTACHMENTS

The final section should include any attachments that will help clarify issues for the prospective business partners. A sample lease document should be included in this section. This gives the prospective partners a clear picture of what the institution will be seeking when contract negotiations begin. It is a good idea to require the prospective partners to include in their proposals any concerns they have with the sample lease to assist the committee in analyzing the proposals. Significant philosophical, operational, or legal differences that are defined in the sample lease can lead to the inability to reach an agreement. It is much better to define these issues up front than to be surprised by these issues during the lease negotiation phase of the process. In addition to the sample lease, any relevant long-term planning documents, historical data, and campus and building maps should be included.

The letter of invitation

Now that the RFP document has been developed, it is time to begin communicating with prospective business partners. During the planning stages, the mailing list for potential partners is identified by reviewing past RFP mailing lists, reviewing trade publications and Web sites, attending conferences, and conferring with colleagues who have sought similar services. The campus purchasing office is also a great resource to identify potential partners.

A letter of invitation must be sent inviting prospective partners to campus for a pre-proposal meeting. The attendance at this meeting should be mandatory for any company that wishes to submit a proposal. By making this meeting mandatory, each prospective partner will be starting at the same point and will have equal access to all available information. This letter should clearly state the intention of the institution and should include the date, time, and location of the pre-proposal meeting. To save on printing and mailing costs, the letter might direct prospective partners to a Web site containing the RFP document, sample lease, and any other pertinent information. Requesting a reply from those planning to attend the meeting will help in developing the final format of the meeting (Porter-Roth, 2002).

The pre-proposal meeting

The committee has been formed and educated, the campus has given its feedback about service needs, the documents have been developed, and permission to proceed has been given by the proper authorities. The time for the pre-proposal meeting has now arrived! This meeting is critical in the RFP process. It is the time that the institutional representatives and the prospective business partners finally meet face to face to discuss the opportunities that lie ahead (Porter-Roth, 2002). Also, for the first time, the committee will be able to find out who is really interested in coming to campus to offer the services that the campus community said it would like to see.

In preparation for this meeting, complete packets of information should be put together to distribute to the attendees. It is important to coordinate with purchasing and any other essential offices on campus so that the appropriate institutional representatives are available at the meeting. Develop an agenda that includes the key individuals involved with the process. Make sure that these individuals are prepared to cover the various components of the process and are available to answer any questions presented at the meeting. A tour of the facility, including the available space, should be scheduled in conjunction with the meeting. If there is a current operator in the space that is being considered for lease, make sure you coordinate the tour with the current operator.

Help bidders understand what your company [union] does and how it operates. Tell bidders who you are and what your goals are. If you're looking for bids for a specific project, explain why your company [union] is undertaking the venture, and what it intends to accomplish as a result. If you're looking to replace an existing supplier, describe your reasons for making the change. (American Express, n.d., ¶ 4)

Any questions that are asked during the tour should be shared with all prospective partners at the final question-and-answer session prior to ending the meeting. Following the meeting, the institution should provide all attendees with written answers to all questions raised during the meeting. In addition, the institution can also allow the attendees to submit additional questions in writing, with the institution responding in writing to all atten

dees. This ensures that each company has the same information to refer to when submitting its proposal (NACUFS, 1999). "The more information you can provide to bidders, the better they can respond. If you're building a house, you need to say if you want a bungalow or a mansion. The same is true for any bid … This will allow you to conduct an apples-to-apples comparison and choose the most appropriate vendor" (American Express, n.d., ¶ 6).

Reviewing the proposals

The proposals should be sent directly to the purchasing office. Depending on campus policy, the proposals may be opened at a time and place that is announced to the general public as well as to the potential partners (where key parts of the proposals are read) or the proposals simply may be forwarded to the campus administrator responsible for the process. In either case, the administrator now must move forward to evaluate the proposals against the criteria that were earlier defined. By using these criteria, the administrator and the committee should be able to rank the proposals as to their feasibility for presentations on campus. According to American Express Business Resources (n.d.):

One of the biggest mistakes businesses make in the RFP process is not having a formal method for evaluating responses. Before sending out your RFP, know how you plan to analyze the responses. Some businesses use a formal rating system, where they grade bids against certain pre-set criteria. This can help you weed out responses that don't meet your needs. Also, don't be afraid to go back to bidders for more information—there may be times when additional details can help you make a smart choice. (¶ 9)

If the current business partner's proposal is competitive, it should be included as a finalist. On the other hand, if its proposal is not competitive or if its performance was not up to the expected standards, it should not be invited as a finalist. Inviting it would be a disservice to the company and the institution.

