The importance of the carefully drafted RFP
By Jennifer Pritchett, Associate Editor
Planning and careful consideration for the goods and services that are required for Ontario hospitals and other health institutions help ensure a smooth procurement process so the request for proposal (RFP) results in the best possible purchase, says Toronto health lawyer Michael Gleeson.
“It’s important to think about the RFP and the particular purchase for a health organization before jumping into a template and drafting it,” he tells AdvocateDaily.com.
“It’s key to understand what you are purchasing — what the good or service is — and to have some idea of the market for potential suppliers to have a sense of what the response may be to the RFP. You may consider whether you need to adjust the procurement process, including the steps and evaluation, to fit the particular needs of the purchase you are making.”
Request for proposals are typically handled by the administrative staff within procurement departments of health organizations or shared services organizations, which do the purchasing for a number of associated health organizations, explains Gleeson, a partner with DDO Health Law.
He says many health organizations have template RFPs that outline a basic and usual procurement process.
“And that process is fine 90 per cent of the time but there are situations where you are doing a more complex procurement where you may want to think about other processes,” Gleeson says.
Determining the mandatory criteria for an RFP is a key part of the process, he says.
“These are the items that a vendor’s response has to address,” he says. “It may be characteristics of a particular product or the ability to provide services in a certain way. If a vendor’s response doesn’t meet those criteria they have to be disqualified.”
It’s not uncommon for health organizations to ask for too many mandatory criteria in the RFP, Gleeson says.
“In doing so, one can limit the number of vendors that reply because not everyone can tick off those boxes,” he says. “Also, you may get a vendor that is able to satisfy all of the mandatory criteria but doesn’t fill out the response properly and then you are forced to disqualify vendors that you are interested in.
“Disqualifications sometimes occur either because of an administrative error or a typo in a response. And the more we can minimize the chances of that happening, the better. Otherwise, you could end up with a five-year contract for an essential part of your hospital with a vendor that you know is not the best in the market because you had to disqualify the top one.”
To avoid that, it’s helpful for health organizations to give thought to determining what criteria is mandatory and preferred, Gleeson notes.
And once a vendor responds to the request for proposals, the purchaser has an obligation to carry out the process as was stated in the RFP document, he says.
“There is a duty of fairness and a duty of transparency,” he says. “There are some contractual obligations, including confidentiality. If a vendor replies to an RFP it implies they are making a conscious effort to be bound by the terms that are set out in it.”
While the RFP may go out for the immediate needs of one particular hospital, others may have the opportunity to “piggyback” onto the contract once it is signed, but purchasers have to be transparent about that and include the information in the request for proposals, Gleeson says.
“We see that with the shared service organizations when they put out an RFP for one hospital but may also indicate in it that the successful vendor may receive work from other hospitals as well to avoid having to go out and issue the same RFP for another hospital,” he says.
“Piggybacking is permitted under procurement law but the entity that distributes the RFP needs to be transparent about all of the other hospitals that may participate. At a minimum, you need to list those hospitals and, in an ideal world, you would also describe what their need is for the service or product for the term of the RFP.”
That allows potential vendors to understand the benefits of getting the work and enable them to adjust their pricing accordingly, Gleeson adds.
If the ability to piggyback is not referenced in the RFP, the applicable law indicates that it should not be permitted, he says.
It’s important to draft an RFP that addresses the whole situation, Gleeson adds.
Language that will allow the purchaser to get out of the RFP if need be should also be added, he says.
“It would be a cancellation right for convenience to avoid being compelled to go through the process and issue a contract with a vendor that you don’t want to work with for legitimate reasons,” Gleeson says.
“You also want to include language that will allow for the right to disqualify vendors for past bad performance. Without strong language in the RFP to allow for that, by law they should either cancel the process or go through it with that vendor as a possible winner.”