1. Elements of a Successful Proposal
Office of Transit
Ohio Department of Transportation
June 28, 2007

2. ? Why Submit a Proposal? Maximize Use of Existing Resources
Expand Revenue Base and Spread Fixed Costs
Generate Local Match
Become Viable Player in Local Community

3. How Do We Let Agencies Know We Are Interested?
Networking
Normal interactions with agencies
Speeches to community groups
Attendance at Pre-Bid Meetings
Participation in Community Groups
Working through Board Members and Government Officials
Newspaper Articles

4. Self Assessment: Can We Do It?
Legal Restrictions — Service Area, Type of Service, Funding Program Limitations
Vehicles — Number, Type, Utilization
Facilities — Size, Capability
Staff — Number, Capability, Flexibility
Type of Service — Is It New or More of the Same?

5. Self Assessment: Do We Want to Do It?
Agency Mission
Board Direction
Management
Interest
Capability
Local Political Realities

6. What are the Keys to Successful Proposing?
Understanding the Solicitation
Preparing a Good Response
Developing a Good Business Plan
Planning for Start-Up and Operation

7. Understanding the Solicitation

8. Understanding the Solicitation
Understand the Environment
Reading the Solicitation

9. Key Transportation Actors
Transportation Agency
Director
Board
Local Governments
Ohio Department of Transportation
Federal Transit Administration
Potential Contractors
Private
Human Service Agencies

10. Labor May Also Be An Important Actor
Be Aware of What You May be “Inheriting”:
Existing employees
Wages and fringe benefits
Past employees practices

11. Key Laws and Regulations
Ohio Revised Code
ODOT Review Schedule
Federal Transit Administration

12. The Public Process is Slow!
Everything is a Process
Publicly-Funded Agencies Cannot Make Snap Decisions
They are not allowed to!
Conclusion: Follow the Rules!

13. ODOT Review Schedule

14. ODOT Review Schedule (Cont’d)

15. Federal Transit Administration
Many Required Contract Clauses
Outlines in FTA Circular C

16. Typical Procurement Methods
Invitation for Bid (IFB)
Request for Proposals (RFP)
Multi-Step Strategies

17. Invitation for Bid (IFB)
Requires Complete and Comprehensive Specifications
Involves Two or More “Responsive and Responsible” Bidders
Award Based on Price (Low Bid)

18. IFB Requires High Degree of Agency Certainty
High Risk for Contractors Since Few Agencies Can Do This Well!
Contractor Must Be Proactive to Seek Clarification at the Beginning of the Process

19. Request for Proposals (RFP)
Prefer General Description of Service Specifications
May Need Oral/Written Discussions With Prospective Contractors
Award Based on Comparative Evaluation of Price, Quality, Contractual Factors
Primary factor need not be price
Preferable Approach Due to Increased Flexibility and Opportunity for Creative Responses

20. Bid Evaluation and Award
IFB and RFP Steps
Invitation for Bid (IFB)
Invitation for Bids
Bidder Submissions
Bid Evaluation and Award
Request for Proposal (RFP)
Request for Proposal
Composite Evaluation and Award
Proposer Submissions
Technical Evaluation
Additional Negotiations
Cost Evaluation

21. Multi-Step Strategies
Pre-Qualify Responsible/Responsive Bidders
Invite/Evaluate Different Technical Approaches
Conduct Discussions to Select Best Technical Approaches
Award Contract to Lowest and Best Contractor in Accordance with Sealed Bid Process
Incorporates RFP Flexibility into IFB Process

22. Multi-Step Strategy Steps
Two-Step Invitation for Bid
Invitation for Technical Bids
Bidder Submissions
Technical Evaluation
Request for Pricing Bid
Bid Evaluation and Award
Request for Qualifications (RFQ)
Qualifications Evaluation and Selection
IFB Process or Two-Step IFB Process
Bid Evaluation and Award
Request for Qualifications
Biddor Submissions

23. Considerations By Procurement Method: IFB, RFP and Multi-Step

24. Considerations By Procurement Method: IFB, RFP and Multi-Step (Cont’d)

25. Typical Solicitation Outline
Cover Page
Overview of Contracting Agency
Statement of Need
Service Specifications
Contractor Qualifications
Contract Mechanics
Agency Protections
Required Clauses
Evaluation Methodology
Format of Submission

26. Service Specifications
Start-Up Date and Performance Period
Service, Routes, and Operating Hours
Fare Collection and Recordkeeping
Required Vehicle Maintenance
Performance Reporting
Capital Items
Can You Do It and What Will It Cost You?

