Procurement 101 Monica Wilkes NASPO Honorary Member CPPO, CPPB Tom Blaine Senior Research Associate, Public Procurement Research Center NASPO Honorary.

Procurement 101 Monica Wilkes

NASPO Honorary MemberCPPO, CPPB

Tom BlaineSenior Research Associate, Public Procurement Research CenterNASPO Honorary MemberCPPO, FCPM, FCPA

Doing Business with State Government

• Why do business with government₋ Open Competitive Opportunities₋ Fair and Reasonable Treatment₋ Reliable Customer₋ Good Payment Practices₋ Transparency- Ethical, Efficient, and Effective public procurement

Types of Purchasing Centralized contracts – generally statewide contractsAgency contracts - delegations granted to agencies to

purchase under the same procedures as Central Purchasing – dollar value, time frame, specific need

Discretionary - generally under a certain dollar threshold without the need for formal competition

Sole source - item is unique and possesses specific characteristics that can be filled by only one source - requires written justification from using agency

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)

Contract TypesPiggyback contracts – One or more organizations bid their

requirements which includes language that allows the ability for others to participate in the contract.

Cooperative contracts – Two or more governmental entities combine their requirements and solicit bids for their requirements. Commonly used by government entities: federal, state, county, local government.

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 state agencies may have authority to perform centralized procurement functions (e.g. construction contracts)

Sole and Single Source

Documentation required• 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 and not

merchandised through wholesalers, jobbers or retailers?

• Must items be interchangeable or compatible with substantial in-place inventory?

Cooperative Agreement Benefits

Aggregate Volume • Reduces administrative expenses • Reduces advertisement (solicitation) &

development acquisition time• Increased competition• Reduces product cost

Set Aside/Preference Programs

• Correctional Facilities• Blind, Disabled Workshops• Certified or non-certified Minority or Women

Owned Business• Small Business• Veteran Business• Instate Preference – (Be aware of reciprocal

legislation)

Types of Bids• Request for Quotation (RFQ) • Invitation for Bid (IFB)• Multi-Step Competitive Sealed Bid, definite

specs, low dollar• Request for Proposal (RFP)• Request for Information (RFI) to survey the

market

IFB vs. RFP

• Invitation for Bid (IFB): Used in the procurement of commodities and awarded to the responsive and responsible bidder on the basis of lowest price; and

• 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 offeringthe best value.

Extension of Use of Contracts

Understand the breadth and depth of contract users or whether they are exempt from centralized procurement

• 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

Types of Contracts

• Commodities• Technology• Services• Telecommunications• Construction• Consulting Services• Professional Services

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

adjustment points (up or down) based on changing indexes or price lists (e.g. NYMEX)

• Labor and materials

Contract Types• Term Contracts - establishes a “source of supply” for the

purchase of goods and/or services made over a specified period of time.– Usually one or more years, dependent on external factors

(commodity, market conditions, compatibility) – Multi-year contracts may provide for yearly extension options – Estimated purchase requirements - based on prior purchases, agency

data, survey, vendor reports, eprocurement systems– No purchase guarantees – estimated quantities

– Definite quantity for a definite period– Indefinite quantity for a definite period

• Other equivalent terms are “Open-ended (estimated quantity) Contracts, Blanket Contracts, Requirements Contracts, or Purchase Agreements.”

Agency Contracts

Agency Term Contracts - established for individual agencies which have a specific need for a product or service which may not be applicable to other state agencies.

• Golf Equip (Parks Department)• Uniforms (Correction)• Guard Rails (DOT)• Advertising/Marketing

Methods of Awarding Term Contracts

• Single Award• Groups of Line Items (By Lot)• Award by Line Item to multiple contractors• Percentage Discount from Catalog or Price List• Geographic Location• Multiple Awards

Other Contracting Methodologies

• Strategic Sourcing• Reverse Auctions• Cross-organization Projects• E-procurement Strategies • GSA Contracts – ability to purchase from GSA

may require statutory authority

Public Advertisements

Bid notifications generally required by law• Newspapers• State publications• Online notifications• Social media• Paid or free systems

Program Funding Models

• Appropriation• Self-funding using administrative fees that

range between .5% to 2% (commonly 1%) may be added to contract prices to support procurement programs

• Combination

Contract Participation• Subcontractors, authorized resellers, dealers,

distributors, or agents. • Promote and provide opportunities for small,

minority, or women-owned businesses.• 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 the contract’s terms and conditions, and are limited to the commodities and services approved under the contract.

Responsive A bidder whose bid meets or exceeds administrative

requirements, technical specifications, and contractual terms and conditions. • Specifications and terms and conditions• Signing bid and any other documents• Bonding and/or insurance requirements• Delivery time • License requirements - Current and Active• Product testing (meeting specifications)• Samples

Responsible

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; and

• Past performance of the bidder on prior government contracts

Become a Successful Bidder• Read entire bid/proposal;• Review submittal for accuracy and completeness; • Submit a timely bid (one minute late, bid may be rejected);• Be responsive to all bid requirements;• Submitting a signed bid package complete with all the

mandatory forms;• Pricing the bid competitively;• Demonstrating vendor responsiveness and responsibility; • Submit questions for clarification. NOTE: Inquiries generally

are required in writing;• If applicable, attend pre-bid and/or post award conferences

Evaluation of Bids or Proposals

• Don’t assume proposals will be negotiated• Ask questions about process prior to bid opening• Make use of “inquiries” format • Avoid protests by fully understanding

requirements; must versus should specifications• RFP evaluations are not public until award

announcement• If unsuccessful, request a debriefing

Tips for Winning Contracts

• Use NASPO website as a resource• Register with state(s) – Check out their

websites• Visit State procurement officer(s)• Meet with state agencies(s)• Daily review of solicitations• Active in user groups - trade shows

Debriefing

• A debriefing will detail the shortcomings of a bid submission

• Unsuccessful businesses should request a debriefing

• During a debriefing, businesses should take notes and ask questions for future improvement opportunities

• Review winning competitor’s bid or proposal

Marketing

• Know your buyer• Understand the procurement laws, and

policies that pertain to the procurements• Determine timing of next requirement• Market your products or services, including

green products • Market your firm’s qualification of small,

minority or woman owned business• BE PROACTIVE AND INFORMED

Technical AssistanceFree technical assistance is available

• Procurement Technical Assistance Centers (PTACs), funded by the US Department of Defense and state and local entities• Help businesses seeking to compete

successfully in federal, state and local government contracting

NASPO RESOURCES

Publications• Survey of State Government Purchasing Practices

– excellent resource of states’ policies• Supplier Guide CD: How to Do Business with

States• State and Local Government Procurement: A

Practical Guide – comprehensive guide for public procurement