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Today’s higher education procurement teams are truly wizards. While they can’t wave a magic wand and clear away all of the purchasing on their desk, they work the way a lot of magicians do. In magic, audiences can appreciate tricks without ever understanding the mechanisms that make it happen.
In an efficient and streamlined procurement system, departments do not have to worry about the behind-the-scenes work done to get them what they need. They just know things show up when and where they need to be. The right goods and services just appear. Magic!
Yet, today’s budget constraints and rising prices are requiring a whole new bag of tricks to manage costs with rising prices. In this article, we will explain how solicitation in procurement works, the benefits of a well-crafted solicitation, and real-world examples to give you ideas for managing your solicitation process. We will also share best practices to streamline solicitations, lower costs, and improve your ROI.
In the simplest terms, solicitation in procurement is the process of requesting proposals, bids, or quotes from potential suppliers for goods or services. In higher education, this can run the gamut from food services to specialized research software to building construction and more.
The solicitation documents outline the objectives and what suppliers need to provide. Suppliers can then prepare bids or proposals to address these needs.
Even for an experienced procurement team, the solicitation process takes time. A poorly crafted solicitation can lengthen the procurement process, return proposals that do not fully address requirements, and make it difficult to fairly evaluate bids.
When you take the time to construct procurement solicitations that clearly define needs and expectations, it creates a roadmap for prospective suppliers and your institution. This creates several significant benefits, including:
However, planning is needed before procurement solicitations are issued. This typically starts with a needs assessment.
Working with stakeholders within the college or university, procurement teams learn about the goods and services required along with any unique characteristics or features that are needed. This helps frame the goals of the solicitation and ensure suppliers know what you want.
A comprehensive assessment provides the details needed to write a well-crafted solicitation and attract potential suppliers.
You should also determine your criteria for evaluating proposals. Today, most academic institutions are evaluating much more than just cost and supplier reputation. Proposals are typically weighted by various factors, including sustainability and diversity. Depending on what you want to purchase, factors may have different weights. For example, disposable cups, paper, and utensils may place a higher priority on recyclability than specialized software that must meet specific technical requirements.
Suppliers should know how they will be judged. This creates fairness and transparency in your procurement process and lets suppliers know what information you will include in your assessment.
Colleges and universities may also solicit a Request for Information (RFI). An RFI is not a formal solicitation but seeks information to help refine the requirements to issue a subsequent RFP or IFB. RFIs are useful to understand markets, explore new and emerging technologies, and establish reasonable budget lines.
There are three types of procurement solicitations:
Request for Proposal
An RFP is used for high-value, strategic purchases where the solution may not be clearly defined. It outlines the institution’s needs, evaluation criteria, and terms. Vendors can propose innovative solutions and demonstrate expertise.
Key components include a detailed project description, technical specifications, evaluation criteria, timeline, and contractual terms.
RFPs are ideal for complex projects like implementing campus-wide software systems or designing new facilities. The process encourages competition and often results in the best value for the institution.
An IFB is used when the institution knows exactly what it needs and seeks the lowest price for standardized products or services. It typically results in a fixed-price contract awarded to the lowest qualified bidder.
Key components include precise specifications, quantity needed, delivery requirements, bidding instructions, and contract terms.
The IFB process is faster and simpler than an RFP, as evaluation is primarily based on price and compliance with specifications. It’s often used for purchases like office supplies or routine maintenance services.
An RFQ is used for smaller, simpler purchases where the institution knows its needs and seeks pricing information from multiple vendors. It’s less formal than an RFP or ITB and is typically used for low-value, non-complex purchases.
RFQs usually include a brief description of required items or services, quantity needed, delivery expectations, request for pricing and discounts, and submission deadline.
This method allows institutions to quickly compare prices and terms from multiple suppliers for straightforward purchases like basic services, repairs, or small equipment.
In higher education procurement, solicitation documents will vary depending on the specific needs of the institution. An example of an RFP for a campus-wide Learning Management System (LMS) might include these sections.
