School Nutrition Skills Development Courses (SNSDC) The NEW Procurement Regulations Are You In Compliance? Presented by Randy Jones Contract Specialist.

School Nutrition Skills Development Courses (SNSDC)

The NEW Procurement Regulations Are You In Compliance?Presented by

Randy Jones Contract SpecialistPhone: (608) - 267-2277Email: [email protected] 2015

The NEW Procurement Regulations Are You In Compliance?

All goods and services purchased for use in the child nutrition programs must be procured according to federal regulations.

Confused about whether you need to do a formal or informal purchasing process?

Do you know what micro-purchasing is?

Changes are on the horizon regarding how the procurement process is reviewed by DPI.

Come to this session to receive an overview of the new procurement regulations and learn more about the new review process.

Participants will also learn how to develop and use a request for proposal (RFP).

The New Super Circular for Federal Awards

Say good bye to Code of Federal Regulations (CFR):– 7 CFR 3015 – Uniform Federal

Assistance Regulations– 7 CFR 3016 – Uniform Administrative

Requirements for Grants and Cooperatives Agreements to State and Local Governments

– 7 CFR 3019 - Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Educations, Hospitals, and Other Non-Profit Organizations

Say hello to:– 2 CFR Part 200

Why have a Super Circular?

The Office of Management and Budget (OMB)

OMB goal is for 21st-Century government to be more – efficient, – effective, and – transparent

Streamlined the OMB Circulars on – Administrative Requirements, – Cost Principles, and – Audit Requirements

Guidance for all Federal awards has been boiled down into one document, “2 Code of Federal Regulations (CFR) Part 200”

Previous OMB Circulars were combined into one Super Circular

What OMB Circulars (regulations) were replaced?

1) Circulars A-21 (Cost Principles for Education Institutions)2) A-87 (State, Local and Indian Tribal Gov. cost principles)3) A-122 (Cost Principles for Non-Profit Organizations)4) A-89 (Catalog of Federal Domestic Assistance (CFDA))5) A-102 (Grants and Cooperative Agreements with State and Local

Government) 6) A-110 (Administrative Requirements for Institutions of Higher

Education, Hospitals and Other Non-Profit Organizations)7) A-133 (Single Audit Guidance)8) A-50 (Audit Follow-up)

The Super Circular

These new rules “2 Code of Federal Regulations (CFR) Part 200” are known informally as the: – “OMB Super-Circular” or “Omni-Circular”

2 CFR Part 200 Subparts (basis for the new provisions): – Subpart A–Acronyms and Definitions

– Taken from A‐110, A‐21 and A‐133– Subpart B–General Provisions

– Taken from A‐110, A‐21 and A‐133– Subpart C–Pre-Federal Award Requirements

– Taken from A‐110– Subpart D–Post Federal Award Requirements (Procurement Standards)

– Taken from A‐110 and A‐133– Subpart E–Cost Principles

– Taken from A‐21– Subpart F–Audit Requirements

– Taken from A‐133 Appendix; A‐110, A‐21 and A‐133

Location and Effective Dates of 2 CFR 200

Location: Copies of the OMB Circulars are available on OMB’s Web site – http:// www.whitehouse.gov/omb/circulars_ default/.

Effective Date: This guidance is effective December 26, 2013. – While entitlement Programs such as the National School Lunch Program and the

Child and Adult Care Food Program operate continuously, funds are appropriated and grants awarded for them on an annual basis.

– Accordingly, the period of performance for these grants coincides with the Federal fiscal year.

– Fiscal year 2015 awards took effect October 1, 2014, while the old rules were still in effect; therefore, those rules will continue to apply until the close of business on September 30, 2015.

– Wisconsin Department of Public Instruction (DPI) has already implemented 2 CFR 200

What Does This Mean for Schools?

Schools need to become aware of the key changes in – Micro-Purchases Option– Written Procurement Procedures– Managing the awarded contract (purchase)

Procurement requirements and sub-recipient monitoring have been expanded.

Mind break…

DPI Procurement Webpage

Procurement Updates at a Glance

In the new uniform guidance, there are five general standards:

– The organization must maintain written policies and procedures over procurement that meet the following standards and any other applicable laws and regulations.

– Costs incurred must be necessary and cost-effective.

– All procurement transactions must provide full and open competition.

– The organization must maintain written standards of conduct covering conflicts of interest.

– The organization must maintain documentation addressing cost and price analysis, and vendor selection, as applicable for selected method of procurement.

