|
Supplying Principles and Practices > USPS Supplying Practices Process Step 2: Evaluate Sources > Perform Risk Analysis on Supplier Proposals
Perform Risk Analysis on Supplier Proposals
The purpose of risk management is to examine and control relevant risks to
ensure successful delivery of the project. During the Evaluate Proposals task
of Process Step 2: Evaluate Sources, due attention must be paid to the risk
impact of supplier proposals. This task is part of the larger risk management
process and ensures that risks are understood and mitigated to the greatest
extent possible.
A risk is a potential event or future situation that may adversely affect the
project. Identifiable risk factors contribute to a potential risk. If a risk occurs,
there will be consequences that may significantly impact the project. For
example:
• Risk factor: a new technology is being used for the first time
• Risk: adoption of the technology is more difficult than anticipated
• Consequence: project delivery is delayed
A risk may be caused by more than one risk factor, and, conversely, a risk
factor may result in more than one risk.
The objective of the risk analysis on the supplier's proposal is to assist the
Proposal Evaluation Team in ensuring that the proposal meets Client
requirements while identifying and mitigating risk to the Postal Service. The
Proposal Evaluation Team considers the outcome of the risk assessment in
the context of the overall evaluation.
"Proposal risk" refers to the risk associated with the potential supplier's
proposed approach to meeting the Client's requirements. The evaluation of
proposal risk includes an assessment of proposed time, resources, and
recommended adjustments. This assessment should be performed according
to the definitions and evaluation standards developed in the Develop
Proposal Evaluation Strategy topic of the Perform Solicitation-Related
Activities task of Process Step 2: Evaluate Sources.
Risk analysis will identify the following to assess the overall risks if the
potential supplier is awarded the contract:
• Critical risk elements inherent in the proposal
• New risks resulting from inconsistencies and discrepancies
between various suppliers' proposals
• Risks signaled by any unsubstantiated representations made in
any supplier's proposal
Not all risks are equally important to the Postal Service; however, a given risk
factor may pose such a threat to successful contract performance as to
render the entire proposal as "high" risk.
The Proposal Evaluation Team will assess each of the identified risks,
together with the supplier's proposal, to determine whether the supplier's
mitigation approach is viable. The risk assessment will consider:
• The supplier's proposed risk management plan, which should be
developed by the supplier. For example, does the proposed plan
include documentation at a level that is adequate to identify risks,
develop associated management activities that will be used
throughout the contract, and integrate resources, technical
performance measures, and schedule in the proposed risk
management plan.
• Any potential for disruption of schedule, increased cost,
degradation of performance, or the need for increased Postal
Service oversight, as well as the likelihood of unsuccessful
performance.
• Potential impact on overall contract performance, cost, and
schedule resulting from those known and predictable risks initially
identified during the Identify, Analyze, and Plan Reponses to
Risks topic of the Decide on Make vs. Buy task of Process
Step 1: Identify Needs.
The following is a list of sample questions to facilitate the assessment of
risks:
• What is the supplier's policy with respect to product quality and
quality control?
• How does the supplier intend to comply with the quality
requirements of the purchase? How will quality standards be met
consistently?
• Are there areas of overemphasis in the proposal that could result
in excessive costs? (Results from the Conduct Price/Cost
Analysis topic of the Evaluate Proposals task of Process Step 2:
Evaluate Sources may be consulted for additional information.)
• If the proposal involves subcontracting, does subcontracting pose
a risk?
• Does the proposal reflect clarity and completeness of what is
being proposed (e.g., scope, roles, and responsibilities, including
those of the Postal Service, suppliers, and subcontractors)?
• Is there a shared understanding of specific contract risk between
the Postal Service and the supplier? What is the supplier's view
of how those risks are to be allocated and managed?
• Does the proposal include all relevant costs, including the
likelihood of significant cost changes over the life of the contract,
and any proposed changes in pricing structure over the life of the
contract?
• Does the proposal address every component of the requirement?
The assessment will produce the following output for consideration by the
Contracting Officer in making the award decision:
• An overall rating (high, medium, or low) of the degree of risk
associated with award of a contract to each supplier
• A narrative evaluation reflecting the strengths, weaknesses, and
deficiencies of the supplier's response to each proposal
evaluation factor
Risk assessment ratings measure the likelihood of whether the potential
supplier will provide quality services that meet the Client's cost, schedule,
and performance requirements over the life of the contract, as shown in
Figure 2.13.
Figure 2.13
Risk Assessment Ratings on Supplier Proposals
|
Rating
|
Definition
|
|
High
|
Proposal exhibits less-than-solid fit to Postal
Service quality control standards and risk
management plan; likely to cause significant
disruption of schedule, increased cost, or
degradation of performance. Risk may be
unacceptable, even with special supplier effort
and close Postal Service monitoring.
|
|
Medium
|
Proposal exhibits solid fit to Postal Service quality
control standards and risk management plan; can
potentially cause some disruption of schedule,
increased costs, or degradation of performance.
Special supplier effort and close Postal Service
monitoring will probably be able to overcome
difficulties.
|
|
Low
|
Proposal exhibits excellent fit to Postal Service
quality control standards and risk management
plan; has little potential to cause disruption of
schedule, increased costs, or degradation of
performance. Normal supplier effort and normal
Postal Service monitoring will probably be able to
overcome difficulties.
|
A risk assessment rating of "medium" or "high" may signal an overall lack of
fit with Client requirements and can negatively impact the technical
evaluation. Certain risk factors may lead to risks that may result in
consequences that will affect the technical rating. For example, an
unrealistically low staffing level for the project can mean work overload per
resource assigned and consequently result in inferior quality of the end
product(s).
Manage Risks topic, Decide on Make vs. Buy task, Process Step 1: Identify
Needs
Develop Proposal Evaluation Strategy topic, Perform Solicitation-Related
Activities task, Process Step 2: Evaluate Sources
Conduct Price/Cost Analysis topic, Evaluate Proposals task, Process Step 2:
Evaluate Sources
Conduct Supplier Capability (Technical and Financial) Analysis topic,
Evaluate Proposals task, Process Step 2: Evaluate Sources
|
