Buying Expertise by RFP: Recipe for Problems

February 2011

• The procurement policies of many public buyers require that a formal "Request For Proposals" process be used to procure professional services above a certain spend threshold. But the standard RFP can become a Recipe For Problems.
• The central problem with the RFP process is that it requires the buyer to start with a specification of the solution that is required from the service providers. How can the buyer define the solution that they need? Buyers may end up missing the opportunity for new ideas and novel solutions that can better meet their needs.
• Buyers seeking support services for energy procurement should take time to do Requests for Expressions of Interest to identify who the service providers are, and then take time to discuss the buying organization's needs and objectives with a cross-section of those service providers.

The procurement policies of many public buyers require that a formal "Request For Proposals" process be used to procure professional services above a certain spend threshold. But, when seeking expertise to address complex or novel procurement situations, the standard RFP can become a Recipe For Problems.

The traditional RFP process seeks to make the proposals of all proponents comparable, by requiring them to submit a proposal on a closely-defined set of deliverables. The RFP document usually details a scoring scheme that will apply to elements of the submission, and often limits the format and content of the response. The buyer's intent is to create an "apples to apples" comparison among the submissions. But, what if the buyer's needs would really better be met with carrots?

The central problem with the RFP process is that it requires the buyer to start with a specification of the solution that is required from the service providers. However, in most cases, the procurement is happening because the buyer recognizes the expertise to solve the problem is not already available in-house. In that case, how can the buyer define the solution that they need?

Typically, the drafter of the RFP will rely on one of three sources to determine the scope of services the RFP respondents will be asked to provide in their proposals:

• The status quo: The scope of services will be the same services as have always been bought.
• The incumbent's view: The scope will be the same as last time, with some suggestions from the incumbent on what needs to be added this time.
• Conventional wisdom: The scope will be what everyone else is buying.

All of these approaches exclude the opportunity for new ideas and novel solutions that can better meet the client's needs, including the possibility that the problem is not what it appears, and no services are required at all! The problem arises because the buyer assumes they know the problem and can define the solution.

Imagine an organization facing legal action. It needs the services of a lawyer to defend the action. Would the buyer of legal services set out in an RFP a list of the legal research, briefs, depositions and examinations required to defend the case, and then invite various law firms to quote on providing those services? Clearly not! The buyer of legal services is looking for expertise and insight to develop the best defence, not merely to implement a standard, pre-defined checklist of deliverables.

Aegent Energy Advisors is often invited to make submissions in response to Requests for Proposals for energy procurement services, and often we decline to do so. In many cases, a review of the RFP documents makes it clear that the solution the prospective client has asked for is very likely not the solution they need. That puts us in an awkward spot. We cannot, in conscience, submit a proposal to do work that we don't think the client needs done and the results of which will not solve their problem. On the other hand, to submit a proposal that deviates from what was requested, and tries to suggest a different way of approaching the problem increases the risk that the submission will be deemed "non-compliant" with the terms of the RFP.

For those who must use RFPs, what is the solution to the RFP problem? It must be acknowledged that once the RFP is issued, it is too late. The issue is one of problem definition, and so the solution has to come at the start of the process. Buyers seeking support services for energy procurement should take time to do Requests for Expressions of Interest to identify who the service providers are, and then take time to discuss the buying organization's needs and objectives with a cross-section of those service providers. These discussions can be used to identify, in broad terms, the types of solutions that may apply. This will help the buyer to break out of the constrained set of possible solutions usually imposed by the status quo/incumbent/conventional wisdom set of perspectives. The result may be a clearer understanding of the problem, and a broader view of the set of possible solutions.

Ideally, the RFP itself will leave more room for proponents to propose novel approaches and justify their thinking. It may make the process of RFP evaluation more demanding, but it is more likely that the process will produce the results that are needed to help the organization achieve its energy procurement objectives.

Why Pay a Consultant for Energy Advice When Suppliers Offer It for Free? Read more»

Knowledge Monopolies: What You Don't Know Can Cost You Read more »