Procurement Updates at a Glance

Then, there are five available methods of procurement for each purchase:• Micro-purchases: Less than $3,000

– No competitive quotes required– Spread purchases out among qualified suppliers

• Small purchases: Less than $150,000– Rate quotes must be obtained from an “adequate” number of

qualified sources – it is left up to the organization to determine what “adequate” is for each procurement

– Quotes can be obtained from suppliers or from public websites• Sealed bids: More than $150,000

– Two or more qualified bidders– Publicly advertised and solicited from adequate suppliers– Lowest bidder for the fixed price contract wins

• Competitive proposals: More than $150,000– Written policy for conducting technical evaluations of reviewing

proposals and selecting the recipient– Most advantageous bid wins, price and other factors considered

• Sole source: Any amount, must meet one of the following four requirements– Good/service is only available from a single source– Only one source can provide the good/service in the time frame

required– Written pre-approval from the Federal awarding agency– Competition is deemed inadequate, after solicitation attempts

through one of the other methods

The Bunny Cat DuoTag Teaming Federal, State, and Local

Procurement

Simplified Acquisition Threshold

Ref. Competition (2 CFR §200.88)

Previously known as “Small Purchase Threshold”

Simplified acquisition threshold means the dollar amount below which a non-Federal entity may purchase property or services using small purchase methods.

– Non-Federal entities adopt small purchase procedures in order to expedite the purchase of items costing less than the simplified acquisition threshold.

– The simplified acquisition threshold is set by the Federal Acquisition Regulation at 48 CFR Subpart 2.1 (Definitions) and in accordance with 41 U.S.C. 1908.

– As of the publication of this part, the simplified acquisition threshold is $150,000, but this threshold is periodically adjusted for inflation.

Full and Open Competition Ref. Competition (2 CFR §200.319(a))

♦ All suppliers must have the same opportunities to compete on a level playing field

♦ Goal of all federal procurement requirements

♦ Federal and State procurement requirements leads to higher quality products and/or services at the lowest possible price.

♦ Specifications must never unduly restrict or eliminate competition.

Buy American The "Buy American" provision was added to the National School Lunch Act by Section 104(d) of the William F. Goodling Child Nutrition Reauthorization Act of 1998 (Public Law 105-786).

Schools are required to purchase domestic commodities and products for school meals to the maximum extent practicable.

• Produced/grown in the US • Processed in the US substantially (at least 51

percent).

Products that are normally purchased by Distributor as non-domestic and bid as part of any purchasing proposal

• Must identify the country of origin. • Distributor must notify school when products are

purchased as non-domestic.

Geographical Preferences Ref. Competition (2 CFR §200.319(b))

The non-Federal entity must conduct procurements in a manner that prohibits the use of statutorily or administratively imposed state, local, or tribal geographical preferences in the evaluation of bids or proposals, except in those cases where applicable Federal statutes expressly mandate or encourage geographic preference.

Nothing in this section preempts state licensing laws. When contracting for architectural and engineering (A/E) services, geographic location may be a selection criterion provided its application leaves an appropriate number of qualified firms, given the nature and size of the project, to compete for the contract.

The non-Federal entity must have written procedures for procurement transactions.

Ref. Competition (2 CFR §200.319(c) (1-2))

The non-Federal entity must have written procedures for procurement transactions.

• These procedures must ensure that all solicitations:

1. Incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. – Such description must not, in competitive procurements, contain features which

unduly restrict competition. – The description may include a statement of the qualitative nature of the material,

product or service to be procured and, when necessary, must set forth those minimum essential characteristics and standards to which it must conform if it is to satisfy its intended use.

– Detailed product specifications should be avoided if at all possible. – When it is impractical or uneconomical to make a clear and accurate description of

the technical requirements, a “brand name or equivalent” description may be used as a means to define the performance or other salient requirements of procurement.

– The specific features of the named brand which must be met by offers must be clearly stated; and

2. Identify all requirements which the offerors must fulfill and all other factors to be used in evaluating bids or proposals.

Prequalified Lists Ref. Competition (2 CFR §200.319(d))

The non-Federal entity must ensure that all prequalified lists of persons, firms, or products which are used in acquiring goods and services are current and include enough qualified sources to ensure maximum open and free competition.

Also, the non-Federal entity must not preclude potential bidders from qualifying during the solicitation period.

Contract Provisions for Non-Federal Entity Contracts Under Federal Awards (Appendix II

to Part 200)

The non-Federal entity's contracts must contain the applicable provisions described in Appendix II to Part 200—Contract Provisions for non-Federal Entity Contracts Under Federal Awards.

See Handout for complete List

This requirement and list of required contract terms did not change.

Added…Procurement of recovered materials (2 CFR §200.322). • A non-Federal entity that is a state agency or agency of a political subdivision of a state and

its contractors must comply with section 6002 of the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act. The requirements of Section 6002 include procuring only items designated in guidelines of the Environmental Protection Agency (EPA) at 40 CFR part 247 that contain the highest percentage of recovered materials practicable, consistent with maintaining a satisfactory level of competition, where the purchase price of the item exceeds $10,000 or the value of the quantity acquired during the preceding fiscal year exceeded $10,000; procuring solid waste management services in a manner that maximizes energy and resource recovery; and establishing an affirmative procurement program for procurement of recovered materials identified in the EPA guidelines.

