In the private business sector, they often find vendors that they like working with and reward them with their loyalty.
Some think it gives them better pricing and others just don’t want to take the risk of switching vendors when the one they have works. Like a “if it ain’t broke, don’t fix it” motto.
So, it’s often a surprise to those who come from the private sector that customer loyalty isn’t actually allowed in government procurement.
Specifically in federally funded programs, like school nutrition, one of the foundational concepts is “free and open competition” or “full and open competition”. It’s the idea that every time you conduct procurement, you create competition among vendors and be open to accepting any response from a vendor that is responsive and responsible.
Why Create Free and Open Competition?
Free and open competition is required for two reasons.
First, it should lead to better pricing.
While in private business, you might be lucky to get some deals from suppliers you’ve known a long time, in general, the length of a contract is not associated with lower costs.
In fact, vendors know what a pain it is for you to switch, so they often can charge you more year after year because they know you’re not going to change. This is especially true for contracts that are notoriously hard to switch over, like software.
If you are truly getting vendors to compete for your business, and pricing is either the only or primary factor in your evaluation, vendors are incentivized to give you the best price. That’s how they will win your business over other bidders.
If a vendor knows they are the only one bidding on your contract, they can charge whatever they want.
In short, competition = better pricing.
The other reason for creating free and open competition is “governmental impartiality”.
Ok I admit, I made that phrase up. But what I mean is that when you’re spending taxpayer money, you don’t have the luxury of playing favorites.
The government has to remain impartial about who receives their contracts.
How would you react if you found out your local government was spending more money on vehicles than they needed to simply because the guy who handles the contracts likes a certain car dealer better? You’d be demanding they switch car dealers to save your taxpayer money!
It’s just not a good look for government employees.
Now you know why you are required to create free and open competition, let’s discuss how you can make that happen.
7 Ways You Can Ensure You’re Creating Free and Open Competition
Are you thoroughly convinced you need to create competition?
Yes? Awesome.
Now you might be thinking, “Kristen, I know I need competition, but the same vendors respond to my solicitations every single time.”
I’m glad you brought that up.
Yes, due to giant mergers of small companies, there are industries where there is little competition, like milk or fresh bread. And rural districts struggle with availability of vendors too.
But if there are more vendors that could respond, and they don’t, then there’s probably something limiting competition. And you need to get to the bottom of it. In other words, it’s not them, it’s you sweetie.
In creating free and open competition, your goal is to not be too restrictive that vendors can’t (or don’t want to) participate in your procurement.
Here are 7 ways you can ensure you are creating competition:
#1: Research what’s out there.
Prior to a solicitation, you should be conducting some research. I write more about this in my article Steps in a Formal Procurement, but part of this research should include finding out your options.
For large contracts or topics you’re not familiar with, I’d encourage you to reach out to vendors to pick their brain. When you know what your options are, you can better write your terms, conditions, and specifications.
For example, you might find out through talking with a vendor that they carry a similar item to what you’re looking for. But, in order for them to compete, you would have to broaden your specification.
Or perhaps a vendor could service you, but they never try because your bid language includes a clause they’re uncomfortable with.
Neither of these examples necessarily require you to change your approach, but once you know, it gives you a chance to evaluate your needs and decide how you want to move forward.
All too often, districts don’t do this and put in language that is too restrictive that they had no idea was too restrictive. Do your research. It helps a lot.
#2 Ask only for what you need.
So many districts put themselves into too restrictive of a box by asking for what they already have instead of asking for what they need. There’s a difference.
For example, if your vendor currently delivers every Wednesday between 8 and 12pm, that’s fine; it works. But is that what you need? Could they deliver Mondays? Tuesdays? Is no one there before 8am or after 12pm?
As you’re researching, you want to ask yourself what it is that you really need out of the vendor. If you have 5 schools and really need all of your schools to be delivered to on the same day, that’s justifiable. But it’s pretty hard to justify needing it to be on a specific day of the week over a 4-hour period. That’s too restrictive.
Restrictive specifications fall into this category as well. Be careful not to describe something simply because that’s what you have or those are the exact nutritional values of a product you saw. You need to approach writing specifications from a perspective of what is the minimum you need.