Such a solicitation document helps suppliers to provide targeted, competitive proposals. A structured format ensures that all crucial aspects of the procurement are addressed, from technical requirements to evaluation criteria, for a fair and transparent selection process.
The forms can vary by college or university. Here are some real-world examples of each.
EXAMPLE SOLICITATION DOCUMENTS FROM VARIOUS COLLEGES AND UNIVERSITIES | ||
RFPs | RFQs | IFBs |
Employing best practices for procurement solicitations can help you reduce costs and improve your ROI.
Implementing strategic sourcing practices can yield significant benefits. By analyzing spending patterns across departments, institutions can identify opportunities for consolidation. For example, a college might discover that multiple departments are purchasing similar office supplies individually. By consolidating purchases, they can leverage economies of scale and potentially secure better pricing.
E&I Cooperative Services offers a no-cost Strategic Spend Assessment (SSA) to evaluate your entire spend portfolio to look for savings.
When crafting solicitations, clear and comprehensive specifications are crucial. For instance, if a university is seeking new laboratory equipment, the solicitation should detail exact technical requirements, capacity needs, and compatibility with existing systems. This clarity ensures suppliers can bid accurately, reducing the likelihood of costly misunderstandings later.
To promote healthy competition, institutions should cast a wide net to attract diverse suppliers. Consider breaking large contracts into smaller lots. For example, instead of seeking one vendor for all campus food services, a university might separate contracts for different dining halls or specific services like catering. This approach allows smaller vendors to participate, potentially uncovering more cost-effective solutions.
Looking beyond upfront pricing is crucial for ensuring both cost-effectiveness and quality.
Implementing a pre-qualification process for complex procurements can save time and resources. For instance, when seeking architectural services for a new building, a university might first pre-qualify firms based on experience, capacity, and financial stability before inviting full bids.
Also, consider the total cost of ownership when evaluating bids. For example, when purchasing a new HVAC system, factor in not just the initial cost, but also energy efficiency, maintenance requirements, and expected lifespan.
Performance-based contracts can further ensure quality standards are met. A food service contract, for example, might tie compensation to customer satisfaction scores and health inspection results.
Regular review and updating of procurement policies is essential to maintain efficiency and effectiveness. This might involve annual audits of procurement practices, staying informed about changes in regulations, and soliciting feedback from stakeholders.
For example, a procurement department might conduct yearly surveys with faculty and staff to identify pain points in the purchasing process and identify areas for improvement.
Cooperative purchasing agreements through group purchasing organizations (GPOs) can provide access to significant discounts.
For example, colleges might leverage the aggregated purchasing power of a large number of academic institutions through E&I Cooperative Services to secure better pricing on everything from office supplies to scientific equipment. This approach can lead to substantial savings without compromising on quality, allowing institutions to allocate resources more effectively towards their core educational mission.
Trying to save money on procurement is a top priority, but you always need to factor in your return on investment (ROI). These eight strategies can help improve your ROI.
What is considered a procurement solicitation?
A procurement solicitation is a formal request issued by an organization to potential suppliers, asking them to submit bids, proposals, or quotes for goods or services. It’s a structured process used to gather information about potential vendors and their offerings, ultimately leading to the selection of a supplier.
What is the difference between RFPs and solicitation?
A procurement solicitation is a formal request issued by an organization to potential suppliers, asking them to submit bids, proposals, or quotes for goods or services. It’s a structured process used to gather information about potential vendors and their offerings, ultimately leading to the selection of a supplier.
What is the difference between an offer and solicitation?
A solicitation is a request made by the buyer to potential suppliers, asking them to provide bids, proposals, or quotes. An offer, on the other hand, is the response from a supplier to that solicitation. In other words, the solicitation initiates the process, while the offer is the vendor’s proposed solution or bid in response to the solicitation.
Streamline your procurement solicitation process by leveraging cooperative contracts through E&I Cooperative Services. View available contracts and see how you can access bulk purchasing power to achieve greater volume discounts.