Procurement a Multi-Step Process

This flowchart provides a visual of the multi-step procurement process

Procurement Method: Micro-PurchaseRef. Micro-purchase (2 CFR §200.67) and Methods of procurement to be followed (2 CFR §200.320)

Micro-purchase means an acquisition of products or services where the aggregate amount does not exceed $3,000.

COMPETITION: Purchases within the micro-purchase threshold can be awarded without soliciting competitive price quotations if the price is reasonable.

PURCHASING: To the extent practicable, purchases must be distributed equitably among qualified suppliers with reasonable prices.  

This distribution of purchases among qualified suppliers can happen in one of two ways; at the time of the purchase or over several purchasing events. For example a school procuring apples may purchase them either:

from various suppliers at the same time (the total of the purchases can’t exceed $3,000), or

choose one supplier for the purchase of the apples and another supplier the next time applies need to be purchased (each of the purchases can’t exceed $3,000).

REASONABLE PRICE: Ways to verify the reasonableness of a price is to compare previous purchases, personal knowledge of the item being purchased, or comparison to similar items to be purchased.

RECORDS: Records must to be kept for all purchases regardless of the procurement method used; including micro-purchases.

COMPETITION: Purchases within the micro-purchase threshold can be awarded without soliciting competitive price quotations if the price is reasonable.

Procurement by small purchase procedures

Ref. Methods of procurement to be followed (2 CFR §200.320(b))

Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold.

Simplified Acquisition Threshold = $150,000

Used when estimated value of the contract is less than the Simplified Acquisition Threshold ($150,000)

If small purchase procedures are used, price or rate quotations (bids) must be obtained from an adequate number of qualified sources.

Procurement Tool: 3 Bids and a Buy

Public notice not required (example newspaper ad)

Price or rate quotations can be opened at any time

Price or rate quotations can be verbal or written

Awarded contract (purchase) is based on lowest price

Records must to be kept for all purchases regardless of the procurement method used; including small purchase.

Procurement by Sealed Bids Ref. Methods of procurement to be followed (2 CFR §200.320(c))

Bids are publicly solicited and a firm fixed price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price.

Used when estimated value of the contract is greater or equal to the Simplified Acquisition Threshold ($150,000)

Procurement Tools: Invitation for Bid (IFB)

Awarded contract (purchase) is based on lowest bid

The sealed bid method is the preferred method for procuring construction, if the conditions in 2 CFR §200.320 (c)(1) of this section apply.

(1) In order for sealed bidding to be feasible, the following conditions should be present:

i. A complete, adequate, and realistic specification or purchase description is available;

ii. Two or more responsible bidders are willing and able to compete effectively for the business; and

iii. The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price.

Procurement by Sealed Bids Ref. Methods of procurement to be followed (2 CFR §200.320(c)(2))

(2) If sealed bids are used, the following requirements apply:

i. Bids must be solicited from an adequate number of known suppliers, providing them sufficient response time prior to the date set for opening the bids, for state, local, and tribal governments, the invitation for bids must be publically advertised;

ii. The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond;

iii. All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly;

iv. A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and

v. Any or all bids may be rejected if there is a sound documented reason.

Procurement by Competitive Proposals Ref. Methods of procurement to be followed (2 CFR §200.320(d))

The technique of competitive proposals is normally conducted with more than one source submitting an offer, and either a fixed price or cost-reimbursement type contract is awarded.

Used when estimated value of the contract is greater or equal to the Simplified Acquisition Threshold ($150,000)

Procurement Tools: Request for Proposal (RFP)

Awarded contract (purchase) is based on highest number of points

It is generally used when conditions are not appropriate for the use of sealed bids. If this method is used, the following requirements apply:

(1) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Any response to publicized requests for proposals must be considered to the maximum extent practical;

(2) Proposals must be solicited from an adequate number of qualified sources;

Offers can't be opened until after a close date and time for excepting offers

(3) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and for selecting recipients;

(4) Contracts must be awarded to the responsible firm whose proposal is most advantageous to the program, with price and other factors considered;

Procurement by Noncompetitive Proposals Ref. Methods of procurement to be followed (2 CFR §200.320)(f))

Procurement by noncompetitive proposals. Procurement by noncompetitive proposals is procurement through solicitation of a proposal from only one source and may be used only when one or more of the following circumstances apply:

Procurement Tools: Request for Proposal (RFP)

Awarded contract (purchase) is based on negotiations

(1) The item is available only from a single source;

(2) The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation;

(3) The Federal awarding agency or pass-through entity expressly authorizes noncompetitive proposals in response to a written request from the non-Federal entity; or

(4) After solicitation of a number of sources, competition is determined inadequate.

