Presentation on theme: "IFB Fundamentals Erin Datri, Debbie Boettner, Kate Brenner and Carol DeWolf."— Presentation transcript:
1IFB FundamentalsErin Datri, Debbie Boettner, Kate Brenner and Carol DeWolf
2IFB Team organizational chart Donna CosgroveBill HughesPaula ShappyErin DatriJoanne HughesRandy McConnachDebbie BoettnerKate BrennerCarol DeWolfMichelle KoPage Morrison
3Bureau of contracts workload statistics 2012 – 2013 State Fiscal Year- Total BOC Transactions Processed7,124 – Total New Contracts Approved by BOC– Total Value of New Contracts Approved by BOC– Total Number of IFB Transactions Processed1,082 – Total Number of New Contracts Approved by IFB– Total Value of All Contracts Approved by IFB– IFB’s Average Processing Time23,731$48 Billion6,045$5.7 Billion13 Days
4NYS Laws, Regulations, Guidelines and Procedures NYS Finance Law, Article 7, §112NYS Finance Law, Article 11, §160 – 168Economic Development Law, Article 4C, §140 – 145OSC Guide to Financial OperationsNYS Procurement Council Procurement GuidelinesNYS Division of Budget – Budget BulletinsSUNY Guidelines, if applicable
5Prior Approval thresholds Pursuant to §112 of the State Finance Law, any contract for the purchases of goods and services exceeding $50,000 and revenue contracts exceeding $10,000 require the approval of OSCProcurements are subject to a formal competitive process when the value of the annual anticipated procurement will equal or exceed $50,000 based on the date of the first purchase unless it is made in another manner consistent with the procurement methods described in §163 of the State Finance Law
6Special note on multiple awards When determining whether or not OSC approval is required on a multiple award contract, the total value of the procurement effort is the deciding factor.For example, assume you are awarding three contracts as follows:Vendor NameContract ValueABC Corporation$75,000XYZ, Inc$60,000All the Rest$45,000Since the total value of the contracts are $180,000, all three would require OSC approval even though All the Rest is under $50,000.
7Sfl §163 – purchase of commodities and services Statutory preference is accorded in the following order: 1st Preferred Sources 2nd OGS Centralized Contracts 3rd Agency or Multi-Agency Contracts 4th Procurement Methods Prescribed by SFL
8Sfl §162 – preferred sources Commodities 1st Corcraft 2nd Industries for the Blind 3rd NYSID, buy “OMH”, Qualified Veterans’ WorkshopsServicesIndustries for the BlindNYSIDBuy “OMH”Qualified Veterans’ Workshops
9Sfl §163 – method of procurement Competitive BidsInvitation for Bid (IFB)Request for Proposal (RFP)Sole/Single SourcePiggybackingEmergency PurchasesDiscretionary Purchases
10When do you use an ifb?Typically used when requirements can be translated into exact specificationsAward will be made based on price aloneMust be used for commodity purchasesMay be used for the purchase of services and technologies
11Step #1 - Formulate the ifb Step #1A – Describe the Commodity/Service Step #1B – Describe the Bidder Qualifications/Requirements Step #1C – General Requirements
12Step 1a – describe the commodity/service Clearly describe the commodity/service neededShould meet program needsBe clear, unambiguous and all inclusiveSpecify if the commodity must meet certain standards
13Step 1a – describe the commodity/service For commodities only – when referencing a brand name, be sure to include “or equal” in the specificationsUse industry standards where applicableSpecify how the vendor is to bidHourly rateSquare footSpecified sizeEtc.Confirm the specifications with the end user
14Step 1b – bidder qualifications/requirements Specify criteria to provide reasonable assurance the vendor will be able to provide the commodity or service requiredDo not use criteria you cannot verify, measure, explain or do not needSpecify if the service requires licensing or certificationBe prepared to justify criteria selected
15Step 1c – general requirements List specific delivery requirements that reflect actual needFOB DestinationReview records of previous contracts, if possible, to review historical usage (estimates), contract deliverables and problems encounteredMandatory requirements should be pass/failEnsure requirements are not so restrictive that only one vendor meets the criteria
16Step 1c – general requirements Be careful when using words such as “must, shall, may not, minimum, maximum,” etc. to describe requirementsDo not invite vendors to include prices for additional services or to expand upon the requirements without figuring these additions into the method of award and evaluationItems cannot be awarded if they are not evaluated
17exampleThe Contract Reporter advertisement and the bid specifications state the winning vendor must be located within 15 miles of the agency’s location. The agency received three bids:VendorDistancePriceXavier, Inc44 miles$14.00Yellow and Co.16.2 miles$12.00Zed Unlimited13 miles$28.00
18discussionWho does the agency have to award to based on the stated requirements?What could’ve been done to avoid this situation?What other issues/problems do you see?
