Solicitation Essentials 2014 CAPPO/NIGP Joint Conference Solicitation Essentials TWO ESSENTIAL ELEMENTS TO EVERY SUCCESSFUL SOLICITATION: SOLICITATION PLANNING (DEFINE GOALS, DECIDE ON BIDDING STRATEGY AND SOW DEVELOPMENT) SOLICITATION EXECUTION (BIDDING PROCEDURES AND EVALUATION CRITERIA) October 9, 2014

Demographics 1. HOW MANY WITH PROCUREMENT EXPERIENCE HOW MANY WITH EXPERIENCE IN DEVELOPING SOW? 2. YOUR ROLE IN THE SOLICITATION PROCESS (HANDS ON OR …) (BID DEVELOPMENT, EVALUATION TEAM EXPERIENCE, P.M.) 3. YOUR AGENCY HAVE CENTRALIZED OR DE-CENTRALIZED PROCUREMENT 4. CHARTER OR GENERAL LAW 5. COMMODITIIES HANDLED: CONSTRUCTION / SERVICES / IT / COMMODITIES

The Good The Marginal The Bad The Growler The Good The Marginal The Bad

Agenda Definitions Solicitation Planning RFx Process Specification Types SOW Solicitation Execution Evaluation Criteria Scoring RFP Responses / Evaluation Team Additional Sources Why are we here? What is the evaluation team make-up?

Definitions Solicitation Planning GAP – Assessing difference between current state and solicitation objectives (needs) Design or Performance Specs. SOW – Statement of Work / Scope of Work Solicitation Execution Evaluation Criteria – Factors specified in the RFP that will be considered for award (Mandatory/Desirable) Best Value – Determined by comparing solutions against customized criteria Life Cycle Cost – Total cost of acquiring, support, operation, maintain and disposal (as applicable) 1. GAP ANALYSIS + MARKET KNOWLEDGE = PROCUREMENT PLAN PLANNING ACTIVITIES INCLUDE: DECIDEING ON BIDDING STRATEGY and SOW ELEMENTS Execution State BIDDING PROCEDURES AND EVALUATION CRITERIA Bidder Conferences Outreach COI/Ethics

Planning Stage Define Business Goals Internal and/or External Expertise Market Research GAP (Comparing Actual w/ Potential Perf.) Outsource or Insource Make or Buy Bidding and Contracting Strategy Statement of Work Development GAP ANALYSIS + MARKET KNOWLEDGE = PROCUREMENT PLAN PLANNING OUTPUTS: - MANAGEMENT PLAN (FTE COMMITMENTS FOR PROJECT DURATION) - STATEMENT OF WORK

RFI, RFB, RFP, RFQ? Request for ……. Caveat: Refer to your procurement code, rules, process, & procedures. RFI – non-binding (used to plan the next phase of the procurement not to actually procure the system, product or service. RFQ can be done prior to RFP to pre-qualify supplier capability

What is a RFP? Rely on Market Expertise Innovation or Creativity is Sought Should reflect business objectives to allow matching solutions Promotes Best Value vs. Low Bid Criteria based Award Determination Follows a structured evaluation procedure to demonstrate impartiality A Request for Proposal is a formal invitation to potential suppliers to propose a solution to a need that the issuing organization has identified.

When to use the RFP method? Needed items and/or services are not clearly identified Department need is goal or results-driven Proposal requirements allow potential bidders the flexibility to respond Procurement may be political in nature Relatively high dollar amount Highly competitive market Protest Potential May be determined for a multiple of reasons. Protest = Red Light example *SOW should provide a clear and thorough description of the goods or services

RFP Planning Checklist Did you perform market research? What are the evaluation team activities? Do you have an evaluation methodology? Do you have an evaluation guide? Do you have debriefing/protest procedures? Consultant roles COI & Ethics Evaluation rules of conduct Obtain Board/Council blessing BAFO Option proposals 1. Consider recommending that evaluators score to their strengths (i.e., technical, business, etc.) 2. Evaluation matrix 3. Criteria weight 4. Optional proposals – SaaS vs. on premise 5. Procedural guides are a must.

