Presentation on theme: "Purchasing Goods and Trade Services"— Presentation transcript:
1 Purchasing Goods and Trade Services Developed by ODOT Procurement OfficeProcurement 201Purchasing Goods and Trade ServicesWelcome everyone!Instructor Introductions. [Student introductions later]Mary WandellNov Office of Project Delivery1 year – Office Specialist 2Alternative Delivery Program Coordinator5 months – Program Technician 22 years – Procurement & Contract SpecialistMarch 2004 – ODOT Procurement Office2 years - Procurement & Contract Specialist4 years - Procurement Training Coordinator (Since April 2008)
2 Housekeeping Safety Information Facilities Breaks Accommodation Handout packet
4 Training ObjectivesAfter completion of this training, participants will be able to:Identify the roles and responsibilities for local procurement of Goods and Trade Services up to $100,000Describe the Small Procurement processPractice procuring Goods and Trade Services using the ‘3 Quote’ processApply Contract Administration practices to both simple and complex purchases of Goods and Trade ServicesUse the Oregon Procurement Information Network (ORPIN) to find existing Price AgreementsGo through training objectives quickly.
5 Agenda Contracting Basics Soliciting in the Open Market Small ProcurementIntermediate ProcurementPurchase OrdersProcurements over $100,000Contract AdministrationResourcesThis training will focus on requirements, process and tools for procuring goods and trade services.
6 IntroductionsYour nameWhere you workWhat you purchase
7 Contracting Basics Section 1 Procurement 201 Review from Procurement 101 –Procurement 201Purchasing Goods and Trade Services
8 First Steps to Procurement PurchasingAuthorityThe “BuyDecision”The DecisionTo PurchaseDefinethe NeedProcurementPotentialFirst Steps of making a purchase…Ask Group:What’s the suggested order of steps to take before you start contacting vendors in the open market?Group consensus on the order?Progress quickly to slide 13 to fill out the chart.Open MarketConducting purchase throughan open solicitation process
9 First Steps to Procurement PurchasingAuthorityThe “BuyDecision”The DecisionTo PurchaseDefinethe NeedProcurementPotentialClickOpen MarketConducting purchase throughan open solicitation process
10 First Steps to Procurement PurchasingAuthorityDefinethe NeedThe “BuyDecision”The DecisionTo PurchaseProcurementPotentialClickOpen MarketConducting purchase throughan open solicitation process
11 First Steps to Procurement PurchasingAuthorityDefinethe NeedThe “BuyDecision”The DecisionTo PurchaseProcurementPotentialClickOpen MarketConducting purchase throughan open solicitation process
12 First Steps to Procurement Definethe NeedThe “BuyDecision”The DecisionTo PurchasePurchasingAuthorityProcurementPotentialClickOpen MarketConducting purchase throughan open solicitation process
13 First Steps to Procurement Definethe NeedDefining a business need in termsof goods and/or services to meet the needThe DecisionTo PurchaseDetermining if the potential purchase fitsthe mission, goals and budgetary constraintsPurchasingAuthorityFinalizing the authority to commit fundsand conduct a procurementThe “BuyDecision”Buying via socio-economic programs andagreements before using open marketProcurementPotentialOpen MarketConducting purchase throughan open solicitation process
14 Getting Started Define the need Estimate the total cost of purchase Assess options; does it require purchasing something or hiring a contractor to do work?Estimate the total cost of purchaseConfirm funds are authorized for the purchaseDetermine who has authority to conduct the purchasing processDefine clear and specific requirementsIf you don’t ask for it, you won’t get it!Define needWhat’s the problem to solve?What’s the proposed solution?What do we already have? What do we need to obtain?Estimating costFunding approvalThreshold for authority to procureClear and specific requirementsAsk or you won’t receive
15 Estimated Total CostEstimated total cost is based on the total cost of contract if amended to it’s maximum limitEstimated cost for initial contractPlus estimated cost for annual renewals or additional projected workTotal cost is for the whole project and the anticipated duration.Equals estimated total cost
16 Requirements for Goods Defining product specificationsProduct features and characteristicsBrand name requirement (more on next slide)Resources for product specifications and standardsODOT Qualified Products List (QPL)Established ODOT standardsProduct catalogs and brochuresInternet researchDeveloping ODOT’s requirements for Goods
17 Brand Name Specifications Requires written determination that it meets at least one of the following:unlikely to encourage favoritism or substantially diminish competition;would result in substantial cost savings;only one manufacturer or seller for the quality, performance or functionality required; orrequires purchase of goods or services compatible with existing goods.Keep written determination in fileDocument how the purchase meets at least one of the criteriaDiscussion of criteriaNo Favoritism; does not limit competition – all vendors contacted sell that brandResults in substantial cost savings –Cost less than other brands to purchase or operateFalls under same maintenance and support agreement as other owned equipmentQuality, performance, functionality -The only brand that includes required featuresThe only brand that meets durability standardsCompatibility –Software compatibility for transfer of dataInterchangeable parts for maintenance and repairInterchangeable accessories for operationAdditional training not required for operationDAS Rules – Under DAS Delegation, OPO can approve Brand Name for purchases over $150,000 up to $5 million.
18 Brand Name or EqualCan specify brand name “or equal” to establish standard of quality, performance, functionality and other characteristics requiredDoes not require written determinationDoes not have to meet required criteriaMust accept bids for products that meet mandatory specifications, regardless of brand nameMore common is to specify a brand name “or equal”This establishes required standards of quality and functionality
19 Requirements for Goods Examples of other requirementsWarranty requirementsMaintenance and support requirementsDelivery requirementsFOB Destination vs. FOB OriginDelivery locations and timelinesInclude cost of shipping and handling in bid priceInsurance requirements (more on next slide)Delivery RequirementsFOB – “Freight On Board” or “Free On Board”FOB Destination preferred;Shipper pays shipping; responsible for damage until ODOT receivesIn solicitation, specify bid must include all shipping and handling charges.
20 Insurance for Goods If vendor delivers goods, require: Recommended: Workers’ Compensation for vendors with more than 1 employeeAutomobile Liability covers bodily injury or property damage associated with vendor’s automobileRecommended:Commercial General Liability covers bodily injury and property damage caused by vendor or product purchased from vendorRecommendations from Ron Bennett, who was ODOT’s Contract Risk & Insurance ConsultantWhen vendor employee will deliver Goods to ODOT, require:Workers’ CompCommercial General LiabilityAutomobile LiabilityCovers any bodily injury or property damage that occurs during delivery of product.Ron recommends always requiring Commercial General LiabilityEven when ordering product by phone and product is shipped to ODOT by commercial carrier (USPS, UPS, commercial shipper, etc.)
21 Insurance for Goods If purchasing a vehicle, also consider: Garagekeepers’ Legal Liability covers damage to vehicle occurring at vendor’s facility when left for service, repair, storage or safekeepingWhen purchasing a vehicle, consider Garagekeepers’ Legal LiabilityPurchase vehicle at dealership – dealership burns down and ODOT’s vehicle is destroyed. Covers value of vehicle.
