RFP Procurement Case: "An Inventory Control System"

You sell seeds from a catalog, and business has been blossoming. But your inventory tracking system is inadequate. In high season, supply outages have been frequent, and customer complaints over delays have been increasing. You fear that your business will die on the vine unless something is done to improve things. You want to hire a management consultant to design a new inventory tracking system. This kind of work normally requires about 6 months of effort. It is now May. You need to issue an RFP for this work. The procurement will be for the design stage only-implementation may or may not be handled under a separate contract at a later date.

3. PROPOSAL The Proposal section of the RFP contains all of the pricing information required from bidders to allow an owner to evaluate the costs of the bids. It can also define technical and management information that is required from the bidders. The Proposal section of the RFP can have different titles in the RFPs issued by different companies. Certain companies call the Proposal section a Bid Form.

3.1. Breakdown of Bid Price It is important that the bidder understand the scope of work that is covered by each requested bid price item. It is helpful to reference the Description of Work and the Specifications and Drawings sections of the RFP in defining the scope of work for each bid price item.

3.2. Revisions and Extra Work If unit prices are feasible for extra work, the Proposal specifies the unit prices required. If extra work will be handled on a reimbursable basis, the Proposal can request cost limits for the reimbursable work.

3.3. Escalation Formulas If the owner is requesting fixed price bids subject to escalation of labor and material costs, the Proposal requests the formulas that will be applied to current labor and material prices to determine escalation costs. The structure of these formulas can significantly impact the cost of a contract.

3.4. Scheduled Completion Dates If an owner wants a bidder to provide schedule dates for key contract activities, the Proposal lists the key schedule activities and requests that the contractor provide the dates. Start and completion dates for key contract schedule activities may be requested.

3.5. List of Subcontractors The Proposal section provides space for bidders to list the subcontractors that they intend to use to perform the contract work. In addition to the names of subcontract firms, bidders should provide descriptions of the subcontractor work scopes, subcontractor experience, location of subcontractor offices, and telephone numbers.

3.6. Key Supplier or Contractor Personnel The Proposal requires that a supplier or a contractor name the person that will be in charge of the contract work and will be the primary contact for an owner. The names of other key personnel can be requested in the Proposal section.

3.7. Length of Time Bid Is Valid If there is a possibility that the award of a contract will not occur until a significant period of time after bids are received, the Proposal requests the length of time that a bid is valid after receipt by an owner.

3.8. List of Bid Document Addenda Reviewed by Bidder If there are bid document addenda issued after the RFP is issued, the Proposal section requests that bidders list the addenda that they have reviewed. This procedure ensures that all bidders have reviewed the necessary documents.

3.9. Notice of Conflicts or Errors in Bid Documents Requesting that bidders formally notify an owner of conflicts or errors in bid documents provides a formal means of communicating conflicts and errors. The errors can be corrected prior to the start of contract work.

3.10. Clarifications of Bids Certain Proposal sections provide space for a bidder to state any clarifications or exceptions to its bid. Although the intent of the RFP is to define the work scope in a manner that eliminates the need for clarifications and exceptions, there may be items that are not clear that should be addressed. Excessive clarifications or exceptions may cause a bid proposal to be rejected.

3.11. Bidder Signature The Proposal contains space for the supplier or the contractor to sign its completed Proposal. It also includes the date the Proposal is signed, the title of the person signing, and any required identification numbers or license numbers.