What makes a good RFP? Well organized procurement goals, objectives, and evaluation process Risk management assessment Performance risk management Well defined statement of work Well organized deliverables Well defined criteria Well defined evaluation process Performance risk = acceptance criteria/POC

RFI/RFB/P/Q or Single/Sole Source? Bus shelters Hybrid buses Parking lot management system project Professional SAP consulting services Enterprise Network Storage system replacement Annual Microsoft Software support Annual custodial services Mobile data computers/terminals and installation Professional consultation services After a RFI, may have the need to develop a business case using a RFB/Q/P

Does the prospective bidder know which one you want? After a RFI, may have the need to develop a business case for acquisition of …

Specification Methods Performance vs. Design Performance = vendor risk Design = buyer risk Performance + Design = joint risk Consensus Standards ANSI, ASME, ASTM, IEEE, ISO, NIST, NFPA, SAE, UL Procurement methods. Performance based specifications focus on outcomes or results rather than process. Design specifications outline exactly how the contractor must perform the service or how the product is made. Performance based specifications allow respondents to bring their own expertise, creativity and resources to the bid process without restricting them to predetermined methods or detailed processes.

Statement of Work Vs. Scope of Work What is a SOW? Statement of Work Vs. Scope of Work The statement of work should provide a clear and thorough description of the goods or services to be provided. Whereas the scope of work should state the breadth and limitations of the contract effort and an overview of Tasks/Work Description” and “Deliverables including any “out of scope” work.

Statement of Work Provides a clear and thorough description of the goods or services to be provided Provide the relevant environment where the product/service will be used Provides a description of the existing business processes and desired performance Should be organized into logical groups A statement of work (SOW) is a formal document that captures and defines the work activities, deliverables, and timeline a vendor must execute in performance of specified work for a client. The SOW usually includes detailed requirements and pricing, with standard regulatory and governance terms and conditions. The Scope of Work is included in the Statement of Work. The SOW should provide a clear and thorough description of the goods or services to be provided. If appropriate, provide the relevant environment where the product/service will be used. In certain types of procurements, it may be critical to describe the existing business processes. If the existing business process will change as a result of the procurement, then also describe what the business process will be after the procurement objectives are completed. If agencies want the respondents to suggest new business processes, ensure that this information is included in the solicitation.

SOW Format and Contents Background and Objectives Scope Tasks / Work Description Project Schedule Place of performance Deliverables Government-furnished resources Applicable specifications and standards Security Requirement Acceptance Criteria/Project Management Payment Schedule See next slide for picture of SOW contents.

Statement of Work How many have an existing SOW Guide? Demo/POC

Writing an Effective SOW Next slide = S.M.A.R.T.

SOW Objectives Specific Measurable Attainable Realistic Timely 1. Specific: your objectives must be clear so that if someone reads them, he or she can interpret them without ambiguity. 2. Measurable: you should be able to measure whether you are meeting the objectives or not. 3. Achievable: do not try to attempt more than you can. 4. Realistic: do you have the resources to achieve your objective? 5. Time-specific: specify when an objective will be attained (date). Next slide = Execution Stage Specific Measurable Attainable Realistic Timely

Execution Stage Bidding and Evaluation Procedures Procurement Team(s) Conflict of Interest / Rules of Conduct Solicitation Specific Evaluation Criteria Outreach Bidder’s Conferences Demonstration Script Documentation

Evaluation Criteria Must represent key areas of importance and reflect user’s needs Qualitative (subjective) and Quantitative (obj.) Always include Costs, think in terms of TCO Relied on to facilitate proposed solutions Published Acceptance Criteria (Demo/POC) Criteria must sync with RFP Data Requests Qualitative vs. Quantitative Qualitative (observations made using the five senses) more subjective than quantitative Quantitative (measurable) The first step is to gather an accurate representation of the users requirements - their evaluation criteria. Don’t allow considerations outside of the published criteria to factor into award decision

