Quantifying the true cost of the RFP process
How do public sector buyers assess whether to run a new solicitation or buy through a cooperative contract? Multiple factors such as purchasing timelines and solicitation resourcing come into play. In Pavilion’s recent webinar, procurement leaders discussed quantifying administrative costs of running public sector solicitations.
As part of the NCPP RFP Tracking Project, nearly 40 entities tracked staff time (down to the half hour) spent on each stage of the bidding / RFP process. Based on this data, the project found that on average, simple solicitations cost around $1,600 while complex projects can exceed $17,000. Several factors influence project complexity, including purchase cost, approvals, type of project, etc.
Chip Geiger from Greater Rockford Airport Authority shared, “I have the advantage of being the procurement department. So in looking at the costs, it's one of those things that's always in the back of your mind, but this time we put it on paper, We were able to document what that time was, from developing the questions for the scope of work, working with the subject matter experts, and getting those scopes of of work developed.”
Alejandro Tirado from the City of Providence described his experience tracking costs for a translation services solicitation. “Like in any other city, we have very limited capacity. I ended up doing the whole development of that solicitation, even though I'm not an expert on translation and interpretation services. I had to rely on examples of other solicitations, make phone calls, and answer questions from multiple vendors.”
“Previously, we didn’t know how much it costs to run a bid. Now, we have solid data. So, if it costs a certain dollar amount to go out to bid and the product is less than that amount, you can ask why you’re going out to bid,” said Tammy Rimes, Executive Director of NCPP.
Robert Bruce from the Howard County Public School System emphasized the significance of quantifying these costs. “How much does it cost to do a solicitation? Especially in school systems where you have limited resources or cuts in staff and budgets, being able to answer that question really helps us when we present items to the Board for approval and talk about how we made that determination on how to get there.”
Mariel Reed, Pavilion founder and CEO, introduced the new Cost to Procure Calculator. “Like how Zillow or Redfin estimates the value of a home, the Calculator estimates the staff cost of going out to bid versus purchasing off a cooperative contract. The calculator it builds in methodology and baseline cost data from the RFP Tracking Project. You just need to input a few basic parameters around your purchase,” Mariel explained.
Listen to the full webinar to learn more about the RFP Tracking Project and the Cost to Procure calculator.