22 Requirements for Goods Specify each requirement as Mandatory or DesirableMandatoryMust reject bid if any mandatory not metCost is included in bid total for low bid determinationDesirableNot required, but adds valueCost generally not included in bid total for low bid determinationIf not included in bid total, cost can be negotiatedMandatory specifications (what you must have)Desirable specifications (what would also be nice to have)
23 Requirements for Goods Invite vendors to offer additional features or accessoriesPrice of these not included in bid total for low bid determinationCost of these can be negotiatedAsk for other related features or accessories vendor offers
24 Sustainability - Buying Green City of PortlandEnergy EfficientEnergy Star logo / website atRecycled ContentPost-consumer content is bestEPA website:Non-ToxicBe wary of products labeled non-toxic without reference to certification or other details.Minimal & Recyclable PackagingBuy Local, Buy MWESBTo include more “green” specifications…City of Portland website is a good resource for informationIncludes:“green” specifications for some purchasesLinks to other websitesDAS – Greg Hopkins
25 Requirements for Services Options for defining requirements for ServicesDescribe the situation and ODOT’s requirements for the final outcome - contractor determines how to get it doneUse a Statement of Work that includes:Tasks - description of work to be doneDeliverables - tangible, measurable outcomes of the workSchedule – date each Deliverable must be completedRequirements for outcome; contractor determines howExamples:HVAC repair at DMV facilitiesPaint outside of buildings E and K at Region 2 complexVegetation management (weed whacking) along Hwy 42Statement of Work specifies tasks, deliverables and scheduleExample:Deliver training to ODOT staffTask 1 – Copy handouts; compile into packets (packets due 2 days before class)Task 2 - Provide class instruction according to prepared curriculum (instruction completed as scheduled)Task 3 - Distribute training evaluations; collect responses and compile into a report (training evaluation report due 2 days after class)
26 Requirements for Services Examples of other requirementsSafety standardsCertifications or licensesSpecifications for materials to be usedInsurance coverage (more on next slide)Other things to think about when procuring services:
27 Insurance for Services Always require:Commercial General Liability covers bodily injury and property damage caused by vendor or product purchased from vendorWorkers’ Compensation for vendors with more than 1 employeeIf services require operation of vehicle, require:Automobile Liability covers bodily injury or property damage associated with vendor’s automobileRecommendations from Ron Bennett who was ODOT’s Contract Risk & Insurance ConsultantAlways require Commercial General Liability and Workers’ Comp,If services include operating a vehicle, also require Automobile LiabilityCovers any bodily injury or property damage that occurs if there is an accident
28 Insurance for Services If service for ODOT vehicle, consider:Garagekeepers’ Legal Liability covers damage to vehicle occurring at vendor’s facility when left for service, repair, storage or safekeepingIf there’s risk of pollution, consider:Pollution Liability covers bodily injury, property damage and environmental damage caused by vendor in a sudden accidental occurrence (can include gradual accidental occurrence)When services are to repair or modify a vehicle, consider Garagekeepers’ Legal LiabilityVehicle left at dealership for repair – dealership burns down and ODOT’s vehicle is destroyed. Coverage for value of vehicle.Pollution LiabilityConsider when contractor will be removing, hauling, storing, or disposing of hazardous materials.Adds to the cost of the contract.May be difficult for small firms to get this coverage at a reasonable cost.What pollution could occur… what is the likelihood?
29 The “Buy Decision” Consider Buy Decision sources in priority order: Surplus PropertyQualified Rehabilitation FacilitiesInmate LaborDAS Statewide Price AgreementNOTE: ORS 190 Agreements such as Intergovernmental & Tribal Agreements may be used at any time in the processOpen MarketIf Buy Decision sources do not meet your needs, the purchase may be made in the open marketMay go through Buy Decision sources with idea of what’s needed and evaluate what they offer.DAS Rule requires consideration in priority order:Surplus – use what State has already purchasedQRF – use public funds to support disabled peopleInmate Labor – use labor resources that public funds already supportStatewide PA – discounts and advantages for volume purchasesIGA – using other public resources to meet the need
30 The “Buy Decision”Required to purchase from a “Buy Decision” source, if it meets ODOT’s needs.Often quicker process than Open Market solicitationsNo limit to quantities or cost of purchaseIf Buy Decision doesn’t meet our need, we develop clear specifications before contacting vendors in the Open Market
31 How to Find Buy Decision Sources SurplusODOT Surplus or websiteDAS websiteQualified Rehabilitation Facility (QRF)DAS website includes lists of QRF providers for Goods or ServicesInmate LaborWebsites for Oregon Corrections Enterprises or Oregon Dept of Corrections Inmate Work ActivitiesHandout: Helpful Websites and LinksAsk someone to name a good and a service they purchaseDo an online demo of each site to look for themHandout
32 How to Find Buy Decision Sources DAS Price AgreementsOPO website for list of Price AgreementsCall Debbie Janke at (503)Oregon Procurement Information Network (ORPIN)Call DAS Hotline at (503) , Option 2Handout: ORPIN Step-by-Step GuideGenerally easier to find PA on ORPIN when you have the PA numberOPO has searchable listCall DAS hotline – they can tell you if there is a price agreement for item you are procuring.Handout
33 Getting Access to ORPIN To obtain “state employee” access to ORPINDebbie Janke, subject line "ORPIN Access"Include your preferred “user name”6 characters or morealpha or numeric characters onlycase-sensitiveFor assistance with ORPINContact Debbie Janke at (503) or byState employee accessdownload documentspost solicitation and award on ORPINContact Debbie Janke for access
34 ORPIN Training DAS provides hands-on classes: ORPIN Full System TrainingORPIN: Just the BasicsiLearnOregon at https://iLearn.oregon.govCheck class dates and timesRegister for trainingDAS offers excellent training on ORPINRegister on iLearn (State system)
35 DAS Price AgreementsIntended to provide cost effective pricing for common goods and servicesPrices in the Price Agreement are the maximum limitsODOT can request lower pricesDesignated as either Mandatory or ConvenienceMandatory – Must use, with some exceptionsConvenience – May useMandatory Price Agreements - Required to purchase from theseIf goods or services meet our needPA may list exceptions when not required to purchaseWhen there are multiple mandatory PA for the same item, choose the one that best fits your needsExamples of Mandatory Price AgreementsOffice suppliesComputer hardwareTiresFuelConvenience PA typically put in place to meet needs of specific agency or project - ODOT not required to purchase from these
36 ODOT Price Agreements ODOT also has Price Agreements Asphalt Emulsions and Recycling AgentsDeicer, Magnesium ChlorideODOT also has Price Agreements.
37 Fleet Equipment Purchases Before contacting vendors, contact Fleet Operations to verify if there is a price agreementRefer to “Fleet Equipment Purchase Process” handout for more informationIf you have questions or need assistance, contact Stacie Olano at (503)Handout: Fleet Equipment Purchase ProcessNew guidelines – will be posted on Fleet’s Intranet site.Handout
38 Process Map - Bid, Award, Pay That covers initial stepsIf Buy Decision meets need, purchase from source.If Buy Decision doesn’t meet needs, go to Open Market.
