November 5, 2018 Breakout Session 2: Procurements and ... · share real-life experiences and lessons learned with the objective of streamlining the procurement process, and overcoming

Breakout Session 2: Procurements and Contract Negotiations.......a Stakeholder Perspective

November 5, 2018

Session DescriptionJoin us for a lively discussion on the government procurement process from inception of the Request for Proposal (RFP), the creation, review and approvals of the RFP, negotiations of the contract and the reviews and approvals of the contract. Our panel, consisting of Government and Industry members, will discuss how best to prepare for and address topics ranging from, but not limited to, the creation, review and approval process, timing for release of the procurement, the requirements of the Terms and Conditions, and exceptions. The panel will seek to share real-life experiences and lessons learned with the objective of streamlining the procurement process, and overcoming challenges and obstacles when implementing new contracts.

Panelists• Penny Burke, Management Analyst, USDA FNS• Kathy Vaughan, TNWIC Project Manager,

Tennessee Department of Health• Andre Gamrasni, Contracts, Conduent State &

Local Solutions

Agenda

• FNS Perspective - Penny Burke• State Perspective – Kathy Vaughan• Processor Perspective – Andre Gamrasni

FNS Perspective - Penny Burke

A FABLE:

EBT PROCUREMENTAre you an ant or a grasshopper?

The Tale of the Ant and the Grasshopper

7

Starting the Process – The Ant

• 3 years in Advance

• SNAP EBT Tools

• Kick-Off Meetings

The Request for Proposal – The Ant

• Uniformity Standard Areas –Keep Unique Items Separate

• Realistic Service Level Agreements – Is 100% realistic?

• Conversion/Implementation Range

• Add Options to the RFPi.e.: Mobile Applications

• If applicable, language to add other card programs

The Request for Proposal (cont’d)• Required Federal Clauses

• Do not have restrictive minimum requirements

• Evaluate experience, company attributes, etc. in the scoring

• Evaluation weighting • Cost, technical, past

performance/experience, etc. • Have a good balance of weighting for

factors• FNS recommends 20-40% for cost

Pro Ant Tips: Request for Proposal• Do not use or dust off your old RFP and call it

good

• Do not re-make the wheel - update accordingly

• Include Online Shopping

• Include Disaster Systems

• Ensure time for vendor questions

FNS Timing is Everything

• 60 Days to Review

• Perfect Ants still receive comments – build in adequate time for FNS review

• Recommend 90 days for solicitation for the RFP

Contract – The Ant• Shorter Contract Documents

• Terms and Conditions and Mandatory Requirements

• Service Level Agreement

• Liabilities

• Hold backs versus Penalties

Pro Ant Tips: ContractIn the Contract

Contract Amendments

Liquidated Damages

Outage Communication Plan

With the Vendor

Communicate clearly

Escalation process

Involve technical folks

Timely follow-ups on actions

FNS Timing is Everything • 60 Days to Review

• Perfect Ants still receive comments – build in adequate time for FNS review

The Grasshopper• Doesn’t heed the warning of getting

started early

• Timelines are crunched

• Federal funds topic of concern

• Contract end date and conversion are not aligned

State Perspective – Kathy Vaughan

Joint SNAP and WIC Solicitations• Advantages & Disadvantages & Lessons

Learned• From the WIC vantage point

Phase T & I QA PMSC EBT STATEProject Initiation, Planning & Management P E

(Risk Mgmt Plan)L P P

System Design L E M -- P

System Transfer, Modification & Testing L E M -- P

UAT P E & L (Scripts) L P P

Pilot Test L E M L P

Data Conversion Rollout L E M L P

Operations and Maintenance & Initial Warranty L -- P L P

Project Closure & Transition P E L P P

Ext. Warranty & Operations Period options L -- -- -- P

L = Lead T&I – MIS Transfer and Implementation ContractorP = Participate QA – Quality Assurance ContractorM = Monitor PMSC – Project Management Services ContractorE = Evaluate EBT – Electronic Benefits Transfer Processor

