Dialogue RFPs can provide for more innovative solutions

By Kirsten McMahon, Associate Editor

As procurements become increasingly more complex, organizations may want to consider dialogue request for proposals (RFPs) rather than the more traditional procurement process, Toronto health lawyer Michael Gleeson tells

“The traditional RFP approach works well when it’s a definable good or service being sought,” says Gleeson, a partner with DDO Health Law. “However, if a hospital is seeking technologies to solve a complex problem, a Dialogue RFP might lead to more innovative solutions.”

He says the Ontario health sector mainly takes the traditional RFP approach, where a purchaser issues a request document with a description of what they want to purchase and interested parties can submit proposals by a certain date.

“It's their one chance to put their bid forward. Whatever they bid is solid — it's set in stone,” says Gleeson, who advises public hospitals and shared services organizations in doing RFP and procurement work.

“The purchaser compares the different bids and,based on the evaluation process set out in the request document, determines the proponent that has the highest score and enters negotiations with that proponent,” he says. “If the organization is looking to procure office supplies or basic medical equipment, this process works well.”

However, if an organization is looking for software or web-based platforms to solve a specific problem, for example, it’s not always clear what’s required or what’s out there in the marketplace.

“An organization can't easily put in a single request document outlining all of the things that they should be asking for because they don't always know what the specifications should be,” Gleeson says.

A dialogue RFP is a more complex procurement process suitable for these types of scenarios, he says. The dialogue RFP — also known as a competitive dialogue — typically involves two stages. First is the initial request document, which is similar to the traditional RFP.

“The purchaser communicates that it has a problem, is seeking a solution and anyone who wants to participate should submit their initial bid by a certain date,” he says. “Where the dialogue RFP differs is that after the initial bid, there is a short list of proponents based on an evaluation of expertise, qualifications and proposed solution.”

The organization then has a confidential dialogue with those on the short list so it can better understand the solutions being put forward and tease out the details.

“At the same time, the bidder can also get a better understanding of the purchaser’s specific needs,” Gleeson says.

At the end of the dialogue portion of the process, the purchaser invites the short-listed proponents to submit their best and final offer — or make changes to their solution in light of the conversation.

This allows for more innovative solutions, he says, because there are some solutions that a vendor may be able to recognize and create once they have a better understanding of the challenges or problems the purchaser is facing.

“Without having the dialogue, each party only has its own knowledge about the technology or the problem,” Gleeson says. “This dialogue also allows for more tailored solutions that best suit an organization's needs.”

While this model is ideal in certain scenarios, it’s not without downsides.

“A dialogue RFP consumes more time and resources than the traditional model, so it probably only makes sense for complex procurements,” Gleeson says. “To that end, vendors may be less willing to participate because the process is more time-consuming. You may see fewer bids or only receive them from large companies with the resources to participate in such a process.”

Because the negotiations are confidential, it could lead to situations where a successful bidder makes accusations that there may be collusion or unfair treatment.

“There's more risk for claims of an unfair process generally because an organization is relying on its evaluation team to make sure they remain subjective and maintain confidentiality and privacy,” he says. “I think because there are more personal interactions involved in the process, there's more room for human error.”

If a procurement team isn’t properly educated on the risks, it could spell trouble.

Gleeson says Supply Chain Ontario, which is part of the Ministry of Government and Consumer Services, is promoting more creative methods of procurement and has helpful resources on its site.

He says these types of procurements are fairly common in the U.K., Australia and New Zealand but are growing in popularity in Canada.

“In the last couple of years, I’ve had more clients using this process or enquiring about it without actually referring to it as a dialogue or a negotiated RFP,” Gleeson says. “It can be a great tool, but the few times you use it, it makes sense to obtain legal advice.”

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