Casting your net in a sea of vendors
Requests for proposals (RFPs) have always been big ticket items for private companies. Local governments frequently look to their own backyards when it comes to purchasing equipment or signing service contracts, but many have realized that, by casting their nets a little farther, they can increase the number of bids they receive and get better pricing from a larger pool of competing vendors.
Getting the word out
Typically, government agencies post RFPs in newspapers and in business or legal publications. They may list ads out of state, but cost restraints frequently limit them to buying ad space in their local newspapers. Posting RFPs online, however, may cost less than multiple news ads; and, with some online bidding by companies, an ad may cost the government agency nothing.
The return on that investment will likely outweigh any cost. In fact, Orlando has reported a 30 percent increase in the number of responses it receives to RFPs since the city overhauled its procurement processes, according to Jon Mead, purchasing director for the city.
To reduce the massive amounts of paperwork — from check requests to inventory reports — that have cluttered every purchase Orlando implemented web-enabled management software from J.D. Edwards, Denver. The new program reduced the previous 12-step purchase order process to three steps and effectively moved the city into an e-business format. The city also standardized annual service contracts and equipment purchase orders.
The interior overhaul adequately prepared Orlando for its next phase of e-business: online bidding. Starting in October 1998, the city began listing RFPs online (at no charge) with DemandStar.com, Winter Park, Fla., and recently enabled its office to begin receiving responses to those requests online, instead of through regular mail.
Vendors register with the service by entering information about their products and services. When a government agency posts an RFP, the appropriate vendors are notified automatically by e-mail or fax. They send their proposals to the agency electronically for review.
“We’ve reduced paper and mailing costs by 40 percent with this system,” Mead says. “And we get more responses.”
The Orange County (Calif.) Transportation Authority (OCTA) expects to save $177,000 annually in copying and mailing costs as a result of establishing online bidding last May. OCTA’s vendors have registered with ebidnow.com, the agency’s online procurement system that was developed by ThirdWave, Los Angeles. Vendors register their business commodity codes with the service, and, as OCTA contracts are announced, e-mails are automatically sent to the vendors whose commodity codes match the contracts.
Vendors then bid on the contracts; some bid within 24 hours of receiving notification. When OCTA selects a firm, the agency posts the contract online, including the amount.
Pasadena, Calif., will be using the same service by the end of the summer to solicit bids for contracts. “We only have to send one e-mail to reach a massive audience,” says Steve Mermell, purchasing administrator for the city. “We’ll be able to reduce overhead in getting quotes, and we will have greater competition for our contracts.”
Competition is the key to better prices on products and services. While Dallas used to be limited to choosing a vendor from two or three responses to an RFP, the city now receives 17 to 20 bids on some requests, according to Dallas Chief Information Officer Dan McFarland. “We get a better quality product and significantly better prices,” he notes.
Late last year, the city began posting contracts for goods and services on its web site, including the bid number and due date. In addition, Dallas published a massive list of all the commodities the city purchases. Called “What the City Buys,” the list includes everything from asphalt to pipe. That gives suppliers a targeted list of the city’s ongoing product needs.
Because Texas requires a “wet” signature on contracts, the city is not able to receive bids online. However, McFarland is working to change that. “When we are able to [receive] bids online, we can get quicker responses back to people and better monitor contracts,” he says.
To assist government suppliers with getting the “scoop” on new contracts, former Georgia Lieutenant Governor Pierre Howard and former State Representative Matt Towery recently launched InsiderAdvantage.com, an Internet-based government information services firm in Atlanta.
Vendors who subscribe to the service can tap an online resource of potential contracts. However, it does not include any confirmed information about government RFPs. “We live by rumor,” Towery says. “But, 90 percent of the time, rumor becomes fact. We’re trying to help people before the news becomes mainstream news.” Since the site launched in April, more than 150 government vendors have subscribed to the service.
As e-government becomes more mainstream, local governments will find many time-saving uses for it, including managing RFPs and bids. Posting RFPs online puts a government agency’s needs in front of a large audience, driving the costs of products and services lower and lower.