27. Service, Routes, and Operating Hours Issues
Make Sure You Know Definitions
Understand the “Service Profile” of Demand
Time of Day
Day of Week
Are There Service Guarantees?
Minimums?
Maximums?

28. Vehicle Requirements Should Be Reviewed Carefully!
Vehicles Provided by Contractor
Do you have the vehicles?
Where and how quickly can you get them?
Can you meet safety and other requirements?
Vehicles Provided by Public Agency
What are the condition of the vehicles?
When will you take possession?
Will you have to supplement the fleet?
Contingency Plan
You need one!

29. Contractor Qualifications
Proposed Personnel
Experience
The firm as a whole
Proposed personnel
Total professional experience
Experience with firm
Financial Capability
Agency wants to make sure you are viable
Cash Flow — Adequate working capital
Capital — Funding of vehicles and facilities

30. Contract Mechanics Contract Length Amendment Process
Reporting Requirements
Payments

31. Contract Length Options
Single Year
Does not address high start-up cost factors
Start-up operations costs
Equipment amortization
Transition costs from prior contractor
Avoid if equipment acquisition is required or other longer-range opportunities are available
Multi-Year
Addresses high start-up cost factors
Should address how service changes are handled

32. Multi-Year Contracts Are Most Common
Often Structured as Minimum Time Frame Plus One-Year Renewals
e.g., Three years plus two one-year renewals
Maximum Contract Length Limited by Federal, State, and Local Regulations

33. Typical Amendment Issues
Changes (±) in Required Service
Amount
Vehicles required
Changes in Commodity Prices
Insurance
Fuel
New Government Requirements

34. Monthly Contractor Reports: Keep Them Informed!
Operations
Revenue/total hours and miles, missed trips, schedule performance
Passengers and Fare Revenue
Financial Results
Accident and Safety Information
Maintenance Activities
Preventive maintenance inspections, warranty work, major repairs
Driver/Mechanic Training Activities
Anticipated Issues for Coming Month

35. Basic Payment Options: Fixed Price
Price set for performance period
Contractor assumes risk for cost and service increases
Conclusion: Avoid if Possible

36. Basic Payment Options: Fixed Unit Price
Most Common
Price tied to output measures
Service provided — revenue/total hours (miles)
Passengers served
Contractor preference: 1) total 2) revenue 3) passengers
Contractor assumes risk for cost increases
Also ridership if price based on passengers carried
Conclusion: Reasonable, But Do Your Homework If Based on Passengers

37. Basic Payment Options: Cost Plus Fixed Fee
Accounts for allowable changes in contractor costs
Agency assumes risk for cost increases
Conclusion: Good Approach, But Few Agencies Willing to Take These Risks

38. Pass-Throughs Can Reduce Contractor Risk and Cost
Approach
Agency agrees to pay exact cost for specified items regardless of increases
Fuel and Insurance Common Pass-Throughs
Risk: Need to Specify How Costs Can Be Disallowed
Other Option is to Provide Items Directly
e.g., fuel at agency fueling island
Conclusion: Discuss with Agency Before and During Solicitation

39. Payment Terms Key To Cash Flow Key Provisions
Required invoicing format
Invoice approval process
Payment timeline
Guarantee is desired

40. Agency Protections Insurance Bonding Key Personnel Subcontractors
Approval of replacements
Subcontractors
Agency Provided Equipment and Assets
Required maintenance program
Required maintenance records

41. Objectives of Bond Requirements
Agency Protection
Assures contractor will enter into contract (bid bond)
Guarantees service performance will meet terms of contract (performance bond)
Credit/Financial Screen

42. Performance Alternatives
Holdbacks (1-5%)
Penalties and Incentives
Post Cash

43. Incentives
Must be:
Important
Measurable
Reasonable
Under contractor control
Conclusion: Do Not Count Your Chickens Before They Hatch! — Generally Do Not Include in Your Budget

44. Penalties Must be: Should Be Proportional to “Offense”
Important
Measurable
Reasonable
Under contractor control
Should Be Proportional to “Offense”
Conclusion: Count Your Chickens Before They Hatch! —Include in Your Budget (Things Do Happen Even in the Best Systems)

