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Observations on a large-scale RFP process by Exelon

InsideCounsel, June 2008 at 63, reports that Exelon Corp., the utility company, recently sent RFPs to 44 law firms and all but two of them responded. Some surveys have decried low rates of responses by law firms (See my post of May 9, 2007.), but this 95 percent rate shows otherwise. Possibly it is because many recipients of Exelon’s RFP already represented the company (See my post of Jan. 27, 2006: endowment effect.). Possibly, as mentioned below, it is because Exelon has done this before and many of the recipients know that.

Also, since Exelon rewarded 35 of the 42 responding firms (83%) with positions on its preferred provider list, it may be that the firms understood that they were likely to be selected and that spurred a high participation rate.

A third observation is the massive size of the RFP process. The law department would have had to deploy a team of people to put specifics into the RFPs and to review the outpouring of responses. In my experience, five to seven invitees is a more normal number.

To close, I noted that this RFP process was Exelon’s third in six years. Apparently, every two years the company conducts them to “streamline its outside counsel list, cut costs and find top-quality service providers.” This frequency is also unusual.