Summary of Procurement Methods Ref. Methods of procurement to be followed (2 CFR §200.320(a-d and f))

Procurement Method

Purchasing Threshold Requirement

Procurement Tool Used

Full and Open Competition Required

Public Notice Required

Closed Procurement Process Required

Public Opening Required

Procurement Records Required

Micro-Purchases

Less than $3,000

None No - but purchases must be spread

amongst vendors

No No No Yes

Small Purchase

Less than $150,000

3 Bids and a Buy

Yes No No No Yes

Sealed Bids More than $150,000

IFB Yes Yes Yes Yes Yes

Competitive Proposals

More than $150,000

RFP Yes Yes Yes No Yes

Non-Competitive Proposals

Not Applicable – School must get approval from DPI and records of procurement process must be maintained.

Procurement Procedures, Contract Management,

and Conflict of Interests Ref. General procurement standards (2 CFR §200.318 (a-c))

Procurement Procedures • 2 CFR §200.318 (a)• The non-Federal entity must use its own documented procurement

procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part.

Contract Management• 2 CFR §200.318 (b)• Non-Federal entities must maintain oversight to ensure that contractors

perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders.

Conflict of Interests  • 2 CFR §200.318 (c)• (1) The non-Federal entity must maintain written standards of conduct

covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. – No employee, officer, or agent may participate in the selection, award, or

administration of a contract supported by a Federal award if he or she has a real or apparent conflict of interest….

• (2) If the non-Federal entity has a parent, affiliate, or subsidiary organization that is not a state, local government, or Indian tribe, the non-Federal entity must also maintain written standards of conduct covering organizational conflicts of interest. – Organizational conflicts of interest means that because of relationships

with a parent company, affiliate, or subsidiary organization, the non-Federal entity is unable or appears to be unable to be impartial in conducting a procurement action involving a related.

Avoid acquisition of unnecessary or duplicative items

Ref. Contract cost and price (2 CFR §200.318 (d))

The non-Federal entity's procedures must avoid acquisition of unnecessary or duplicative items.

Consideration should be given to consolidating or breaking out procurements to obtain a more economical purchase.

Where appropriate, an analysis will be made of lease versus purchase alternatives, and any other appropriate analysis to determine the most economical approach.

Avoid acquisition of unnecessary or duplicative items

Ref. Contract cost and price (2 CFR §200.318 (h))

The non-Federal entity must award contracts only to responsible contractors possessing the ability to perform successfully under the terms and conditions of a proposed procurement.

Consideration will be given to such matters as;– contractor integrity, – compliance with public policy, record of past

performance, and – financial and technical resources.

2 CFR §200.318 (h)(i)• i. The non-Federal entity must maintain records

sufficient to detail the history of procurement. • These records will include, but are not necessarily

limited to the following: – rationale for the method of procurement, – selection of contract type, – contractor selection or rejection, and – the basis for the contract price.

Contractual and administrative issues arising out of procurements

Ref. Contract cost and price (2 CFR §200.318 (j))

The non-Federal entity alone must be responsible, in accordance with good administrative practice and sound business judgment, for the settlement of all contractual and administrative issues arising out of procurements.

These issues include, but are not limited to, source evaluation, protests, disputes, and claims.

These standards do not relieve the non-Federal entity of any contractual responsibilities under its contracts.

The Federal awarding agency will not substitute its judgment for that of the non-Federal entity unless the matter is primarily a Federal concern.

Violations of law will be referred to the local, state, or Federal authority having proper jurisdiction.

Foster greater economy and efficiency Ref. Contract cost and price (2 CFR §200.318 (e))

To foster greater economy and efficiency, and in accordance with efforts to promote cost-effective use of shared services across the Federal Government.

The non-Federal entity is encouraged to enter into state and local intergovernmental agreements or inter-entity agreements where appropriate for procurement or use of common or shared goods and services.

Cost analysis – The Regulations Ref. Contract cost and price (2 CFR §200.323 (a)-(d))

(a) The non-Federal entity must perform a cost or price analysis in connection with every procurement action in excess of the Simplified Acquisition Threshold including contract modifications. The method and degree of analysis is dependent on the facts surrounding the particular procurement situation, but as a starting point, the non-Federal entity must make independent estimates before receiving bids or proposals.

(b) The non-Federal entity must negotiate profit as a separate element of the price for each contract in which there is no price competition and in all cases where cost analysis is performed. To establish a fair and reasonable profit, consideration must be given to the complexity of the work to be performed, the risk borne by the contractor, the contractor's investment, the amount of subcontracting, the quality of its record of past performance, and industry profit rates in the surrounding geographical area for similar work.

(c) Costs or prices based on estimated costs for contracts under the Federal award are allowable only to the extent that costs incurred or cost estimates included in negotiated prices would be allowable for the non-Federal entity under Subpart E—Cost Principles of this part. The non-Federal entity may reference its own cost principles that comply with the Federal cost principles.

(d) The cost plus a percentage of cost and percentage of construction cost methods of contracting must not be used.

