Bidder offers alternate solution 3

[chippowell]

I’m comparing bids from four different vendors for a project that I estimated would cost between $225K and $300K. The specifics aren’t relevant, but I wondered if I could get anyone’s take on a scenario.

The requirements were for X, all four vendors submitted pricing for X.

Vendor 4 was the only one to ask “have you considered doing Y instead of X? It would be cheaper now, cheaper over time, better altogether, and in fact we recommend it.” (Y and X are related…call it Fuji apples vs. Granny Smiths, instead of apples vs. oranges). I said I would be open to looking at pricing for Y, even though I didn’t ask for that specific solution, and in fact wasn't sure it was a realistic option. The other vendors are all capable of offering Y, but they never suggested it.

Assuming Y is in fact a viable solution - I'm still researching this on my own - and assuming I would be fine with moving forward with the vendor who offered it (this is not a formal RFP process), should I give the other three vendors the opportunity to offer pricing for the Y solution? The other three vendors are also all reputable companies I would feel confident about working with.

But I’m not sure how I feel about proposing a a new potential solution to the other three vendors; they should be the ones to propose the solution to me. I have made it clear to all the vendors that if they have other ideas on how to go about this project, other than our X requirement, I am open to listening to them. Still, none of the other three have proposed Y.

Again, if Y is viable it will be much cheaper than X, and will be less expensive for me as a customer to maintain and support over the years. Obviously, this means a smaller sale for the vendor, and less maintenance and support revenue for them in the future. Again, the question: should I offer the other vendors an opportunity to offer pricing on a Y solution?

Thoughts?

 

[MDXer]

The problem as I see it is you submitted requirements how detailed they were I do not know, and what you recieved was what you asked for. Even if you had said I am open to other options if companies deal with a lot of requests most people have done the research and want a price for what they ask for. The problem could have been that you requirements were to detailed. If requirements are.

Build customized Application in JAVA that is backended by an Oracle DB which will be approximately X GB in size is going to giver you different results than

Custom application backended by a RDMS which can be approx X GB in size.

Differences could be in hard ware costs, licensing costs and skill set. The choice of and cost of the RDMS can differ for a 2GB database as opposed to a 900GB.

If you are bringing people in to solve a problem or meet a need and you tell them the problem or the need then you will get more input about various other options but if you say I want X then you may get some that will tell you about Y but most will give you what you ask for under the impression you have done your homework and know what you want.

 

[CajunCenturion]

==> But I'm not sure how I feel about proposing a a new potential solution to the other three vendors; they should be the ones to propose the solution to me.
The vendors did propose a solution to you. You asked for X and they provided a proposal to meet the requirements of X.

You say this is not a formal RFP process, but how did you solicit the bids in the first place? How did the vendors obtain the requirements for X? What would be different if this were a formal RFP process?

Did you give the vendors the latitude to offer alternatives? If all you needed was Y, then why did you ask for X?

Put yourself in the shoes of one of the vendors. How would you want to be treated?

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[robertjo24]

If you asked for a solution to accomplish a set of goals, like provide a camera and recording solution to monitor and record in a warehouse scenario, then I think you are fine with proceeding with the vendor who offered option Y instead of option X.

If you had the vendors quote specifics, like provide a analog camera solution with a DVR to monitor and record in a warehouse scenario, and all the vendors quoted a DVR based solution, while the last vendor quoted an IP based solution, then you need to have the other vendors re-quote the Y scenario.

This will go a long way in keeping health relationships with your vendors. An angry vendor is much less likely to work hard for you in the future to get you that extra 3-5% off the next project.

 

[Noway2]

I agree, if Y is different enough to have an impact it would be in your best interests to see if the others have something similar.

At the same time, I also say kudos to the vendor that thought outside the box. We have been looking at o-scopes at work (about at $15K investment). One vendor suggested taking a loot at a higher end model that sells for about $30K and suggested we might be interested in a demo model to get the price more in line. After looking at the quote on the higher end model, it is definitely the most scope for the buck. They had enough insight to ask questions and see if we might be interested in an up sell beyond which we even considered.

