By Kristin Cummings, Director or Marketing & Communications
and Brian Reilly, Senior Municipal Advisor | Managing Director
Creating Effective Professional Services Requests for Proposals
Just like any other organization, governmental entities regularly seek the assistance of professional experts in a particular field. You’re running an operation focused on your core functions; it would be both ineffective and a poor use of finite resources to have people on staff with the technical aptitudes not required on a consistent basis. More importantly, because of limited opportunities, those people wouldn’t be able to acquire the knowledge and experience necessary to effectively serve your organization when you needed them most.
Whether it’s legal, engineering, architecture, banking, or financial advisory, when local governments seek to engage professional services providers, their goals are fairly simple. Namely, they’re looking for the same things you might in your personal life:
- A reputable company with sufficient staff well-qualified to do the job
- A proven track record for delivering the service(s) required
- Exceptional customer service
- Good value when comparing cost to performance and quality
It’s important to remember that you’re “acquiring” a trusted relationship that will indispensably serve your organization for years to come. You’re not buying “widgets” or a piece of equipment. When it comes to assessing a slate of companies relative to which one may be best suited to provide the services needed, the process can seem daunting, especially when you might not be sure what you’re asking for. Enter the request for proposals, or RFP. How you construct one and the approach you take in evaluating proposing firms can make the difference between an apples-to-apples platform from which you can make an informed decision, and a stack of disparate proposals that makes it far more difficult to objectively compare potential providers. Fortunately, by following a few simple guidelines, you can develop an RFP that will get you exactly what you need to effectively evaluate proposals and successfully choose a service provider.
If you’re crafting an RFP for the first time or for a service you’ve not had to procure before, it may be tempting to search the internet for existing templates, then simply cut and paste that content into your own document. The problem with relying on internet-based examples is that they’re typically either too generic for your specific needs or are intended for a different service altogether, which will only create confusion for your potential proposers. Also, how do you know those examples are representative of quality and insight? Instead, reach out to your peers in other communities to gather same-service RFPs they have used successfully. Even better, connect with providers in the industry for some examples they think are thoughtfully crafted and constructed? Those providers routinely respond to dozens of RFPs each year, both good and bad. If you can obtain a handful of reliable samples from peers and professionals, you should be able to glean the detail that’s relevant to your organization and its unique situation. This pre-work will prove valuable as you begin to build the structure and scope of work for the RFP. If you have a formal procurement process and procurement department, now is the appropriate time to organize a meeting with your internal partners to prepare the formal document and discuss the timeline.
Speaking of timeline, the calendar you provide is one of the most important aspects of your RFP process and one you have complete control over. You want thoughtful and complete responses that speak directly to your situation, not boilerplate marketing materials, so you’ll need to give respondents sufficient time to do that. Additionally, you should include time to receive and respond to questions from respondents. People want to craft proposals that meet your needs, and there are sometimes, errors and inconsistencies that need clarification. Give yourself enough time to ingest these inquiries and prepare concise responses that leave nothing in doubt. The investment of time made before release of the RFP will hopefully limit the amount of questions you receive. Also, don’t underestimate the amount of time you’ll need to review and evaluate proposals once received. A one or two-day turnaround is unrealistic; this isn’t the only thing you and your team will be doing, of course. Finally, your calendar should anticipate in-person interviews with two or three finalists. Provide respondents a window of a few days where you expect this to occur, so they can reserve it on their calendars and you on yours. After all, you wouldn’t hire someone based purely on their resume.
With a good guide and the right people on your team, crafting a strong RFP is a much simpler task than you might think. Specific to RFPs for all things public finance, Ehlers’ advisory teams have amassed decades of experience not only responding to them, but helping clients develop them as well. If you need RFP assistance or a template from which to start the process, we’re always happy to help!
For additional detail regarding the technical aspects of building strong RFPs, read on!
Technical RFP Development Guidelines
Construct an RFP Format
Generally, requests for proposals should include the following information, in this order:
- This is where you craft some narrative about your organization and any specific circumstances that are relevant now or in the near future. It’s the reader’s chance to get to know your organization and what’s important to you. You can also speak to why you’re going out to proposals. Maybe it’s something you do every few years, or perhaps there’s no incumbent provider(s).
