(Originally published in Purchasing B2B magazine, December 2013.)
As announced in November 2013 at the Canadian Public Procurement Council’s annual conference in St. John’s, Newfoundland, the City of Lethbridge was the recipient of Summit Magazine’s Leadership in Public Procurement Award for 2013. The award is the culmination of a procurement governance overhaul commenced several years ago at the City of Lethbridge that featured the deployment of flexible tendering formats such as the Dialogue RFP.
As noted by Lethbridge Procurement Manager Craig Milley during his presentation at the St. John’s conference, Lethbridge’s senior leadership was all too aware of the negative results flowing out of an audit of the City of Calgary’s procurement operations in 2009 and 2010. To their credit, the Lethbridge leadership team decided to adopt proactive measures to avoid becoming another Alberta municipal case study. The journey that led to the Dialogue RFP began with an assessment of Lethbridge’s procurement practices and with the realization that its current suite of inflexible, high-risk tendering formats was in need of a significant overhaul. As Milley noted, fixed-bid tendering was resulting in significant performance issues and post-award cost increases. Recognizing that the problem presented an opportunity, the City’s solution was to implement more flexible tendering formats.
Deploying Flexible Formats
This decision was supported by an independent legal review of the City’s procurement practices, which included recommendations on how to deploy a suite of flexible, low-risk tendering formats and integrate that deployment into an organizational governance framework. That deployment included the use of a simplified Request for Quotation format for construction projects. The RFQ operated under traditional contract law rules instead of the fixed-bid tender law rules that generate most of the tendering lawsuits in the construction industry.
Another tool in the City’s revamped tendering toolkit was the Dialogue RFP, with its use of short-listing, dialogue and a best-and-final-offer process. As with the simplified RFQ, the Dialogue RFP operates under traditional contract law, enabling the post-bid discussions that facilitate the clarification of contract responsibilities before the contract is awarded. Milley’s team had hoped that this would reduce the performance issues and cost overruns associated with fixed-bid no dialogue tendering, and the Dialogue RFP delivered on that promise.
Deploying the Dialogue RFP on Major Projects
As noted in Lethbridge’s award submission, the City deployed the Dialogue RFP on two high-profile projects:
- a $40 million project for a community ice centre with twin hockey rinks and curling facility
- a $26 million project for the renovation and expansion of police headquarters
In both of these projects, Lethbridge leveraged the flexibility afforded by the Dialogue RFP. It engaged in concurrent discussions with the short-listed finalists to better refine project details at the critical pre-award design stage. According to Milley, this concurrent dialogue helped ensure that project objectives were understood by all parties, that project risks were mitigated and that competitive tension remained in the process prior to contract award.
The Benefits of Expanding the Use of Dialogue RFPs
In his St. John’s address, Milley was careful to note that once the tendering format overhaul was completed, the Dialogue RFP was successfully implemented using internal staff resources. While achieving significant savings – over $500 000 in post-bid reductions to date and counting – the City was also able to avoid the large transactional costs commonly associated with using external advisors in complex projects. Furthermore, to counter the fear of pre-award delays, Milley statistically recorded how the Dialogue RFP led to much faster contract awards when compared to the two-staged prequalification-invitational bid process commonly used in similar projects. The significant measurable benefits attributable to the Dialogue RFP format support its broader deployment. As Milley noted, the Lethbridge story can serve as a blueprint for implementing the format across other public sector institutions.
Wave of the Future
Those who are alive to industry trends know that the Lethbridge story reflects a movement that reaches well beyond southern Alberta. In fact, public and private sector institutions in all parts of Canada are adopting flexible tendering formats to mitigate risk, increase flexibility and better serve their institutions. With the Lethbridge story adding the latest chapter in the evaluation of advanced tendering practices, it’s only a matter of time before flexible formats become the industry standard across all purchasing institutions.