The following is a general description of key components of a Request for Proposal. The discussion below also includes explanations of important contracting words, phrases and concepts.
This summation should help the reader better understand the contracting process and should make RFPs easier to understand for district officials contemplating privatization. A good RFP, in turn, will make the contract easier to write and will help produce a more effective contract monitoring process.
Several points should be made about an RFP before considering its contents. An RFP and the subsequent bidding process usually involve vendors who are for-profit businesses, but not always. Iron Mountain Public Schools in the Upper Peninsula of Michigan contracts for food services from Dickinson Area Catholic Schools, the local Catholic school system. Moreover, one “not-for-profit” bidder is implicitly present in all school district privatizations: the school district employees who currently provide the school support service. As a practical matter, they are usually “competing” with potential private vendors as soon as the district’s intention to privatize is announced, since school employee unions will often offer wage, benefit and work-rule concessions to entice the district to forgo competitive contracting with private firms.[xxxviii]
Another point: An RFP must be informative. A school district uses this document to tell vendors what it wants and when. The instructions are often very detailed, but a well-written RFP does not include language so restrictive that it unnecessarily limits the number of vendors who might bid on a contract.
For example, an RFP that unrealistically limits the time in which a contractor is expected to take over an entire service may exclude most bidders from participating in the process. An experienced vendor has a good sense of how much time is needed to ensure a smooth transition. Demanding a turnover of school transportation responsibilities in just two months when the vendor knows this to be unrealistic will result in failed attempts to secure a capable vendor.
[xxxviii] Another possibility is that the school district’s employees will be invited to submit a formal bid in the competitive contracting process. Such an approach does occur in the privatization of other government services, such as regional transit, but it is uncommon among Michigan school districts. One challenge in any such public-private competition is ensuring that the cost of the public employees’ provision of the service is fully accounted for, so that the district realizes genuine savings and the public employees are bidding on a level playing field with private contractors. For instance, the cost to heat a school workshop where school bus repairs are performed would need to be included in a public school transportation employees’ bid, as would other service-related capital costs that may well be hidden in the district’s current accounting scheme.