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Elements of a Successful Proposal

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Presentation on theme: "Elements of a Successful Proposal"— Presentation transcript:

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

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

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

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

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

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

7 Understanding the Solicitation

8 Understanding the Solicitation
Understand the Environment Reading the Solicitation

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

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

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

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

13 ODOT Review Schedule

14 ODOT Review Schedule (Cont’d)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

30 Contract Mechanics Contract Length Amendment Process
Reporting Requirements Payments

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

61 Preparing a Good Response

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

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

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

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

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

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

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

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

70 Award and Start-Up Agency Responsibilities Contractor Responsibilities

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

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

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

74 Example of Expense Assignment

75 Example of Unit Cost Calculation

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

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

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

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

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

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

82 Sample Problem: Summary of Three Approaches

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

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

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

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

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

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