Innovation Can’t Happen in a Box: What Vendors Want You to Know about RFPs

In the past 20 years I’ve been partnering and consulting with local governments and educational institutions, there have been incredible technological advancements, such as mainframes moving to the cloud and the emergence of big data. It’s been amazing to see how these developments have improved how we communicate, share and do our jobs more efficiently.

However, during this time, there’s one thing that hasn’t appeared to change much at all: the procurement policies the public sector abides by when requesting, evaluating and selecting technology.

In a world where advancements and innovation are happening at breakneck speeds, the request for proposal (RFP) process has lagged behind. It’s currently counterintuitive to allowing organizations to evaluate new and innovative tech products and services in a timely fashion.

Putting ‘Innovation’ in a Box: Death by RFP

Current procurement policies do serve a good purpose: They ensure the public receives the best value for the goods that are being purchased. However, all too often, we see RFPs that state they want “innovative” solutions. But because they’re boxed in by templates of extremely specific and confining legal and procurement criteria, vendors aren’t actually able to respond with innovative concepts and solutions, and collaborative partnerships with vendors are constricted by procurement policies.

As a cloud application provider for the government, we evaluate RFPs on a daily basis to determine our fit and the resources required to respond. Recently, my company came across a local government RFP whose goal was to acquire an innovative cloud-reporting solution that would leverage leading-edge technology and be agile, cost-effective and flexible. However, the way respondents’ proposals were scored heavily emphasized the size of the vendor, the number of references it could provide, five years of audited financial statements, the projected cost of the solution, and millions of dollars of insurance requirements. Plus, the response required that 14 printed and bound copies be mailed to the organization for review.

The cost that goes into the response of the RFP is ultimately reflected in the price an organization must pay and could be limiting the number of respondents, due to the effort and cost to respond. Kudos to those that have adopted an electronic submission process, but they’re currently the minority.

Essentially, all young or small vendors that decided to respond to this RFP would be scored lower and disqualified regardless of how great their solutions were. If you didn’t have a five-year track record of positive reviews or didn’t want to spend thousands of dollars having your financial statements audited, you didn’t stand a chance.

By judging small companies on the same merits as larger, antiquated technology solutions, the government may be missing out on some of the biggest benefits of working with up-and-coming trailblazers whose sole goal is to offer new technology to industries such as the public sector.

Each vendor is unique, and its product could provide value to organizations in ways that might not have been imagined. Therefore, governments should approach the requirements they list in an RFP as a starting point — not the end point. This will allow for plenty of flexibility for vendors to showcase value-adding elements that the organization hadn’t even considered when writing the scope of the RFP.

Restricting two-way discussion while placing vendor demonstrations under strict rules doesn’t allow an organization to see and evaluate the full value of a service or a product.

How to Escape the Box

Opening the door for a more innovative RFP process only requires a few tweaks to the existing system. Both government organizations and vendors can play an active role in making this positive change.

Here are four ways to take the procurement process out of the box:

  • Pre-RFP Networking: Most government RFPs are so well-defined because they were budgeted far in advance. This is what creates that long list of immovable demands. The budget is set in stone, and any variance to the plan is highly discouraged from a financial standpoint. Holding technology-focused town hall webinars and in-person networking events before the financials are set will allow for a more realistic budget and understanding of requirements. This would be an opportunity for meaningful conversations with vendors where ideas can be exchanged, goals can be expressed, and products can be demonstrated. Vendors could also find ways to partner, and they’d know in advance whether the organization is a good fit and has a proper budget.
  • Collaboration: Great vendors thrive on collaboration. Their core mission is to come up with creative solutions while working with organizations — not for them. RFPs desperately need to address this by incorporating flexibility and directly asking for vendor input. Adding engagement to the process will create long-term partnerships and a better understanding of the desired outcomes that will ultimately come at a reduced cost to organizations. Current procurement policies and procedures in the RFP process are simply too stringent. They limit creativity and shut the door on way too many eager vendors. There needs to be a complete overhaul of the vendor evaluation processes and scoring criteria. Even the scripted meeting and demos that some RFPs allow leave no opportunity for fluidity or discussion.
  • Budget Transparency: Typically, RFPs will not identify the budget dollars that have been allocated for the proposed contract. While it’s important for government organizations to get the best price for an opportunity, this practice results in hours of extra work for both them and vendors.Without knowing the budget, vendors end up spending countless hours bidding on projects­ they would’ve never considered had the budget threshold been made public. Then, organizations waste hours upon hours evaluating these submissions before realizing the budgetary discrepancies. Having an open-book policy in advance that gives the exact or approximate budget will benefit all involved parties.
  • Vendor Notifications: In this cloud-based, tech-savvy world, limiting the dissemination of an RFP to just your organization’s website or regional notification services reduces the number and quality of bids you’ll receive. Registering with a service that distributes your RFP throughout the country broadens your reach exponentially. There are several options, but three great ones are Onvia, BidSync and Public Purchase. As a vendor that exclusively services the public sector, we’ve registered with more than 50 notification services — national and through individual organizations — that constantly send us RFPs. There’s a growing number of tech companies sprouting up across the nation, and there are many governments and organizations at federal, state, and local levels using the RFP process. Enrolling with notification services is a necessary next step for the public sector.

It’s unrealistic for government organizations to expect innovative solutions without first revisiting their procurement processes. There should be a balance between the firm requirements of a project and any outside-the-box solutions vendors can bring to the table.

Ultimately, everyone has the same mission: improving the work lives of employees and better serving constituents. Reevaluating procurement policies will achieve this goal while saving tax dollars, brain cells, and a whole lot of trees.

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Lyndon Dacuan

Erin,

This is a great article and I think you touch on a number of key points, most importantly all of the strategies you offer to “get ahead of the RFP”.

Two of the points you make are “pre-RFP networking” and “budget transparency”. I think these go hand-in-hand as vendors can accurately predict when an agency is looking to issue a bid or RFP by studying budgets. Did you know that Onvia has a solution called Spending Forecast Center that can help vendors track expected agency spending months and even years before that spending becomes a bid or RFP? The time period before the bid/RFP is a crucial strategy that vendors can use to do that “pre-RFP networking” that you suggest and Spending Forecast Center can help vendors do just that. Here’s a link in case your readers are interested in learning more: http://www.onvia.com/products/spending-forecast-center

Onvia also recommends that government vendors, specifically those who are invested in the state, local and education (SLED) market do what you’ve outlined here and build a long-term sales pipeline for their government sales (rather than a reactionary “wait for the bid and respond) type strategy. This free whitepaper titled “Building a Long-Term Sales Pipeline in the Public Sector” offers some neat strategies that most vendors can use as well as handy flowcharts to do just that, here’s the link: http://www.onvia.com/business-resources/white-papers/building-a-long-term-sales-pipeline-in-the-public-sector

Really great article I’ll be sure to share it around!

-Lyndon

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