The process for securing a vendor for your property owners association (POA) is not always as simple as it seems. There may be several vendors for the service you require, or there could be very few. But how can you, as a community manager or board member(s), ensure you are making the right decision or recommendation when choosing a vendor? In this article, we answer this question by looking at the request for proposal (RFP) process for POAs and highlight the differences between an RFP and the master service agreement (MSA).
Who is a Vendor?
Before we examine the RFP and MSA, it is helpful to understand who exactly is considered a vendor. A vendor is anyone from outside of the POA that provides a service for the POA. Vendors include any service provider, such as a landscaper, plumber, painter, or pool maintenance company. Vendors also include the POA’s professional team, such as the POA’s attorney, CPA, banker and insurance broker. At any given time, the POA may require a new vendor for one of these services or want to learn more about the different providers that are in the market. To learn more about the options available, the POA can use the RFP process.
What is an RFP?
An RFP is exactly as the name suggests it is – a request for a proposal of services from a vendor. While its name is straightforward, what is included in an RFP may not be as readily apparent. POAs can often get lost in the basics and only request a bid on the cost and completion time of the service that has been requested and not ask for further details from a potential vendor that can be necessary, or helpful information in deciding on the right vendor for the POA.
With the recent passage of SB 1588, it is imperative every POA should have an RFP process. Vendor services valued at over $50,000 are now required, by state law, to go through a bid process set forth by the POA. The POA should consult with their legal counsel to determine the types of services and contracts this will include. The RFP process should be consistent no matter the type of service the association is requesting. An RFP should set forth what is expected of the vendor in specific detail so that the vendor can provide a proposal that will be reasonable in light of the price being paid for the desired service. When preparing the RFP, the POA will need to consider the various elements for which the POA needs more information. Those elements should include: the scope of the project, the specifications, the expectations of the association, the standards, the quantifiable results, payment terms, default, references for the vendor and the types and policy limits of insurance the vendor carries. When issuing a call for an RFP, the POA should use the same type of form for each vendor to submit their information.
What is an MSA?
The MSA, also known as the master service agreement, is the POA’s contract for use with its vendors. The MSA sets forth the requirements that often stall or terminate the process. These requirements include, but are not limited to:
- Right of Termination
The vendors’ bids using these requirements are based on a set contract document, which helps avoid confusion for the POA when comparing the bids.
Understanding the Differences Between and RFP and an MSA
The RFP and MSA are two separate tools working together to find the vendor that is right for the POA. An RFP should never be viewed as a final contract between the POA and the vendor. The RFP should only outline the type of service the association is seeking and the specific elements from the vendor to perform that service. The MSA is the final contract that is executed by the POA and the vendor once a vendor is selected. Each provision within the MSA is important to understanding the agreement between the POA and its vendor. Both parties need to perform as they have agreed to ensure a great relationship between the vendor and the POA is maintained.
To learn more about the RFP process and the MSA, join Equity Shareholder Greg Godkin and Shareholder Brady Ortego on July 21 from 11:30 a.m. to 12:30 p.m. for our Don’t Sign That Proposal webinar. Greg and Brady will further explain what the POA needs to do during the RFP process, how the MSA is formed and detail the various requirements that should be included in the MSA. Click here to register today!