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cperrotta 04-22-2013 06:56 PM

Pros and Cons: Primary provider vs. Bids
We are coming to the end of our current contract with our primary food provider, and want to weight the pros and cons of using a primary contracted vendor versus just bidding out our food reguarly. Please share your thoughts? FYI as a rough estimate we probably spend upwards of $800,000 a year in food.

KS_Purchasing_Manager 07-12-2013 08:11 PM

My .02C
I would suggest performing regular quarterly or yearly bid process for something of this size.
That being said, there is a value in working with a business relationship. New relationships means more problems to fix, arrangements to make, etc. While the upfront cost may be cheaper, the extended (total value) cost may be greater than the initial bid price.

What I would suggest?

Put out an extensive and solid RFP/Q document weighted by whatever issues you find is important. You know who the currently, primary vendor is, and give them a 1-2% 'retain advantage' in the bidding.
Imagine you have two bids; new guy bids $100; current, acceptable vendor (with whom you have a relationship) bids $100.50. Given he has a 2% 'advantage', the acceptable vendor would win the bid (as he would have to have been $102 ceiling to retain business.

This way, you can't say you're not valuing 'relationships' but you're also not giving an overwhelming advantage to the current guy.

If the new guy bids 20 or 30% lower than the current guy...then I think that justifies going to the new guy.

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