39 Soliciting in the Open Market Section 2Procurement 201Purchasing Goods and Trade Services
40 Process Map - Bid, Award, Pay Open Market procurements go through Bid – Award process.Complexity of process changes based on several factors:Total estimated costRisk and complexity of purchaseSolicitation method
41 State of Oregon Procurement Policy ORS 279A.015A sound and responsive public contracting system should:Instill public confidence through ethical and fair dealing, honesty and good faith on the part of government officialsAllow impartial and open competition, protecting both the integrity of the public contracting process and the competitive nature of public procurementTaxpayers and businesses are very interested in how we manage procurements.State of Oregon procurement policy in ORS 279 states:Public confidence through ethical and fair dealing,Don't engage in unethical or unfair business practicesDon't create perception of unethical or unfairADOT articleImpartial and open competition3 quote process, ITBs and RFPs.Don’t unnecessarily limit competition for ODOT contractsFormer FAA article
42 State of Oregon Procurement Policy ORS 279A.015 (continued)A sound and responsive public contracting system should:Promote efficient use of government resources, maximizing the economic investment in public contracting within this state.Clearly identify rules and policies that implement each of the legislatively mandated socioeconomic programs that overlay public contracting and accompany the expenditure of public funds.Efficient use of government resources –SurplusInmate laborDAS Price AgreementsORS 190 AgreementsLegislatively mandated socioeconomic programsMWESB notification requirementsQualified Rehabilitation Facilities (QRF)ESB program
43 Ethical Considerations Public employees are held to high standards of conductGovernment Ethics (ORS 244)Staff declare potential or actual conflicts of interest; Agency reassigns to staff with no conflict of interestNo unfair gain from public employmentPotential COICould be direct benefit - Creates perception of unfair advantageActual Conflict of InterestWould be direct benefit - Giving unfair advantage to relative or businessSelecting relative’s business in vendor selection process; unfair competition. Instead, declare as actual or potential conflict of interest.Giving information to relative that is not available to other bidders; unfair advantage. Instead, refer them to point of contact. If you are the point of contact, notify your supervisor of the potential conflict. They may need to reassign the solicitation.Conduct solicitation that includes vendor you used to work for. Refer to ODOT Code of Conduct policy. Consult with OPO.COI - Region 4 Baggett ArticleNo unfair gainStone Cole CorruptionGift certificates, points, bonuses and kick-backs for personal benefit.
44 Ethical Considerations Maintain public trustPromote impartial and open competitionMaintain a fair and level playing fieldBe good stewards of taxpayers moneyProtect best interests of the StatePromote impartial and open competitionDo 3 quote in La Grande for purchases under $5,000Request quotes from more than 3 vendors for Intermediate ProcurementDon’t fragment purchasesDon’t create unnecessarily restrictive specificationsMaintain a fair and level playing fieldGive all potential bidders the same informationDon’t play favoritesBe good stewards of taxpayers moneyDo low bid when most efficient; otherwise best interest of state gives you more flexibilityAsk for what ODOT needsProtect best interests of the StateAssess risks to ODOT or the publicManage the risks appropriately
45 Procurement Authority & Thresholds FormalProcurementAbove $5 millionDAS AuthorityAbove $5 millionDAS AuthorityDASProcurementFormalProcurementAbove $150,000ProcurementOPOIntermediateProcurement$100, to $150,000$100, to $150,000Personal ServicesPublic ImprovementsIntermediateProcurementExceptionsProcurementLocal$5, to $100,000$5, to $100,000Significance to youLow dollar purchasesFewer requirementsSimplified procurement processFewer involved in the processYou have more control over how quickly you can complete the purchaseHigher dollar purchasesMore requirementsMore complexity in the procurement processOthers involved in the processTakes more time to complete the purchaseUPDATE NOT REFLECTED IN CHARTOPO now has authority to conduct solicitations under DAS authority up to $5 million;IT PurchasesITPAMSmallProcurementUp to $5,000Up to $5,000TGM ProjectsTGM
46 High Complexity–High Risk Purchases Personal ServicesCompleted by OPOA&E and Related Services under ORS 279C; non-A&E under ORS 279BPublic Improvements (Public Works)Some under ORS 279C; others under ORS 279BBOLI or Davis-Bacon prevailing wage requirementsBond requirementsODOT required to pay fee to BOLI for Public Works over $50,000Personal Services and Public Improvements – many requirements and complexitiesPersonal Services:OPO does mostDAS does some
47 High Complexity–High Risk Purchases IT Related PurchasesCompleted by ITPAMPurchases must meet ODOT’s standard specificationsPurchases require ODOT’s Chief Information Officer approvalGoods & Trades over $100,000Completed by OPOSolicitation requirements become more complexLarge contract amounts generally have more riskAggressive competition for contracts; more protestsIT Related PurchasesITPAMOPODASGTS over $100,000
48 Complexity & Risk Matrix Low Complexity& RiskHigh ComplexityIncreasingRiskComplexityComplexity and Risk impact communication, process, and contract typeverbal vs. written solicitationsimple informal solicitation vs. more formal solicitationdirect selection vs. competitive processpurchase order vs. contractComplexityComplexity and risk of your purchaseimpacts:Communication with vendorsLevel of detail to provide vendorsCriteria used to select vendorContract documentRisk
49 Complexity & Risk Matrix Low Complexity& RiskHigh ComplexityIncreasingRiskComplexityDetermine Complexity based on factors such as:Product sophisticationFederal and state requirementsServices generally considered complexComplexityAssessing complexityWhich is generally more complex:Buying a hammer or buying land surveying equipment?Buying a new engine for a specific vehicle (Part number) or buying a new vehicle?Services to repair a broken faucet or services to replace HVAC and ductwork in an old building?Public Works under $50,000 or Public Works over $50,000 (bonding & prevailing wage)?Risk
50 Complexity & Risk Matrix Low Complexity& RiskHigh ComplexityIncreasingRiskComplexityDetermine Risk based on assessment of:What could go wrong?Likelihood of occurrence?What kind of harm or loss?How can the risk be managed?ComplexityAssessing riskWhich generally has a higher level of risk:Buying same GPS unit that ODOT already uses or buying innovative new type of GPS unit?Obtaining landscape maintenance services for office location or having contractor replace carpeting in DMV office? (confidential records and information on desktops)Purchase and installation of park bench at highway rest area or tree removal along a section of highway?Risk
51 Evaluating Complexity and Risk Washing outside of T-Bldg windowsComplexityProduct sophisticationTypes of servicesFederal and state requirementsRiskWhat could go wrong?Likelihood of occurrence?What kind of harm or loss?How can the risk be managed?Group DiscussionPhone quote or written solicitation?
52 Evaluating Complexity and Risk Buying or leasing a specialized copier (not on DAS Statewide Price Agreement)ComplexityProduct sophisticationTypes of servicesFederal and state requirementsRiskWhat could go wrong?Likelihood of occurrence?What kind of harm or loss?How can the risk be managed?Group DiscussionPhone quote or written solicitation?
53 Evaluating Complexity and Risk Seats for One Ford F550 Truck (Part number L45879A2)ComplexityProduct sophisticationTypes of servicesFederal & state requirementsRiskWhat could go wrong?Likelihood of occurrence?What kind of harm or loss?How can the risk be managed?DiscussionPhone quote or written solicitation?