- Schedule of RFP process events including deadline for questions, date(s) any addenda will be issued, deadline for proposal submission, date for potential finalist interviews, date for final selection, and contract term commencement date.
- Minimum qualifications/requirements. Remember, this is not a request for bids, rather proposals. You reserve the right to select a provider that is not the lowest cost. However, you may have certain criteria that must be met, such as insurance requirements, years of experience, local presence of assigned personnel, etc. You should also consider if your organization is willing to waive or amend requirements as a result of reasonable requests from proposing firms.
- Scope of services detailing all work you want the proposing firm to undertake (more on this below).
- Proposal requirements that outline how responding firms should organize the information you want to receive.
- Proposal submission guidelines such as deadline, form of transmittal, and completion of any special forms or agreements your municipality requires under purchasing policies and procedures.
- Proposal scoring criteria and selection process.
- Attachments containing any additional information potential respondents may need to construct a proposal that comprehensively addresses your scope of services.
Establish a Well-Focused Scope of Services
This is where the concept of “you get what you ask for” really takes hold. If you want to receive complete proposals from prospective service providers, it’s important to clearly state everything you want them to do for you. For example, if you are looking for a full-service municipal advisor, you may wish to engage a firm that can help you with any or all of the following:
- Debt Planning & Issuance
- Developing financing plans
- Collaborating with bond counsel on various legal and tax matters
- Preparing offering documents, such as an official statement
- Seeking a credit rating and/or credit enhancement/bond insurance
- Managing competitive and/or negotiated sales process
- Coordinating the closing
- Debt Management
- Monitoring for refunding opportunities
- Advising on investment of bond proceeds
- Monitoring for arbitrage requirements & completing necessary reporting
- Fulfilling continuing disclosure requirements
- Managing bi-annual bond payments
- Advising on credit rating reviews
- Economic Development & Redevelopment
- Planning & project management
- Developer’s Pro forma analysis
- Developer selection & negotiation
- Tax increment district formation & administration
- Housing finance planning & execution
- Financial Planning & Fiscal Studies
- Utility rate studies
- Long-term financial management plans
- Capital improvement plans
- School district enrollment projection modeling
- General budget assistance
While this list is fairly exhaustive, it illustrates the need to be specific when developing the scope of services for your RFP. If you simply stated you require “debt management services,” but really need everything within that category, it’s likely you’ll receive wildly disparate proposals. The work you put in on the front end will help identify the scopes of work that are most applicable to your organization.
Be Clear About Information You Want Respondents to Provide
When you develop the requirements for proposal content and organization, it’s critical to state that all respondents must craft their responses as prescribed in the RFP. By doing so, you have a far better chance of receiving a consistent set of proposals that allows for a more objective comparison. A strong RFP typically asks for the following information, presented in this order:
- Submittal Letter: This will serve as an executive summary of the respondent’s proposal and is generally where an individual authorized to bind the firm will affix a signature.
- General Firm Profile: Information requested may include length of time in business, ownership structure, number of offices, number of employees, services offered, licenses and registrations, and client composition.
- Experience With Scope of Services: Generally, the information requested should include a combination of both qualitative and quantitative narrative to demonstrate that the respondent has a strong track record of successfully delivering the services you need. You may also ask for specific client case studies or examples of work completed for communities similar to your own.
- Approach to Scope of Services: This section should ask the respondent how they go about providing the stated scope of services. Information may include philosophy, processes, and/or an approach to a specific situation your municipality is facing.
- Assigned Professional Team & Qualifications: Information requested should include the names, titles, and contact details of the individuals who will be assigned to complete the work on behalf of the proposing firm, as well as the roles they will play in doing so. You may also ask for professional biographies for each team members that clearly demonstrates their qualifications and experience relative to the scope of services.
- References: This section should ask respondents to provide three to five reference contacts for those who can attest to their quality of work, availability, and service.
- Other Relevant Qualifications, Experience & Services: This section can serve as a bit of a “free form” for respondents to offer additional information about their firms, assigned team members, and services available that you may not have directly asked for in the RFP. This section can provide valuable information, especially for those that may be undertaking this effort for the first time.