Developing the RFP Evaluation Criteria Well developed Criteria produce market solutions targeting your needs Involve stakeholders knowledgeable about goals How will responses be measured against criteria Rating Scales Scoring Phase(s) consideration Determine relative importance (Criteria Weight) Concurrently develop the scoring matrix / evaluation worksheet Use the information from the Planning stage to pinpoint your evaluation factors tied to your main contracting objectives

Sample Criteria Technical Approach and Understanding Key Personnel Capabilities Demonstrated Successful Experience Project Management Plan / Timelines Risk Assessment / Fiscal Strength Ability to meet standards Cost (TCO)

Evaluation Methodology Objectives Encourage accurate comparison of potential suppliers against individual RFP criteria Align weighting to reflect overall procurement goals Allow criteria to be grouped into sections Allow the scores of multiple evaluators to be contrasted or aggregated Enable multiple evaluators to contribute to the scoring process Compare TCO Fairness/Transparency Enable criteria to be weighted - not all criteria are of equal importance * Allow criteria to be grouped into sections, and allow weightings to be assigned both at section and criteria level * Enable multiple evaluators to contribute to the scoring process * Allow the scores of multiple evaluators to be contrasted or aggregated Provides consistency, discipline and rationality to the source selection process

Criteria Publishing Decisions Proposal criteria must be established prior to the release of the RFP and published in the RFP document. The evaluation criteria (not the weights?) were included in the RFP document. Query audience on posting criteria and/or weights. Weights? Evaluation Criteria Company Qualifications and References System Capabilities Customer Service and Support Pricing Risk Assessment Total

Weighting Methodologies Fixed Weights Variable Weights Trade-off Analysis (overall value determined as a trade-off between technical differences and their relative worth to the agency) Go, no-go (are minimum technical and/or managerial needs met?, if yes then the proposal clears to cost evaluation) Variable weights: This weighting system allows more flexibility in the weighting of criteria where it is determined that, as to satisfying certain criteria, proposals are of relatively equal merit. In such a case, the selection committee could give greater weight to other criteria. For example, the weight given to cost as a criterion could increase as the selection committee determines that the proposals are relatively equal based on other certain criteria evaluated. Trade-off analysis: determination of best value will be made by comparing the differences in the value of performance capability factors with the differences in the costs proposed

Evaluation Scoring Methods Comparing relative proposal cost Low cost vs. points Assigning weighting TCO/Life Cycle Consensus scoring Demo/POC 1. The most simplistic RFP scoring method is to assign a score (1 to 10) to each supplier for each criteria. Ideally, reflect the varying importance of criteria to score each question on a different scale based on importance. 2. Lowest cost vs. points = a price-based approach Lowest Price Technically Acceptable (LPTA) = Used mostly by the Feds. Competitors that are graded “technically acceptable” defined in the request for proposals make it to the final round. Between these finalists, price alone dictates which proposal wins. 3. Pass all the Mandatory requirements scores are given for Rated requirements = points The price is calculated by comparing relative cost between proposers. *Develop standard evaluation scoring sheets.

Typical RFP Cost Evaluation “Normalization” Price of Lowest Cost Proposal / Price of Proposal being rated X Maximum cost points available = Awarded Price points Example: The total points available for cost in the RFP was fifty (50) points. The cost of the lowest acceptable proposal is $100,000. Therefore the lowest proposal cost of $100,000 would be awarded fifty (50) points. The second lowest acceptable proposal submitted a cost of $125,000. The second lowest proposal cost of $125,000 would be awarded forty (40) points. $100,000 / $125,000 = .80 X 50 = 40

Evaluation Phases Step 1 - Responsiveness Review Step 2 - Mandatory elements met Step 3 - Minimum / steps / threshold score Step 4 - May include interviews, demos, presentations Step 5 - Post Award POC Ex: Proposal’s receiving less than 20 points on the Project Plan will be eliminated from further consideration. Discuss variances in evaluation scores.

