Industry Watch – Responsibility Standards – How the Public Sector is Getting Smart About Qualifying Contractors.

In an article posted January 29th, 2020, Mark Cavitt writing for the Oakland Press tells us about a new resolution adopted by the County of Oakland Michigan which impacts the way the County awards construction projects.

Resolution 19416 states that performance of public construction and maintenance in the County of Oakland will be performed by Contractors that meets the “Responsible Contractor and Best Value Bid Evaluation Standard for Construction Project Policy“.

The standard states that “best value will be determined by looking at a variety of criteria including: quality, references, experience, proposed schedule, safety, time and cost. The responsibility of a bidder will be determined by looking at: experience on projects of similar size and complexity within the past 5 years, references from owners, credit worthiness/financial condition and bonding capacity among other criteria.

The resolution establishes that the county shall create, “a standard measurement of responsibility qualifications for each, construction project bid.

The resolution goes on to identify the information that may be required as;

  • Experience on projects of similar size and complexity within the past 5 years.
  • References from owners.
  • Credit worthiness/financial condition and bonding capacity.
  • Proof of Insurance and/or Certificate of Insurance.
  • Certification from the bidder that construction workers will not be misclassified.
  • Disclosure of any debarment by any federal, state or local governmental unit.
  • Disclosure of any violations of any federal, state, or local laws, including OSHA/MIOSHA violations.
  • If required by bid standards, ensure there is a criminal record check for each employee the bidder proposes to use on a construction site or alternative security clearances approved by the County.

For far too long public sector procurement has strictly observed the practice of awarding contracts to the lowest “responsible” bidder.  Lawmakers have relied on the interpretation of the word “responsible” as a form of qualifier, but that single word created vagueness and ambiguity that allowed too broad of an interpretation.  Often this interpretation translated into “any” bidder with insurance and a license was deemed “responsible”.  This left public sector works exposed to unqualified or barely qualified suppliers instead of in the hands of “Responsible Contractors”.

The issue that will likely come up from a policy like this will be award challenges from Contractors who fail to meet the County’s standard.

The success of this policy will be tied to establishing clear and objective scoring methodologies.  This can be challenging, so in support the move by Oakland County, I wanted to spend some time discussing the keys to establishing sound and objective scoring methodologies for evaluating supplier qualifications.

Phrasing the question

The number one consideration for ensuring a sound scoring methodology begins with how you phrase your question.

In developing your questions, you have to consider the kind of a responses you will receive.  If the question is so open-ended or so broad that the only way to respond is to write a long paragraph, you will not be able to score that objectively.

To some degree the response to each questions must be predictable.  I don’t mean that you should know the answer in advance of asking the question, I mean that the response must be limited to a few potential answers.

Responses cannot be verbose.  They must be able to be answered succinctly. This is the only way a response can be scored objectively.

The challenge is not to develop a question that is leading. You don’t want to give the answer in the question, but you also don’t want to have to grade an essay.

Consistent scoring methodology

The next consideration in scoring qualifications is to ensure that you are using consistent scoring.  If your scoring requires you to pick a number from 1 to 5 (or any other range), your scoring is not going to be consistent.

As humans, we all have biases.  Our bias comes through no matter what we do to suppress it.  You can be biased by the name of a Company, their logo, the colors of their brand, the words they use, the relationships you have, or whether the person they send for the interview was attractive or not.  With so many potential biases, you cannot expect that you (or any of your Stakeholders) will be able to select a score that objectively reflects the response that was given.

In some cases, we have no choice.  Scores created following an interview or scores of a technical document simply must be based on individual judgement, but scoring the qualifications that determine whether a bidder is “responsible” must be based on formulas.

I use simple algorithms that take bidder’s responses and turn them into scores relative to the pool of responses.  For example if I ask for years of experience and Bidder-A responds with 20 years and Bidder-B responds with 10 years, then Bidder-A gets 100 points and Bidder-B gets 50 points.  It’s a simple mathematical formula that takes the highest (or lowest number (whichever side of the scale is most favorable)) and establishes that number as the baseline by which all other responses are evaluated.

That makes the scoring completely objective and irrefutable.

Weighting each question

I love Kepner Tregoe decision making.  I learned about Kepner Tregoe (KT) when I first got involved with procurement.  I remember seeing people using weight in the evaluations and I wanted to know all about where that came from and how it worked.

Some people say I’m a little too crazy about KT decision making.  I use it for everything.  I made decisions on which car to buy, which neighborhood to live in, and which college to send my daughter to using KT decision making.  With that as context, it should be no surprise that I use KT decision making in my work.

The way I use KT decision making is at the most granular level.  Every question gets a weight.  If I have no basis for adjusting the weight, I spread the weight out evenly.

Every section has a weight and every factor that goes into my final decision is weighted as well.

This makes for a very dynamic scorecard.  If you change the weight of any single part, the whole ranking shifts as well.  This can be good, but it can be bad too.

Weights should be determined BEFORE you see the final scores.  It’s too tempting for you and your Stakeholders to try to manipulate the weights to favor the Vendor you are biased towards.  Resist this by establishing the weight for every question and every section before you see the final scores.  Once you have established the weights lock those in and never let them change.

Closing

I am thrilled to see the public sector procurement catching up to the private sector in ensuring that only the best qualified suppliers are awarded work.  The County of Oakland will be tested in the coming months.  As the County goes forward in adopting this new policy, they will need to ensure that their standards are applied equally and objectively.  If they don’t, they may find themselves back-tracking.  I don’t want to see that happen and I hope that other jurisdictions adopt similar policies in the future.

What do you think?  Is Oakland County on the right track?  Do you use KT decision making in your life?  Tell me your stories.

Thanks for reading.  If you enjoyed this content, please feel free to browse my previous articles and please like, share, comment, and subscribe.  This helps promote my content and is greatly appreciated.

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