Procurement 101

1. Procurement 101 Monica Wilkes, CPPO, CPPB NASPO Honorary Member Universal Public Procurement Certification Council (UPPCC) Governing Board Tom Blaine, CPPO, FCPM, FCPA Senior Research Associate, Public Procurement Research Center NASPO Life Member

2. Goals • Prepare vendors to do business with governmental entities • Familiarize attendees with general policies, rules, regulations, and state statutes • Learn to navigate the governmental “maze” • Better understand the “procurement language” • Gain tips and learning tools to be successful bidders and contractors

3. Doing Business with Government • Equal Competitive Opportunities • Fair and Open Competition • Reliable Customer • Good Payment Practices • Transparent • Ethical, Efficient, and Effective public procurement • Guards against favoritism, improvidence (not providing for the future) and extravagance, fraud and corruption • Strict laws protect the purchasing practice

4. Types of Purchasing Centralized contracts – generally statewide contracts Agency contracts - delegations granted to agencies to purchase with same procedures as Central Purchasing Discretionary - purchases under a certain dollar threshold (authorized by law) without the need for formal competition (generally M/WBE, small business, recycled). NYS definition - aggregates purchases over 12 months and requires public notification if greater than $ value Sole source - item is unique and possesses specific characteristics that can be filled by only one source Single source - products or services available from two or more sources of supply but agency chooses a single source based on the best interests of the state. (e.g. – equipment maintenance required from a certain vendor to maintain the warranty)

5. Contract Types Piggyback contracts – One or more organizations bid their requirements and the bid includes language that allows the others to participate in the contract. Cooperative contracts – Two or more governmental entities jointly combine requirements and solicit bids. Commonly used by federal, state, county, or local government entities. Emergency contracts - used in an urgent and unexpected situation where health and public safety or the conservation of public resources is at risk. Note: Other agencies may have authority to perform centralized procurement functions (e.g. construction or technology contracts).

6. Sole and Single Source Requires Substantive Documentation • Is product or service unique and easily established as one of a kind? • Can program requirements be modified so that competitive products or services may be used? • Is product available from only one source, not through wholesalers, jobbers or retailers? • Must items be interchangeable or compatible with substantial existing inventory?

7. Cooperative Agreement Benefits Aggregate Volume • Reduces administrative expenses of one or more entities • Reduces advertisement (solicitation) & development acquisition time • Increased competition • Reduces product cost • Saves taxpayer dollars

8. Set Aside/Preference Programs Statutory Authority may include preference for: • Correctional Facilities • Blind, Disabled Workshops • Certified or non-certified Minority or Women Owned Business Enterprises (M/WBE) • Small Businesses • Veteran Businesses • Instate (local) Preference – (Be aware of reciprocal legislation)

9. Types of Solicitations • Request for Quotation (RFQ) • Invitation for Bid (IFB) or (ITB) • Request for Proposal (RFP) • Request for Information (RFI) to survey the market • Multi-Step Competitive Sealed Bid, definite specs, low dollar

10. IFB vs. RFP • Invitation for Bid (IFB or ITB): Used in the procurement of commodities and awarded to the responsive and responsible bidder on the basis of lowest price. • Request for Proposals (RFP): Used for procurements when factors in addition to cost are weighed. The contract is awarded to the responsive and responsible proposer offering the best value.

11. Contract Extension of Use May include: • State authorities and public benefit corporations; • Local governments and municipalities; • Public and private elementary and secondary schools, universities and colleges; • Volunteer ambulance and fire companies; • Libraries; and • Other authorized users.

12. Types of Contracts Commodities Technology Services Telecommunications Construction Consulting Services Professional Services

13. Pricing Methodologies • Firm Fixed Price • Percentage Discount with or without price adjustments due to changing price lists • Percentage Upcharge (cost plus) • Firm Price with pre-established price adjustments (up or down) based on changing indexes or price lists (e.g. NYMEX) • Labor and materials (construction or services)

14. Contract Types • Term Contracts - “source of supply” for the goods and/or services over a specified period of time. • Usually one or more years • Multi-year contracts with yearly extension options • Estimated purchases – no purchase guarantees • IDIQ - Indefinite delivery – indefinite quantity • Estimated - Indefinite quantity for a definite period based on prior history, surveys, vendor reports • Requirements Contracts – agency specific requirements • Definite quantity for a definite period (i.e. fuels)

