IFB Fundamentals Erin Datri, Debbie Boettner, Kate Brenner and Carol DeWolf

IFB Team organizational chart Donna Cosgrove Bill Hughes Paula Shappy Erin Datri Joanne Hughes Randy McConnach Debbie Boettner Kate Brenner Carol DeWolf Michelle Ko Page Morrison

Bureau of contracts workload statistics 2012 – 2013 State Fiscal Year - Total BOC Transactions Processed 7,124 – Total New Contracts Approved by BOC – Total Value of New Contracts Approved by BOC – Total Number of IFB Transactions Processed 1,082 – Total Number of New Contracts Approved by IFB – Total Value of All Contracts Approved by IFB – IFB’s Average Processing Time 23,731 $48 Billion 6,045 $5.7 Billion 13 Days

NYS Laws, Regulations, Guidelines and Procedures NYS Finance Law, Article 7, §112 NYS Finance Law, Article 11, §160 – 168 Economic Development Law, Article 4C, §140 – 145 OSC Guide to Financial Operations NYS Procurement Council Procurement Guidelines NYS Division of Budget – Budget Bulletins SUNY Guidelines, if applicable

Prior Approval thresholds Pursuant to §112 of the State Finance Law, any contract for the purchases of goods and services exceeding $50,000 and revenue contracts exceeding $10,000 require the approval of OSC Procurements are subject to a formal competitive process when the value of the annual anticipated procurement will equal or exceed $50,000 based on the date of the first purchase unless it is made in another manner consistent with the procurement methods described in §163 of the State Finance Law

Special note on multiple awards When determining whether or not OSC approval is required on a multiple award contract, the total value of the procurement effort is the deciding factor. For example, assume you are awarding three contracts as follows: Vendor Name Contract Value ABC Corporation $75,000 XYZ, Inc $60,000 All the Rest $45,000 Since the total value of the contracts are $180,000, all three would require OSC approval even though All the Rest is under $50,000.

Sfl §163 – purchase of commodities and services Statutory preference is accorded in the following order: 1st Preferred Sources 2nd OGS Centralized Contracts 3rd Agency or Multi-Agency Contracts 4th Procurement Methods Prescribed by SFL

Sfl §162 – preferred sources Commodities 1st Corcraft 2nd Industries for the Blind 3rd NYSID, buy “OMH”, Qualified Veterans’ Workshops Services Industries for the Blind NYSID Buy “OMH” Qualified Veterans’ Workshops

Sfl §163 – method of procurement Competitive Bids Invitation for Bid (IFB) Request for Proposal (RFP) Sole/Single Source Piggybacking Emergency Purchases Discretionary Purchases

When do you use an ifb? Typically used when requirements can be translated into exact specifications Award will be made based on price alone Must be used for commodity purchases May be used for the purchase of services and technologies

Step #1 - Formulate the ifb Step #1A – Describe the Commodity/Service Step #1B – Describe the Bidder Qualifications/Requirements Step #1C – General Requirements

Step 1a – describe the commodity/service Clearly describe the commodity/service needed Should meet program needs Be clear, unambiguous and all inclusive Specify if the commodity must meet certain standards

Step 1a – describe the commodity/service For commodities only – when referencing a brand name, be sure to include “or equal” in the specifications Use industry standards where applicable Specify how the vendor is to bid Hourly rate Square foot Specified size Etc. Confirm the specifications with the end user

Step 1b – bidder qualifications/requirements Specify criteria to provide reasonable assurance the vendor will be able to provide the commodity or service required Do not use criteria you cannot verify, measure, explain or do not need Specify if the service requires licensing or certification Be prepared to justify criteria selected

Step 1c – general requirements List specific delivery requirements that reflect actual need FOB Destination Review records of previous contracts, if possible, to review historical usage (estimates), contract deliverables and problems encountered Mandatory requirements should be pass/fail Ensure requirements are not so restrictive that only one vendor meets the criteria

