Sending Out RFQ's for a Transit Agency? Your Bids May Surprise You!
Recently, I submitted a Bid in response to a Request for Quotation (RFQ) from a particular Transit Agency. Our company priced our product fully 50% higher than previous bids for similar material. In talking with other non-competing suppliers, I am hearing similar stories from them. Bids are coming in at higher prices everywhere and for everything.
Wish I could be more specific, like naming materials and Agencies. I just cannot.
But that's not as important as the trend. I believe this is ultimately going to result in bad news for Public Agencies. Prices are going to go higher. Supply at those higher prices is going to be harder for them to find. Why? Several reasons.
-Suppliers are finally beginning to assign a cost to the voluminous and over-complicated Bidding Documents. In other words, Agencies and their Consultants are "Scaring their Bids". Take, for example, my Bid noted above. The Bid Form alone totaled over two dozen pages! Many of the forms required information that was frankly obtrusive. As is typical with any government agency, these things are not getting simpler. The cost in time and money to do business with these Public Transportation Agencies is out of proportion when compared to other customers, which leads me to the fact that:
-Class One Railroads are buying things like never before! Everybody that I talk with is crazy busy! I know I am, which is one reason my posts are more infrequent. So, if you were making widgets as fast as you can, and one customer is buying almost everything you can make, but here comes another customer who requires this-that-and-the-other to be happy, you will ask yourself, why put up with the hassle here? Case in point: For some time, railroad material suppliers have filled their production schedules with work obtained by winning bids from Agencies. Suppliers put up with the associated aggrevation in order to cut overhead with full production. Now, Class One Railroads are claiming all of that once-excess production. And, I don't know any supplier who would rather deal with an Agency than a Railroad.
-Not only that, but US Suppliers are being courted by foreign concerns! And these people are more than willing to purchase a quality US-made product without anywhere near the problems that must be dealt with when working with a domestic concern. That means nothing but more pressure on production.
Here's what it boils down to: Production capacity is not increasing; production demands are increasing. The result will be, believe it or not, that suppliers can begin to select their customers!
It is already happening. Our Bid resulted in a call from the Agency wondering why our Bid was so high. We explained. Believe me, we explained. If that Agency could read between the lines, the message was that we just didn't want the problems that came with doing business with them. And, we are running pretty close to capacity! Bottom line: It's going to cost you.
So what will happen? No-hassle Railroad customers will be the first to be supplied. Customers whose adversarial RFQ's and Bidding Documents look like CYA documents for potential lawsuits will not. Should be interesting.