Help Me With Sign California Banking RFP

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so I'd like you to do me a favor here for a second think about something that used to be done in Canada quite commonly but that we don't do in Canada anymore there's a lot of things that could be let me let me give you some of the things that I have thought of when I thought about this we used to remove tonsils when I was a kid we go to elementary school and you'd walk in the class and a teacher would always say Billy won't be there for the next seven days because he's having his tonsils removed and you'd say huh lucky Billy well I can't I have tonsils that are bad you know all the ice cream he can drink either drink and you know seven days away from jail I mean elementary school and but then you think about that as an adult and you realize you know some kid had to go to the hospital for a couple or three days there's some pain and suffering the healthcare system incur to cost parents may have had to take a week off of work to look after this kid and all the while knowing that it wasn't really an effective cure anyway so at some point somebody said you know what maybe we shouldn't do what we've always done we should do something different right so there's an example of something we used to do in Canada a lot which we don't do very often now I can't think of more than one or two kids that I know of today that have had their tonsils own something else we used to do a lot in Canada is drive without seatbelts anyone remember doing that January 1st 1976 Ontario was the first province to legislate the mandatory use of seatbelts about a decade or so later all of Canada had followed suit but I remember being an 11 year old kid and we were leaving Manitoba to go see my relatives in Ontario and Canora just over the border and as we're approaching the border this would be like June 76 my dad said boys find the seatbelts think about that find the seatbelts say that's your kids today in the car so I take my skinny 11-year old arm and I go digging underneath the back seat of that 1971 Plymouth Fury 3 because that's where the seatbelts were from the day of manufacture they had never been brought in outright and so you find one end over here and one end over there and you'd click them together with about four kids in that one seatbelt and you were you were compliant there was gonna be no fine at the border if the opp were checking right so you can see we've got legislative change that caused us to do things differently think of all the pain and suffering and the time and money and the cost to our economy that didn't happen because of that legislative change right now we have over a 90% compliance rate seatbelt use still some people who don't use them but here's another thing we use cartoon characters to sell cigarettes if you don't believe me just Google Fred Flintstone cigarette commercial and you'll see some really interesting stuff I was able to buy these the other day these are puppy candy sticks but in my day they were puppy candy cigarettes you look like you'd like a smoke here you go sir but social pressures caused us to rethink this and then the advertiser said maybe it'd be better if we got Freddy Flintstone flogging vitamins instead of smokes see things change things can change even big things but one thing that hasn't changed that we still do in Canada as we hire experts based on a low price right what we should be doing is hiring experts based on the most qualified person or firm available okay so what do I mean by experts let me start explaining myself here architects engineers lawyers accountants management consultants ad agencies market research firms etc right so you don't want to hire the cheapest if you are not-for-profit a private sector firm or government what you want to do is hire the person that's going to bring the best solution to you right we don't need architects on staff typically what we need is once in a lifetime or three times in a lifetime we need it we have a big project read an architect or we need an ad campaign or we have some market research we need to do so we go and access that expertise that we don't need in-house right so how is it done today well typically what happens is a big firm or a government agency which could be a local municipality or the federal government or a not-for-profit will issue what's called a request for proposal right this is exciting stuff I know but we'll get to some really good stuff so a request for a proposal could be a 10 20 50 hundred page document that says here are the variables that we think we need to buy and so tell us why you can deliver those variables and give us your best price while you're at it okay so what we should be this means is everybody respond to this document writing a proposal in response to a request for proposal is going to be focused on the only critical defining factor that will determine the award of that contract which is low price innovation goes away and value goes away because you have to interpret the project as the least viable smallest cheapest product or project right instead what we should be doing was using a methodology called qualifications based selection so when qualifications based selection you don't consider price which sounds counterintuitive doesn't it if we want to get good value shouldn't we be looking at price I'm telling you know we shouldn't be not when it comes to professional services and experts okay when you when you pay a fair price through a QBs or qualifications based selection methodology what you do is you encourage the respondents to provide you innovative solutions and to drive a value because they don't have to worry about being the lowest cost you've probably told them what your budget is and now they come back and say here's how I can drive value into that budget you still with me good okay am I saying an RFP is bad request for proposal is bad no it's got its place in society if you want to buy commodities that where you can define the variables like pens or pencils go to town so pens for example you might say I want this brand this color ink this many in a box this many boxes in a case this many case is delivered to this location at this time on this state free on board