Acquisition cost Ref. Federal regulation (2 CFR §200.2)

Acquisition cost - This means the total cost of the asset including the cost to ready the asset for its intended use.

– Acquisition cost for equipment, for example, means the net invoice price of the equipment, including the cost of any modifications, attachments, accessories, or auxiliary apparatus necessary to make it usable for the purpose for which it is acquired.

– Acquisition costs for software includes those development costs capitalized in accordance with generally accepted accounting principles (GAAP).

– Ancillary charges, such as taxes, duty, protective in transit insurance, freight, and installation may be included in or excluded from the acquisition cost in accordance with the non-Federal entity's regular accounting practices.

Total Cost of Ownership

Full List of New Regulations

See handout (Comparison Chart).

USDA National Procurement Training Takeaways

Buying Groups

Government and Private Buying Groups– Government or Group Purchasing Organization (GPO), Cooperatives,

purchasing associations, and the list goes on…– Federal or State list of approved vendors.

• Note, just because a vendor is on this kind of list doesn’t mean it was competitively procured.

– Beware of GPOs trying to circumvent the competitive procurement process.

Buying Groups: Things to Considerations

Third Party: Non-government Entity?

Material Change: Would change cause a bidder to bid differently.

Child Nutrition Program (CNP) Regulations: Check Awarded contract for compliance issues.

Writing Clear and Thorough Specifications

• Product Name (all products)

• Variety• Grade• Size• Quantity• Quality• Cleanliness

• Packaging• Delivery• Food Safety• If applicable, Farm

Practices and Characteristics

• Other requirements based on product or service

Required Sections of a Solicitation

• Contract Type (fixed price or cost reimbursable)

• Introduction/Scope

• General Descriptions of Goods and Services– Prime vendor, Milk, Bread, Vended Meals, FSMC, Equipment ,or

Other

• Timelines and Procedures

• Technical Requirements

• Evaluation Criteria (Points for RFP or Price/cost for Bid)

Food Service Management Company (FSMC) Guidance and Changes

FSMC – What we discussed that the procurement training– Some states only allow for fixed price FSMC contracts– With Cost Reimbursable contracts; school contracts/solicitations must be

in the School name– If school is unable to manage the cost reimbursable contract states can

mandate the school to use a fixed price contract– Some states have mandatory training for schools with cost reimbursable

contracts • Training is optional for schools with fixed price contracts• Some state provide training with food service directors and school administrators specifically

for schools contracting with FSMCs

– Separate training for FSMC companies doing business with schools– Possible yearly conference with schools and FSMCs to discuss ongoing

issues and changes– FSMC in a cost reimbursable contract is acting only as a procurement

agent and should not hold contract directly with prime vendor, only school – Still need to get guidance on the following:

• Pending discussion with USDA regarding amendments received after contracts are awarded. • FSMCs requiring or schools using deposit accounts

Managing the Contract

This ensures that contractors perform in accordance with the terms, conditions, and specifications of their contracts, and allows for adequate and timely follow-up of all purchases.

– Procurement Steps:

Procurement proceduresForecastingSelecting the proper procurement

methodDeveloping a solicitationAdvertising the solicitationEvaluating proposals/offersAwarding the ContractManaging the Contract

Cost Reimbursable ContractsRebates, Credits, and Discounts

Cost Reimbursable Contracts:– Food Service Management Company (FSMC) Contracts– Prime Vendor contracts– Time and Material Contracts

Cost reimbursable plus a fixed fee. Need the following language added for rebates, credits, and discounts:

• The Vendor must identify the amount of each discount, rebate, and other applicable credit on bills and invoices presented to the School for payment and individually identify the amount as a discount, rebate, or in case of other applicable credits, the nature of the credit. The Vendor may permit the Vendor to report this information on a less frequent basis than monthly, but no less frequent than annually. The Vendor must identify the method by which it will report discounts, rebates, and other applicable credits allocable to the contract that are not reported prior to conclusion of the contract.

• The Vendor must maintain documentation of costs and discounts, rebates, and other applicable credits and must furnish such documentation upon request to the SFA, DPI, or USDA.

• No expenditure may be made from the nonprofit school food service account that permits or results in the Vendor receiving payments in excess of the Vendor’s actual, net allowable costs.

• Reference USDA memo dated: April 5, 2011; memo code: SP 01-2011 Revised subject: Reaffirming the Requirement that School Food Authorities Comply with Federal Regulations Affecting Rebates, Discounts, and Other Applicable Credits in All Cost Reimbursable Contracts

New Procurement Tool (Procurement Review)

New Procurement Tool – Will be implemented for the 2016-17 school year – States will get there training the new tool in the spring of 2016

• Look for DPI to conduct training soon afterwards

– Wisconsin may be selected as a test site for the new procurement tool– New procurement tool will include sections for both procurement and

contract management for all lines of business. – Purchasing log of vendors paid may be used as starting point of the

review.– Review all SFAs every three years. (OIG wanted every year)– Offsite review may be an possible option– Review up to 15-16 contracts but in some cases it will be less– Review will look at awarded contracts and associated invoices

Questions on this part of the Training?Next is Developing and Evaluating RFPs

Developing and Evaluating Request for Proposals (RFP)

Lets Get Started!