19solutionProblems:The requirement to be located within 15 miles was mandatoryAgency may have restricted competitionUnless the IFB allowed for making no award, the Agency has to award to Zed UnlimitedWays to avoid this:Conduct an internet search prior to soliciting bidsConduct a request for informationScan the document for must, shall, will and decide are they necessary
20Step #2 – method of awardStep #2A - Determine your Method of Award Step #2B – Weights and Estimated Usage Step #2C - Additions during the Contract Period
21Step 2a – determine your method of award Should be clearly statedExamples of appropriate Methods of AwardAward by itemAward by lotAward by grand totalIndicate the potential for multiple awardsIndicate how tie bids will be decided
22example“Agency reserves the right to award the bid based on any of the following criteria, whichever is in the best interest of the State:Total of Item ATotal of Item BTotal of Item A plus Item B”
23Discussion What item(s) is needed by the agency? What drives the decision on how to award the contract?Would all vendors be able to determine how the contract will be awarded?
24solution“Award will be made by item to the lowest responsive and responsible vendor or vendors. Agency reserves the right to make no award on any individual item.” OR “Award will be made by grand total to the lowest responsive and responsible bidder.”
25Step 2b – weights and estimated usage When determining the Method of Award, assign a weight to the cost based on estimated usageIf certain services or commodities will be used more frequently, the associated costs must be weighted accordingly in the evaluationShould be a reasonable estimate – based on historical usage when possibleReasonable estimates may be percentages or actual unitsUse total weighted cost as the determining factor, not unit prices
26exampleThe method of award states: “Award will be made based on the lowest average of the four classes shown below: Service Technician $________________ Foreperson $________________ Journey Level Person $________________ Apprentice $________________ Average $________________
27discussion Does this create an even playing field? How could this be altered to better reflect the agency’s need?What problems do you foresee when bids are received?
28Vendor a vs. vendor b Title Hours Vendor A Hourly Rate Extension Vendor B Hourly RateService Tech10$100.00$1,000.00$90.00$900.00Foreperson5$78.00$390.00$60.00$300.00Journey Level$50.00$250.00$45.00$225.00Apprentice$1.00$5.00$35.00$175.00Average$57.25$411.25$57.50$400.00Vendor A is the low vendor according to the method of award; however, they only send service technicians when work is required and the IFB and contract language does not specify who determines the skill level required for a job.
29Suggestions for improvement Indicate expected usage by categoryIndicate the agency will specify the skill level required for each jobRequire the per hour amounts must be equal to or greater than prevailing wagesPrevailing wage document or a Prevailing Rate Case (PRC) # must be provided
30Step 2C – additions during the contract period If you anticipate additions during the contract term or if you are requesting pricing on options, these must be evaluated in the method of award, or you cannot make an award for the additions.
31exampleAn IFB was conducted for lab testing services where vendors were asked to submit a per test price. In addition, the agency requested the vendors provide hourly rates for data review and expert testimony. These additional services are rarely used and no estimated number of hours were provided in the bid document. The method of award states: “Award will be made to the bidder meeting all of the Mandatory bid requirements and submitting the lowest per sample price.”
32discussionDo the vendors have enough information to submit reasonable prices for the additional services?Does the method of award clearly reflect the agency’s need?What information may help bidders formulate their bids most appropriately?What information may help the agency identify the true low bid?