delivered what the only variable remaining is price right if you can deliver exactly this who ever can deliver to that the best price wins I'm perfectly fine with that the challenge is that when you're hiring experts the solution is complex it's high dollar value and it's customized right so for example one of the reasons you might hire a consultant is because you've got a high staff turnover okay so you know the problem but you don't know the cause of that problem so you can't even determine what the solution is going to look like because your high staff turnover might be an IT problem and might be a compensation problem it might be a leadership problem it might be an ergonomics problem it could be a supervisory skills problem it could be a lot of things so what you need to do instead of saying I want someone to do this you need to say I want someone who's seen this problem in my industry before I can come in and fix it for me so show me why you've done this before and why you're the most qualified to take care of this right it's a slightly different approach but you're sitting there thinking okay Josephine and Joe average are sitting there saying while Cal why should I care I'm not a procurement person I'm not a government minister maybe I don't volunteer on the board but some of you will some of you will work for government some of you will work with a not-for-profit maybe as volunteer a paid person some some of you will work in a company that does use an RFP so what can you do and why should you care well let's talk about why you should care first you should care because of your safety so what you see here is the Auditor General of Ontario special report and winter highway maintenance from April of 2015 and the Auditor General was asked in Ontario to provide this report because things weren't going really well with winter driving in Ontario so the auditor's report said that when the service to clean roads keep the snow off de-ice them because you don't want to select the driving roads especially high was in Canada in the winter right if they're not well taken care of they can be very dangerous and the problem was they're having service failures and they linked it all the way back to the way that the contractors were hired in fact the report says that they actually didn't not nearly adequately assess the ability of the vendors to actually do the work the work points simply to the lowest price vendor so what happens when you hire the person to clean highways in the winter with the lowest price they're probably have the least amount equipment the wrong equipment the poorest train staff etc like you don't get low price for nothing so even further on several pages in the report they went on to say that the tendering process caused us to choose unqualified vendors which created service failures which created road deaths I've never seen a report linked procurement to service failure to death more clear than this one and I encourage you to go find a report and read it so if safety if your own skin is not important to you how maybe your money is important to you right we think that when we hire people based on a low price that that's how we're going to keep our cost down keep our taxes down because a lot of this procurement is done by government at all levels right and you are the buyer you're handing your taxpayer dollars over your money to the governments to say go buy this on my behalf let's look at a typical and scary process for hiring an architecture firm this goes back about a year and a half real story told me by a real architecture firm in Western Canada it was a government agency that contracted out the contract or they did went through a process to hire an architecture firm to do an expansion on a building because we have fee guides for architects in Canada you can pretty easily tell what a contract should be worth for architects in Canada in this case it was a $50,000 project right so anyone who in the industry would have said what are the fees going to be they were said that's gonna be around 50 grand 48 52 something like that the challenge was that the RFP required pricing so pricing is customized it's complex and when you hand over a proposal saying I will do this work for this amount of money you've just handed over a legal documents the courts have told us that clearly so you're binding yourself and committing yourself to do work for a certain dollar value but you're kind of guessing at what the projects really going to be like so you actually have to start almost figuring out the problems for free just so you can give them an estimate that takes a lot of time in this case it cost $20,000 for this one firm to write the proposal in response to an RFP which they hope to win and get $50,000 worth of work now that $20,000 the retail value if they'd sold that proposal to somebody they would have charged them $50,000 okay now 38 firms responded with proposals who's good at math 38 firms times $20,000 because that's the level of effort you would have had to put in to be complying means 760 thousand dollars was spent by the architecture community so that one of them could get 50 thousand bucks but it gets worse because there are procurement costs as well someone's got to write the RFP in order to issue it they've got to manage 30 eight proposals coming in which becomes very expensive you got to come up with the selection committee you got evaluate them interview defend them etc so what happened in order to make a decision about a fifty thousand dollar contract eight hundred thousand dollars was jammed of expenditure was jammed into our economy now did anybody get an invoice for eight hundred grand not a single person does the mean doesn't mean the expenditure was not real it's real it's called overhead in an architecture engineering management consulting ad agency because every year when they're doing the budget these firms sit down and say how many proposals were gonna have to write in order to stay in business well they each cost us 20 grand we're gonna have to write ten of them to stay in business because we'll win one in four so we're gonna spend two hundred thousand dollars this year writing proposals so we build that into the hourly rate so every time you pay an architect engineer