45. Why So Many Contract Clauses?
Public Safety
Good Public Fund Stewardship
Employee Protections

46. Required Contract Clauses (Standing in the Agency’s Shoes)
FTA Circular C
ODOT Rural Transit Program Manual
The Key Clauses Are Covered Next

47. 1. Remedies for Breach of Contract
Available Remedies to the Grantee if Contractor Violates or Breeches Contract Terms
Administrative
Contractual
Legal Remedies
Provision for Appropriate Sanctions and Penalties
Ideally, We Should Never Get This Far

48. 2. Contract Termination (>$10,000)
Conditions Under Which the Grantee May Terminate the Contract for:
Default: Contractor fails to comply with terms of the contract
Convenience: Contractor cannot comply due to circumstances beyond contractor’s control

49. 3. Equal Employment Opportunity (>$10,000)
Contractor Agrees to Take Positive Action to Insure that Persons Employed or Seeking Employment Are Treated Without Bias Regarding:
Race
Religion
Color
Sex
National origin
Contractor Required to Conspicuously Post Notices

50. 4. Contract Work Hours and Safety Standards Act
Contractor Must Pay Overtime (1.5 x wage rate) to Laborers and Mechanics for Work Exceeding 8 Hours per Day
Prohibits Requiring Workers to Work in Unsanitary, Hazardous, or Dangerous Conditions as Defined by Secretary of Labor
Applies to:
Construction contracts > $2,000
Other contracts > $2,500

51. 5. Access to Contractor’s Records
Provisions Cover Access to the Contractor’s:
Books – Papers
Documents – Records
Access Granted to:
Grantee
ODOT
FTA
Comptroller General
Authorized agents
Materials Must Be Maintained for 3 Years

52. 6. Disadvantaged Business Enterprise
Contractor Will Take Affirmative Steps Whenever Possible to Use DBEs as Sources of Supplies, Equipment, Construction, and Services
Selected Affirmative Steps
Place qualified DBEs on solicitation lists
Assure that DBEs are solicited when they are potential sources
Divide projects into small tasks suitable for DBEs
Establish procurement schedules that encourage DBE participation
Make Sure You Know Agency Requirements

53. 7. Buy America
Steel, Cement, and Manufactured Products Used in FTA-Supported Projects Must Be Produced in US.
FTA Can Make Special Exceptions

54. 8. Title VI Civil Rights Act of 1964
Non-Discrimination
Selection and Retention of Contractors
Procurement of Materials and Leases of Equipment
Employment Practices
Provide Access to Records
Compliance with Regulations
Requirements Pass Through to Subcontractors

55. 9. Americans with Disabilities Act
Service Provided by Contractor Must Meet All Requirements for Grantee — (Standing in the Agency’s Shoes)
Complimentary service
Vehicle accessibility
Public information
Telecommunications

56. 10. Drug and Alcohol Testing
Comply with Federal Requirements
49 CFR Parts 655 and 40
Drug Free Workforce Act 49 CFR Part 29, Subpart F

57. 11. Selected Other Contract Clauses
Lobbying
No Government Obligation to Third Parties
Program Fraud and False or Fraudulent Statements and Related Acts
Government-wide Debarment and Suspension Non-Procurement

58. Evaluation Methodology
Depends on Procurement Method
IFB — Assessment of “Responsive” and “Responsible”
RFP — Assessment of Cost and Non-Cost Factors
Evaluation Objectives
Objective
Quantifiable
Conclusions
Need to write your proposal to cover criteria
Need to state “obvious” facts about yourself

59. Common RFP Evaluation Factors
Cost
Proposed Technical Approach
Service Delivery Approach
Maintenance Plan
Transition/Start-Up Plan
Proposed Personnel
Experience

60. RFP Factors Often Weighted to Aid Contractor Selection
Scoring of Bob’s Contracting, Inc. by Barry Bonds, Reviewer
Conclusion: Write Proposal in View of Point Emphasis

61. Preparing a Good Response

62. Keys for Writing a Good Proposal
Demonstrate that You Know:
The services to be provided
The local operating environment
Know Your Competitive Strengths and Weaknesses
Who are your likely competitors
What sets you apart from them
Demonstrate that You Will Provide Value

63. Pre-Bid Meetings Can Help You Develop a Responsive Proposal
Typical Agenda
Agency overview
Project objectives
Key project information
Agency contact for questions
Contractor questions

64. Suggestions for Pre-Bid Meetings
DO Ask Clarification Questions
DO NOT Ask Questions that Reveal Your Approach
USE the Meeting to Size Up Your Competition
DO NOT USE the Meeting to Reveal Your Proposed Team
USE the Meeting to Establish a Good Relationship with the Agency

65. Write for Someone Who Does Not Know You
Describe the Services Provided by Your Company
Describe Your Experience and Knowledge of the Local Community
Highlight Your Accomplishments
Toot Your Own Horn!

