Procurement groups may choose to work with an outside consultant to assist with the procurement. Groups that are considering working with consultants should determine how costs will be split among participants.

Cost considerations for selecting a consultant

Consultants can often be paid through a success fee or hourly rates. Paying a consultant through a success fee reduces or eliminates the need to pay the consultant up front, which can be attractive to cash-strapped local governments. However, success fees can have two potential downsides. First, if a deal does go through, the local governments will almost certainly end up paying more in the long run, as the consultant will reasonably require a higher rate of return to compensate them for taking on the risk that a deal might not happen. Furthermore, success fees give the consultant a financial incentive to get a contract signed, which could impact their ability to provide neutral advice in some cases.