33Vendor A vs. vendor b The following represents two bids received: 100 Samples$98.00$9,800.00$100.00$10,000.0010 hrs. Review$1,000.00$50.00$500.0010 hrs. Testimony$200.00$2,000.00Total$12,800.00$11,500.00Using the method of award stated, Vendor A would have been awarded the contract; however, Vendor B’s total contract value was lower.Optional/additional items should be incorporated into the method of award to ensure the State is obtaining the best price.
34Step #3 – develop your ifb Step #3A – Administrative ProcessStep #3B – IFB and/or Contract Terms and Conditions, including but not limited to – price adjustment clauses, renewals, termination, site visits, appendices
35Step 3A – administrative process Date, time and place of bid openingRequirements for submitting electronic, faxed or sealed bidsTimeline for processName, phone, fax and address of the contact person(s) for questions, Lobby Law and debriefingsTimeframe for submitting and responding to written questions relating to the IFB, if applicableDescription of how bidders will be informed of potential addendums to the IFB
36Step 3B – Price Adjustment Clauses Increases for contractors’ costs but also allows for the State to realize savings if costs decreasePrice adjustments will affect bids; therefore, must be included in the solicitation document in order to be included in the contract
37Step 3B – Price Adjustment Clauses Must be clearly definedMust identify frequency of increases/decreasesConsumer Price Index (CPI) must include the index, region, base period and itemProducer Price Index (PPI) must include the proper series IDCPI/PPI indices must be relevant to the item/service being procuredMay use other items such as prevailing wages, fuel indices, etc.Contracts utilizing de-escalation/escalation for both services and materials should include a proportional breakdown of the cost in the bid document
38Example escalation clause Vendor, or the State, may request a price increase or decrease based on changes in the CPI. CPI to be used is CPI - All Urban Consumers – Northeast All Items for the 12 months ended 90 days prior to the anniversary date of the contract. Requests for changes must be initiated 60 days prior to the anniversary date of the contract. Only one price adjustment per year will be granted on the anniversary date of the contract.
39Step 3b – renewals and termination provisions Contract term and subsequent renewalsCannot exceed five years totalTermination ProvisionsUnilateral termination by the vendor is unacceptable (Guide to Financial Operations (GFO), Chapter XI, Section 2. I. – Unilateral Termination Provisions)Consequences of Default (i.e. liquidated damages)Lobby Law ViolationsAgency’s convenienceCauseST220 violationsIran Divestment Act violations
40Step 3b – site visitsIf the site visit is mandatory, it cannot be waived for any vendorProvide OSC with a sign-in sheet for verificationBids received from vendors who did not attend the mandatory site visit must be rejectedSite visits should be conducted on one day at one time so all vendors have the same informationQuestions and answers generated as a result of the site visit must be distributed to all attendees
41Step 3b – IFB and/or contract terms and conditions Prevailing wage schedules, if applicableMandatory requirementsOrder of Precedence clauseVendor Responsibility documentationTax Department CertificationProcurement Lobbying documentationAppendix AIran Divestment Act languageProof of Workers’ Compensation and Disability coverage
43Step 4a – contract reporter advertisement Must appear in the Contract Reporter at least 15 business days prior to the proposal due dateNYS Agencies are required to publish:Bid solicitations over $50,000Annual anticipated procurements up to $50,000 based on date of first purchase (SFL §163 (6)(b))Contract Reporter exemptions must be approved by OSC prior to publishing the exemptionMake sure to include an “or equal” in your advertisement to avoid restricting competitionAgencies must use due diligence to identify potential biddersGFO Chapter XI, Section 14.A. – Publication of Procurement Opportunities
44Step 4b – discretionary advertising Discretionary purchases under $50,000 SFL §163 (6)(b)Obligates state agencies to aggregate expected purchases for the same commodities or services within twelve months from the date of purchase to determine whether the procurement falls within the discretionary thresholdExpressly prohibits split orderingA change to or a renewal of a discretionary purchase shall not be permitted if the change or renewal would bring the aggregate amount of all purchases of the same commodity or service from the same provider within the twelve month period over the discretionary threshold and should have been reasonably expected prior to the date of first purchase
45Step 4b – discretionary advertising Discretionary purchases between $50,000 and $200,000 Best Practices Language #1[Agency x] intends to purchase [1,000 widgets] pursuant to its discretionary authority under State Finance Law Section 163 (6). Interested parties should contact [agency contact person] to discuss this opportunity.Best Practices Language #2[Agency x] intends to purchase [1,000 widgets] pursuant to its discretionary authority under State Finance Law Section 163 (6), which authorizes purchases without a formal competitive process in certain circumstances, including purchases from New York State small businesses, from businesses certified pursuant to Article 15-A of the New York State Executive Law and, if applicable, from businesses selling commodities or technology that are recycled or remanufactured. Interested parties should contact [agency contact] to discuss this opportunity.
