Unbundling Large Contracts to Advance Vendor Diversity

govlab.hks.harvard.edu

Unbundling Large Contracts to Advance

Vendor Diversity

Procurement Excellence Network (PEN) Training

August 9, 2023

Welcome! Please

post in the chat:

Your name & what

government you

represent.

1. Has your government ever broken up a large contract

into smaller ones to give small and diverse firms a better

chance to compete?

a) Yes, we've done this multiple times

b) Yes, but only once or twice

c) No, we haven’t tried this

d) Unsure

2. Who is leading the push for equity in procurement and

contracting in your government?

a) Elected leaders

b) City staff

c) Vendors

d) Community-based orgs

e) Changes in law

f) Media or press

Icebreaker

Instructions:

Take 2-3 minutes to

complete the Zoom

poll on your screen

Agenda

Introduction & Icebreaker

Strategies for Unbundling

Government Case Study: City of Phoenix, AZ

Small Group Discussions

Feedback Poll & Wrap-Up

Small and diverse businesses face significant barriers

to contracting with government

Common Challenges:

1. Difficulty navigating confusing websites to

find opportunities

2. Long RFPs with unclear submission

instructions and complicated requirements

3. Insurance and bonding requirements that

require significant financial capital

4. Lack of targeted outreach

5. Vendors aren’t paid on time

6. Size and scope of solicitations that are too

large to take on, or with requirements that are

too hard to meet

Small and diverse firms have a much

harder time bidding on and

winning government contracts. As a

result, these firms receive far fewer

contract dollars than expected based on

their availability.

Impact:

“I don’t believe that small businesses have much of a

chance on most bid opportunities”

Scenario #2: Connect with Every Home in

Countyville

With the county council's commitment to

transparent communication, Countyville seeks

a vendor to spearhead a door notification

project. This initiative involves graphic design,

printing, and widespread distribution of mailers

to every doorstep across the county's diverse

neighborhoods.

Scenario #1: Transform the Streets of

Citylandia

Are you ready to be part of history? Citylandia,

a thriving metropolis known for its vibrancy, is

seeking a skilled contractor to lead a

repavement project spanning across its four

distinctive downtown quadrants.

The sheer size and

scale of this project

is too big for one

small vendor.

A lot of complexity in the

project for one small vendor

to comprehensively address

all of these areas of

expertise.

The Opportunity: Unbundle Large Contracts to Advance

Vendor Diversity

✓ Encourage more businesses – especially small and diverse firms – to compete

on contracts previously out of reach.

✓ Keep tax dollars from a public contract in the local economy and invest in

historically disadvantaged businesses.

✓ Create an opportunity for businesses to explore working with the government

and to scale up their business if they want to grow.

✓ Reduce risk by spreading responsibilities across multiple vendors.

✓ Foster competition and innovation by increasing the number of bids.

Group Discussion: What potential barriers or

challenges do you see with unbundling?

Please post in the chat or come off mute:

1. Do these barriers/concerns resonate? What other thought do

you have?

2. How have you addressed these challenges? Or how might you

address these challenges?

• Administrative complexity: need to manage multiple contracts, potentially

monitor different timelines, and manage multiple contractor relationships.

• Increased costs: prices could go up if the government is unable to take

advantage of economies of scale.

Strategies for Unbundling

Criteria for Candidates for Unbundling

When starting a new solicitation or contract renewal, ask the following questions – answering "yes" is an

indicator that your contract might be a good fit to unbundle into smaller opportunities

Contract Size

Is this one of your largest

contracts?

Performance History

Have you had issues with this

service, good, or product?

Contract History

Has this contract been awarded

to the same vendor year after

year?

Contract Interest

Has this contract previously had

a lot of interest and

competition?

Contract Subcontractors

Could the contract include

subcontractors?

Available Vendors

Do many qualified vendors exist

for this contract or service type?

Best Practices for Unbundling Contracts

Use the Right Method

Decide the best way to break up the

scope of work - this may be by

location if the contract spans a large

geographic area or by responsibility if

the contract contains different

activities or scopes.