54 Small Procurement Section 3 Procurement 201 Handout: Procurement Decision Flow ChartGetting StartedDefining the NeedProcurements regions don’t have authority to procureBuy DecisionConsider the sourcesIf they meet need, use them.If they don’t meet need, go to Open MarketProceed to Open MarketChart shows only procurements for Goods and Trade Services (including Public Works)Procurement 201Purchasing Goods and Trade Services
55 Small Procurement ORS 279B.065 Any procurement of goods or services not exceeding $5,000A Small Procurement may be awarded in any manner deemed practical or convenient, including by direct selection or awardReminder: By the time you’ve gotten to this point, you’ve already determined that goods or services are not available through Buy Decision, including DAS Price Agreements.Statutory RequirementsOpen Market purchases up to $5,000 – called “Small Procurement”Direct Selection –means we can choose vendor without competitive processMay be in ODOT’s best interest to do competitive process for some purchases even though not requiredRemember ethics - we don’t recommend:Purchasing from your brother, the sales rep (conflict of interest)Purchasing from vendor who offers you gift certificates (gifts)Both prohibited per ORS 244
56 Small Procurement ORS 279B.065 A contract awarded under this section may be amended to exceed $5,000 only in accordance with rules adopted under ORS 279A (Amendment must not increase contract total to exceed $6,000)A procurement may not be artificially divided or fragmented so as to constitute a Small Procurement.Statutory RequirementsDon’t split large purchase into smaller purchases to stay under $5,000Fragmentation prohibited by law and ODOT Policy SUP 03-01IG Faults DHS article
57 Complexity & Risk Matrix Low Complexity–Low RiskContact one vendorMake purchaseHigh Complexity–Low RiskLow Complexity–High RiskMarket research to find appropriate goods or servicesSelect in practical or convenient mannerHigh Complexity–High Risk3 Quote processPO with attachmentsMarket ResearchDirect Selection3 Quote Process PO with attachmentsComplexityMarket ResearchDirect SelectionDirect PurchaseLow complexity – Low riskOne time purchase of a simple product or service.High complexity – Low riskPurchase products that must comply with very technical and complex mandatory specificationsComplex when there are many products on the market that do not meet ODOT’s mandatory specs.Low complexity – High riskVery rural area – Products and services are available from 3 local vendors High risk - because local vendors are complaining about unfair business practices claiming ODOT has been purchasing from the same vendor and not giving others opportunities for ODOT business.High complexity – High riskServices that ODOT has not obtained in the past; unfamiliar with the vendors that provide the services. If services not done properly, the services could damage people or property.Risk
58 Process Map - Bid, Award, Pay Small Procurement Bid – Award – Pay process requirements are minimal.Can be as simple as going into a store and purchasing an item using a SPOTS card.If purchase is more complex or high risk, it may be wise to do more than is required by statuteTo improve communication with potential biddersTo provide more opportunities for local vendors to compete for ODOT businessTo increase enforceability of the final agreement in case things go wrong
59 Small Procurement Award in any manner deemed practical or convenient Direct selectionCompetitive 3 Quote process (optional)Contracting/Purchasing methodPay direct from invoiceSPOTS Visa cardPurchase Order or Standard Contract (optional)Summary of requirements for Small Procurements
60 Small Procurement Procurement Responsibility Local Purchaser: Initiates and completes purchaseOPO: Information and support for local purchaserDAS: Not involved at this threshold levelSummary of responsibilities for Small Procurements
61 The Magic Number Anyone want to guess what the magic number is. Hint: It’s between 0 and 100,000
62 The Magic Number - $5,000 $5,000 or more requires: $5,000 or less: Can use SPOTS card to make purchase$5,000 or more requires:Notification to Advocate for Minority, Women, Emerging Small Business (MWESB)Purchase order or contractOver $5,000 requires:Competitive solicitationPosting on ORPINAdditional requirements on purchase when meets or exceeds $5,000$5,000 or less – can purchase with a SPOTS card$5,000 and moreMWESB notification (statutory requirement)PO or contract required (ODOT requirement)Over $5,000Competition required, with some exceptions (statutory requirement)Post on ORPIN (DAS requirement)
63 The Magic Number - $5,000 MWESB Notification (ORS 200.035) ODOT must provide timely notice to the Advocate for Minority, Women and Emerging Small Business (MWESB)Required for each solicitation of $5,000 or more and each contract award of $5,000 or moreThree options to meet the requirement:Self search database and fax results after awardFax for solicitation and separate fax after awardPost solicitation and award on ORPINHandout: Notification to Advocate for MWESBOptions to meet requirementSelf-search database; fax results after awardFax to report solicitation; fax to report awardPost solicitation and award on ORPINHandout
64 The Magic Number - $5,000Oregon Procurement Information Network (ORPIN) (OAR )DAS requirement applies to purchases not directly related to transportationDAS requires posting a notice on ORPIN for:Each solicitation that exceeds $5,000Each contract award that exceeds $5,000DAS requires all solicitations and awards over $5,000 to be posted on ORPINApplies to purchases not directly related to transportation system
65 The Magic Number - $5,000 The Notice in ORPIN must provide: A general description of Goods and Services to be acquired;A reasonable and sufficient interval between the first date of the notice and bid closing. For purchases exceeding $100,000, interval must be at least seven calendar days;The name, title and address of the ODOT staff authorized to receive bids; andAny other information ODOT deems to be appropriate.Notice on ORPIN must include at least this info.
66 Intermediate Procurements up to $100,000 Section 4Procurement 201Purchasing Goods and Trade Services
67 Intermediate Procurement ORS 279B.070Any procurement of goods or services exceeding $5,000 but not exceeding $150,000Must seek at least three informally solicited competitive price quotes or proposals from prospective contractors and keep a written record of the sources of the quotes or proposals receivedIf three quotes or proposals not reasonably available, document effortsORS defines purchases over $5,000 up to $150,000 – “Intermediate Procurements”Delegations within ODOT – Locals can purchase up to $100,000.Statutory requirements are still fairly minimal.Seek at least 3 quotes (may have to contact more than 3 vendors)Keep written record of sources of quotes received (not required to do a written solicitation… can obtain quotes by phone)Document efforts if unable to obtain at least 3 quotes
68 Intermediate Procurement ORS 279B.070Award to bidder whose quote or proposal best serves the interests of agency taking into account price as well as considerations such as experience, expertise, product functionality, suitability for a particular purpose and contractor responsibilityA procurement may not be artificially divided or fragmented so as to constitute an Intermediate Procurement.Statutory requirements (continued):Award to bidder who best serves interests of agency (not required to award to lowest bidder)Don’t fragment or split a large purchase into smaller purchases to stay under $150,000Additional requirements often inadvertently skipped:notification to MWESBposting on ORPIN (when not related to transportation)
69 Amendment Limitations ORS 279B.070A contract awarded under this section may be amended to exceed $150,000 only in accordance with rules adopted under ORS 279A.065So what are the rules we’ve adopted? Go to next slide -
70 Amendment Limitations Intermediate Procurements – ODOT AuthorityCumulative amount of amendments cannot exceed 25% of original contract amountReview…This applies to change orders too.ODOT authority – directly related to transportation system.
71 Amendment Limitations Intermediate Procurements – DAS AuthorityIf contract total will exceed $150,000, must obtain prior approval from DAS for Special ProcurementAnticipated Amendments – No limit to amendments until contract total reaches $150,000Unanticipated Amendments – Prior OPO or DAS approval is required to exceed 20% of original contract amountDAS Authority – Not directly related to transportationIf original PO or Contract plus amendments will exceed $150,000, must obtain DAS approval for Special Procurement before doing amendment.Anticipated amendments –Any anticipated conditions that would require a need to amend the PO or contract – must be defined in the PO or contract.Unanticipated amendments –A totally unexpected need to change the contract.
72 Intermediate Procurement Procurements over $5,000 up to $150,000Competitive process required –Seek to obtain 3 quotes or proposalsKeep written record of quotes or proposals receivedDocument efforts if 3 are not availableAward to quote that best serves interests of AgencyLowest bid or other considerationsContracting methodPurchase OrderContractSummary of requirements for Intermediate Procurements.
73 Intermediate Procurement Procurement ResponsibilityLocal Purchaser:Initiate and complete purchase of $100,000 or lessSubmit Purchase Requisition to OPO if over $100,000OPO: Complete procurement if over $100,000DAS: Not involved at this threshold levelSummary of responsibilities for Intermediate Procurements.
