K EEP THE E ND IN M IND AT THE B EGINNING Contract Management, Administration and Compliance VAGP 2012 Spring Conference Francine C. Barnes Toya Peterson.

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KEEP THE END IN MIND AT THE BEGINNING

Contract Management, Administration and Compliance

VAGP 2012 Spring Conference

Francine C. Barnes

Toya Peterson

March 22-23, 012

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KEEP THE END IN MIND AT THE BEGINNINGCourse Objectives

• Contract Process

• Contract Management• Contract Administration• Contract Compliance

• Provide tips and strategies to prepare effective contracts

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CONTRACTING PROCESS

Objectives of the Contracting Process

To obtain goods and services within the budgeted cost in accordance with the project schedule and the contract performance requirements and/or specifications

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CONTRACTING PROCESS

PROCUREMENT PLANNING

SOLICITATIONPLANNING

SOLICITATION

SOURCESELECTION

CONTRACTADMINISTRATION

CONTRACT

CLOSE OUT

or

TERMINATION

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CONTRACTING PROCESS

Procurement PlanningDetermining what to procure and when

Solicitation PlanningDocumenting product requirements and identifying potential sources

SolicitationDevelop and issue invitation for bids or request for proposals

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CONTRACTING PROCESS

Source SelectionAward solicitation in accordance with award clause

Contract AdministrationManage the contractual relationship with the contractor

Contract Close Out or TerminationCompletion and settlement of the contract including resolution of any open item

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CONTRACT MANAGEMENT

Definition of Contract Management

The art and science of managing a contractual agreement throughout the contracting process

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RESULTS OF NEGLECTED CONTRACT MANAGEMENT

• End user frustration because of poor contract performance in timeliness & quality

• Lack of contractor accountability

• Agency acceptance of poor quality

• Increased costs; and

• Under or overpayment to a contractor

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End Useror Contract

Owner

Contract Officer

Contract Administratorsand

Contract Monitors

Contract Management

Team

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ROLES AND RESPONSIBILITIES

Owner of the contract

Overall responsibility for meeting project and contract objectives

Cost Schedule

Performance

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ROLES AND RESPONSIBILITIES

Contract Officer

Responsible for providing procurement support throughout the contracting process

Authority comes from the Virginia Public Procurement Act

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ROLES AND RESPONSIBILITIES

Contract Officer

Prepare solicitation and addendum for posting and distribution with input

from end user

Receive and evaluate bids and proposals

Award contract

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ROLES AND RESPONSIBILITIES

Contract Officer

Communicate duties & responsibilities to the Contract Administrator Mediates with contractor and Contract

Administrator if performance is unsatisfactory

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ROLES AND RESPONSIBILITIES

Contract Officeris the only one

Authorized to make binding changes and modifications to a contract

(including exercising contract renewal options)

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ROLES AND RESPONSIBILITIES

Contract Administrator

Manages the contractual relationship with the contractor in accordance with the contract specifications, scope of work and performance requirements

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ROLES AND RESPONSIBILITIES

Contract Administrator

Review the contract award package upon receipt

Retain a file copy of contract

Distribute contract copy to Contract Monitor

Coordinate delivery of goods and services in accordance with contract

Verify receipt and condition of goods and services immediately

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ROLES AND RESPONSIBILITIES

Contract Administrator

Contact Contract Officer for ANY changes or modifications to contract

Report contractor’s persistent/serious service delivery failures to Contract Officer

Review invoices for accuracy, approve partial or full payments, & pay promptly

Track payments against contract progress

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ROLES AND RESPONSIBILITIES

Contract Administrator

Ensure expenditures do not exceed the total contract cost

Maintain an open line of communication with the Contract Officer and the Contractor

Communicate need for contract renewal to Contract Officer

Provide input in development of future solicitations

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ROLES AND RESPONSIBILITIESContract Monitor

Understand specific tasks of contract requirements

Review contract award package and receive clear direction from Contract Administrator

Schedule the delivery of goods and performance of services with contractor

Timely inspect the condition of goods received and quality of work performed

Document and report the contractor’s failures to the Contract Administrator

Provide input in development of future solicitations

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CONTRACT ADMINISTRATOR

CONTRACT START-UP DUTIES

Review designation letter

Sign and return to Contract Officer

Identify contract requirements

Identify and consult with contract team members

Communicate roles and responsibilities

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CONTRACT ADMINISTRATOR

Conduct implementation meeting

Coordinate other start-up activities as needed

Create a file/binder to retain all contract information

CONTRACT START-UP DUTIES

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CONTRACT MANAGEMENT TEAM

A Successful Team

Has effective communication

Defined project expectations

Accountability of all team members

Dedication from contract management team

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MEASUREMENT OF TEAMS SUCCESS

