Contracts Basics Presentation

1. Contracts Basics Presentation December 14, 2009 Anne Shaw, AAG Education Division and Linda Sullivan-Colglazier, AAG Government Operations Division

2. In the beginning . . . • Preliminary Questions to ask: • What is the agency purchasing? • Does it have authority to purchase this? • What are the requirements/restrictions for this type of purchase?

3. What is the agency purchasing? • Services – what kind • Personal or client services • Purchased services • Goods – what kind • “Information Technology” • Combination

4. Who has authority over this purchase? • OFM (Personal Services) • RCW 39.29 • OFM (Client Services) • RCW 39.29 • GA (Purchased Services and Goods) • RCW 43.19 • DIS (Information Technology) • RCW 43.105

5. Does the agency have independent statutory or delegated authority? • Some agencies have independent statutory authority for specific purchases • What scope, limitations, or requirements? • Agencies may have delegated authority from GA, OFM or DIS • Dollar limitations • Specific type of purchase • Must still comply with all applicable laws & rules

6. So you’ve decided to buy it – now what? • Competitive bidding • Solicitation development • Invitation for Bids or Request for Proposals/Qualifications and Quotes • Evaluating responses • Award • Protests

7. Competitive Bidding • Not required unless constitutional, statutory or charter provision mandating • But strong public policy in Washington State favoring competitive bidding • Especially solicitations involving large dollar amount, long duration, or complexity of services • Dual purposes • Primary - Protection of taxpayer & public funds • Secondary - Fair forum to bidders

8. Caution: • Public contract entered into in violation of public bidding law is illegal and void

9. Solicitation Development: • Agency needs to do sufficient research • Check: • industry publications, standards and other resources • Other Washington contracts • Other States’ contracts • Can do Request for Information (RFI) from the vendor community

10. Solicitation Development: • Preparation of specifications: • Must have a sufficient degree of specificity • “Sufficiently certain and definite to form a fair basis for competitive bidding” • Required qualifications must be relevant to performance of contract • Cannot limit competition or favor one bidder

11. Solicitation Development:Specific to Performance Based Contracts • Differs from Traditional Contracts • Emphasizes results, not work performed • Outcome oriented • Clearly defined objectives • Measures performance standards • Contains quality assurance plans • Contains performance incentives

12. Solicitation Development: • Potential Benefits of Performance Based Contracts • Encourages Innovation • Results in better prices and performance • Contractor has more flexibility • Shifts risk to contractor so they are responsible for achieving outcomes • Provides incentives

13. Solicitation Development: • Potential Issues of Performance Based Contracts • Need adequate management information systems to correctly interpret data • Outcomes may be contingent on factors outside contractor’s control • Contractors may have limited resources to assume risk • Contractor may provide reduced care to vulnerable clients to achieve outcome or goal.

14. Types of procurements: • Invitation for Bids (IFB) • Request for Proposals (RFP) • Request for Quotes (RFQ) • Request for Qualifications and Quotes (RFQQ)

15. How to Get the Word Out – Publicize Opportunity to Contract • Send announcement of opportunity to bid to compiled vendor list • Publish in established business or vendor publications • Post on WEBS–RCW 43.19.1908 • Post on agency website

16. Evaluating the Responses • Responsiveness • Bid meets all the material terms of the solicitation • Responsibility • Bidder is capable of performing the contract • Lowest price

17. Other Evaluation Considerations • Must use evaluation criteria set out in solicitation document • Must treat all bidders equally • Other factors than lowest price may be considered if established in solicitation • Non-cost factors such as service, quality, or delivery

18. Award of the Contract • General Rule – Can NOT negotiate • But, may be able to negotiate: • with lowest bidder • proposed alternative terms and conditions in some types of contracts

19. More Award Considerations: • Give notice of the award to all bidders not awarded the contract • May want to give notice of intent to award • Debriefing session may be a requirement prior to award protest • Strongly recommended!