15. Agency Specific Contracts For individual agencies with specific needs that may not be applicable to other state agencies. • Golf Equip (Parks Department) • Uniforms (Correction) • Guard Rails (DOT) • Advertising/Marketing (Lottery)

16. Methods of Awarding Term Contracts • Single Award – awarded to one contractor • Multiple Award – awarded to more than one contractors • Award based on geographic locations within the state and/or by region • By “Lot” based on a group of line items

17. Other Contracting Methodologies • Strategic Sourcing • Reverse Auctions • Cross-organization Projects – across several organizations • E-procurement Strategies • Piggyback Contracts • GSA Contracts – ability to purchase from GSA (may require statutory authority)

18. Public Bid Advertisements Generally required by law • Newspapers • State publications • Online notifications • Social media • Paid or free systems

19. Procurement Program Funding Models • Appropriation in state budget • Self-funding using administrative fees that range between .5% to 2% (commonly 1%) and added to contract prices to support procurement programs • Combination of both

20. Contract Participation • Subcontractors, authorized resellers, dealers, distributors, or agents • Small, minority, or women-owned businesses (S/M/WOB) • Contact the manufacturer or contractor directly for participation opportunities • Sales through an authorized contract reseller, dealer, distributor, or agent must be made in compliance with contract terms and conditions, limited to the approved contract commodities and services

21. Responsive Bidder A bidder whose bid meets or exceeds: • Administrative requirements • Technical specifications • Required terms and conditions • Required document signatures • Bonding and/or insurance requirements • Delivery time • License requirements • Product testing certifications to meet specifications • Samples • Reports

22. Responsible Bidder Vendor responsibility (Acronym FLIP) • Financial and organizational capacity • Legal authority to do business with the state • Integrity of the owners/officers/principals/ members and contract managers • Past performance of the bidder on prior government contracts

23. Successful Bidders Must: • Read entire bid/proposal • Submit written clarification prior to bid opening. • Review submittal for accuracy and completeness • Submit a timely bid (bid may be deemed rejected if one minute late) • Submit a signed bid package complete with all mandatory forms • Price the bid competitively • Be responsive and responsible (bid exceptions may disqualify bidder) • Attend pre-bid and/or post award conferences, as required

24. Key Words • Must, shall, will – mandatory requirements • Should, could, may – recommended conditions

25. Evaluation of Bids or Proposals • Seek clarifications prior to bid opening - “Don’t assume” • Avoid bid or award protests by fully understanding requirements • Understand “must” versus “should” requirements • Use Freedom of Information to the extent permissible by law FOI or FOIA (limited availability prior to award) • IFB prices prior to award may be public information • If unsuccessful, request a debriefing where permissible

26. Debriefing • A debriefing details the shortcomings of a bid submission • Unsuccessful businesses should always request a debriefing • During a debriefing, take notes and ask questions for future improvement opportunities • Review winning competitor’s bid or proposal (where possible) and understand its strengths

27. Marketing Contracts • BE PROACTIVE AND INFORMED • Know your buyer and users – review state budget • Understand procurement laws and policies that govern the procurement • Market your firm’s qualifications and those of your subcontractors – especially small, minority or woman owned business • Market your contract, including green products • Be active and participate in user groups and trade shows

28. Technical Assistance Free technical assistance • Procurement Technical Assistance Centers (PTACs), funded by the US Department of Defense and state and local entities • Centers help businesses seeking to compete successfully in federal, state and local government contracting  http://www.aptac-us.org/new/

29. RESOURCES • State’s web page - laws, policies, requirements • NASPO White Papers and Research Publications (www.naspo.org) • Survey of State Government Procurement Practices • Supplier Guide CD: How to Do Business with the States • State and Local Government Procurement: A Practical Guide – a comprehensive guide for public procurement • NIGP - National Institute of Government Purchasing • Online Dictionary of Procurement Terms http://www.nigp.org/eweb/Dynamicpage.aspx?webkey=53c9abc8-5475-4fef-b86d-7f8de1e45542

30. Strategies • COMMUNICATE with state agency and buyer • BE PREPARED – review expiring contracts and budgets • Don’t “assume,” clarify • Register with state – review state information and website • Best Defense is a Good Offense! GOOD LUCK TO ALL