General comments on RFPs/Solicitation• Timeframes and cautions• Q and A - allow time to answer and compare

answers

Bring in Partners Early• Procurement Staff – responsible for the whole of

the solicitation• FNS – approvers of the solicitation• Program staff – Business Unit rules• IT staff – critical for interfacing• Treasury staff – Hold the cards for paying the

eWIC Processor • PMSC for new projects

Communications • Method• Frequent

Processor Perspective – Andre Gamrasni

Focus Areas for Today’s Presentation1. Structuring Effective Service Level Agreements (SLAs)2. A Balanced Approach to:

• Intellectual Property Rights• Liability Issues

A Vendor’s perspective of what constitutes an appropriate allocation of risk

Developing Effective Service Level Agreements (SLAs)

• Whenever possible, the SLAs should align with FNS standards and guidelines and Quest Operating Rules

• Establish clear performance metricsoThe service level requirements should be properly defined

and measurableoIf possible, specify the calculation methodology used to

determine compliance with the SLAoDefine key terms (such as “Availability” or “Uptime”)

• Each performance metric should specify a Measurement Interval (preferably monthly)

Developing Effective Service Level Agreements (SLAs)

• Financial offsets should be reasonable and proportionate with the service deterioration caused (not punitive)

• Define a monthly “at risk amount” for financial offsets• Consider an “earn-back” mechanism to motivate good

behavior and performance• Clarify any “excused event” circumstances, where penalties

are not applicable (e.g. State or third party failures)

A Balanced Approach to Intellectual Property Rights - Overview1. Mandatory Federal Software Ownership Clause - For specified human services

programs, the provisions of the CFR govern software ownership rights for automated data processing systems that states procure using Federal Financial Participation (FFP). 45 CFR 95.617.

2. State Ownership Requirement - Under the CFR, the state’s contract with the vendor must grant the state ownership of all original software developed under the scope of the EBT contract (i.e. paid for with FFP).

3. Broad Federal License - In addition, the Federal funding agency, in this case FNS, must be granted a broad license to use, and more importantly authorize others to use, the developed software on a royalty-free basis. (This license allows the Federal funding agency to leverage its investment of FFP by promoting the transfer of the technology to other states.)

A Balanced Approach to Intellectual Property Rights – Key Issues1. Vendor’s Pre-Existing IP - In the EBT arena, the vendor’s core technology platform

has often been developed outside of any individual state contract, and represents the vendor’s pre-existing intellectual property. As such, this software would be beyond the scope of the CFR software ownership provisions.

2. Licensed vs. “Internal Use” Software - State EBT contracts often specify the outputs required from the vendor platform, but do not require the state’s actual use of the system (except in some cases for ongoing project monitoring). Here, the system largely serves as the vendor’s own “internal use” software for delivering the contracted services. Thus the state would not require extensive license rights.

A Balanced Approach to Intellectual Property Rights – Recommended Practices1. The language of the EBT service agreement should clearly outline the distinction

between 1) works created specifically for the benefit of the state client and 2) pre-existing vendor IP.

2. The state customer should acquire title to all original or created works developed under the contract (typically includes custom reports, system interfaces, etc. developed for the specific project).

3. Any license rights the state may require for use of the vendor’s pre-existing software should expire upon the termination or expiration of the EBT service agreement.

A Balanced Approach to Liability Issues

• Indemnification:o Specify the types of liability where the duty to indemnify may arises (e.g., bodily injury, death,

damage to real or personal property, infringement)o Require the vendor’s indemnification liability to be fault-based – i.e., the injury must have been

cause by vendor’s negligence or willful misconducto If Contractor’s negligence combines with the Customer’s negligence or willful misconduct to

cause the injury, the indemnity provision should allow for equitable apportionment of liabilitybetween the parties (determined by a court).

• Limitation of Liability:o Contractor’s total aggregate liability for direct damages (including indemnification liability)

should be capped (unless prohibited by State law)o Indirect, consequential, incidental, punitive or special damages should be excludedo Any claim brought against either party should be timely (preferably within one or two years

after the claim or cause of action arises)o Each party should have a duty to mitigate damages for which the other party is responsible

Questions and Answers