Another look at fairness in the bidding process

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My recent posting about rigging the matrix for bidding and RFP proposals has resulted in some significant response.  Recently, Mary Jo Mrochinski, director of marketing and business development at kpb architects in Anchorage, Alaska, emailed me with these thoughts (I’ve asked her permission before publishing them here.)

Thanks for the interesting topic you introduced and the letter you got  from Clive Thurston.  Having been on both sides of the desk (I have written proposals in response to RFP’s and solicited proposals by writing RFP’s), there is some merit in the concerns you raise regarding the evaluation process.  My own two cents is that when I wrote RFP’s, in many cases, I was looking for responses that could be narrow-cast to the folks who met some very specific criteria in order to expedite the design and construction process.  If they could not meet those criteria, the smart ones didn’t bother submitting.  The ones who do meet the criteria were really the ones I wanted to hear from.  I think what it comes down to is the quality of the RFP and the honest assessment of capability by the offeror.  When they are in sync, the process is an equitable one; when the RFP is too “loosey-goosey” or the offeror is overstating their capability, that is when you can get into some bad short-list and award situations.

For what it’s worth, I do agree there can be abuses on both sides – especially when the economy is poor and the stakes are high.

The question is:  Is there a fair balance between the qualitative and subjective assessment processes used for selecting design and construction services (represented in part by the Brooks Act in the U.S.) and the hard and fast “low price wins the work” approach in most conventional public sector (and sub trade) fixed price bid tenders?

I’ll be blunt and straightforward and say right out, that I haven’t found the answer yet.

The reason is that subjective elements can and should rationally count from the owner’s perspective in deciding on design and construction services.  I can think of few nightmares in hell greater than someone choosing the (legal) low bidder, then facing a barrage of change order requests as the contractor pores over every possible failing in the drawings or even the most minor unplanned change request to earn back the under-bid.  Worse, you have the owner saying “the price is the price” and refusing to pay any change order — turning a bad job into something even worse.

Theoreticaly, the solution is to develop a qualification structure and then narrow the price-focused bidding to contractors with good reputations, enough capital and resources and ability to manage complex projects.  This solution, in fact, works for medium to large projects.  Only a relatively small group of contractors have the resources (and bonding capacity) to bid really large projects, so if the selection matrix is set at a high enough threshold (but not to ridiculous extremes), the owner can use a two-stage process; starting with a subjective assessment to narrow things down to three or five bidders, then a hard price number to ensure the actual winner is truly competitive on price.

These solutions don’t work for truly small jobs.  “Open and fair” public bidding turns into a zoo, much like job seekers responding to a posted career opportunity requiring skills that many share, but in this case, the owners are asking job-seekers say how low a salary they are ready to accept and the potential “employee” willing to work for the lowest income gets the job.

Ugh.  Does this happen?  Just ask the Ontario Realty Corp., which tried to open the door for wider bidding and then received a flood of bids for seemingly small jobs for Ontario provincial building projects.  I’ve learned that some site meetings were chaotic with dozens of potential bidders crowding the place to learn about a single job in an obscure location.

Since this blog focuses on marketing and helping architects, engineers and contractors navigate these murky waters, I will advocate that the best solution to the challenge is to look both within and beyond your work.  Sure, you can improve your chances of success with fixed price and RFP opportunities by combining resourcefulness, preparation and good ideas.  (As an example, if you are a contractor bidding on project, if you can see through innovative approaches the way to deliver the work at a lower cost than your competition, while still complying with the job requirements, you might just win — and be profitable — even if you are an outsider.)

However, are more likely to succeed when you truly deliver on your promises and you reach the highest level when you avoid the need to depend on others’ public opportunity postings.  In other words, you are most likely to succeed in the RFP/bidding process when you don’t need to go there to actually find your work because you know where and when you have the genuine inside track through your relationships and thoughtful pre-planning and marketing.

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