66. Identify and Write to Members of the Agency Evaluation Team
Sometimes the Members are Identified in the Solicitation
If not, Ask Who They Are

67. Follow All of the Rules! Order of Presentation Due Dates
Number of Copies
Size — Pages, Fonts, Tabs, Margins
Signatures/Legal Forms
Attachments

68. Remember the Agency’s Procurement Requirements
Treat All Prospective Sources Equally
Maintain An “Arms-Length” Procurement Relationship
Do Not Accidentally Put Your Agency Friends in a Bad Position

69. Recourse: “Partnering” Meet and Discuss
Objectives
Keep agency informed about operations
Address issues before they escalate into big problems
Focus on solutions and lessons learned
Recommend Weekly Meetings

70. Award and Start-Up
Agency Responsibilities
Contractor Responsibilities

71. Agency Responsibilities
Agency Should Designate Points of Contact
Contract Manager
Changes/amendments, recordkeeping, respond to inquiries
Service Manager
Operations issues, monitor performance, initial invoice review, initiate contract changes, assist contractor

72. Contractor Responsibilities
Start-up Plan
Hiring and Training of Personnel
Procurement of Equipment
Communication with Former Contractor(s)
Vehicle Repair

73. Understanding of Your Costs
Fixed Costs Do Not Vary with the Amount of Service Provided (e.g., Administrative Salaries)
Variable Costs Change Relative to the Amount of Service Provided (e.g., Drivers’ Wages)
Fixed
Variable
Total
Output (Hours/Miles)
Cost

74. Example of Expense Assignment

75. Example of Unit Cost Calculation

76. Three Estimates of Contract Costs
Fully Allocated (Highest)
All costs (variable + fixed)
Reallocated Fixed Costs
Variable costs
Fixed costs (spread over more service)
Incremental Costs (Lowest)
Variable costs only

77. Sample Problem
The transit system wishes to start a new service between a small town and the county government center.
What should you charge for this service?
Estimated Annual Operating Data for the New Service.
Hours = 6, Miles = 153,000

78. Sample Problem: Fully Allocated Cost
All Costs Increase with New Service

79. Sample Problem: Incremental Cost
Only Variable Costs Increase with New Service

80. Sample Problem: Reallocated Fixed Costs
Only Variable Costs Increase with New Service
Reallocate Fixed Costs Across Existing and New Service

81. Sample Problem: Reallocated Fixed Cost
All Costs Increase with New Service

82. Sample Problem: Summary of Three Approaches

83. Business Plan – Non-cost Components
Staffing – Drivers
Part-time
Full-time
Overtime
Dispatchers
Supervisor Coverage
Scheduled
On-call
Management Team
Support
Local
Corporate
Financial Manager
Budget
Cash Handling
Fare/Revenue Collection Procedures
Expenses
Recordkeeping/ Reporting

84. Startup / Transition Plan
Timeline – Work Backwards From Startup Date
Understand Interrelationships Between Tasks
Be Thorough
Incorporate Contingencies
Commit Necessary Resources
Staff Hours
Revenue Outlays
Vehicles
Facilities
Be Prepared to Mobilize Quickly

85. Startup Plan Components
Staffing
Recruiting
Hiring
Drug Testing
Training
Vehicles
Purchase/Lease
Inspections
Preventative Maintenance
Repairs to Minimum Standard

86. Startup Plan Components (Cont’d)
Administration
Recordkeeping
Accounting/Bookkeeping Procedures
Personnel Policies/Procedures
Telephone Lines / Internet
Procurement
Inventory
Maintenance Consumables
Equipment
Supplies
Brochures/Ride Guides

87. Startup Plan Components (Cont’d)
Operations
Service Design and Characteristics
Driver Manifests/Schedules
Scheduling/Dispatching Procedures In Place
Obtain Necessary Information From Former Contractor – Check for Accuracy/Efficiency