management consultant that agency you're paying for part of their your money goes towards paying for proposals they wrote and lost for some other procurement group that's not a lot of fun right you got to remember you are paying for this inefficiency because I hear a lot of you know sometimes the procurement community will say hey Cal that's just the cost of doing business as an architect or an engineer you guys got to eat that cost I'm saying they're absolutely eating the cost and then sending it right back to you so as soon as you realize that you're inefficient buying process is costing you money then maybe there's an incentive to change so when I'm saying we should change the RFP process I'm saying that it's to the buyers the buyer benefits the most if we change this because it's just a flow-through cost for the consultants the third reason you should care about this is because you want to live in a better country how many of you want to live in a worse country none of you I don't even need an answer none of you want to live in a worse country there's plenty available if you do but we want to make our country better all the time now take that $800,000 I just Illustrated for you multiply it by a gazillion RFPs every year in this country and you get about by my estimate five billion dollars worth of waste and economic what I call it it's sand in the engine of our economy so what would happen if we pulled even 50% of that waste out say we pulled 2.5 billion dollars worth of waste out of our system what would happen would architecture and engineering and ad agency fees plummet I don't think so I think their fees were just remaining the same but what would happen is they'd be a little bit more profitable they'd have a little bit more room to do things like their own research hire another staff person maybe do some marketing into another country to sell their services elsewhere and bring foreign dollars in right good things will happen if we can pull that waste out of our economy doesn't mean it's gonna get cheaper and that's not the point it's not to make it cheaper to make it more efficient so what can you do again maybe you're not directly involved in this but you probably have opportunities through your lifetime to influence this process we're gonna hire somebody like an architect engineer management consultants how do we do it first thing in when it says let's do an RFP a little bit gets it okay time to work it's not gonna work so what do you do pretend instead instead of hot that you're hiring consultants pretend you're hiring staff okay let's do a little comparison what would you do if you're hiring staff first you would do the vfo Q's bona fide occupational qualifications you would define the requirements of the job and the qualifications required by the best candidate if you hire and staff that's what you do if you're hiring a consultant just do the same thing the person who would be best for this project what kind of qualifications should they have and it probably relates to they've done very similar other projects for other people in a similar sector right it's easy to understand you would share budget info whether you share it or not you have clearly defined the salary range for a new staff person quite often ads for in career sections we'll say between $900,000 these benefits this amount of time off blah blah blah blah blah well do the same thing with a good sultans say it makes sense for us to spend a hundred grand on this project share that information with them usually procurement people cringe in fear when I say share your budget but that's something we have to get over the next thing is shortlist the top three right you looked at all the resumes you looked at all the proposals because the proposal in our resume are almost the same thing and you pick the top three th three that you think could do the job now you got to decide who's going to who's the best to do it so then what you do is your interview them and one of them bubbles to the top at that point you negotiate with them the person who you're hiring you say well we're gonna give it a ninety two grand a year and here's your holidays and your benefits such as that work for you and they say I want ninety four and you settle at ninety three and you're done same thing over here you say look our budget is a hundred grand but if we had a hundred and ten grand could we get an extra thirty percent of value out of bumping it up by ten grand or what if we really only wanted to spend 80 grand could we have a conversation about that and the vendor who's successful will say yeah absolutely and then that's why you get really good value in innovation because you could have that conversation it's not someone blindly forwarding a written proposal trying to guess at the lowest price have you ever heard of a building project that was you know confirmed to be ninety million dollars but when it's done it's a hundred and ninety million that never happens right it's a little bit project that's why so you get more accurate pricing you get fewer surprises and that's a good thing what I just described you is called qualifications based selection or QBs right and here's the dirty little secret since 1972 QBs has been required by law in the United States when hiring architects or engineers for federal government projects so we're 43 years behind our largest trading partner in terms of how we hire professionals and experts I think we can probably improve that right there's a thing called the Brooks Act it's a piece of legislation that says you shall not consider price when hiring architects or engineers for federal government projects so I think what Canada needs to do is first we need to change our philosophy around how we hire these very important people and get them doing important things instead of writing proposals that go on a recycling bin change the procurement culture when it comes to price and how to hire people without considering price and we probably also need to consider legislation like the Brooks Act we probably need a Brooks Act in Canada but the thing we want to do the one thing we absolute will absolutely want to do is make the price based RFP something we used to do in Canada no matter how we do it thank you very much