20. Public Disclosure Requests • Bids/proposals may be subject to public disclosure • Proprietary information • Information identified by bidder as proprietary or trade secret may be exempt • Give notice to bidder of request and give reasonable time to obtain protective order

21. Protests and Appeals • Administrative protests • Set out in regulations or solicitation document • Time limited • Specific protest criteria • Disappointed bidders may have the right to administratively appeal the protest decision

22. Litigation • Once all administrative remedies are exhausted the disappointed bidder may file a protest action in Superior Court • Pre-award as disappointed bidder • Injunctive relief only; no damages • Post-award: taxpayer suit only • Must establish standing • Bidder may file TRO to prevent award and preserve status as disappointed bidder

23. Client Service Contracts and the DSHS Contracts Process Mark Tyler, Interim Contracts Administrator Central Contract Services Department of Social and Health Services

24. DSHS Central Contract Services The mission of Central Contract Services (CCS) is to partner with DSHS programs to develop, implement, and support efficient contracting practices that result in effective and enforceable contracts. CCS oversees all Personal, Client and Interlocal (interagency) Contracts authorized under Chapter 39.29 RCW and Chapter 39.34 RCW, and shares oversight of data sharing agreements with the Information Systems Services Division (ISSD). Our primary customers are department staff who initiate contracts to serve clients or obtain needed services for the department. Presenter: Mark Tyler, Interim Contracts Administrator (360) 664-6074; tylermt@dshs.wa.gov

25. Client Service Contracts Definition: Client Services Contract is a Contract with an entity or individual to provide direct services to clients of the agency. Training: All state employees involved in personal service and client service contracts must complete an OFM agency approved training for personal services and client services contracts.

26. Client Service Contracts • Exempt from Competition Requirements • Reason: flexibility to meet client needs • However, programs often choose to use a formal competitive procurement process because: -Avoids appearance of favoritism - Transparency in government - Increases competition - Can result in lower service prices - Encourages innovation - Condition of federal funding

27. Client Service Solicitations • Average Procurement Timeframes: • 19 since March 2008: 113 days – 3.8 Months • 40 between 7/06 & 2/08: 132 days – 4.4 Months • CCS Procurement Team assigned to 2106 projects: • Attorney with extensive procurement experience, including Hearing-Impaired Telephone Relay System, Regional Support Network, FamLink, and Provider Compensation Systems • Contracts Consultant with extensive provider stakeholder and multi-program project experience, and several years direct experience supporting CA • Standardized Protest Procedure. CCS Contracts Counsel reviews protests, providing agency an administrative review process to address disputes.

28. DSHS Contracts Process • Distributed Signing Authority. Staff in our local offices as well as in our central offices have the ability to approve and sign specific types of contracts. This allows for quick and efficient contracting with service providers in local areas where services are needed. • Standardized Contract Documents and Language. The Department uses an system of contract types and codes to create boilerplate contract documents to streamline the contract development and approval process. We have several hundred contract codes in place for a wide variety of services. • Staff Roles & Security System. The automated system that we use to manage our contracts has security levels that allow the right staff, with the right authority to approve and sign the right contracts for their program’s services. DSHS employs a highly structured contract management model that achieves many efficiencies. This model uses:

29. Contract Formats • A Preapproved format is a contract template that has terms customized to a particular service or set of services. Pre-approved contracts are used for client services where the Terms, Conditions, and Statements of Work are identical for each contractor. • A Semi-Custom format is similar with a standardized framework, but the ability to customize certain terms. • A Custom format may be written on an as-needed basis for specific services.

30. Agency Contract Database (ACD) Tools • CCS manages contract content in the ACD through a system of Contract Codes and Subcodes. Codes are “templates” for a specific service. Subcodes are sets of established contract language that are used as components to build documents. The ACD assembles contracts from the code template and the subcode components. Statements of Work can be managed through “Optional Subcodes” which staff choose as needed. • Central Management of Terms – All terms subcodes are in centrally managed files. Any changes are reflected in new contracts created from the date of change forward. • One Subcode Can Apply to Many Contract Codes. For example, Children’s Admin currently has eight Professional Services subcodes used in client service and county agreements. • Special Terms Setup in Specific Codes – CA contracts staff may select SOW Subcodes when creating contracts, tailoring the contract for specific circumstances. ACD Subcode Control Screen Shot:

31. The End • Any questions?

32. Update on Implementation of 2SHB 2106 To the Child Welfare Transformation Design Committee By Children’s Administration December 14, 2009

33. Purpose of the Update • Provide status of our work to date • Outline some initial ideas for Phase I of the transformation • Describe the work we are doing with others to make the change 2