 

[lionelhill]

You've got several things to think about:
(1) What are you obligated to do? If this isn't a formal tendering system, you may not be under any obligations.
(2) What outcome do you actually want?

If the point of tendering was to get the cheapest, most cost-effective system, then the vendor who offered you "Y" has done you a favour, but one of the other vendors might be able to do "Y" even better. They may even have wanted to suggest it, but felt your tender didn't let them.

Your original tender probably said you weren't under an obligation to accept any bid. If you have time, it might be better now to re-tender, either in more general terms (allowing X, Y and Z), or for Y specifically.

Explain to the vendor who suggested Y, that after publishing the tender for X, this option arose and that you felt you had excluded some vendors from offering it by the terms of your original tender document, so you're throwing the field open, and would very much welcome their suggestion. Give them an opportunity, if they'd like, to flesh out their version of "Y" in a new response to the new tender. They should feel positive about the situation; after all, they clearly understand the possibilities of Y.

 

[Mountainbear]

The reason the other vendors didn't offer Y,

"It would be cheaper now, cheaper over time,.."

Meaning less money for them.
All vendors were aware of your willingness to consider other offers.

" I have made it clear to all the vendors that if they have other ideas on how to go about this project other than our X requirement, I am open to listening to them"

It would seem to me vendor 4 either has a reason to sell option Y (excess inventory in stock), he is looking for follow up work, or he is just a nice guy.
Vendor 4 offered a solution that will cost less than you anticipated paying so even without re-tendering you have saved money.
The other thing to consider is, if the other vendors did not mention this less expensive option can you trust them to keep your best interest in mind down the road?
If he is a reputable Vendor I would go with Vendor 4 and be done with it.

 

[gbaughma]

If he is a reputable Vendor I would go with Vendor 4 and be done with it.

Unless the other vendors, which you may have relationships with, respond with "He asked us to bid on X, and he bought Y... we would have bid on Y if that's what he wanted..."

It boils down to this: If you're considering Y, then you should get prices for Y from the vendor.

You've changed the playing field; make sure the other vendors are playing the same game.



Just my 2¢

"What the captain doesn't realize is that we've secretly replaced his Dilithium Crystals with new Folger's Crystals."

--Greg

http://parallel.tzo.com

 

[Noway2]

The bottom line as I see it is: give them a shot at quoting Y. You have nothing to lose by doing so and you may gain.

 

[chippowell]

This is good feedback and a great conversation. Thank you very much!

To answer a couple questions and make some comments:

I have all the flexibility in the world, and plenty of time. I am not obligated to do anything except try to obtain the best product I can, for the best price, with a vendor with whom I’m comfortable having a business relationship with for years to come.

This business, although lucrative for the vendors and dispersed across a wide geography, is somewhat of a “small community.” All the vendors know each other, while reps and engineers move between companies every few years. It is in my interest – both personally and professionally – to maintain positive relationships with all these vendors.

Y is not necessarily a smaller solution, just a different solution, but not markedly different from X. It’s not a lot cheaper, but somewhat cheaper, and certainly will continue to be cheaper as time goes on. All the other vendors sell and support the Y solution also, but may have various levels of experience with it. I like robertjo24’s example above: “If you had the vendors quote specifics, like provide a analog camera solution with a DVR to monitor and record in a warehouse scenario, and all the vendors quoted a DVR based solution, while the last vendor quoted an IP based solution, then you need to have the other vendors re-quote the Y scenario.”

I’m not sure I completely agree. Suppose the IP solution is not only cheaper, but just plain makes more sense in respect to tying multiple warehouses together, ongoing costs, simpler maintenance and administration across multiple sites, etc.? And suppose all the other vendors DO IN FACT sell and support IP camera/recording solutions, but never thought to offer the customer the option, or even ask if he was interested?

Even so, I’m now leaning toward allowing the other vendors to quote the Y solution. They are all capable of doing it, and ultimately I will be working with the engineers on installation and ongoing support, not the sales reps. I still need to consider strength of the vendor, the quality of their solutions, ability to maintain and support the solution, etc. I fear that my inclination to go with Vendor 4 is an emotional decision, wanting to reward them for being first, for being creative, for being forward thinking. All these things are very strong qualities in their favor, but my job is not to reward vendors, but to find the best solution for my company overall.

