Procurement Basics (Part 2)

Last week’s post discussed different procurement methods and how they differed from each other. This week’s post focuses on how to determine which one is appropriate and what needs to be done before posting the solicitation. And a lot of this depends upon if you are public sector or private. For now, we’ll just focus on general issues.

Choosing which method:

So, how do we choose which method to use? Part of the answer was laid out in Part 1. More factors play a role though. For example, a new good may have come into the market and there are only a few suppliers. And to complicate matters, not much information is known. At this point, an RFI is best. Remember the RFI is not intended to award a contract but to obtain more information.

Another factor to consider is the impact on the company. Generally, the more stakeholders there are, the more complicated the purchase which is typically best handled using an RFP. You want to evaluate technical factors more so than price. And each key stakeholder requires a seat at the evaluation committee.

But what about simple goods? One method that wasn’t mentioned is the multi quote method which is an informal version of an ITB. ITBs are generally for construction procurements. The multi quote method is as simple as identifying multiple vendors you like and asking for quotes, awarding to the lowest one.

To Do List:

So what needs to be done before posting a solicitation? First, the project manager and procurement specialist should identify key features of the scope of work and develop an independent cost estimate. Then they should secure the budget for such expense. All the while, they should be conducting market research to identify any supply chain issues, identify top suppliers, who mainly buys this particular good or service, and any other issues/pertinent information,

Second, identify key stakeholders. This helps determine the type of solicitation you’ll use and it appropriately addresses risks, along with the extending common courtesy of including those impacted by your decisions,

Third, identify any regulations that impact the solicitation,

Fourth, draft scope of work accordingly,

Fifth, add pertinent terms and conditions, and

Sixth, identify appropriate advertising areas to post your solicitation. Visibility is key. The more attention your solicitation gets, the more quality proposals/bids you are likely to get.

Doing these things will help mitigate risks and enhance your chances of finding a quality supplier. And on a side note, it helps identify appropriate contract length. Some goods need replaced every few years and some services are only needed for so long. The more information you have, the better your solicitation will be.

Finally, this all seems like it takes a long time to do just to procure services. And to an extent, yes, it is time consuming. However, there are things that can be done to expedite the process. And that will be the focus of next week’s blog post. And as always, feel free to reach out for any consultation needs.