74 Complexity & Risk Matrix Low Complexity – Low RiskSolicit quotes by phonePurchase Order (PO)High Complexity – Low RiskLow Complexity – High RiskWritten solicitation/Fax to vendors or post on ORPINPO with attachmentsHigh Complexity – High RiskMore formal written solicitationContractRequest for BidPO with attachmentsITBContractComplexityRequest for BidPO with attachmentsPhone QuotesPOAgain, if a purchase is more complex or high risk, it may be wise to do more than is required by statute.Written solicitations not legally required, but highly recommended.Low complexity and low risk for goods and services – Phone Quotes and PO.High complexity or high risk for GOODS – Use the Request for Bids and PO with attachments (specifications, insurance requirements, price list, etc.)High complexity or high risk for SERVICES – Consider using the Intermediate ITB and contract. Generally services are considered high complexity.High complexity and high risk for goods and services – Intermediate ITB and contract or contact OPO for assistance.Risk
75 Process Map - Bid, Award, Pay Basic Bid-Award-Pay process still applies, but with some additional activities in some of the steps.Handout: 3-Quote ChecklistMarket ResearchIdentify minimum of 3 vendorsContact VendorsSolicit bids from minimum of 3 vendorsNotice of solicitation to Advocate for MWESBPost on ORPINVendor SelectionDirect selection not allowed; competitive selectionAward ContractPO or contract requiredNotice of award to Advocate for MWESB
76 Market Research Identify potential vendors Handout Vendors previously used by ODOTDatabase of certified MWESBODOT’s Small Contracting Program databasesODOT’s Contractor Emergency Registry System (CERS)Oregon Procurement Information Network (ORPIN)Telephone bookInternetHandout: Helpful Websites and LinksHandout
77 Identifying Potential Vendors Qualified Products List (QPL)List of products that meet ODOT specificationsIncludes contact info for manufacturers and vendors for information about product specificationsDoes not limit who you purchase from; do market research to identify potential vendorsFor QPL products, not limited to the vendors listed on the QPL.Vendors are info resources for products specs.If you can’t find vendors, get some leads from Dean Chess or Otto Heider.
78 Identifying Potential Vendors If unable to locate three or more local vendorsConduct market research for vendors outside localeCheck our specifications and requirements; are they unnecessarily restrictive?Can’t find vendors in your locale area – cast a wider net for potential vendors.Other countiesOther regionsOther statesOther countriesOnly one vendor in your locale – probably not sole sourcesole source is the only vendormust meet one of five criteria in statute
79 Prepare SolicitationPrepare solicitation documentation so each vendor is given the same informationScript for phone quotesRequest for Bids formIntermediate Invitation to Bid formAdditional attachments, such as:Product SpecificationsStatement of WorkSpecial Terms and ConditionsInsurance RequirementsEasier to give all vendors same info when you do written solicitations.Fair and level playing field - give all vendors the same infoSolicitation requirements – how to submit bids, deadline, ODOT contact infoMandatory and desirable specifications – and other related features or accessories they offerContract requirements – fax or them a copy of the PO T&C with any additional requirements or attachments
80 Notice of Solicitation Keep documentationTimely notification to MWESB Advocate of solicitationComplete self-search of MWESB database and include certified businesses in pool of vendors to be contactedFax notification form of solicitationPost solicitation on ORPIN (Required when under DAS Authority)MWESB Notification – Use one of the 3 acceptable methods – fax notice/wait, self search, or post on ORPIN/wait.
81 Contact Vendors Contact vendors to obtain minimum of 3 quotes Keep documentationContact VendorsContact vendors to obtain minimum of 3 quotesCommunicate to vendors by phone or written solicitationIf unable to obtain 3 quotes, document efforts made to complyDocument bid information receivedPhone - Document on “Purchase Phone Quote” formor Faxed - Keep bid forms received from vendorsSolicit minimum of 3 quotes, bids or proposalsIf 3 are not reasonably available, fewer will suffice, but document the effort made to solicit 3If you did MWESB self search, include certified vendors in pool of vendors to be contacted
82 Evaluation and Selection Evaluate and select vendor on basis specified in solicitation:Lowest bidMust meet all mandatory specificationsUse total price of required products or services as “bid” to determine low bid; do not include price of desirable features
83 Evaluation and Selection Evaluate and select vendor on basis specified in solicitation:Best serves ODOT interestsMust meet all mandatory specificationsDesirable features considered in selectionPrice or cost is one of the evaluation criteriaDocument the basis for selection and how it best serves ODOT’s interestEvaluation of other criteria –Group discussion of possible other criteriaDeliveryQuality or Functionality of productCan evaluate additional features offered by vendor, if included in the solicitation.
84 Evaluation and Selection Bidder must be responsive and responsibleResponsive – Complied with all requirements of solicitationResponsible –As defined in ORS 279B.110 or ORS 279C.375If ODOT determines the apparent “winning” bidder is not responsive or not responsible, document the basis for that determinationHandout: Responsive and Responsible BiddersWhat if you receive bids from 4 bidders, bid closes, you notify the lowest bidder you intend to do business with them, and then you receive a bid from a 5th bidder that’s even lower? Are you required to change the award to the 5th bidder? No - 5th bidder is non-responsive; bid received after bid close.What if the lowest bid is from a bidder that you have reason to believe is an unemployed individual who submitted a bid in hopes of finding work and they are not really a viable business? Are you still required to award to them? Request info from bidder to determine if they are “responsible” or contact OPO for assistance.Handout
85 Award Contract Notify selected bidder and send contract Keep documentationNotify selected bidder and send contractPO with standard terms and conditions and other attachmentsContract, exhibits and attachmentsNotification to other biddersCan do as a courtesy; it’s not requiredresults with “bid tab” of bidders and bid pricesFor low bid contracts:Some buyers always send a bid tab of results to all bidders.Some require public records request to release that info.Whatever you decide to do, be consistent in your business practice.
86 Notice of AwardKeep documentationTimely notification to MWESB Advocate of contract awardFax notification of self search and award; orFax notification form for award; orPost award on ORPIN (required when under DAS authority)
87 Phone Solicitation Best limited to simple, one-time purchase of goods Market ResearchSearch MWESB databaseIdentify vendors to obtain minimum of 3 quotesPrepare SolicitationFill out top section of “Purchase Phone Quote” formPrepare a script of what to tell vendorsHandout: Purchase Phone Quote formHandout
88 Phone Solicitation Contact Vendors Call vendors; describe product or services neededConfirm vendors can meet required specificationsObtain price quotesDocument vendor contacts and quotes on “Purchase Phone Quote” form
89 Phone Solicitation Evaluate Bids and Select Vendor Compare quotes obtained from vendorsReject quotes that are not “responsive”Award is typically based on lowest bidIf selecting other than lowest bid, document how award best meets ODOT’s interest
90 Phone Solicitation Award Contract Make Purchase Send PO with terms and conditions to selected vendorSend MWESB notification of self-search and awardIf under DAS Authority, post “Purchase Phone Quote” on ORPINMake Purchase
92 Let’s buy attenuators! Activity Disclaimer This activity is very loosely based on actual ODOT purchases.The scenario, technical specifications, and bid information do not reflect actual work zone safety requirements, approved product or delivery specifications, or actual product costs.The information compiled for this activity was imaginatively compiled and embellished on by OPO trainers solely for procurement training purposes.
