Asking the Right Questions During RFP Planning
It’s RFP season! Well in reality, every season is RFP season! RFPs are a top priority for programs this year as it was clearly indicated by the volume of inquiries and the number of 2018 REOI applications requesting RFP support in one form or another.
So, if you’re thinking about or have been voluntold to prepare an RFP and are not sure what to include (or exclude) then this blog is for you.
It’s important to remember that it doesn’t really matter how big or small your municipality is, the goal of an RFP is to obtain the best value; the right service solution for the right price. And it is with this in mind that enough effort and time must be spent at the RFP planning stage thinking of and addressing a host of critical questions. Answers to these questions will drive the direction of the RFP and ultimately help you achieve your goals through the life of a contract.
So, based on the feedback we’ve received this year, some of the questions to consider as part of RFP planning include:
1. What is the duration of the service to be provided (core years + extension)?
This is important to consider in context of the impending transition to full producer responsibility (Waste Free Ontario Act). A longer duration contract allows proponents to amortize vehicle and equipment purchases favourably, yielding a lower cost to the program. However, a potential drawback would be an increased risk of stranded assets. This may be mitigated through the use of key transitional clauses like the ones below.
2. What kind of transitional related clauses should you include?
When developing a new RFP, programs are strongly encouraged to include early exit clauses in the event of a legislated program shift during the contract term. This may include an assignment clause (reassigning the contract to a 3rd party (e.g. steward organization, clearinghouse) and/or an early termination clause (outlines the cost of termination which is typically reflective of stranded costs). In CIF’s Centre of Excellence Procurement pages, we regularly update these key clauses.
3. Should you allow the proponents to utilize used collection vehicles?
This may allow for more competitive pricing and should provide greater flexibility for the proponents in the event that publication of the RFP is delayed and doesn’t afford enough time for the purchase/delivery of new vehicles. If there’s a reliability concern with used vehicles, you can require that they be no older than 2 or 3 years.
4. Should you compensate the MRF service provider based on inbound or outbound tonnage?
This is an important consideration in light of increasing inbound contamination rates and greater scrutiny at the end market stage. Compensating a service provider based on inbound materials reduces the risk from increased contamination. Or compensation can based on the outbound which would force the service provider to do the best they can to recover marketable material.
5. What will be on your list of materials to be collected and sorted?
With the evolution of packaging we see the advent of new packaging types, substrates, shapes and sizes each adding complexity to the already complex world of recycling. With this in mind, it’s important to consider and be clear on what is allowable and what is not and how the RFP will permit change (i.e. addition or omission of materials) with continued evolution.
6. How will you define contamination?
A contaminant to the recycling system can be broken down into three categories: i. unsolicited materials such as toys, batteries, wood waste; ii. over compacted materials which decrease sorting efficiency; and iii. solicited materials that may be contaminated with product (e.g. peanut butter jar with product contained within; pizza box with a piece of cheese stuck on). A consideration for all three may be warranted. But for items under the third category, it’s important to define as part of the RFP the threshold at which the solicited material is now a contaminant (e.g. peanut butter jar half full; two square inch piece of cheese on a pizza boxes).
7. How will you be compensated (earn revenue) for your recyclables?
Three key options include marketing recyclables yourself, hiring a broker or passing on the responsibility to your service provider. Each has its pros and cons, requiring detailed analytical work and risk assessment during planning to determine your best option. Look for a blog on this topic in the near future.
8. How will you carry out your revenue accounting?
It’s important to be clear in the RFP how revenues will be accounted for and whether or not you will allow your service provider to market to themselves, even if they are not a true end market.
9. How will the RFP address relief assistance requests from service provider?
It’s important to realize that during difficult times, your service provider may seek some form of relief. Thus, it is vital that your RFP and subsequent contract is clear about your rights in the event a request is made.
10. Should you partner with a local municipality to maximize economies of scale?
This can be effective, but it’s very important to select the right partner and put in place agreements that enable programs to retain the ability to make decisions that benefit their municipalities.
CIF Staff Will Answer your RFP Questions
This blog highlights considerations in the top 10 of the 100+ questions we’ve discussed with program reps this year. And we know the other 90 are just as important to consider before attempting to write the RFP. Once you have your answers, RFP prep will be fairly seamless compared to the effort undertaken during the planning phase.
CIF staff members are always available to answer your RFP related questions, regardless of the stage of development. We also offer a wealth of resources and samples at the CIF Centre of Excellence procurement page and through the in person Strategic RFP training.