Solicitations effectively convey requirements

Early involvement to resolve contract issues

No merit to protest and claims received

Contractor performance tracked through proper documentation

Expenditures within budget

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GUIDING PRINCIPLES OF CONFLICT RESOLUTION

• Think Before Reacting

• Listen Actively

• Assure a Fair Process

• Attack the Problem

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GUIDING PRINCIPLES OF CONTRACT RESOLUTION

• Accept Responsibility

• Use Direct Communication

• Look for Interest

• Focus on the Future

• Options for Mutual Gain

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IDENTIFYING CONTRACT RISKS

• Eliminate the possibility of differing interpretations of the intent of contract

• Avoid using ambiguous phrases

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TYPES OF CONTRACT RISKS

• Proposal • Surety and Liability • Contractual • Schedule • Performance • Price

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SAMPLE AMBIGUOUS PHRASES The repair is to be warranted for a minimum

of 12 months.

The trailer to be furnished to conform to the latest specifications.

Equipment is to be delivered to the Main Headquarters.

Any exceptions to these specifications must be listed in a letter attached to this bid.

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SAMPLE UNAMBIGUOUS PHRASES

All repairs shall be warranted for a minimum of 12 months from date repair is accepted by the department.

The trailer must conform to Section 110 of the 2008 Edition of the National Equipment Motor Co publication or latest specifications.

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SAMPLE UNAMBIGUOUS PHRASES

Equipment must be delivered to Main Headquarters, 111 E Main Street, Richmond, VA on or before March 1, 2012.

There can be no exceptions….this is a mandatory requirement of an IFB.

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ETHICS & CONTRACT ADMINISTRATION

As government procurement-related employees we are all responsible to perform all duties on an ethically manner.

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THE CODE OF VIRGINIA PROCUREMENT RELATED LAWS

1. CODE OF VIRGINIA 2.2-4370DISCLOSURE OF SUBSEQUENT EMPLOYMENT

2. CODE OF VIRGINIA 2.2-4371. ASOLICITATION OR ACCEPTANCE OF GIFTS

3. CODE OF VIRGINIA 2.2-4371. BGIFTS BY BIDDERS, OFFERORS, CONTRACTORS OR SUBCONTRACTORS

4. CODE OF VIRGINIA 2.2-4372KICKBACKS

Ethics & Contract Administration

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ETHICS IN CONTRACT ADMINISTRATION

Your Ethical Performance May Also Touch:

• Immediate Family Members – spouse, children, parents, brothers, sisters, and any other person living in the same household as the employee lives

• Official Responsibility – anyone having the administration or operating authority, whether intermediate of final to initiate, approve, disapprove or otherwise affect a procurement transaction or any claim resulting there from

• Procurement Transaction – all functions that pertain to the obtaining of any goods, services or construction, including the description of requirements, selection and solicitation of sources, preparation and award, and all phrases of contract administration

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CODE OF VIRGINIA 2.2-4377

Penalty for Violation

Any person convicted of a willful violation of any provision of this article shall be guilty of Class 1 misdemeanor.

Upon conviction, any public employee, in addition to any other fine or penalty provided by law, shall forfeit his employment.

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SAMPLE ETHICS VIOLATION

A contract administrator of a landscaping contract has a daughter that is on the youth softball team. The coach is the contractor awarded the landscaping contract. The contract administrator was collecting donations to raise money for the youth softball team to go Disney World. The contractor donated $2,000 to the youth softball team.

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SAMPLE ETHICS VIOLATION

The same contract administrator needed to purchase a television and a DVD player for the conference room at the local office. The contractor of the landscaping contract was contacted to provide the television and DVD player. The contractor purchased the items from Best Buy for $2,100 and provided the items to the agency for $2,800.

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SAMPLE VENDOR REQUIREMENT

A qualified firm that is approved, authorized or licensed by roofing system manufacturer’s product and that is eligible to receive manufacturer’s warranty if the repair components were being placed as a new roofing system.

Installer Certificates: Signed by roofing system manufacturer certifying that Installer is approved, authorized, or licensed by manufacturer to install similar EPDM roofing systems.

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From: Your Manager’s Manager Sent: Tuesday, April 17, 2007 10:06 AMTo: Mr. Well Established Contract Administrator P.E.Cc: Your BossSubject: Coe Trailer Issue  Mr. Well Established Contract Administrator P.E.– Senator Frank Wagner called me regarding a dispute the district is in with Coe Co from Virginia Beach. His understanding is that Mr. Coe’s company manufactured a trailer for us, we paid for it and then it fell apart. We asked Mr. Coe to repair and he did not do this so we have called the bond. Mr. Coe has stated to the Senator that we overloaded the trailer and that is what broke it. Can you give me background on this please. The Senator is also sending me some information.

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VDOT EQ ID R08601 – 16 Ton Tilt-Bed Trailer

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Trailer loaded with 30,486 Lb. Front End Loader

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Trailer Bowing under weight of 30,486 Lb. load

Level across center

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Extent of bowing

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(1 ½” X 4”) tubing, spaced at 24” center, is too small to handle 16 ton load limit.