93 Let’s buy attenuators! 3-Quote Checklist Define Need Expenditure & Procurement Authority in place?Available through Buy Decision sources?Is purchase IT, PSK, PW/PI, or GTS over $100,000?Assess complexity and riskComplete self-search for MWESBIdentify vendors to contact for minimum of 3 bidsComplete solicitation documentEvaluate bids and make selectionComplete MWESB notification form
94 Written Solicitation Not required; recommended for most purchases Market ResearchPrepare Solicitation“Request for Bid” or “Intermediate ITB” formSpecify how bids must be submitted and deadlineDescribe selection criteria to be used for awardInclude written specifications or statement of workInclude sample of contract terms and conditions, and other attachments when applicableSolicitation forms are located on OPO Intranet Site –Procurement FormsGoods, Trades Services and Public Works section
95 Request for Bid New for written 3-Quote solicitation Limited to simple, one-time purchase of goodsGenerally used with a Purchase OrderLow to medium complexity or riskNot recommended for servicesPurchase Order lacks important provisionsHandout: Request for BidWe’ll go through this packet in more detail later.Handout
96 Intermediate Invitation to Bid Two versions available online:Intermediate ITB for GoodsIncludes a comprehensive contractFor high complexity or high risk purchases of goodsIntermediate ITB for ServicesRecommended for procuring all trade servicesHandout: Intermediate ITB for GoodsIntermediate ITB for ServicesWe’ll go through this packet in more detail later.Handout
97 Written Solicitation Contact Vendors Evaluate Bids and Select Vendor Send solicitation documents by or faxWhen DAS authority, post solicitation on ORPINReceive completed bid formsEvaluate Bids and Select VendorEvaluate bids based on requirements specified in the solicitationSelect based on criteria specified in the solicitationFor more formal procurements, best practice is to evaluate only the bids received prior to Bid Close date and timeWith informal process, can be more lenient about bid close.Indicate a date that they need to get back to you by (e.g. put a day preferred by, but not a time, etc.)If not getting bids, call and ask why. If they need more time, okay to give them more time if you can.Can close a bid early if you’ve received all the bids you know you’re going to get.
98 Written Solicitation Award Contract Make Purchase Notify selected bidder; send PO or contractCourtesy notice with bid tab to other bidders (optional)Send MWESB notification of award or post notice on ORPIN, if under DAS AuthorityMake Purchase
100 Purchase Order Responsibilities Financial Administration and Standards Manual Chapter Issuing Purchase OrdersPOs are sensitive inventoryKeep in a secure locationRecord issuance of each PO in log provided with pad of POsUpon issuance of all POs in pad, forward log to Financial Services for reconciliationHandout: FASM Issuing Purchase OrdersHandout
101 Purchase Order FormsOrder Purchase Orders from ODOT Storeroom (Form )Electronic Purchase Order available on IntranetFinancial Services payment forms
102 Purchase Order Forms When using electronic Purchase Order: Employ unused PO number from PO pad and ensure number is not used for another purchaseFill out electronic PO onlinePrint PO and obtain approval signature on printoutMake copies and distribute appropriately
103 Purchase Order Requirements Purchase Order (PO) required for:Purchases of $5,000 or morePurchases under $5,000, when required by vendorTo order off existing contract or price agreement, when requiredPurchase Order NOT required:For invoice payment on existing contract or price agreement, when the contract or price agreement doesn’t require a PO when submitting ordersHandout: FASM Issuing Purchase Orders
104 Using Purchase Orders How is Purchase Order being used? (Option A) as legally binding contractSend PO, standard terms & conditions, and other attachments to vendor; keep copies(Option B) as ordering formReference contract or price agreement number on PODo not include PO standard terms and conditions; they do not applyHandout: How to Fill Out a Purchase Order FormRefer to handout page with copy of POBox about signature blocks – Options A or BOption A – Using PO as a contractOption B – Using PO as an order device from an existing contract or PAPurchase Orders can be used as the contract for many purchasesComplex or high risk purchases, you may use Standard Contract insteadDo not write your own contract!!Do not sign vendor contracts without approval from OPO or DOJ!!There are specific terms and conditions and certifications that ODOT is legally required to include in all our contractsHandout
105 Using Purchase Orders Send PO and other attachments to vendor Keep copies for your files“Approved by” signature on PO approves payment of invoice; separate signature on invoice not requiredSend PO with invoice to Financial Services for payment, signature not required on invoice.Handout
106 Purchase Order as a Contract Requirements not written in the contract are not legally enforceableUse attachments for additional requirementsExamples:Technical specificationsStatement of WorkInsurance requirementsMap of project siteIn “Special Terms & Conditions” include language to incorporate the attachments into the contract by referencePO AttachmentsFor additional documents that need to be part of the contractSee back page of PO instructions for language to use to incorporate attachments into contract.
107 Purchase Order as a Contract Anticipated AmendmentsApplies to purchases under DAS authorityIdentify anticipated circumstances which would require amending the PO (contract)List “anticipated amendments” on PO or attachmentAnticipated amendments can exceed 20% of original contract amount without OPO or DAS approvalAmending a Purchase OrderContact the ODOT Procurement Office for guidanceAnticipated Amendments (when using PO as a contract)Examples:Anticipated amendment to add services and renegotiate contract costs if assumptions about current project conditions are inaccuratePainting - if dry rot in building, amend to extend schedule, add services and cost for painting primer on repaired areas
108 Solicitation Exercise Envelope Opening MachinePass out technical specifications
109 Envelope Opening Machine ScenarioDMV has an aging and technologically deficient envelope opening system. A dramatic increase in mail volume over the past two years has caused a back log of DMV’s income business-mail processing time.DMV wants to obtain a higher capacity envelope opening machine with more robust features and increased safety to meet the increasing demands of mail handling. The DMV manager has approved up to $13,000 for purchase of a new system.
110 Envelope Opening Machine 3-Quote ChecklistAssess complexity and riskFax MWESB solicitation notificationPrepare “Request for Bid” solicitation documentComplete Purchase Order form for purchaseFax MWESB award notificationQuickly review technical specs – Assess complexity & Risk; strategizeMore complex purchase – Low riskWritten solicitation instead of phone quotesOption: Request for Bid formPurchase Order for the contractRequest for Bid takes more time, so fax MWESB notices for solicitation and awardGo through the Request for Bid document – how would this be modified for this purchase??Review the Purchase Order Form for the purchase
111 Solicitation Exercise Gettings Creek State Rest AreaExercise
112 Gettings Creek Septic Tanks ScenarioThe Gettings Creek State Rest Area (SRA) septic tanks are out of compliance with DEQ regulations.All of the tanks need to be pumped out and the walls sprayed down and cleaned with clean or gray water.Based on traffic and SRA usage, the work must be done between the hours of 8 pm and 5 am. All work must be completed in no more than 2 days.The District Manager has approved up to $18,000 to have this work completed.
113 Gettings Creek Septic Tanks 3-Quote ChecklistAssess complexity and riskReview “Intermediate Invitation to Bid for Services” solicitation documentMeet MWESB notification by posting Intermediate ITB on ORPINDiscuss complexity and risk of the scenarioHigh complexity and high riskPhone quotes or written solicitation?Recommend: Intermediate ITB for all servicesLonger process, so either fax MWESB notices or post solicitation and award on ORPINReview the ITB – compare against template to show what’s been modified.
