The following is the fifth in a series of blogs on demand response transportation design and operations from guest blogger Steve Yaffe. In this blog, will discuss using a Request for Proposals (RFP) a method for procuring transit technology.
As discussed in my previous blog, a Request for Proposals (RFP) is the preferred procurement method for transit technology – especially for technology used for ride booking, scheduling, and dispatch. The heart of an RFP is the Scope of Services (Scope), in which the functionality of the needed technology is described. While my previous blog presented the need for an Independent Cost Estimate (ICE), that ICE has to be based on the functionalities discussed in the Scope.
Solid RFPs are best prepared as a partnership with a purchasing officer, who can serve two purposes: ensure that the document is in compliance with procurement best practices and your agency’s policies; and being from a non-transportation perspective, ask for clarifications to ensure that the language is clear. If your organization doesn’t have a purchasing officer, you can consult with the purchasing staff of your local metropolitan or regional planning organization or state department of transportation.
1. Basic Elements of an RFP
The RFP begins with an introductory letter from the purchasing officer containing the procurement number, title, and when/where the proposals are to be submitted. This is followed by a table of contents and (the sequence may change) a listing of contract documents including the required proposal documents and certifications, the expected procurement key-milestone schedule, and a description of the evaluation process including the points assigned to each criterion.
Contract Terms and Conditions are based on state and local procurement regulations. These include designation of the project officer overseeing the contract; payment terms; contract term including option years; Disadvantaged Business Enterprise (DBE) requirements; provisions for subcontractors; living wage requirements; insurance requirements; privacy and data protection (HIPAA); data ownership; personnel background checks; replacement of key personnel and subcontractors; indemnification; audit standards; dispute resolution; and termination for cause or by mutual decision.
The procurement milestone schedule may look like this:
Material describing the service area and current services offered is necessary. Offerors will need to know about the jurisdictions served, land area, and population of the service area; the peak bus requirement; annual ridership; expenses; revenue; service miles and hours; discussion of clientele groups and their service needs; and annual or monthly reports. This information is useful in assessing productivity and issues of concern. A discerning offeror (vendor) will request this information (if it isn’t included in the RFP), as well as on-time performance statistics and any other key performance indicators. This information can precede the Scope or be in the beginning of the Scope. The Scope may also include a glossary of terms to minimize confusion, as well as clarification questions.
Any language concerning certifications that the offeror must present, which may arise from federal or state funding sources, would follow the Scope, usually in the form of an appendix containing the text of each certification, including a place for a dated signature.
Until the RFP is released to potential offerors, this document has to be confidential. One can include ideas gleaned from peers and vendors as well as adapt language from vendor brochures, similar RFPs, blogs and other outside sources for the RFP. However, draft RFPs should not be circulated outside the authoring agency. Circulating draft RFPs could give a vendor an unfair advantage. If other outside viewpoints are needed in the development of the RFP, three options are available:
- Hire a consultant who agrees to keep the document confidential and not join a team responding to the RFP;
- Issue a Request for Expressions of Interest (REOI) – discussed in my previous blog; or
- Issue a Request for Information (ROI) to assess which firms have the capabilities to be sought in the Scope.
As noted in the sample schedule above, one should expect questions from the vendors. These questions may ask for clarifications to either the Scope or procurement provisions or may inquire whether alternative approaches are acceptable. All questions should be submitted in writing or electronically to the procurement officer. The questions from all potential offerors and responses should be compiled into an addendum available to all potential offerors. One-on-one conversations with offerors that include responses to questions could open the procurement award to a protest.
Once the RFP is issued, all relevant outside communications need to be routed through the purchasing officer assigned to this procurement. The only exception is notifying potential offerors that the RFP has been issued.
3. Advertising a Procurement
While some purchasing departments may mail an official notice of a procurement to those registered in a database, my experience is that those notices are either unclear or ignored. Several good options are available in print (which usually isn’t required) or on-line to advertise a procurement. Most print publications also offer e-newsletters. These include APTA’s Passenger Transport, CTAA’s Community Transportation, Mass Transit Magazine, and Metro Magazine. Some excellent options are on-line only, but widely read, such as Transit Talent’s Transit Intelligence. A printout of each advertisement with the publication date should be placed in the procurement file. While an email to likely vendors with an on-line link to the procurement and directions of how to register in the procurement database is also common, an advertisement is best practice to reach new vendors.
