Case 8 Rfq
Part 1 – Executive Summary
The subject materials have been selected for competitive bid, the RFQ has been issued, and responses from nine potential vendors have been collected. The variations in the bid responses are staggering, causing concern for the validity of the RFQ process. Should we decide to proceed with the lowest bidder, we would do so at our own risk, as the bidder may not have understood the requirements of fulfilling the contract. I propose that we re-evaluate the RFQ documents to ensure that the bidders have a consistent understanding of the Statement of Work. This is the best way to offer our company the value created by the competitive bid process.
Part 2 – Issue Identification
We are midway through the process of competitively bidding flap shrouds and equipment …show more content…
Typically, we would expect to see a variation of approximately 20% between the high and low bids. The fact that the low bidder offered a savings of 73% relative to the high bidder brings the entire RFQ process into question. If all of the bidders had the same understanding of the requirements, how could we have received bids so far apart? Even more concerning is the fact that the incumbent supplier is the highest bidder. We would expect that the incumbent would have the greatest understanding of the requirements for this job. If the current vendor will not reduce their price at all, it is a questionable decision at best to believe at face value that the low bidder can provide it for 73% less. It is also important to note that materials typically make up approximately 50-55% percent of the total manufacturing costs in Aerospace. Therefore the low bidder is offering us the entre job for less than the material cost from the current vendor. It becomes evident that the low bids in this RFQ do not have the same understanding of the requirements of this job that the higher bidders
The subject materials have been selected for competitive bid, the RFQ has been issued, and responses from nine potential vendors have been collected. The variations in the bid responses are staggering, causing concern for the validity of the RFQ process. Should we decide to proceed with the lowest bidder, we would do so at our own risk, as the bidder may not have understood the requirements of fulfilling the contract. I propose that we re-evaluate the RFQ documents to ensure that the bidders have a consistent understanding of the Statement of Work. This is the best way to offer our company the value created by the competitive bid process.
Part 2 – Issue Identification
We are midway through the process of competitively bidding flap shrouds and equipment …show more content…
Typically, we would expect to see a variation of approximately 20% between the high and low bids. The fact that the low bidder offered a savings of 73% relative to the high bidder brings the entire RFQ process into question. If all of the bidders had the same understanding of the requirements, how could we have received bids so far apart? Even more concerning is the fact that the incumbent supplier is the highest bidder. We would expect that the incumbent would have the greatest understanding of the requirements for this job. If the current vendor will not reduce their price at all, it is a questionable decision at best to believe at face value that the low bidder can provide it for 73% less. It is also important to note that materials typically make up approximately 50-55% percent of the total manufacturing costs in Aerospace. Therefore the low bidder is offering us the entre job for less than the material cost from the current vendor. It becomes evident that the low bids in this RFQ do not have the same understanding of the requirements of this job that the higher bidders