Noway2 sums it up very well when he says: “The bottom line as I see it is: give them a shot at quoting Y. You have nothing to lose by doing so and you may gain.”

Any other thoughts, I would be happy to continue to discuss this. I very much appreciate this forum and all your feedback. It has been extremely helpful.

 

[CajunCenturion]

==> I'm not sure I completely agree. Suppose the IP solution is not only cheaper, but just plain makes more sense in respect to tying multiple warehouses together, ongoing costs, simpler maintenance and administration across multiple sites, etc.? And suppose all the other vendors DO IN FACT sell and support IP camera/recording solutions, but never thought to offer the customer the option, or even ask if he was interested?
Because you asked them to provide a DVR based solution, and any proposal that didn't provide a DVR based solution could be thrown out for not meeting specs.

If you ask for a DVR solution and then choose an IP based solution, then you are not being honest with the specifications that you provided to your vendors.


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Good Luck
To get the most from your Tek-Tips experience, please read
FAQ181-2886
As a circle of light increases so does the circumference of darkness around it. - Albert Einstein

 

[chippowell]

But remember, the vendors were all told "I'm open to any other ideas you may have on providing the best possible solution, besides X." And the vendor 4 did offer an X solution, and a Y solution as well.

But again, I think if I decide Y is a better plan, all the vendors should have the opportunity to bid for it.

 

[CajunCenturion]

Oh, I know you said that, but you still haven't answered the question I asked in my original response. How did you solicit the bids, and what did you say in the solicitation? It all comes down to what you said.

Did you say, "I need the solution to meet the requirements of X using a DVR-based approach.", or did you say, "I need the solution to meet the requirements of X by a cost-effective means."? The first case tells the vendor that the DVR-based approach is what you're looking for. It doesn't leave the vendor much leeway in interpretation. The second case afford the vendor the opportunity and flexibility to provide what they think is best.

I haven't seen your request nor the bids, so I can only guess, but it sounds like you asked for solution in terms of the first option, but now wish to evaluate the bid in terms of the second.

I can tell you it's not something I would ever do. Since new information has come to light, I would produce an amended set of specification and provide it to all bidders. Anything less is not providing the vendors a level playing field.

--------------
Good Luck
To get the most from your Tek-Tips experience, please read
FAQ181-2886
As a circle of light increases so does the circumference of darkness around it. - Albert Einstein

 

[robertjo24]

hiyosilver333, good point.

While we are responsable to our companies to get the biggest bang for our buck, vendor relationships are important.

It seems as times get leaner, this is falling to the wayside.

 

[harebrain]

This all begs the question that when you send out a request for proposals, state the problem, not the solution even if you have a particular solution in mind. Then vendors will respond with technical solutions and prices, and you won't create a dilemma like this.

 

[gbaughma]

when you send out a request for proposals, state the problem, not the solution

Mmm. Yes and no.

If I am sending out a RFP for a new server, I already know the specifications. I wouldn't say "I want a new terminal server; what do I need?" I'm looking for a price. By the time I go out for bid, I've already researched what I need.

If I'm sending out a RFP for a new phone system, I know how many stations I want and what features I would like; I wouldn't specifically say it has to be "x" brand.



Just my 2¢

"What the captain doesn't realize is that we've secretly replaced his Dilithium Crystals with new Folger's Crystals."

--Greg

http://parallel.tzo.com

 

[lionelhill]

also if you're looking for a phone system but you issue too vague a tender, you could end up having to justify not using carrier pigeons.

 

[strongm]

Carrier pigeons?

http://www.ietf.org/rfc/rfc1149

http://www.ietf.org/rfc/rfc2549

 

[lionelhill]

strongm, Strewth! That made my day.

 

[MadMichael]

In real life, not very reliable, 55% packet loss:

http://en.wikipedia.org/wiki/IP_over_Avian_Carriers