Build Internal Buy-In

Bring key stakeholders on board

before you get started, especially

if unbundling will impact their

services or workload.

Build Vendor Capacity

Invest heavily in support for new

vendors so they are prepared to

respond to and win unbundled

opportunities when they arise.

Subcontracting and benches as

alternatives

When might you want to use

subcontracting versus a bench?

• Subcontract: Large project with a

defined scope and want a single

vendor to oversee all work, like

constructing a new building.

• Vendor Bench: Project with

anticipated need but undefined

scope or timeline, like standing

repairs to a building that might

arise at any point.

Conduct Vendor Outreach

Allocate resources to targeted

outreach efforts,ensuring vendors

that might not have worked with

the government before are well-

informed about the

unbundled opportunities.

• Charleston unbundled its existing contract for

janitorial services for City buildings into two

separate RFPs

• Reduced size and scope for each RFP

• All locations requiring special requirements like

background checks contained in one RFP

• Creating two distinct RFPs allowed the City to

have separate evaluations, dates to submit

questions, and dates to submit proposals

• Approach resulted in more opportunities for

small and diverse firms

o Both RFPs awarded to an MBE

o General Locations RFP awarded to a new

vendor

Government Example - RFP in Charleston, SC

RFP #1 for General Locations

RFP #2 for Special Locations

Government Example – Unbundled Janitorial Services

• This City unbundled location options within

its upcoming RFP for janitorial services for

City buildings

• Developed nine subgroupings of locations

based on geography, square footage, and

special requirements

• Respondents will be able to bid on one or

multiple location groups

• Incentivized local respondents by including

workforce goal of hiring local staff in

evaluation criteria

Location Groups Will Be Included in RFP

Government Case Studies

Phoenix, AZ unbundled landscaping contract that

provided services across 400 locations

Prior to 2021, the City had been giving the vast majority of those sites to just two vendors (one of whom

earned $19M out of $24M contract). After unbundling, the City received 2x as many responses and two

contracts were awarded to small, local businesses.

Phoenix – Landscape Solicitation Interactive Map

Small Break-out Group Discussions

We’ll now take 10 minutes in break-out rooms to discuss

how your government might begin to (or continue to)

unbundle large contracts:

1. What is a specific contract your government could

unbundle to advance vendor diversity?

2. How would you split that contract up? (e.g., by

geography, by activity, or by scope)

3. What is one challenge you anticipate? How might you

address that challenge?

4. Which stakeholders would you need to get on board?

Discussion Questions

There will be a GPL facilitator in each room.

Feedback Poll

Unbundling Large

Contracts to Diversity

Your Vendor Pool

Additional Resources on Equity in Contracting

In this quick read, we talk about the

basics of unbundling, how to prioritize

contracts for unbundling, and additional

best practices.

Using Government

Procurement to

Advance Racial Equity

This how-to guide highlights innovative

procurement strategies that can help

governments increase investments in

historically marginalized communities and

deliver services more equitably.

Surveying Your Vendor

Community to Assess

Satisfaction and Identify

Pain Points

This how-to guide explores how to design

and implement a vendor survey and

highlights concrete examples and promising

practices in survey implementation across

different governments.

• Post a question on our Community Conversations

board or answer someone else’s

• Have additional questions? Sign up for 1:1 office

hours with a GPL expert to discuss how to begin

unbundling in your government

Continue the Conversation on PEN

I could use additional

support designing a

strategy to unbundle

selected contracts.

How can I scan citywide

contracts to look for

unbundling opportunities?

Sign-up at https://gplpen.hks.harvard.edu/contact-us/

or send us an e-mail at gplpen@hks.harvard.edu

Upcoming Events

Tuesday,

September 19,

1-2pm ET

Wednesday,

October 11,

1-2pm ET

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senior leaders and customer departments take note.

Join us for a training breaking down what you need to know

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evaluate if your purchasing thresholds are right for your

jurisdiction, provide strategies for creating purchasing

thresholds that maximize efficiency, and share examples of

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to better fit their needs. And if you do decide to adjust your

purchasing thresholds, we’ll cover best practices for making

the case to your governing authority.