Patrick Pearson, Government Banking

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RFPsBest Practices

• Presented by
• Patrick Pearson, Government Banking
• David Bass, Consultant

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Reasons Not to Issue a RFP

• Dont know where to start.
• Dont have the time or staff.
• Its a lot of work.
• Weve been with our bank for 20 years, and were
  happy.
• We dont get charged any service charges

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Why Go Out To Bid?

• Mandated
• Services Available
• Pricing Comparison
• New Products Available in the Marketplace

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Questions For You

• Why issue a full blown RFP?
• How about a pricing RFP?

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Bank Considerations

• Is a local branch within City limits important?
• To you?
• To City Council?
• Why?
• Do you consider a banking office the same as an
  office in a grocery store?
• Why or why not?
• Is it important that the Bank have a separate
  Government Banking Division?
• Why or why not?

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State/Bank Relationship

• Is it important that the Bank under consideration
  be able to make LAIF transfers directly?
• Why?
• Is there an advantage to working with a Bank that
  has a relationship with the State?
• Why?

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Seven Primary Steps

• Set Objectives
• Establish Review Team
• Determine Scoring Methodology
• Write and Issue RFP
• Evaluate, Score, Award
• Implementation Process

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Set Objectives

• Background on entity history, size, current
  services
• Define current processes and procedures
• Include sample volumes
• Include analysis statements
• Identify challenges and hot buttons
• E.g., security, fraud, efficiency
• Clearly specify objectives
• E.g., enhance or add controls to
• check issuance improve investment
• return consolidate accounts, reduce costs,
  new
• technology
• - Duration of contract

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Set Objectives

• Whether you are focused on improving your
  efficiency, saving money, preventing fraud or
  finding the best vendor with the best services,
  the process of writing and evaluating proposals
  starts with a picture of your current process and
  a clear view of your objectives.

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Establish Review Team

• Outside Consultant
• Internal Team
• Number on team will vary
• Select early in process
• Let them participate in entire process
• Agree upon scoring tools and values

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Determine Scoring Methodology

• Create a Scoring Template or Matrix based upon
  the objectives you set
• Assign values or weights to the objectives in
  line with their importance to you
• If primary objective is to maximize amount of
  funds available for investing, assign this
  highest value
• Determine your scoring methodology before
  evaluating responses
• Criteria for awarding points to non-optimal
  answers
• Mandatory criteria

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Determine Scoring Methodology

• Sample Scoring Sheet

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Gather Information

• Gather latest information about bank services and
  processes, matching relevant services with your
  needs and objectives prior to issuing RFP
• Meetings with banks
• Industry functions
• Speak with peers
• Provide information about your processes,
  challenges, and objectives that vendors can use
  to create a proposal that is easier to evaluate

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Write Issue RFP

• Writing the RFP
• Many elements of the RFP can be boilerplate
• Customize RFP based upon your current servicing
  needs and objectives
• Include a pricing sheet
• Pre-Bid Conference
• Include RFP response guidelines
• Establish dues dates and timeline
• Questions and clarification process and time
  frame
• How do you want the response to be ordered
• State Conditions for Termination and Contract
• Requirements
• Paper versus electronic

Request For Proposal
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Youve Issued the RFP, now what?

• Have you considered . . . .
• Having each Banker visit your office and
• See your operation
• Analyze your operation
• Work with you
• You/banker ask each other questions

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Services

• Lockbox
• Utilities
• Business License
• Bill Consolidator
• Remote Deposit
• Eliminate trips to bank (employee liability)
• Reduce/eliminate armored car costs

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Bank Products

• Are you aware that your Bank offers
• Remote Deposit
• Sweep
• Controlled Disbursement
• Merchant Services
• Pay Button for your web site

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Evaluate Score - Award

• Evaluate Proposal Responses
• Independent evaluations versus group versus
  outside consultant
• Involve peers
• Separate pricing from proposal responses
• Ability to perform
• Cost
• Contact references
• Inquire on relevant issues
• In RFP ask for lost customers

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Evaluate Score - Award

• Pricing Review
• DO NOT attempt line by line price comparison
• Complex due to technology and methodology
• Best Price is not necessarily the lowest price.

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Evaluate Score - Award

• Post bid presentations
• Provides opportunity for hands-on demonstrations
  and clarification
• Allows vendors to highlight proposal
• Timeframe
• Decision and Notification
• Making decision
• Announcing decision

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How Pay For Services

• Soft dollars?
• Hard dollars?

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Implementation Process

• Schedule meeting with new vendor soon after
  awarding
• Discuss contract at this time
• Obtain any required paperwork
• Designate key contact(s)
• Hold periodic meetings during implementation
• How often?
• In person or conference call?
• Follow up/through
• Who will deal with LAIF, County, State?
• Establish basis for on-going meetings
• Quarterly, semi-annual or annual
• What are your expectations?

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After ImplementationEstablishment of Relationship

• Banker Visits
• How often?
• Discussion of new products?
• Review analysis statement?

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Questions