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Curt Castagna, CEO/President
Government agencies, private businesses and even some non-profit organizations utilize the request for proposal (RFP) process to solicit bids from qualified proposers and select the most qualified entity to deliver a project or service.
Aimed at achieving optimal solutions, the RFP process is utilized for projects that have a complex scope, require comparison and analysis of concrete data, and require a cost estimate from a pool of qualified bidders. For example, an RFP may invite prospective contractors to demonstrate their skills, experience and expertise to complete major airport capital projects, such as the reconstruction of runways and taxiways.
According to its website (https://www.lawa.org/lawa-businesses/lawa-contracting-process), Los Angeles World Airports (LAWA) procures over $500 million a year of goods, materials and services to maintain efficient operation of Los Angeles International Airport and Van Nuys Airport. From asphalt to safety equipment to legal services, many divisions utilize outside contractors to provide specialized products or services to fulfill airport needs.
While each contract solicitation presents a unique business opportunity based on specific goals, there is a standard process by which most airports solicit and evaluate potential contractors:
Ideally, the RFP process enables airport sponsors to detail their specific needs, maintain transparency in the selection process, create benchmarks to measure project success, and determine which entity will deliver the optimal solution.
However, there are several reasons why RFPs may not produce their desired results – costing both airports and proposers valuable time, energy and money. This is especially the case when dealing with service-oriented situations, as opposed to purchasing products and supplies.
First, an RFP evaluates the competency of a responder, but eliminates the opportunity for meaningful and productive two-way communication. Because the RFP process is basically an interview process, there is no opportunity to determine whether a proposer offers innovative ways to enhance the airport’s economic, sustainability or social goals over the long-term.
Second, an RFP may potentially eliminate an airport’s ability to take advantage of new and innovative solutions. Depending on how it is written, an RFP can restrict an organization from receiving proposals offering processes, services and products they have never considered in the past. Limiting those solutions in burdensome procurement policies and legal interpretations limit airports from using private sector investment to improve airport conditions that may benefit both the airport and the community.
For example, an airport sponsor that has leased firefighting services over a long period of time may draft an RFP in a way that leaves no room for alternatives or new ideas. Also, because of the restrictive language contained in RFPs, some qualified proposers may opt not to respond, limiting the creative and profitable solutions available.
Third, completing the long, detailed and arduous RFP process does not guarantee a successful outcome. In fact, a proposer that presents an impressive RFP proposal may not prove the best for the job. Highly capable contractors and lessees may be overlooked if their RFP responses are not as extravagantly or expensively packaged as those submitted by their competitors.
Overall, for airports looking to find the lowest qualified bidder, an RFP may be sufficient. However, for airports pursuing optimal solutions, an RFP is not always the best method. This is because an RFP changes the focus from a forming a long-term strategic partnership to enacting a simple business transaction.
As with many other traditional processes, RFPs should be viewed through a new lens. While this process is intended to provide transparency and a level-playing field for qualified proposers, it often creates barriers to innovation, progress and even profitability.
It is also important to note that the Federal Aviation Administration does not require RFPs, but encourages competition. This paves the way for airport sponsors to evaluate their individual needs and requirements, and follow a procurement method that best suits the current need on a case-by-case or airport-by-airport basis.
Moving forward, airport sponsors should think strategically about their goals and needs, and consider alternatives to an RFP-based approach. In addition, RFP requirements, especially those related to long-term lease agreements, should leave space for creative technical and financial solutions, as well as opportunities for innovative public-private partnerships.
