Whether searching for a new vendor or just researching the options available, the Request for Proposals (RFP) process can be a daunting one for a plan sponsor, especially given the time and other resource constraints that government employees are faced with daily. However, a thorough RFP process will assist in ensuring plan participants are offered the best plan possible and will decrease headaches caused by choosing a vendor that just doesn't quite fit the plan's unique needs.
Creation of the Questionnaire
The first step in the RFP process is to determine the plan's priorities and reasons for seeking new vendors; and then create a questionnaire based upon these priorities and reasons. The plan priorities list should include the core set of products and services the plan expects to offer. Each plan is different, and so each RFP should reflect this.
These questions should be direct and ask for detail where needed so vendors know exactly what is being asked. This will cut down on follow-up time and may allow fewer apples-to-oranges comparisons between RFP submittals. It is important to find a balance between too few questions and too many; too few questions may not allow the plan to make the best decision while too many may deter qualified vendors from responding.
The work put into the RFP questionnaire will pay dividends after the process has ended – from easier selection of a qualified vendor to a long-lasting partnership with the chosen plan vendor.
After RFP responses are received, it is necessary to evaluate each according to the priorities laid out during the creation of the questionnaire. If using a scoring system, it may be necessary to place more weight on questions of greater importance. Using a team to evaluate and score the responses may be helpful to keep the team from being swayed by an in-person presentation and to help find a balance between various departments in the plan sponsor. It is of note that when employing a team to evaluate, the team should use the same scoring worksheet.
The responses to the RFP, however, are not the only means of evaluating a vendor. A plan sponsor may also want to explore other attributes of the vendor company, such as the people and relationships that have been developed in the process, and the vendor company's values and culture. Site visits to meet with the finalists can be helpful gleaning this type of information. Finding congruities in these areas can also help to ensure a good fit between plan and vendor.
Another consideration when evaluating finalists is data conversion in the event of switching vendors. Some vendors may not offer historic data conversion, and each individual plan should evaluate whether or not the historic data is needed.
Flexibility during the RFP process is important; each plan is different and solutions should be tailored to fit each one. This might mean more work in the short term, but the work will pay dividends over the long run.
NAGDCA: Preparing and Evaluating a Request for Proposals: How to Select a Vendor
Benefits Link: Finding “Best Fit” in a Retirement Plan Provider through the RFP Process
Vanguard: Getting the Most out of your RFP Process
Neither NAGDCA, nor its employees or agents, nor members of its Executive Board, provide tax, financial, accounting or legal advice. This memorandum should not be construed as tax, financial, accounting or legal advice; it is provided solely for informational purposes. NAGDCA members, both government and industry, are urged to consult with their own attorneys and/or tax advisors about the issues addressed herein.