Why Write an RFP?

Quiz Question

Are RFP used only for purchasing?

No – They are sometimes used for hiring and awarding grants.

Overview of the RFP/Procurement Process

Identify Needs!

Write out the specifications and determine costs related to

procurement

Choose a procurement method; informal or formal

Prepare solicitation documents

Solicit, clarify and select offerors for evaluation

Evaluate Offers

Negotiate and award the contract Manage

the contract

Select a offeror with the highest points scored.

Mapping Out Your RFP Plan

Determine who is going to be involved in the development of the RFP

Make a list of all stakeholders

Make a list of Subject Matter Experts (SMEs)

Determine who will be on the evaluation committee

Determine who are the decision makers for final approval of RFP and awarding the contract

CONFLICT OF INTEREST

Make sure you do not have any potential conflict of interests.

An example of a conflict of interest is a situation in which a employee (or family member) owns a business that is competing for the contract, and that employee participates in the decision-making process to award that contract.

It is important to avoid even the appearance of impropriety in the evaluation process.

Disclose potential problems at the earliest possible time and make adjustments to keep the process fair to all competitors.

If there are any questions about potential conflicts of interest, evaluation member will need to notify the procurement coordinator immediately.

If a conflict of interest exists, that person cannot be an evaluation member.

Note!

It is very important that all evaluation members read the RFP and have a clear understanding of the requirements and evaluation criteria before attempting to evaluate the proposal.

Responsible Offerors vs. Responsive Proposals

The procurement coordinator will review all proposals for responsiveness before distributing them to the evaluation members .

This will prevent the evaluation team from reading a proposal that can’t be considered for award.

A proposal is considered “responsive” if the proposal has been prepared in full compliance with the requirements of the RFP.

Evaluation members cannot evaluate proposals deemed non-responsive.

Important Questions to Consider Before Drafting RFP

– What kind of contract will be awarded?

– How are you going to compare proposals?

– What areas do you want vendors to compete?

– What kind of responses are you looking for from vendors?

– What kind of narrative statements would help differentiate vendors?

Develop a internal timeline and coordination with stakeholders RFP

TIMELINE EXAMPLE - TENTATIVE SCHEDULE AND DUE DATES FOR:

– Final draft of RFP

– Issue Date

– Last Day for Questions

– Site visit by vendors

– Proposal Due Date

– Written Proposal Evaluations

– Commission Approval

– Award Contract

– Executed Contract

Designing the RFP

Getting started!

Don’t try to re-invent the wheel:

– Look at other SFA and state RFP templates as a rough guide to get started.

– This is particularly useful if you're not sure how to get started.

– Even though each RFP is unique, most of them contain similar types of information in one form or another.

Lets look at the RFP example while going over the next slides

The Cover Page of an RFP

The first page of the solicitation should contain:

– Proposal identification number (optional)

– Issue Date

– Deadline For Submissions (date and time)

– Proposal Opening (optional)

– It is best to hold openings on any day except Mondays and any time after 1:00 p.m.

– Complete address to return of proposals

– Contact person’s name and phone number/email

Elements of an RFP

1. Organizational background 2. Short description of products and services to be procured 3. Requirements and Objectives:

This section is often referred to as the scope. This is often the lengthiest section of the RFP, as it

describes the characteristics that define a successful outcome in your estimation.

Keep in mind that, in general, specific, closed questions are easier to evaluate and score than open-ended ones.

The following are some suggestions that might help you when writing this section:

• Define your audience.• List required and desired features.• Note any system integration needs.• Indicate any preferences.

Elements of an RFP (Continued…)

4. Milestones and Deadlines

5. Questions and required information:

– Is there any other information you’ll need in order to evaluate and score proposals?

– You can ask any question in an RFP – your questions will vary based on your past experiences with vendors and the nature of the procurement.

6. Contact information and deadline for submissions

Proposal Submittal Instructions

The RFP should include information about how to submit proposals.

– Proposers need to know items such as;

• the number of copies to submit,

• the required format,

• the protocol for questions about the RFP, and

• the deadline (date and time) for submitting proposals.

Be clear when providing instructions.

Terms and conditions

Terms and conditions (continued…)

This section of an RFP includes the SFA’s, Federal, State, and Local contractual requirements.

– These requirements define the SFA's expectations for working with the vendor and the relationship between different participants to the awarded contract.

– Generally, all organizations have contractual requirements that are included in all RFP solicitations.

– This section may also include information such as audit rights, record retention, governing law, limitation of liability, remedies and indemnification.

Terms and conditions (continued…)

In addition to these contractual requirements, this section may include procurement specific contract provisions;

For example: a clause describing how price increases will be handled.