114 What if…The estimated cost was under $100,000, yet all bids came in over $100,000?!Contact ODOT Procurement Office (OPO)Send all solicitation documentation to OPOOPO will review the documentationIf it complies with requirements, OPO will award the contractIf it doesn’t comply with requirements, OPO will cancel and redo the solicitationFirst check…Are funds available to cover the higher cost?Does person with expenditure authority approve the purchase at the higher cost?Local Purchasers do not have procurement authority over $100,000Contact OPO to complete the solicitation
115 Procurements over $100,000 Section 6 Procurement 201 Purchasing Goods and Trade Services
116 Procurement Authority Local purchaser not authorized to solicit for:Goods and Trade Services over $100,000 – Send Purchase Requisition to OPOPublic Improvements (or Public Works) – Send Purchase Requisition to OPOPersonal Services – Send Personal Services Request form to OPOIT Related Purchases – Contact IT Procurement and Asset Management (ITPAM)Local purchasers’ authority is limited to $100,000OPO conducts solicitations over $100,000 when transportation related (ODOT authority)OPO conducts solicitations when over $100,000 up to $5 million when not related to transportation (DAS authority)DAS conducts solicitation when over $5 million and not related to transportation (under DAS authority)
117 Complexity & Risk Matrix Higher complexity:More variations available in products and servicesFederal funding includedPublic Improvement or Public WorksHigher risk:Larger projects have more opportunities for things to go wrongWhen things go wrong, often larger impact on ODOT or publicHigh Complexity Low RiskHigh Complexity High RiskComplexityLow Complexity Low RiskLow Complexity High RiskComplexity increases:High dollar contracts (over $100,000)Include federal fundingPublic improvement or public worksRisk increases:Projects are larger and so more opportunities for things to go wrongMore impact on ODOT or public if things go wrongRisk
118 Local Purchaser Responsibilities Define needObtain approval to purchaseDevelop specifications or statement of workDefine criteria to be used to select vendorSend Purchase Requisition to OPOWork collaboratively with OPO staff throughout solicitationRefer vendors to ODOT point of contact during open solicitation (from advertising to award)Local purchaser responsibilities for all procurements over $100,000If a vendor contact you with questions about the solicitation, refer them to the OPO Point of ContactVery important to have one person communicating with vendors –Reduces chances of one vendor receiving more info and unfair advantage over other vendorsReduces chances of vendor getting conflicting infoFair and level playing field for bidders
119 OPO ResponsibilitiesReceives Purchase Requisition and determines procurement authorityRelated to Transportation – ODOT AuthorityOPO conducts all solicitations over $100,000Not Related to Transportation – DAS AuthorityOPO conducts solicitations $100, to $5 millionDAS conducts solicitations over $5 millionWhen DAS conducts solicitation, OPO:Sends Purchase Request to DASCollaborates with DAS on local purchaser’s behalfOPO responsibilities for purchases over $100,000UPDATE: Not related to transportation – DAS authority
120 OPO ResponsibilitiesConsults with customer and provides periodic updates of procurement statusPrepares solicitation documentsPrepares Request for Bid, ITB or RFP documentReviews and edits specifications, statement of work and attachmentsObtains DOJ legal sufficiency review, when requiredOPO responsibilities when soliciting for purchases over $100,000Collaborate with you to prepare solicitation documents –Goals:To meet your needTo comply with legal requirementsTo effectively manage risk to ODOT and the publicFair and level playing field for biddersLegal sufficiency review - estimated total purchase exceeds $150,000
121 Solicitation Methods and Forms Intermediate Procurement options (over $100,000 up to $150,000)Request for BidIntermediate Invitation to BidInvitation to Bid (ITB)Request for Proposal (RFP)Formal Procurements options (over $150,000)Solicitation options:[More info about these on next few slides]
122 Invitation to Bid (ITB) ITB used to conduct Competitive Sealed BiddingAdvantages:Typically faster than RFP processSolicitation posted on ORPIN minimum of 14 daysPromotes price competition between vendorsThe solicitation document becomes the contract
123 Invitation to Bid (ITB) ITB used to conduct Competitive Sealed BiddingDisadvantages:Must describe exactly what you require in the specificationsSometimes difficult to evaluate bid info to determine if it meets all the mandatory specificationsMust select lowest bid even if another bid meets ODOT’s need betterLimited negotiations of contract allowedDisadvantages:include all your mandatory specifications, or you may not get themncluding mandatory specifications that are not really needed, risk of rejecting a bid that meet ODOT’s needMust select lowest bid even if another bid would meet ODOT’s need better
124 Request for Proposal (RFP) RFP used to conduct Competitive Sealed ProposalAdvantages:Can select based on criteria in addition to priceCan solicit proposals for solutions to a problemCan negotiate contract after selection (including cost)Advantages:Can base selection on multiple factors; not required to award to lowest bidder
125 Request for Proposal (RFP) RFP used to conduct Competitive Sealed ProposalDisadvantages:Takes more time than ITB processSolicitation posted on ORPIN a minimum of 30 daysRequires extensive evaluation, scoring and ranking of proposalsContract is separate from the solicitation documentDisadvantages:Must slower solicitation process
126 OPO Responsibilities Contact with vendors Posts solicitation documents on ORPINODOT’s single point of contact for solicitationResponds to requests for clarification and protestsPrepare and issue addenda, when neededEvaluation and SelectionReceives bids or proposalsCompletes pass/fail administrative evaluation of bids or proposalsFacilitates evaluation of bids or proposals by customer’s evaluation teamOPO responsibilities when soliciting for purchases over $100,000 (continued)After preparing the solicitation documentation, OPO manages the solicitation process on your behalf.
127 OPO Responsibilities Award and Contract Issues Notice of Intent to Award to selected vendorNotifies competing vendors of intent to awardResponds to protestsObtains required documents from selected vendorAssists with negotiations of contract, when requestedPrepares contract documentObtains DOJ legal sufficiency review of contract, when requiredObtains required signatures on contractDistributes copies of executed contractMaintains procurement file for solicitation and awardOPO responsibilities when soliciting for purchases over $100,000 (continued)
128 Contract Administration Section 7Procurement 201Purchasing Goods and Trade Services
129 Contract Administration Procurement OverviewContract ManagementAward &ExecuteContractITBXxx xxx x x xxxx xxx xxxx xx xVENDORContract Administration is the phase of the procurement process that begins when the contract is signed.There are contract administration duties for all ODOT purchases.Contract Administration129
130 Process Map - Bid, Award, Pay Contract administration relates to the “Pay” portion of the Bid-Award-Pay process.
131 Scoping Contract Administration Impact of Complexity and Risk on Contract AdministrationLevel of effortDegree of detailTimelinesIncreasingComplexityActive ContractAdministrationComplexityMinimal ContractAdministrationIncreasingRiskComplexityRiskLow& RiskIncreasingHighThe amount of time and effort spent doing contract administration is often related to the complexity and risk of the purchase.For example…When purchase is Small Procurement of goods – go into store, purchase item with a SPOTS cardContract administration - simple as logging purchase on SPOTS log, submit receipt and SPOTS log to Financial ServicesWhen purchase is Intermediate or Formal Procurement for services on long-term projectTime and effort on contract administration increasesMore opportunities for things to go wrongGreater impact to ODOT or public when things go wrongWe’ll talk about this more.Risk
132 Contract Administrator The officer, employee, or other individual designated in writing as Contract Administrator in the contractResponsible for administering the contract; can delegate duties, but not the responsibilityGood contract administration starts with knowing what’s in the contractResponsibility for contract administration is assigned to Contract AdministratorContract Administration responsibility typically delegated in writing; often to the ODOT staff requesting the purchaseLarge purchases - contract administrator is specifically named in contractSmall purchases - person listed as “Agency contact person” on POContract Administrator can delegate duties, but not the responsibilityRead the contract!!To do effective contract administration, you have to know what’s in the contract.
133 Effective Contract Administration For GoodsOrderReceive and inspectAccept or rejectPay invoice(s)Monitor contract expirationFor ServicesAssure contractor does all work required in the contractAssure performance effort is appropriate and proficientAssure satisfactory qualityAssure timeliness of performanceAssure compensation is within available contract limitsEvaluate and document performanceDocument - Document - DocumentContract Administration looks different for goods than it does for services.Services generally require more time and effort than purchase of goods.
