Homework $4-$ City of Oakwood Maintenance Supply Contract Case Study Answer Sheet

The City of Oakwood is issuing an RFP for a $3-$year contract to supply maintenance, repair, and operations $($MRO$)$ equipment and materials to its Public Works Department. This includes tools, hardware, cleaning supplies, safety gear and other consumable products used by the city's maintenance crews.

The previous MRO contract had an estimated annual spend of $$475,000$ based on historical usage data. However, this amount has increased by about $15\%$ each year due to new infrastructure projects, aging municipal facilities requiring more upkeep, and rising material costs.

The procurement team needs to carefully evaluate pricing scenarios and supplier cost structures to ensure they obtain competitive value and pricing that accurately projects future expenditures over the $3-$year contract term.

What factors should be considered when projecting pricing for this MRO supply contract?

How could a firm fixed$-$price model be structured to provide ceiling pricing protection?

What are benefits of a cost$-$plus pricing model for this requirement? Potential risks?

How could an indexed pricing model be utilized for this contract?

What other pricing techniques could be evaluated by the procurement team