{"id":3559,"date":"2021-02-15T06:28:38","date_gmt":"2021-02-15T11:28:38","guid":{"rendered":"https:\/\/www.certitrek.com\/nlpa\/2017\/02\/15\/standard-terms-and-conditions-in-your-rfp\/"},"modified":"2023-11-30T11:09:03","modified_gmt":"2023-11-30T15:09:03","slug":"standard-terms-conditions-in-your-rfp","status":"publish","type":"post","link":"https:\/\/www.certitrek.com\/nlpa\/blog\/standard-terms-conditions-in-your-rfp\/","title":{"rendered":"Standard Terms and Conditions in Your RFP"},"content":{"rendered":"

A member recently asked me: \u00a0\u201cWhen including your standard terms and conditions in your RFP, how flexible should you be with considering supplier exceptions to those terms and conditions?\u201d<\/p>\n

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Well, my answer to this question is similar to my answer to many procurement questions I am asked: \u00a0\u201cIt depends.\u201d<\/p>\n

It depends on the market.<\/p>\n

If there are a large number of qualified suppliers in the market, you can afford to strictly require agreement to your standard T\u2019s & C\u2019s without exception as a condition of doing business. \u00a0In other words, you\u2019d include your standard T\u2019s & C\u2019s in your RFP, require suppliers to acknowledge that they will agree to those terms if awarded your business and disqualify any suppliers whose proposals do not include that acknowledgment or that agree to certain terms but take exception to others.<\/p>\n

However, if there are a limited number of qualified suppliers, you probably want to be more flexible. \u00a0You may end up with a substandard supplier just because of legal inflexibility. \u00a0That\u2019s not to say that you instead ask suppliers for their terms, and you agree to those. \u00a0But, it is to say that you should include your terms, ask for the acknowledgment that suppliers will agree to those terms if awarded your business, but not threaten disqualification.<\/p>\n

Instead of disqualifying bidders who take exception to your terms \u2013 or ignoring the fact that a supplier has taken exception \u2013 you should treat supplier responses to the T\u2019s & C\u2019s acknowledgment as you would other variables such as price warranty, lead time, payment terms, etc. \u00a0You should include \u201cagreement to standard terms and conditions\u201d as one of your supplier selection criteria<\/a>\u00a0(ideally under the \u201cRisk\u201d category) and score each supplier\u2019s on your supplier scorecard<\/a>.<\/p>\n

Let me describe this process in a little more detail.<\/p>\n

As I teach in our online course, \u201c7 Critical Steps of Effective Supplier Selection<\/a>,\u201d you would award a maximum raw score of 100 points for the \u201cagreement to standard terms and conditions\u201d criterion if a supplier agreed to all of your standard terms and conditions without exception. \u00a0And you would have a method for awarding fewer points to suppliers who do take exception. \u00a0Say, for example, you have 20 articles in your standard terms and conditions. \u00a0You would deduct 5 points from the maximum raw score for each article that a supplier doesn\u2019t agree to as-is. \u00a0Now, if some terms \u2013 like indemnity, the limit of liability, etc. \u2013 are more critical than others, perhaps you assign different point values to each term as long as the total of point values for all terms adds up to 100. \u00a0That can get complicated and would require collaboration with your legal team. \u00a0But it may be necessary. \u00a0I\u2019ll let you decide how to handle it. \u00a0I just wanted to give you an example of how you could do it.<\/p>\n

I absolutely feel that suppliers\u2019 willingness to agree to your organization\u2019s standard terms and conditions should be factored into your supplier selection decisions. \u00a0Negotiating those terms can take time, involve expensive resources (like lawyers), and allocate more risk to your organization. \u00a0All of those things have a negative business impact and, therefore, should be considered when deciding which supplier is the most attractive out of a group of suppliers.<\/p>\n

So, considering suppliers\u2019 willingness to agree to your organization\u2019s standard terms and conditions is recommended for any critical proposal evaluation process, whether you take an instant disqualification approach or a scoring approach.<\/p>\n

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