– Ideally, all contractual provisions are non-negotiable.

– However, if organization decides to allow negotiations on certain clauses, it should identify them in the RFP.

– Vendors should be instructed to include all suggested language for negotiated clauses in their proposals

Examples of Standard Terms and Conditions

– Recordkeeping

– Audits

– HACCP Compliant

– Insurance and Indemnification

– Risk of Loss

– Taxes

– Buy American

– Debarred, Suspended, Proposed for Debarment, Declared ineligible, or Voluntarily Excluded

– Federally Required Contractual Provisions

– Contract Terms (dates)

– Remedies Upon Default

– Termination

– Delivery of USDA Foods

• Direct Diversion

• Brown Box

Mandatory Requirements

Mandatory Requirements (continued…)

The RFP will need to clearly define;

– the work the vendor will be required to provide;

– where and when the work will occur; and

– the extent of the work.

Mandatory Requirements (continued…)

These items are sometimes called deliverables that must be measurable and identify the minimum acceptable limits of each requirement

Some examples of good and bad language:

– If a organization needs a technician to respond quickly to maintenance requests, its RFP might state,

Bad language: “Proposer must have a local office within a 30-mile radius of the city's main office.”

While the distance from the organization to a contractor's office would be measurable, it would not guarantee that the technician would respond quickly.

Good Language: “Proposer must provide evidence of the ability to respond to service calls within two hours of initial call.”

Evaluation – Pass/Fail vs. Points

Requirements may have a defined point value assigned to them.

This is done when you want to compare one offeror to another based on performance.

For example, an SFA could assign a certain number of points to a offeror who is able to provide a software system to manage inventory and place orders or simply make this a requirement.

The number of points assigned may vary based on how well the software work’s with existing school software and employees are able to use it.

Desirables

RFP will request certain features, services, or products that exceed the mandatory requirements.

These are called “desirables”.

– Desirables can have point values assigned to them based on their value to the goals of the procurement.

– Vendors are not required to provide responses to desirables, but, if they can, they can earn extra points in the evaluation process.

– For Example, geographical preference points can be given to offerors who can provide locally produced fresh fruits and vegetable that have not been processed.

Providing Pricing

The RFP needs to define how pricing information should be submitted.

– Providing a pricing form will ensure that vendors will provide their cost information uniformly.

– Conversely, if all vendors submit different pricing structures, the evaluation committee will have difficulty comparing costs.

– Vendors should use a separate form to state pricing.

Providing Pricing (continued…)

The pricing section is rated using a point system

– Usually, the proposal with the lowest cost receives the maximum number of points.

– All other proposals receive a percentage of the points based on how their costs compare to the lowest priced proposal.

– Lowest Cost Proposal / Cost Proposal X (Points for Cost) = Evaluated Points

Example: $95,250 / $97,500 X 60 points = 58.62 or 59 points

Pricing should be submitted separately with the proposal

– This will ensure that the evaluation committee is unbiased when judging the other sections.

RFP Evaluation

The RFP should identify the criteria that will be used to determine which of the proposals will best meet the SFA’s needs.

– The SFA must clearly state evaluation criteria and weigh the criteria according to its importance.

– The scoring methodology should be included in the evaluation section.

– Proposals can be evaluated only using the criteria identified in the RFP.

Stating the award criteria in the RFP and then following the criteria during the evaluation process makes the selection process easy to defend.

RFP Evaluation Process

How Should You Score and Evaluate RFP Responses?

– As mentioned previously, creating scoring criteria while drafting your RFP will save you time in the long run.

– As you discuss purchasing requirements, ask your colleagues which features and requirements should receive the highest priority and use this input to craft a list of scoring criteria.

– Ask more than one person to participate in scoring the responses.

– Average the scores of all team members for each vendor's response.

Award the contract to the vendor with the highest average score.

Evaluating Proposals

After issuing an RFP and receiving proposals, you should assemble a committee to evaluate the proposals.

– The evaluation committee should meet prior to reading the proposals to discuss the scoring process so everyone understands how to judge proposals.

– Each member of the evaluation committee needs a copy of the RFP and an evaluation worksheet that lists all the mandatory requirements, desirables and pricing information along with the maximum points available for each item.

The first phase of the evaluation process involves judging the proposals' mandatory requirements.

– They are evaluated on a pass or fail basis.

– If a vendor does not meet the minimum requirements, its proposal is rejected and is not evaluated further.

Evaluating Proposals (continued…)

In the second phase

– committee members assign points to the mandatory requirements and desirables based on how well they meet the SFA’s needs.

In the third phase

– committee members assign points to the pricing.

After the mandatory requirements, desirables and pricing sections are evaluated

– committee members add up the points awarded in those sections.

– Evaluation committee members should score the proposals independently or then meet as a group to discuss their decisions.

– When meeting as a group, the committee may assign a consensus score to each proposal.