Insufficient welds throughout trailer (incomplete and without penetration)

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Insufficient tubing is not supporting the decking

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When tilted for loading\unloading, the side channel is digging into the tire sidewall. The channel has bowed as far as to the top of the rim.

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There are plates welded between the frame and the hinge pins that are not completely welded and are without proper penetration of the weld. This is ALL that holds the bed to the frame! (shown on opposite side in next photo)

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The hinge pin is not secure in the hinges. It has slid three inches to one side against the frame.

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Tubing that the cushioning cylinder is attached to is not welded completely.

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General: The 16-ton tilt-bed trailer shall conform to the following specifications. •Delivery: Unit must be delivered and accepted before June 15, 2006. VDOT reserves the right to reject any unit delivered after June 15, 2006. Capacity: Trailer must be capable of hauling a 32,000 lb., load at 50 miles per hour. Platform: The tilting platform shall be 8’ wide and not less than 20’ long with 7” fold-down approach plate. Overall length of trailer is to be approximately 25’. The rear of the platform must tilt all the way to the ground and permit loading of equipment without use of skids. Steel side channels to be approximately 8” deep. Deck is to be 2” oak. Platform lock is to be horizontal type. Lock must adjust itself for wear and hold tilt platform tight and rattle free. To have minimum of three lashing rings per side. To have single platform cushioning cylinder.

16-Ton Tilt-Bed Trailer Specification

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16-TON TILT-BED TRAILER SPECIFICATION

Hitch: Towing eye is to be standard 3” inside diameter and full adjustable. An adjustable screw type tongue stand is to be supplied. Tongue must be equipped with a pair of ½” Grade 30 safety chains complete with grab hook with safety lock. Suspension: The trailer shall be equipped with spring suspension and two 16,000 lb., tandem axles with a total of eight wheels in a tandem arrangement. Axle spacing to be not less than 44”. Radial tires are to be correct for trailer GVW. Spoke or disc wheels to be furnished. To have wheel oil seals.

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16-TON TILT-BED TRAILER SPECIFICATION

Electrical System: Dual stop and taillights, side marker lights, license plate light, and turn signals to be supplied. Amber reflectors front and red reflectors rear and sides are required. Sealed modular wiring harness with rubber grommet mounted seal beam lights to be furnished. Miscellaneous: Trailer to weigh approximately 7,000 lbs. A license plate bracket is to be supplied. Warranty: The trailer is to be warranted for a minimum of 12 months from the date the unit is placed in service by the Virginia Department of Transportation (VDOT). Warranty is to include all items covered under the manufacturer’s standard warranty. Any forms required for updating warranty start dates are to be delivered to VDOT at the time the units are delivered.

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16-TON TILT-BED TRAILER SPECIFICATION

Safety: Trailer to be furnished to conform to the (National Traffic and Motor Safety Act of 1966) Federal Motor Vehicle Safety Standards with amendments as of date of delivery and the Motor Vehicle Code of Virginia. Delivery: Equipment is to be delivered to the District Headquarter locations listed in the Request for Quote (RFQ). Unit to be fully assembled and ready to operate before being accepted by the Department. Current Model: To be standard proven model of manufacturer’s latest current production with additional features outlined herein. Unit not to be materially modified or augmented. 

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• Can two 16 ton axles haul a 32,000 lb load at 50 miles per hour?

• Or would two 16 ton axles accommodate a trailer load, the weight of the trailer including the trailer tongue and the haul a total not to exceed 32,000 lbs?

• To build a trailer capable of hauling a 32,000 lb. load and weighing approximately 7,000 lbs would require a gross vehicle weight of 39,000 and two 19.5 ton axles?

Please provide a copy of the certificate of origin for the referenced trailer or any other paper work delivered with the trailer that states the trailer towing or hauling capacity.

ASK PROBING QUESTIONS

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In May 2006, an award was made to buy a 16 ton trailer per AMD specification dated April 6, 2006.

The Company delivered the trailer on September 22, 2006 and the trailer is not capable of hauling a 32,000 pound load at 50 miles per hour.

The trailer suffered structural damage when the district loaded 30,486 pounds on the trailer.

The Company stated that the trailer specified in the 16 Ton Tilt Bed Trailer Specification dated April 6, 2006 could not be built to haul 32,000 lbs.

INFORMATION GATHERING

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TIPS FOR IMPROVING CONTRACT MANAGEMENT, ADMINISTRATION AND

COMPLIANCE

• Avoid using ambiguous terms

• Identify risk at planning stage

• Meet with vendor community

• Establish contract management team early

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TIPS FOR IMPROVING CONTRACT MANAGEMENT, ADMINISTRATION AND

COMPLIANCE

• Maintain open mind when gathering information

• Seek legal counsel input

• When documenting compliance issues use direct quotes from solicitation or contract to strength position