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RFP’s, Contracts, and Hair Loss

  

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[Ed. Note - Each month we will feature a guest blog post from corrections professionals and industry thought leaders. This month, Mr. Jim Rokosky, COO of Digital Solutions / Inmate Telephone, Inc., writes about the RFP contract process.]

So, you need a new inmate phone vendor. After consulting with legal and procurement you send your RFP or Bid to the street and the fun begins. You meet a lot of great vendors; see exciting new product and technology demos, etc. You make your selection and everyone is excited to get the project started and get all of those goodies that you were promised. The project now moves to that dreaded phase – contract negotiations. This is where I come in, along with both of our legal consul teams. Within a few weeks of what seemed like an exciting, fun adventure has turned into a grueling death march of language parsing, mistrust, and arguments over what is “reasonable”. This is the part of the process where we all get frustrated and pull our hair out. If you are involved in this routinely and on an extended basis, you will end up like me, throwing in the towel and just shaving off what little hair you have left. Does it really have to be like this? The good news is that no, it doesn’t. The even better news is that once you get the contract signed, the delivery team will show up and everyone will roll up their sleeves and start working. Hopefully, at the end of the day, you will have a really great project and even have some fun while you are at it.

You have to be asking the question by now: if the project is enjoyable before the contract phase and we are going to have fun after the contract phase, is there something we can do to improve everyone’s experience DURING the contract phase? I will suggest that there is. The problems with the contracting phase start before the contracts are even exchanged, before the product demos and RFP responses, are received and even before the RFP is released to the street. As I see it, the problem is that many inmate phone solicitations come with “one size fits all” legal requirements and a boilerplate that just doesn’t fit within the parameters of an inmate phone contract. The contract is fundamentally different from the vast majority of other public contracts. Consider that an inmate phone solicitation will result in an agreement whereby a governmental agency not only receives goods and services, but also receives a revenue stream for itself. Consider also that the inmate phone vendor will be expending significant time and money at the front of the project and then recover their cost over the next 3-5 years. This is much different than a procurement where the vendor is paid for their work as delivered and there is no revenue sharing with the agency.

OK, so these are different types of agreements, but what does it hurt to use the same boilerplate? The first most obvious problem is that the provisions required to protect both the vendor and customer are different because of the nature of the agreement. Some provisions of a contract for the purchase of goods don’t apply to a vending agreement, some provisions of an agreement to purchase goods and services conflict with an inmate phone vending agreement, and then there are other provisions and concerns that are simply missing from an agreement to purchase goods and services that need to be in an inmate phone vending agreement. The bigger problem, though, occurs when vendors are faced with responding to a bid or RFP solicitations that require a response to these requirements. Honest vendors will want to take exceptions to problematic provisions and call out other provisions that should be included in a final agreement. But most vendors have been burned in the past by responding straight up to questions like this and have found themselves being disqualified or graded very poorly by selection committees for taking exceptions. Some vendors will simply respond “agree and comply” with all requirements and then try sort things out during contract discussions – this approach usually ends up  with wrong expectations and an angry customer that is frustrated with their “selected” vendor. And so the end result is that honest vendors are penalized, dishonest vendors are rewarded, and the customer ends up frustrated and confused by the contract negotiation process.

So, what do we do to fix this? The answer, in my humble opinion, is very simple. As a customer, recognize that this is an issue and resolve to help yourself by helping vendors to be comfortable responding in an open and honest fashion to your solicitations. Educate yourselves, your purchasing department, and your legal department on the differences between these types of agreements and the importance of releasing clean legal requirements in your bids and RFPs. Tailor the legal and contract requirements to the type of solicitation that you are releasing. As a vendor, provide a simple statement of your concerns and include your standard contract for the customers review. Offer to work towards a final agreement that combines elements of the customer contract and elements your contract to reach a mutually beneficial conclusion. For both vendors and customers: be honest, set realistic expectations for what needs to be in a final agreement, and be open to understanding the reasons that the other side is asking for inclusion or exclusion of different provisions in the contract.

Contracting often seems like an uphill battle but I really believe that it does not have to be. What do you think? Have your experiences been different or similar? Do you have other ideas for making the contracting process easier on all parties? Are you going gray or losing your hair over the contracting process? Leave a comment or send me an email and let me know!