46Step 4b – discretionary advertising Discretionary purchases between $50,000 and $200,000 Best Practices Language #3[Agency x] intends to purchase [1,000 widgets] pursuant to its discretionary purchasing authority under State Finance Law Section This procurement opportunity is limited to NYS Small Businesses, businesses certified pursuant to Article 15-A of the NYS Executive Law and, if applicable, businesses selling commodities or technology that are recycled or remanufactured.This language can only be used when no formal solicitation has been made using an IFB or RFP.
47Step 4c - exemptionsExemption requests must be submitted to and approved by OSC prior to entering into a contractRequest must include:Justification of needJustification for the selection of the vendorJustification for reasonableness of price
48Step 4c - exemptionsState agencies shall conduct formal competitive procurements to the maximum extent practicableShall be used only when a formal competitive process is not feasibleShall minimize the use of single source procurementsShall only be made under unusual circumstancesShall include a determination that the specifications have been designed in a fair and equitable manner
49Step 4d – single/sole source exemptions Subparagraph ii was added to Section 163 (10)(b) to limit the use of single source procurements to circumstances where a formal competitive process is not feasible and provide that the term of the single source contract shall only be for a period of time until such circumstances are ameliorated. Furthermore, state agencies must document in the Procurement Record why competition is not feasible and publish these reasons on its website within 30 days of awarding a single source contract. This is in addition to the requirement that single source contracts be let only in unusual circumstances where material and substantial reasons exist.
50Step #5 – Bid tabulations Bid Opening Submission to OSC
51Step #5 – bid tabulations At the time of the bid opening:Ensure all bids are available to be openedReflect all bids receivedSigned and certified by the agency on the day of the bid openingBefore sending it to OSC:Indicate any rejectionsIndicate the winning bidder based on the method of award
53Step 6A – awarding the contract Award to the lowest responsive and responsible bidderAward in accordance with the method of awardEnsure the product/service being offered meets the minimum specifications of the bidCompare the minimum specifications of the product offered with those of the brand name referenced, if applicableVerify the vendors’ calculations
54Step 6b – vendor responsibility Verify the vendors meet the minimum requirements stated in the IFBInvestigate large variations in bid prices to ensure the low bidder understands the scope of workReview vendor responses/questionnaire and analyze resultsConduct other independent research to identify undisclosed issuesVerify the vendor is not present on the Workers Compensation or Labor Law debarred lists
55Step 6c – exceptions/deviations Exceptions/deviations to the bid specifications should be acknowledged and included in the procurement recordInclude a memo for OSC and the procurement record indicating the following:How the agency determined the exceptions/deviations are immaterialHow were other bidders and potential bidders not harmed by accepting the exception or deviation
56exampleRegarding the qualifications of the vendor, the agency indicates the following:“Vendor must have a minimum of 5 years experience.”“Vendor will provide evidence of licensing.”“Vendor shall possess the necessary equipment to perform the required service(s).”The agency received only three bids – two with less than 5 years experience and one with 6 years experience. The vendor with the most experience was the highest bidder.
57discussion Are the qualifications mandatory? Can the agency deem the lack of experience a minor deviation?What problems might this present?What could the agency have done to avoid this?
58solutionPrior to release of the IFB, scan the document for the words must, shall and will which indicate mandatory requirements.An agency can determine a qualification or specification is a minor deviation if the agency can document that inclusion of the mandatory requirement did not advantage the winning vendor, cause any qualified potential vendor to refrain from submitting a bid, and did not otherwise disadvantage any bidder or potential bidder. When qualified potential bidders are referred to, this includes any vendor in the entire field of potential vendors, not only those submitting bids.
