Bidder Conferences
Also called as contractor conferences, vendor conferences
and pre-bid conferences are meetings with perspective sellers prior to
preparation of a bid or proposal and to ensure that all prospective sellers
have a clear, common understanding of the technical and contract requirements.
Responses to questions can be incorporated into the procurement documents as
amendments. All potential sellers are given equal standing during this initial
buyer and seller interaction to produce the best bid.
Advertising
Sellers can often be expanded by placing advertisements in
general circulation publications such as newspapers or in specialty
publications such as professional journals. Some government jurisdictions
require public advertising of pending government contracts.
Develop Qualified Sellers List
If information is readily available in the organizational
assets qualified or approved sellers' lists can be developed from there also.
The project team can also develop its own sources whether or not that data is
available. General information is widely available through internet, library
directions, relevant local associations, trade catalogs, and similar sources.
Detailed information on specific sources requires more extensive effort, such
as site visits or contact with previous customers. Procurement documents can
also be sent to determine if some or all the prospective sellers have an
interest in becoming a qualified potential seller.
Select Sellers
Bids or proposals are received evaluation criteria, as
applicable, to select one or more sellers who are both qualified and acceptable
as a seller are applied under select sellers process. Many factors can be
evaluated in the seller selection decision process.
Primary determinant for an off-the-shelf item can be the
price or cost. But if the seller proves unable to deliver the products,
services or results in a timely manner, the lowest proposed price may not be
the lowest cost.
Proposals are often separated into technical and commercial
sections with each evaluated separately. Sometimes management sections are
required as part of the proposal and also have to be evaluated.
Critical products services and results to mitigate risks
that can be associated with issues such as delivery schedules and quality
requirements could require multiple sources. The potentially higher cost
associated with such multiple sellers, including any loss of possible quantity
discounts and replacement and maintenance issues are considered.
The overall process of requesting responses for sellers and
evaluating sellers' responses can be repeated on major procurement items. A
short list of qualified sellers can be established based on a preliminary
proposal. A more detailed evaluation can then be conducted based on a more
detailed and comprehensive proposal that is requested from the sellers on the
short list.
Select Sellers: Tools and Techniques
Weighting systems
The method for qualifying qualitative data to minimize the
effect of personal prejudice on the seller section is called a weighing system.
Most such systems involve assigning a numerical weight to each of the
evaluation criteria, rating the prospective sellers on each criterion,
multiplying the weight by the rating and totaling the resultant products to
compute an overall score.
Independent Estimates
The independent estimate is sometimes referred to as a
should-cost estimate which the procuring organization can either prepare on its
own or have an independent estimate of the costs as a check on proposed pricing
for many procurement items. Significant differences from these cost estimates
can be an indication that the contract statement of work was not adequate that
the prospective seller either misunderstood or failed to respond fully to the
contract statement of work or that the marketplace changed.
Screening System
Establishing minimum requirements of performance for one of
the evaluation criteria are involved in the screening system that can employ a
weighting system and independent estimates. For example, a prospective seller
might be required to propose a project manager who had specific qualifications
before the remainder of the proposal would be considered. These screening
systems are used to provide a weighted ranking from best to worst for all
sellers who submitted a proposal.
Contract Negotiation
In order to reach to a mutual agreement prior to signing the
contract, structure and requirements of the contract are clarified in contract
negotiation. Final contract language reflects all agreements reached. Subjects
covered include responsibilities and authorities, applicable terms and law,
technical and business management approaches, proprietary rights, contract
financing, technical solution, overall schedule payments and price. Contract
negotiations conclude with a document that can be signed by both buyer and
seller or the contract can be a revised offer by the seller or a counter offer
by the buyer. For complex procurement items contract negotiation can be
independent process with inputs (e.g. an issues or open items list) and outputs
(e.g. documented decisions) of its own. For simple procurement items, the terms
and conditions of the contract can be fixed and non-negotiable and only need to
be accepted by the seller.
Even though the project manager and other members of the
project management team may be present during negotiations to provide, if
needed, any clarification of the project’s technical quality and management
requirements, the project manager may not be the lead negotiator on the
contract.
Seller Rating Systems
The seller performance evaluation documentation generated
during the contract administration process for previous sellers is one source
of relevant information. Seller rating systems are developed by many
organizations and use information such as the seller’s past performance,
quality ratings, delivery performance and contractual compliance. These rating
systems are used in addition to the proposal evaluations screening system to
select sellers.
Expert Judgment
Expert judgment is used in evaluating seller proposals. A
multi-discipline review team accomplishes the evaluation of proposals with
expertise in each of the areas covered by procurement documents and proposed
contract. This can include expertise from functional disciplines such as
contracts, legal, finance, accounting, engineering, design, research,
development, sales and manufacturing.
Proposal Evaluation Techniques
Based on some expert judgment and some form of evaluation
criteria, many different techniques can be used to rate and score proposals.
Evaluation criteria can involve both objective and subjective components.
Evaluation criteria are usually assigned predefined weighting with respect to
each other when used for a formalized proposal evaluation. The proposal
evaluation then uses inputs from multiple reviews that are obtained during the
select sellers' process and any significant differences in scoring are
resolved. Using a weighting system that determines the total weighted score for
each proposal, an overall assessment and comparison of all proposals can then
be developed. These proposal evaluation techniques also can employ a screening
system and use data from a seller rating system.
