Outsourcing Vendor Red Flag #3: A Bid Is Inaccurate Or Suspiciously Low

If your gut is telling you something is not right, that’s a great place to start. However, strategies exist to substantiate a bid’s value based on more than the “sniff test.” Ideally, you have protected yourself against just such an occurrence by providing potential vendors with a detailed request for proposal (RFP), including accurate, trial-specific information and ample time for communication with the vendor.

Also, asking about rates is crucial. It allows you to conceptualize the plan in terms of something other than dollars and to close in on “effort.” It is one thing if a bid is lower because the vendor will complete the same amount of work for 75% of a competing company’s rate. But if the vendor’s rates are higher and the bid still is much lower, you should be wondering just how much work they actually propose to perform. Asking about rates also gives you an idea of whether the activities the vendor proposes are calculated appropriately.

Finally, change order management and mitigation begins with the sponsor initiating the conversation around change orders and setting a clear, articulated point of view early in the relationship. But beware that establishing clear change order language in the contract is no replacement for a direct and open conversation.