Once the finalists are determined, on-campus presentations should be scheduled. (Note: If only one proposal is received, the committee would have to decide whether to move forward with one finalist or to halt the process and analyze its stated needs and inability to attract sufficient interest.) These presentations should be structured so that each finalist is given an equal opportunity to review its proposal, present additional information, and answer any follow-up questions. As many committee members as possible should attend the presentations along with any other key people on campus.

After the presentations are completed, it is time to conduct reference checks and make site visits. Although a variety of committee members can participate in the reference calls and visits, it is important for the contract administrator to be involved in each step of the process to tie all information together.

As soon as the committee has completed its review process and has selected a preferred business partner, a justification on why the particular company was chosen must be written. This justification can then be sent to the key individuals on campus that need to sign off on the selection. After receiving the permission, a letter of intent indicating the institution's acceptance of the basic proposal and the desire to enter into a contract is written by either the RFP administrator or a representative from the purchasing office and is sent to the preferred business partner (NACUFS, 1999). In addition, at this time the RFP administrator should notify in writing all companies who submitted proposals that the institution is in the negotiation phase with another company. These companies should be thanked for their interest and participation in the process, as it is very possible that they will be asked to participate in another RFP process in the future.

Negotiating the contract

The contract will become the legal document that guides the relationship between the institution and the business partner in the years to come. This contract is the responsibility of the RFP administrator. Often other departments within the institution, such as purchasing and risk management, are involved with the preparation of the contract. Because this is a legal document, the institution's legal office should always review the contract prior to final signature. It is important that the RFP, the proposal and any key points from the presentation are made part of the contract. For the contract to be consummated, either the appropriate individuals with signing authority or their designee must be included in the final review process.

The road to opening

After the contract has been signed by the appropriate parties, the process of developing construction plans, the move out of the current partner, and the build out by the new partner will begin. Because these steps were detailed in the contract, all parties should be well aware of their responsibilities.

When the design and build process is underway, it is a good idea to meet with the key operating representatives from both the institution and the business partner. These may be the same individuals that were involved in the RFP process, but often the operations staff is different than those involved with the RFP. A complete review of the RFP, the proposal, and contract involving the RFP administrator and the key operations staff from both the institution and the business partner is critical to make sure that everyone's understanding and expectations are the same. Once the construction is complete and the operations staffs are working toward the same goals, the campus's newest service is ready to open.

We have only just begun … managing the leased operation

While the RFP process is long and detailed, the success of any relationship is based on the ongoing communication between the institution and the business partner. Creating a harmonious working relationship, maintaining a willingness to share information, and the desire for all parties to succeed are important components of a long-term relationship. The selected partner becomes another member of your team and part of your institution. Build a relationship based on mutual respect and the agreed upon requirements of the work that will need to be performed.

American Express Business Resources. (n.d.). Creating an effective RFP. Retrieved January 16, 2004 from http://www10.americanexpress.com/sif/cda/page/0,1641,16383,00.asp.
Kenny, P.E. (2000, February 1). Creating the RFP. Circulation Management. Retrieved January 16, 2004 from http://circman.com/ar/marketing_creating_rfp.
Meyer, R. (2003). Writing a good RFP [Handout]. NACUFS Contract Administrators Symposium, Charleston, S.C.
The National Association of College & University Food Services. (1999). Administering food service contracts. East Lansing, MI: Author.
Porter-Roth, B. (2002). Request for proposal: A guide effective RFP development. Boston: Pearson Education, Inc.
Porter-Roth, B. (2003). RFP development workbook. Retrieved November 29, 2003, from http://www.rfphandbook.com/RFPResources/Workbook.pdf.
Updated Nov. 9, 2012