RFPs: The School Improvement Provider Market
The primary vehicle for significant government purchases of products and services for public education and the implementation of school improvement grant programs is the RFP – Request for Proposals. A dozen federal agencies, 50 states and several territories, and 15,000 school districts issue RFPs every year. Every jurisdiction, agency and program has its own approach to the process.
In Part I and Part II of this series, we discuss the basics of the RFP and how government agencies issue RFPs public education on the web.
Part III talks about the difficulty of having a complete list of relevant RFP opportunities.
We started to talk about the single most important reason why national RFP reporting services do not do a good job of meeting school improvement providers’ needs: the size of their addressable market is not sufficiently attractive to develop a more comprehensive method of reporting the relevant RFPs. Let us take a deeper look at this addressable market.
The prime business of RFP reporting services firms is serving other business that rely on government procurement of products and services that have become commoditized. Every year thousands of government agencies procure hundreds of billions of dollars worth of construction, telecommunications, professional, cafeteria, janitorial and other services, and computer, office and other typical business products. Tens of thousands of firms are interested in these contract RFPs – construction and engineering companies, HVAC contractors, law and accounting firms, food service companies, fuel providers, car companies, etc. Few of these companies have any interest in grants because their sales are rarely made through agency grant processes.
I know of no authoritative statement of the number of firms seeking federal, state and local government work on a national or multi-state level that use RFP reporting services, but my conservative, “back of the envelope” estimate is at least 50,000. If the average annual fee for an RFP reporting service is $2500 per firm, the market is in the range of $125 million.
By this standard, the school improvement market is small. Based on my own experience with the for-profit and nonprofit segments of the school improvement business, I estimate some 5000 organizations with more than a handful of employees. Perhaps half of these serve one city or region in one state. They have no need for RFP reporting services – they rely on information gleaned from personal contacts with local education agencies and philanthropy. So roughly 2500 organizations are in the market for national or multi-state RFP reporting services. At present, contract RFP reporting service fees range from $1000-$5000 per year. At an average of $2500 per year per client, the market is worth about $6 million a year or 5 percent of RFP reporters’ mainstream client base.
The needs of most firms that sell commodities to government agencies are quite different than the expectations of school improvement providers. Thousands of federal, state and local government agencies and their units promulgate multiple contract RFPs for construction, legal services and paper products every year. The idea of using the web to announce RFPs is widespread. The result is far more business opportunities than any one firm can pursue, let alone fulfill.
By comparison, in school improvement, the business opportunities presented by RFPs are scarce. As noted earlier, only a subset of education agencies issue school improvement RFPs on the web. More often than not, school improvement RFPs are anything but commodities. Every purchase has a particular fit with its agency’s educational program, infrastructure, culture and philosophy – and their descriptions and labels are far from uniform. Paving is “paving,” professional development might be labeled as a reading or math program, or named “Project Achievement Now.” Moreover, school districts might purchase professional development services once a year, or information systems once every five years, and a handful of districts will pursue such purchases every year. In short, every RFP is unique and precious. Missing out on one sales opportunity means both missing out on several years of revenue and a long wait for another comparable opportunity from another district. School improvement providers need complete information.
In addition, a district’s decision to purchase school improvement products or services might depend on a prior decision to pursue a state or federal grant. Some sales will be based on the school improvement provider’s ability to identify appropriate grants and use them to attract business and facilitate sales. But for RFPs reporting services to follow grants is to monitor a large and entirely new set of government websites.
The bottom line here is that any RFP reporting service seeking to meet the needs of the school improvement market must upgrade its service process. It must cover every agency issuing school improvement RFPs on the web. It must make sure that every relevant RFP makes its way to the school improvement provider addressing those needs. It must cover grants as well as contracts.
Each requirement is daunting. The first is impossible because rival reporting services provide many education agencies ‘ procurement webpages and are not eager to share easy access with competitors. The second is no less difficult because while commodities lend themselves to computer-driven word-search sorting strategies, unique school improvement products and services do not. The third requires development of an entirely new reporting service.
Given the relatively small size of the school improvement provider market, and an average fee of $2500, substantial service process upgrades are simply not worth the required effort to any RFP reporting service. From the perspective of national RFP reporters, the prospect of adding a few hundred new clients does not justify the investment. And from my own experience, I would argue that too few school improvement providers are willing to spend more than they do today. And so, because RFP reporting services incur no additional costs providing their current offering, they will continue to sell the same service that school improvement providers find unsatisfactory today. And in the absence of an alternative, school improvement providers will continue to buy these unsatisfactory services.
Next: Reinventing How You Find the RFPs You Need
Inadequate sales are the most significant barrier to the growth, sustainability and profitability of organizations involved in school improvement. No one will find this a great insight. Considerable resources are spent on “customer acquisition,” but only a miniscule amount is spent identifying “ready, willing and able” buyers.
It is time to 1) review the role of RFP research in current marketing and sales processes, and its cost and contribution to sales, 2) determine whether that contribution implies a need more or less investment in RFP identification and, 3) re-invent school improvement firms’ marketing and sales strategies and operations.
[box]Marc “Dean” Millot, is the Managing Partner for K-12 at Good Harbor Partners and the Publisher of K-12Leads, with expertise in K-12 provider due diligence, business models and strategy, federal education policy, public school reform, and history of the school improvement marketplace. [/box]
[learn_more caption=”About The 101 Series” ] EdTech Times introduces The 101 Series, a collection of articles about education and education technology fundamentals, explained by experts. [/learn_more]
Good Harbor Partners is a consulting and strategic advisory firm focused exclusively on Ed Tech entrepreneurs. We have been entrepreneurs ourselves and understand the complex decisions that you need to make on a daily basis. We position our clients for success to growth their business by identifying, preparing, and generating their next capital event. Identifying revenue opportunities through K-12 leads is just one example of our hands on approach. Visit us at www.goodharborpartners.com or at our Boston offices co-located with the Exponential Tech Space, LearnLaunchX accelerator, and LearnLaunch.org.