4. Functionalities That May Be Discussed in the Scope
The Scope functionalities will be discussed in the next blog.
5. Technical and Business Proposal
As a contract resulting from an RFP is subject to negotiation, the proposal should be divided into two documents: a technical proposal and a business proposal. The technical proposal would respond to both the Contract Terms and Provisions and the Scope. The business proposal responds to the RFP Price Sheet.
The Price Sheet is a key document within the RFP, vital to both cost projections and cost control. A well-structured price sheet – which can also be provided in an attached electronic spreadsheet – will enable the agency to project costs over the contract term. As option years are generally subject to negotiation, analysis should focus on the fixed-term of the contract. Depending on state procurement regulations, a contract term may be three to five years with a single or annual negotiation of pricing for option years. If the Scope is focused on functionality rather than equipment, the service being procured is unlikely to become obsolete during the contract term.
The structure of the Price Sheet is dependent on the functionalities listed in the Scope.
- If some of the functionalities specified in the Scope are optional, then each option should be separated in the Price Sheet.
- If the procurement includes a call center, then the Price Sheet should have a fixed cost line-item to cover rent, supplies and overhead, as well as a variable (hourly) cost line-item to cover labor.
- Each broad functionality should have a line-item to cover license fees as well as provision of hardware, software and communications. Call Center ride-booking and scheduling technology should be separated from dispatch and reporting/customer service. By separating these line-items, spotting a low-ball proposal becomes much easier.
6. Transition Planning
The final element of the Scope should be a discussion of transition activities necessary toward the end of the agreement, should the vendor not be awarded the next contract. This is a key factor in scheduling the procurement, as the lead-time necessary for equipment installation and training has to be both included in the proposals and factored into the procurement. The transition period and procedures discussed in this section are also the first phase of the implementation of new technology. If the procurement process from RFP issuance to final approval is as along as 16 weeks, and the anticipated transition period including installation and training is 4 weeks, the RFP should be issued 5 months before the technology is to be fully implemented and used.
A selection advisory committee (SAC) is the usual forum to evaluate proposals. Some SACs have a subcommittee to evaluate the technical proposal that includes personnel with an operations, maintenance, and service monitoring/evaluation perspective. Some SACs have a second subcommittee to evaluate business proposals that include personnel with a financial perspective. SACs with subcommittees may be comprised of department lead personnel including the division responsible for overseeing the service as well as other divisions or organizations that purchase rides. Subcommittees are not required.
Regardless of the SAC structure, all members sign a non-disclosure agreement before being notified of which offerors submitted proposals and receiving the technical proposals from the purchasing officer. SAC members promise to avoid discussion of the procurement with anyone not on the SAC or SAC subcommittees. Initially, the SAC and technical subcommittee members only receive the technical proposal. These proposals are discussed in relationship to the evaluation criteria, ranked as qualified or unqualified, and then the qualified proposals are scored.
Business proposals including the Price Sheet for those offerors deemed qualified (regardless of the technical score) are distributed to the SAC and business subcommittee members. These are discussed and the qualified vendor proposals are re-ranked. The SAC is then expected to write and approve a memorandum for the file discussing the process, analyses, rankings and recommendations for preferred, second preference and third preference offerors. A negotiating committee is appointed, with the ability to discuss the technical approach and relate the Price Sheet to the Independent Cost Estimate (ICE) discussed in my previous blog. The usual procedure is to negotiate with the top-ranked vendor. If an agreement is reached, a Memorandum of Negotiations is prepared and attached to the original or revised Price Sheet for final approval. If no agreement with the top-ranked vendor is attained, then the process is repeated with the second-ranked vendor. One cannot return to the top-ranked vendor after concluding negotiations.
Further Reading on Public Sector Contract Terms and Conditions
The next blog will discuss transit technology functionality specifications and evaluation criteria for the RFP Scope. Your comments to these blogs are welcome – please email the author at yaffe@YMobility.info.
Steve Yaffe is an independent consultant and a contractor for the National Aging and Disability Transportation Center. He draws upon 40 years’ experience planning, procuring, overseeing and evaluating demand response and fixed route transit services, including 16 years with a consolidated human service transportation program. He has served on research panels and co-chaired the 2019 Transportation Research Board’s International Conference on Demand Responsive and Innovative Transportation Services.