DISCUSSIONS WITH OFFERORS

After the initial evaluation, offerors may be offered the opportunity to discuss their proposals with the procurement coordinator and with the evaluation members .

The procurement coordinator may limit discussions to specific sections of the proposals received or specific sections of the request for proposals.

Offerors must be accorded fair and equal treatment with respect to any opportunity for discussion and revision of proposals.

The opportunity for confidential discussions, if held, must be extended to all offerors submitting proposals for award.

Do not use any “auction techniques” that reveal one offeror's price to another and do not disclose any information derived from competing proposals.

Any oral modification of a proposal resulting from discussions must be reduced to writing by the offeror.

BEST AND FINAL OFFER

The evaluation team may determine that it is in the best interest of the procurement to request best and final offers.

Best and final offers are not necessary when the evaluation members is satisfied with the proposals received.

The procurement coordinator will send out the request for best and final offers in a letter stating any specific areas to be covered and the date and time in which the best and final offer must be returned.

Best and final offers should are normally be submitted only once.

If an offeror does not submit a best and final offers or a notice of withdrawal, the offeror's previous proposal is considered the offeror's best and final proposal.

After best and final offers are received, final evaluations will be conducted.

Best and final offers must be reviewed and scored using the same evaluation criteria published in the original RFP.

REJECTION OF ALL PROPOSALS

A decision may be made to reject all proposals received; Reasons might include: none of the responses met the specifications, the prices received were not reasonable or exceeded the budgeted

amount, or competition was insufficient (e.g. few, if any, competitive proposals were received).

Provide a written justification whenever a decision is made to reject all proposals.

Notify all vendors that responded to the solicitation and explain why all proposals were rejected.

The solicitation process may be repeated or canceled altogether.

Repeating the procurement process immediately is acceptable when there are significant changes to the specifications, more vendors are given the opportunity to respond, or there were mistakes in the original solicitation.

In fairness to the vendors whose prices have been revealed to their competitors through the procurement process, a solicitation that was opened, but not awarded should not be reissued for at least three months.

REQUESTS FOR PUBLIC INFORMATION

After the Notice of Intent to Award is issued, the proposals and contents of the procurement file become subject to state open records laws.

You can expect to receive requests for copies of proposals and evaluation documents.

Remember, information can only be confidential if determined to be so under state or federal law.

Offerors will very commonly mark their proposals as “confidential.”

Before releasing the proposal to the requestor, contact the firm that submitted the proposal and inform them that you have received a request for public information.

Tell them that WI has an open records law, so information can only be kept confidential if it determined to be so under State and/or Federal law.

Then, point out that their whole proposal is marked “Confidential."

Ask them to indicate specifically what information or sections they consider confidential.

Requests for public information must be answered promptly, so give the firm a deadline to respond to you.

If the request for public information includes the section that the offeror feels is confidential, contact your assistant attorney general to help determine whether or not that section can be made open or must be kept confidential.

PROTESTS, APPEALS, AND LAWSUITS

Protests, Appeals, and lawsuits are a part of procurement life.

It is possible that that one or more of these actions could occur over the procurement for which a evaluation members serves as an evaluator.

Such actions may or may not center on a particular evaluation member’s activities as an evaluator, but generally they are not.

Most actions are related to procedural issues and involve only the decision of the procurement coordinator.

It’s not uncommon for a protester to review the scoring of individual evaluation members.

This is why it’s essential that evaluation members work hard to score the offers in a consistent and explainable manner.

Basic Anatomy of an RPF

Request for Proposal (RFP) Cover Page

• Summary: __________

• RFP issued by: __________

RFP Outline

Section I - Request for Proposals

• Introduction

• Procurement Description

• Scope of Services

• Submittal Deadline and timeline

• Proposal Contents and Format

• Proposal Evaluation Criteria

• Selection Process

• Protest Procedures

• Contract Requirements

Section II - Forms required at submission

Section III – Attachments

Concluding Remarks

Writing an effective RFP is not an easy task.

The process forces SFAs to seriously consider their purchasing goals and to explain them in sufficient detail to solicit solutions at competitive prices.

Plan your RFP process out according to purchasing time lines. If you need to make a purchase in May start planning for this purchase at least 90 days in advance.

If product testing is required add another 30 to 60 days to this time line.

Questions?

Thank you!!!

Randy JonesSchool Nutrition Team

Contract Specialist/ProcurementDepartment of Public InstructionE-Mail: [email protected]

Phone: 608-267-2277

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To file a complaint of discrimination, write USDA, Director, Office of Adjudication, 1400 Independence Avenue, S.W., Washington D.C. 20259-9410 or call toll free (866)-632-9992 (Voice). Individuals who are hearing impaired or have speech disabilities may contact USDA through the Federal Relay Service at (800)-977-8339; or (800)-845-6136 (Spanish). USDA is an equal opportunity provider and employer.