Scoring Proposals Sample Scoring Scale (0-3) 3. Exceeds requirements 2. Meets requirements 1. Minimally meets requirements 0. Does not meet requirements *Should match proposal strengths/weakness

Rating Considerations 90-100%: Meets or exceeds all requirements 80-89%: Meets all requirements and standards 70-79%: Proposal indicates a basic understanding 60-69%: Proposal indicates only a marginal 0 - 59%: Proposal demonstrates a significant lack of understanding of the requirements. * Rating should match description Meets or exceeds all requirements could also equal 70-79% Proposal indicates a basic understanding of the requirements You need to have agreement / understanding as to the scoring scales so evaluators are on the same page Combined with Scoring Proposals (e.g., technical team performs 1st pass, Exec Team final pass).

Bad things do happen! Unbalanced and missing bid prices Bid Calculation Errors Material vs. immaterial Bid price conflict between words and numbers Protests Mismatch between specifications and goals Missing information Communication and politics Check with your legal.

Only One Response? Open or Not to open Call potential suppliers Review specifications Review pricing methods/formulas Review terms and conditions Too many projects on the table * Consult with your legal folks Did you remember to perform vendor outreach?

Scoring Examples Consider weighting the importance.

Weighted Criteria – Ex1 Criterion Weight PM Strengths 10 Previous Experience 20 Understands Problem Financials 5 Project Support Project Price 40 Total Weight 100 * Determine importance

Scoring – Ex2 Proposer Qualifications and References Score (20 points)   Proposer Qualifications and References Score (20 points) System Capabilities Score (25 points) Customer Service/Support Score (20 points) Pricing Score (25 points) Risk Score (10 points) TOTAL Score (100 points) Redflex 18.60 16.88 12.50 25.00 10.00 82.98 ATS 19.40 18.44 18.83 79.17 Xerox 17.94 15.94 14.50 15.69 74.06 Gatso 14.13 16.25 8.50 9.55 58.44

Score Variance – Ex1 Evaluator Proposal A Proposal B Proposal C PM Strengths Proposal B Proposal C Michael 2 5 Raymond 4 Diana 6 TOTALS 9 12 Proposal strengths & Weakness 0-5 Rating Scale: 5 - Excellent response. Meets or exceeds reasonable expectations and requirements 4 - Meets expectations and requirements with minor issues. Response lacked insight or detail. 3 - Meets expectations and requirements with significant issues. Response lacks evidence. 2 - Does not meet significant expectations. Response shows lack of understanding 1 - Minimally meets requirements. Response is unconvincing, empty claims. 0 - Does not meet requirements * Variance in evaluator scores

Score Variance – Ex2 Evaluator Proposal A Proposal B Proposal C Michael 1 4 10 Raymond 9 6 Diana 7 8 TOTALS 17 20 24 0-10 Rating Scale: Consider balancing the scores. Make sure that an evaluator doesn’t spread their scores across the range.

Balancing price and qualifications Proposer Total Proposal Price Price Proposal Score Technical Proposal Score Total Proposal Score Vendor A $985,142,530 70.00 20.55 *90.55 Vendor B $1,085,111,111 63.55 26.13 89.68 Vendor C $1,365,770,098 50.49 27.71 78.20 Vendor D $1,537,049,000 44.87 21.41 66.28 Do you really want a contractor that scored the lowest in the technical evaluations? Low bid or best value? * 30 points = technical evaluation 70 points = price Abstract scoring * Test scoring

Differences in Total Scores Total Score (Pts) Vendor A 87 Vendor B *86.5 Vendor C 83 What happens when there’s a small difference between top scorers? A re-evaluation of the vendors with near similar scores is warranted. * Check decimal placement

Need for Documentation Decision Maker Data Repository Auditor or Administrative (Board) needs should an issue arise relative to selection Facilitates FOIA requests Facilitates final Contract Development EX. Sharepoint collaboration. Support Board/Council approvals/decisions.

Recap RFP Planning Process Statement of Work Specification Types Evaluation Criteria and Scoring Methodology Document the Process

Nugget Successful solicitations always involve: Sound Planning Solid Execution Planning = defined business goals, proper bidding strategy and SOW development Execution = bidding procedures in place, procurement teams, criteria documentation

Sources http://cappo.org Leginfo http://www.rfpmentor.com/ http://www.nigp.com Check with your legal.

The End Beginning Check with your legal.