134 Contract Administration of Goods OrderFollow ordering requirements in the contractReceive and InspectIf damage is visible, refuse shipment and contact vendorVerify correct goods included in shipmentInspect goods for damage and functionalityOption: Visible damage – photograph and send to vendor
135 Contract Administration of Goods Accept or rejectDocument acceptance on packing slip and sign PO “received by”Or if rejected, contact vendor and arrange for return of item
136 Contract Administration of Goods Pay invoiceEnsure invoice reflects only goods received and acceptedEnsure that amounts charged comply with contract requirementsShort pay invoices to correct amounts when needed – document reasons for adjustments on invoice and notify vendorODOT
137 Contract Administration of Goods Pay invoice (continued)Send Financial Services the invoice, the approved PO and written verification that goods were receivedInvoices must be paid within the number of days specified in the contract, typically “Net 30”If payment is after 45 days from receipt of invoice, ODOT may be charged a penalty for late payment
138 Contract Administration of Goods Monitor contract expiration dateDo not order goods after contract expirationIf extending contract, execute amendment before contract expiresGoods ordered and received prior to contract expiration can be paid for after contract expirationTo pay out of current budget, goods must be received before end of biennium and paid for prior to biennium payment deadlineAmendment to extend a contract are sometimes completed by OPO staff. When extending a contract, there may be several things to follow up on:Price increasesConfirmation of insurance renewals
139 Contract Administration of Services Assure contractor does all work required in the contractPeriodically check that services performed are in the contractDon’t pay for services that are:Not in the contractIn the contract, but not being performed
140 Contract Administration of Services Assure performance effort is appropriate and proficientFor time and materials contract, contractor’s employees should be well managed by their supervisor and kept productive as much as possibleApprentices should not be doing journeyman work
141 Contract Administration of Services Assure satisfactory qualityInspect the work deliverables to confirm they meet the requirements in the contractDocument issues and contact contractorIf requirements in the contract are clear, ODOT doesn’t pay for additional work to correct issuesIf requirements not in the contract or not clear, ODOT may have to pay extra
142 Contract Administration of Services Assure timeliness of performanceTrack date work deliverable is completed against schedule in contractIf late, be proactive on next deliverableCheck status with contractor before next due dateIf delays are anticipated, ask what steps they’re taking to complete deliverable on timeReport late deliverables on performance evaluation
143 Contract Administration of Services Assure compensation is within available contract limitsPrices or rates used on invoice must be within contract limitsTotal amount of all invoices paid must not exceed total contract amount
144 Contract Administration of Services Evaluate and document performanceComplete a written performance evaluation to document quality of contractor’s performanceProvide contractor a copy and an opportunity to respondCan consider documented performance for award of future contracts
145 Contract Administration of Services Monitor contract expiration dateDo not authorize services after contract has expired; all work must stop!If extending contract, execute amendment before contract expiresServices performed prior to contract expiration can be paid for after contract expirationChange Orders are a type of Amendment – it formally documents an agreed-to changes to the contract.
146 Change Management Amend contract in writing to: Change requirementsAdd or remove servicesAdd, remove, or modify list of goodsChange billing rates or price listIncrease or decrease total contract amountChange schedule of work deliverable due datesChange contract expiration dateCannot add money to contract unless providing additional products or services
147 Change ManagementAmendments may require DOJ legal sufficiency approvalAll required signatures must be obtained before terms of amendment are effectiveIf adding more work, contractor should not start the new work until the amendment is signed.We should not be invoiced for work that has occurred prior to execution of the amendment.
148 Change Management Small Procurements Amended contract cannot exceed $6,000Intermediate Procurements – ODOT AuthorityCumulative amount of amendments cannot exceed 25% of original contract amountReview…This applies to change orders too.
149 Change Management Intermediate Procurements – DAS Authority If contract total will exceed $150,000, must obtain prior approval from DAS for Special ProcurementAnticipated Amendments – No limit to amendments until contract total reaches $150,000Unanticipated Amendments – Prior OPO or DAS approval is required to exceed 20% of original contract amountReview…This applies to change orders too.
150 Records RetentionKeep Documentation of Solicitation, Selection and AwardDocumentation sent to potential biddersBids receivedEvaluation of bidsSpecial OPO or DAS approvalsWritten explanation of bid rejectionsBasis of selection if not lowest bidNotice of award to vendorsPurchase Order or ContractKeep documentation – may be needed for:DOJ reviewGovernor’s Office inquiriesAudit of procurement recordsJustification for future selection and awardFor direct selection small procurements there may not be any documentation.
151 Records Retention Not subject to public records requests Proprietary information such as vendor trade secretsConfidential information such as comments or advice ODOT receives from DOJKeep this documentation separate in the file or keep in a separate fileBids or proposals are public records and must be available for public inspection upon written requestProprietary InformationBidder must mark information in their bid that is ProprietaryProprietary info is exempt from public disclosure when meets criteria in statutesConfidential InformationOn solicitations and contracts over $150,000 go to DOJ for legal sufficiency reviewRevisions, comments or advice received from DOJ is confidential; do not send to contractor; could compromise our client-attorney privilege for the whole contract.
152 Records Retention Contract administration documentation InvoicesContract amendmentsCorrespondence with vendor, including sPerformance evaluationsKeep records for 6 years after purchase or contract expiration; then destroyKeep 10 years after substantial completion if contract includes federal funds and for construction, alteration or repair of public improvementsFor small procurements, documentation may just be the invoiceSend invoice to Financial Services for paymentFinancial Services maintain copy of invoice (imaging)
154 Resources and Wrap Up Section 8 Procurement 201 Purchasing Goods and Trade Services
155 Points of Contact ODOT Procurement Office assists with: Defining Need Solicitation and SelectionAward and NegotiationPerformance IssuesChanges & AmendmentsBilling Rate Review and AcceptanceInvoice Review and ProcessingMany points during procurement where Program Staff and OPO collaborate:Don’t hesitate to contact OPOInformationQuestionsAssistance
156 Online Resources - Intranet OPO’s Home Page:Finding it: ODOT Home → Topics A-F, ContractsWhat’s available:Contact UsRequest OPO ServicesForms and TemplatesProcurement-related TrainingUse A-Z Index to find what you’re looking forQuick online tourShow how to find:Contact info for customer focus teamsProcurement FormsA-Z IndexMore if there’s time
157 Training Available Classes Coming in Spring 2012 Procurement 101: Contracting BasicsProcurement 201: Purchasing Goods and Trade ServicesFiscal and Procurement ResponsibilitiesComing in Spring 2012Contract Administration for ESB ContractsProcurement related classes
158 Training Available Online Training and Resources Speaking Procurement First Steps to Procuring Goods and ServicesAuthority to ProcureMWESB NotificationSmall Procurement of Goods and Trade ServicesIntermediate Procurement – Legal RequirementsIntermediate Procurement – ‘3-Quote’ Checklistand more to come!Online tutorials are available
159 Training ObjectivesAfter completion of this training, participants will be able to:Identify the roles and responsibilities for local procurement of Goods and Trade Services up to $100,000Describe the Small Procurement processPractice procuring Goods and Trade Services using the ‘3 Quote’ processApply Contract Administration practices to both simple and complex purchases of Goods and Trade ServicesUse the Oregon Procurement Information Network (ORPIN) to find existing Price Agreements
160 Thank you for your participation! Developed by ODOT Procurement OfficeThank you for your participation!A training evaluation survey will be ed to you soonWe appreciate your feedbackThank youEvaluation will be ed – please fill it out (maybe 5 minutes)Certificates – on back table or will be mailed to you
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