34. Discussion Topics • Values for the Transformation • Phase I • Phase II • Next Steps • Linking the Phases 3

35. DSHS Goals for Transformation • Safely reduce the number of children under dependency orders in Washington State by: • Safely keeping more children in their homes • Safely reunifying children in out-of-home care • Safely achieving permanency outcomes more quickly 4

36. DSHS Values for Transformation • We need to be good stewards of public funds and apply the best services every time. • The services that children and families served by the child welfare system need should be available to all. • We must provide culturally competent services that meet the specific needs of each child and family. • This transition to performance-based contracts will enable us to better achieve our goals for children and families in the child welfare system. • We will work openly with our partners and staff, communicating through multiple channels, as the planning and implementation proceeds. • We recognize that the desired outcomes for children and families are best accomplished through strong partnership with service providers and other community members. • We are working toward an integrated organization as one department with one vision, one mission and one core set of values. 5

37. What we want to accomplish • Increase access to services and provider capacity • A better match of services to the unique needs of each family and child • Clarify expected outcomes and performance • Track and measure outcomes and performance 6

38. Guiding Principles for Transformation • The DSHS Values align well with the Guiding Principles agreed to by the Transformation Design Committee. Some of those principles are: • Have a manageable set of system goals and outcomes • Reflect input from stakeholders including parents, foster parents and youth who have experienced foster care • Invest in public resources in a thoughtful and strategic way • Build community capacity so core services are delivered in a consistent manner around the state • Be accountable to the public through performance measures • Build upon assets provided by state employees, tribal leaders, community-based service providers, advocacy organizations, and other stakeholders 7

39. 2SHB 2106 DSHS has organized work into two parts: • Phase I: Performance-Based Contracting • Phase II: Demonstration Sites • Please see Handout: “HB2106: Transforming Child Welfare Services 8

40. Performance-Based Contracting • Our approach is to define with our partners how to achieve outcomes for children and families in the child welfare system. • For 2SHB 2106: • Section 2:(9) "Performance-based contracting" means the structuring of all aspects of the procurement of services around the purpose of the work to be performed and the desired results with the contract requirements set forth in clear, specific, and objective terms with measurable outcomes. Contracts shall also include provisions that link the performance of the contractor to the level and timing of reimbursement.” 9

41. Performance-Based Contracting • From 2SHB 2106: • “ In accomplishing this transition (to performance-based contracting), the department shall decrease the total number of contracts it uses to purchase services from providers.” 10

42. Advantages of Performance-Based Contracts • Key Themes from the experience in other states: • Improved Outcomes for Children And Families in the Child Welfare System • Easier for Social Workers to Access Needed Services • New Partnerships with Providers Based upon Closely Aligned Goals 11

43. Preparation for Transition to Performance-Based Contracts • This transformation will require the whole system to learn and develop by: • Making a culture shift • Refining and clarifying our expectations about Performance and Practice • Clarifying how performance connects to safety and permanency outcomes • Clarifying Roles • Evaluating Performance rather than only Compliance Monitoring • Training and Consultation to support a new way of doing business • Clarifying how payment connects to performance measures 12

44. Phase 1: Key Terms • Master Contracts • Coordinated Care Model 13

45. Phase I - Program Model The approach to service will be a Coordinated Care Model that emphasizes the following principles: 14

46. Phase I – Program Model • The Coordinated Care Model is consistent with and supports existing Children’s Administration initiatives to improve practice including: • Solution-Based Casework • Family Team Decision-Making • Disproportionality Remediation Plans 15

47. Phase I – Master Contract Responsibilities • Master Contract Agency is Responsible for: • Direct services to children and families • Having the required service array available • The quality of services directly provided and those services subcontracted • An internal quality assurance system • Fiscal management and budgeting • Building system capacity and improving access • A system to manage problems and opportunities 16

48. Phase I – Care Coordinator & CA Social Worker 17

49. Phase I – Master Contracts Our current thinking is to transition to Master Contracts with service in 4 categories: • Family Support Services • Placements, Reunification and Permanency • Treatment Placements • Independent Living and Educational Supports for Older Youth 18

50. Phase I – Master Contracts • Service Category1: Family Support Services: • Services to: • reduce risk of child abuse and neglect • stabilize families of children who remain in their homes without a dependency order • This service category would include services similar to the current Family Preservation, Early Family Support Services and Home-Based Services 19