- Conflicts of Interest/Regulatory Sanctions: It’s important to ask responding firms if there may be any real or perceived conflicts of interest related to establishing a service relationship with you, and if, so how they plan to mitigate them. Otherwise, you may find yourself in a situation where you select a firm, only to find out after the fact that they aren’t able to work for you. You’ll also want to take into consideration any prior regulatory sanctions levied against the firm and/or its personnel.
- Fees: Professional services firms price their offerings using different structures, which can sometimes create an apples-to-oranges scenario when it comes to evaluating their proposals. To avoid that, consider developing a templated form and require that respondents conform to it. Additionally, depending on the weight you wish to place on the fees for services when scoring each firm’s submission, consider asking for the fee proposal as a separate document. You should feel compelled to follow up with any respondents if pricing is unclear.
Definitively State Proposal Submission Terms and Conditions
To ensure you receive proposals when and how you want them, be definitive in your instructions to respondents. Submission requirements should include the following:
- Date, time, format, and location of proposal delivery deadline: Generally, four – six weeks should suffice. For location, If you’re requesting hard copies, state the address, contact name, and delivery memo for the package. If asking for an electronic or commercial bidding site submission, be sure to include the email address or URL.
- Page limit: Some communities choose to implement page limits in hopes of receiving succinct. “information only” proposals. Be careful here. When respondents face strict page limits, they often leverage appendices where information highly important to you may end up buried. We generally recommend against this restriction.
- Proposal Validity: Establish a time period for which respondents must agree to honor their proposals, including fees. 90 days is a good rule of thumb.
- Proposal Withdrawal: Communicate a specific date and time until which respondents may withdraw their proposals from consideration.
- Final Disposition of Submitted Proposals: Typically, professional services proposals and supporting documentation become the property of the requesting municipality and become a matter of public record. Respondents can request confidentiality for specific information contained in the proposal, but the entity issuing the RFP cannot likely guarantee confidentiality.
Establish Objective Scoring Parameters
Creating a proposal evaluation scorecard serves two important purposes. First, it creates a platform to efficiently rank all proposals to help you select finalists. It also signals to respondents what’s most important to you relative to engaging a service provider. When developing scoring parameters, choose the four to five service attributes most important to you, and assign a scoring weight to them. Then, communicate it within the RFP using a simple table. An example may look a little like this:
“All proposals submitted will be evaluated against the following weighted criteria with a maximum total score of 100 points.”
|Proposal Quality & Completeness
|Qualification & Experience of Assigned Professional Team
|Experience & Approach in Delivering Scope of Services
When establishing scoring criteria, remember that price is what you pay, value is what you receive. Scoring that over-weights pricing can be shortsighted. Also, establishing a not-to-exceed contract amount for an “on-demand” service is not likely relevant to most professional services engagements.
Ehlers is the joint marketing name of the following affiliated businesses (collectively, the “Affiliates”): Ehlers & Associates, Inc. (“EA”), a municipal advisor registered with the Municipal Securities Rulemaking Board (“MSRB”) and the Securities and Exchange Commission (“SEC”); Ehlers Investment Partners, LLC (“EIP”), an SEC registered investment adviser; and Bond Trust Services Corporation (“BTS”), holder of a limited banking charter issued by the State of Minnesota.
Where an activity requires registration as a municipal advisor pursuant to Section 15B of the Exchange Act of 1934 (Financial Management Planning and Debt Issuance & Management), such activity is or will be performed by EA; where an activity requires registration as an investment adviser pursuant to the Investment Advisers Act of 1940 (Investments and Treasury Management), such activity is or will be performed by EIP; and where an activity requires licensing as a bank pursuant to applicable state law (paying agent services shown under Debt Issuance & Management), such activity is or will be performed by BTS. Activities not requiring registration may be performed by any Affiliate.
This communication does not constitute an offer or solicitation for the purchase or sale of any investment (including without limitation, any municipal financial product, municipal security, or other security) or agreement with respect to any investment strategy or program. This communication is offered without charge to clients, friends, and prospective clients of the Affiliates as a source of general information about the services Ehlers provides. This communication is neither advice nor a recommendation by any Affiliate to any person with respect to any municipal financial product, municipal security, or other security, as such terms are defined pursuant to Section 15B of the Exchange Act of 1934 and rules of the MSRB. This communication does not constitute investment advice by any Affiliate that purports to meet the objectives or needs of any person pursuant to the Investment Advisers Act of 1940 or applicable state law.