And if you’re new to school nutrition, you may have not heard yet that if you specify a brand name, you must include the words “or equal” or “or pre-approved equal”.
You can’t go into the process with a brand name in mind without being open to considering other equivalent brands. Even if you think nothing else exists out there that’s equal, you could have missed something or be unaware of a brand-spanking new product out there that’s equal.
#3: Solicit as many vendors as you can.
If you want to create free and open competition, you want as many vendors as possible to respond to your solicitation. All too many districts try to get by doing the bare minimum here.
For small purchases, doing the bare minimum would be getting only the minimum number of quotes your state requires (two or three usually). For formal methods, that would be just posting to a website and putting an ad in the paper.
This just isn’t going to cut it if your goal is to truly create competition.
When getting quotes, get as many quotes as possible. Yes, sometimes there are only two or three suppliers that can supply that item. Other times, there are nine. Contact all nine! Doing the bare minimum here is only going to reduce your chances of getting good pricing while increasing your chances of getting a vendor complaint. Not good.
When soliciting responses to a formal procurement (IFB or RFP), you want to send the document to anyone you think might be interested. If it’s a distributor, you can also send it to manufacturers and brokers so that they can start working on your pricing for the distributors. The more people that know about it, the less of a chance it slips through the cracks of someone’s inbox.
You definitely do not want to only send it to a certain vendor and intentionally exclude vendors you know could respond. This would be intentionally limiting competition.
#4: Give vendors time to respond.
The amount of time needed to respond depends on how complicated your solicitation document is, but the general recommendation is at least 4 weeks.
It takes vendors time to put together a response and not giving them time is either going to result in:
1) less responses, because vendors don’t think they’ll have time to put together a response, or they miss it alltogether or
2) higher prices, because vendors can’t do a good job negotiating good prices on your behalf, so they over-charge to cover their bases.
Not giving vendors enough time to respond will favor your current vendor since they are already familiar with what you want. This will open you up to complaints from other vendors about not being open and fair.
#5: Treat vendors fairly.
This seems like an obvious statement when thinking about free and open competition, but you may be giving an edge to a certain vendor more than you realize.
Give all vendors equal time to respond, so send your solicitation out at the same time. You wouldn’t want to send it to a vendor and give them a few days head start to work on it.
If you disqualify one vendor for doing something, you have to disqualify another for an equal or similar infraction.
If you give a vendor a piece of information that could help them, you need to give all the vendors the same piece of information. A common practice is to collect questions during the procurement process and share them with all the vendors to ensure everyone has access to the same information.
You also need to do whatever you said you would do in your solicitation document. This may mean disqualifying a vendor for not being responsive or awarding the contract to a new vendor because they won based on your selection criteria, even if these actions aren’t what you want to do. But if that’s what you’d said you’d do, that’s what you have to do. It’s only fair.
#6: Be transparent.
You don’t want your vendors to feel like Aaron Burr in The Room Where It Happens. Where my Hamilton musical nerds at? No? Ok.
Well, you don’t want your vendors to feel like they’re left out of a process that’s going on secretly behind closed doors.
You can remedy this by clearly defining your process, especially your selection criteria, in your solicitation document.
You also will hold your bid opening publicly so that they can be present as you open the bid to show them you’re not doing anything shady.
Lastly, you’ll want to inform all the bidders which bidder was selected for award. It’s always frustrating to get bad news through the grapevine and doesn’t build trust with the vendor. Hearing the news directly from you helps ease discouraging thoughts about the process.
These practices increase the transparency of your procurement process to help vendors feel like they understand how you got to your final decision.
#7: Act ethically.
You’re required to have a code of conduct that addresses procurement ethics. This includes avoiding conflicts of interest and not soliciting or accepting anything of value from vendors.
This protects the integrity of the procurement process so that your integrity isn’t called into question when issuing or managing awards.
You also can’t let vendors write specifications for you and then award them that contract. It would give them an unfair advantage.
Summary
If you do these 7 things to create free and open competition, you may find more vendors participate in your process. And that’s the intent of free and open competition!
