Procurement

Procurement is a writing problem

Almost every bad facilities contract we review was a bad specification first. The negotiation gets the attention, but by the time anyone is negotiating, the outcome has largely been determined by what the document asked for.

The failure mode is specifying activity instead of result. A cleaning specification that requires floors to be mopped daily has purchased mopping. It has not purchased clean floors, and when the floors are not clean, the contractor is fully compliant and you have no remedy. A specification that defines an inspectable standard, with a measurement method and a stated frequency, has bought the actual thing.

What we do

• Requirement definition. Establishing what outcome you actually need, which is frequently different from what the previous contract described, because the previous contract described the building as it was.
• Specification writing. Outcome based where outcomes can be measured, prescriptive where they cannot, and explicit about which is which.
• Market approach. Deciding how many bidders, whether to prequalify, and whether the package should be bundled or split. Bundling looks efficient and often reduces the number of firms that can respond, which costs more than the efficiency saves.
• Bid leveling and evaluation. Normalizing responses, identifying exclusions, and testing whether the low bid is low because of efficiency or because of an assumption that will surface later as a variation.
• Contract structure. Service levels, measurement, reporting obligations, remedy, and a termination provision that can realistically be exercised.

The lowest bid question

Low bids are not automatically bad. Genuine efficiency exists, and treating every low number as suspect means overpaying systematically. The distinction worth drawing is between a bidder who is cheaper because their method is better and a bidder who is cheaper because they have priced a smaller job than the one you described. Only the second is dangerous, and it is detectable by asking bidders to price the same defined scope and then examining the differences in assumption.

We wrote about this at length in why the cheapest bid so often costs the most.

Renewals

The most common engagement in this practice area is not a new procurement, it is a renewal that someone has become uneasy about. A contract signed at a competitive rate five years ago has since absorbed additional scope through informal requests, none of which were individually large enough to trigger a review. Testing that contract against the market is usually worth doing well before you intend to change anything, because the result is useful either way.