Examining the Results of a Solicitation

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The end result of a solicitation, as expected, is a collection of proposals, bids, and quotations. These documents indicate the sellers’ ability and preparedness to complete the project work. The proposals should be in alignment with the stated expectations of the buyer, and they may be presented orally, electronically, or in hard copy format. Of course the relationship between the buyer and seller—and the type of information being shared—will determine which modality is the best choice of communication.

Determining Source Selection

Once the sellers have presented their proposals, bids, or quotes (depending on what the buyer requested of them), their documents are examined so that the project manager can select which sellers are the best choice for the project work. In many instances, price may be the predominant factor for choosing a particular seller—but not always. Other factors besides price may also be taken into consideration:

• The cost of an item may not reflect the true cost to the performing organization if the item cannot be delivered in a timely manner. If a seller promises to have a product on site by a specific date and fails to do so, the project can be delayed, costing the organization thousands—or more—in losses.

• Proposals can be separated into two categories: technical and commercial. The technical category describes the approach and methodology to complete the project work. The commercial category delves into the price to complete the project work. An evaluation takes into consideration both categories in order to determine the best choice for the project.

• Critical, high-priority projects may rely on multiple sellers to complete the project work. This redundancy can balance risk, cost, and opportunity among multiple vendors.

Preparing for Source Selection

Source selection weighs and evaluates the proposals, bids, and quotes for the procured portions of the project and then makes a determination as to which seller is the best for the project work. Source selection has three inputs to the decision-making process:

• Proposals The proposals, bids, and quotations provided by the sellers are key inputs. These are the documents the performing organization will evaluate to determine which seller is the best provider for the project.

• Evaluation criteria The evaluation criteria, such as referrals, samples of previous work, and references are considered. The evaluation criteria are evidence of the quality, depth, and experience of work the seller has performed in the past and, hopefully, is capable of performing on the current project. Evaluation criteria are developed in solicitation planning and applied in source selection.

• Organizational policies The performing organization likely has procurement policies and procedures the project manager is expected to follow in regard to source selection. The organizational policies should be known before starting the source selection process to avoid any discrepancies, conflicts of interest, or other breaches of the policies. For example, some organizations’ procurement policies do not allow project managers to accept any gifts beyond $25 in value.

Completing the Source Selection Process

For the performing organization to finalize the process of source selection, there must first be eligible sellers. Assuming there are more than one seller that can satisfy the demands of the project, there are four tools and techniques the project manager can rely on:

• Contract negotiation The performing organization creates an offer, and the seller considers the offer. The contract negotiation process is an activity to create a fair price for the work the seller is to complete. The performing organization and the seller must be in agreement on the expectations, requirements, authorities, terms, technical and business management approaches, price—and any other pertinent factors covered within and by the contract—prior to signing the contract.

• Weighting system A weighting system takes out the personal preferences of the decision-maker in the organization to ensure that the best seller is awarded the contract. A weighting system creates a matrix, as seen in Figure 12-5. Weights are assigned to the values of the proposals and each proposal is scored. Because the weights are determined before reviewing the proposals, the process is guaranteed to be free of personal preferences and bias. The seller with the highest score is awarded the contract.

  
  Figure 12-5: Weighting systems remove personal preferences from the selection process.

• Screening system A screening system is a method to remove sellers from consideration if they do not meet given conditions. For example, screening could require that sellers must be certified by a specific organization, have prior experience with the project technology, or meet other values. Sellers that don’t meet the requirements are removed from the selection process and their proposals are not considered.

• Independent estimates These estimates are often referred to as “should cost” estimates. These estimates are created by the performing organization, or outside experts, to predict what the cost of the procured product should be. If there is a significant difference between what the organization has predicted and what the sellers have proposed, either the Statement of Work was inadequate or the sellers have misunderstood the requirements.

Examining the Results of Source Selection

The one output of source selection is a contract between the buyer and the seller. A contract is a legally binding agreement between the buyer and seller in which the seller provides the described product and the seller pays for the product. Contracts are known by many names:

• Agreement

• Subcontract

• Purchase order

• Memorandum of understanding

Contracts have to be signed by a person with the power to authorize the requirements and payment specified in the contract. This role is called the delegation of procurement authority. Whether this person is the project manager depends on the procurement policies of the performing organization.

Exam Watch

A letter of intent is not a contract, but a letter stating the buyer is intending to create a contractual relationship with the seller. Letters of intent are often used when there is an emergency procurement need and a contract is not available immediately.

In some organizations all contracts flow through centralized contracting. Centralized contracting requires all contracts for all projects to be approved through a central unit within the performing organization. Other organizations use a decentralized contracting approach, which assigns a contract administrator or contract officer to the project.

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