59Step 6d – bid protestsGFO, Chapter XI, Procurement and Contract Management, 17. Protest ProceduresAgencies should:Establish their own protest proceduresProvide notice of their protest procedures in the solicitation documentsNotify non-selected bidders of the contract awardIf a protest is received, agencies must:Respond appropriately to the protest (uphold or deny)Include all documentation with the procurement package to OSCI Object!
60State Finance Law §163 (9)(c) Step 6d - debriefingsState Finance Law §163 (9)(c)“The opportunity for an unsuccessful offerer to seek a debriefingshall be stated in the solicitation, which shall provide a reasonabletime for requesting a debriefing.”Include your procedures for debriefings in the solicitation documentRespond when a debriefing is requestedDiscussion should be limited to the vendors bid onlyInclude documentation with the procurement package submitted to OSC
61Step 6e – rejected bids Rejected bids should: Be supported by a memo Include the reason for the rejectionAllow due process for non-responsible biddersBe included with the contract package submitted to OSCInclude all correspondence between the rejected vendor and the agency
62Step 6f - generalEnsure all bidders receive written response to any questions and answersEnsure all bidders receive any addendums issuedIf less than three bids are received:Canvas no-bidsInclude price justification
63Step #7 – the contract agreement and applicable appendices Step #7A – Contract Agreement Step #7B – Applicable Appendices
64Step 7a – the contract agreement Written agreement between the agency and the vendorMutually agreed upon terms and conditionsFormulate the contract based on the IFB and the winning vendor’s bid, including, but not limited to:Contract term including renewalsPrice Adjustment Clause(s)TerminationsIran Divestment Language must be included in every contract – GFO, Chapter XI, Section 18. F. The Iran Divestment Act of 2012
65Step 7a – the contract agreement Required SignaturesGFO, Chapter XI, Section 2Vendor with acknowledgement - XI.2.MAgency – XI.2.KAttorney GeneralOSC – XI.2.LOther required by Law (e.g. Civil Service)
66Step 7b – applicable appendices The following appendices may be attached to each contract:Appendix A – mandatory (GFO, XI.2.J.)Agency specific appendicesSales and Compensating Use Tax (ST220CA) (GFO, XI.18.D)Vendor Responsibility (GFO, XI.16)Consultant Disclosure (GFO, XI.18.C)MWBE Utilization (GFO, XI.18.A)Procurement Lobbying Act (GFO, XI.18.B)GFO, Chapter XI Procurement and Contract Management
67Step 7b – applicable appendices GFO, Chapter XI Procurement and Contract ManagementIran Divestment Act of 2012 (GFO, XI.18.F)Workers Compensation and Disability Insurance Coverage (GFO, XI.18.G)Division of Budget Bulletin B-1184 Attachment A or B (GFO, XI.11.A)Prevailing Wages, if applicable
69GFO, Chapter XI, Section 2. C. Encumbering a Contract Step 8a - encumbrancesGFO, Chapter XI, Section 2. C. Encumbering a ContractAgencies must be prepared to enter the PO encumbrance when requested by OSCAgency should indicate the intended encumbrance amount on the bottom of the STS or AC340SCalculating the minimum encumbrance amount (in general):Contract value/#of years = yy/12 = monthly amountMonthly amount multiplied by the # of months between start date of contract and end of fiscal year = minimum encumbrance amount
70Step 8a - encumbrancesEXAMPLE Calculate the minimum encumbrance amount on a $360,000, three year contract beginning August 1st. $360,000/3 = $120,000 $120,000/12 = $10,000 $10,000 x 8 = $80,000 MINIMUM ENCUMBRANCE NEEDED
71STEP 8B – THE CONTRACT PACKAGE REFER TO HANDOUT PROVIDED
72Step 9 – Contract Approval How to determine your contract has been approved by OSC:SFSOpen Book New YorkWhat you receive back from OSC upon approval:AC-1552S OSC Transmittal LetterSignature Pages with OSC approvalHow to determine your contract has been non-approved by OSC:Non-approval notice