Step 1c – general requirements Be careful when using words such as “must, shall, may not, minimum, maximum,” etc. to describe requirements Do not invite vendors to include prices for additional services or to expand upon the requirements without figuring these additions into the method of award and evaluation Items cannot be awarded if they are not evaluated

example The Contract Reporter advertisement and the bid specifications state the winning vendor must be located within 15 miles of the agency’s location. The agency received three bids: Vendor Distance Price Xavier, Inc 44 miles $14.00 Yellow and Co. 16.2 miles $12.00 Zed Unlimited 13 miles $28.00

discussion Who does the agency have to award to based on the stated requirements? What could’ve been done to avoid this situation? What other issues/problems do you see?

solution Problems: The requirement to be located within 15 miles was mandatory Agency may have restricted competition Unless the IFB allowed for making no award, the Agency has to award to Zed Unlimited Ways to avoid this: Conduct an internet search prior to soliciting bids Conduct a request for information Scan the document for must, shall, will and decide are they necessary

Step #2 – method of award Step #2A - Determine your Method of Award Step #2B – Weights and Estimated Usage Step #2C - Additions during the Contract Period

Step 2a – determine your method of award Should be clearly stated Examples of appropriate Methods of Award Award by item Award by lot Award by grand total Indicate the potential for multiple awards Indicate how tie bids will be decided

example “Agency reserves the right to award the bid based on any of the following criteria, whichever is in the best interest of the State: Total of Item A Total of Item B Total of Item A plus Item B”

Discussion What item(s) is needed by the agency? What drives the decision on how to award the contract? Would all vendors be able to determine how the contract will be awarded?

solution “Award will be made by item to the lowest responsive and responsible vendor or vendors. Agency reserves the right to make no award on any individual item.” OR “Award will be made by grand total to the lowest responsive and responsible bidder.”

Step 2b – weights and estimated usage When determining the Method of Award, assign a weight to the cost based on estimated usage If certain services or commodities will be used more frequently, the associated costs must be weighted accordingly in the evaluation Should be a reasonable estimate – based on historical usage when possible Reasonable estimates may be percentages or actual units Use total weighted cost as the determining factor, not unit prices

example The method of award states: “Award will be made based on the lowest average of the four classes shown below: Service Technician $________________ Foreperson $________________ Journey Level Person $________________ Apprentice $________________ Average $________________

discussion Does this create an even playing field? How could this be altered to better reflect the agency’s need? What problems do you foresee when bids are received?

Vendor a vs. vendor b Title Hours Vendor A Hourly Rate Extension Vendor B Hourly Rate Service Tech 10 $100.00 $1,000.00 $90.00 $900.00 Foreperson 5 $78.00 $390.00 $60.00 $300.00 Journey Level $50.00 $250.00 $45.00 $225.00 Apprentice $1.00 $5.00 $35.00 $175.00 Average $57.25 $411.25 $57.50 $400.00 Vendor A is the low vendor according to the method of award; however, they only send service technicians when work is required and the IFB and contract language does not specify who determines the skill level required for a job.

Suggestions for improvement Indicate expected usage by category Indicate the agency will specify the skill level required for each job Require the per hour amounts must be equal to or greater than prevailing wages Prevailing wage document or a Prevailing Rate Case (PRC) # must be provided

Step 2C – additions during the contract period If you anticipate additions during the contract term or if you are requesting pricing on options, these must be evaluated in the method of award, or you cannot make an award for the additions.

example An IFB was conducted for lab testing services where vendors were asked to submit a per test price. In addition, the agency requested the vendors provide hourly rates for data review and expert testimony. These additional services are rarely used and no estimated number of hours were provided in the bid document. The method of award states: “Award will be made to the bidder meeting all of the Mandatory bid requirements and submitting the lowest per sample price.”

discussion Do the vendors have enough information to submit reasonable prices for the additional services? Does the method of award clearly reflect the agency’s need? What information may help bidders formulate their bids most appropriately? What information may help the agency identify the true low bid?

Vendor A vs. vendor b The following represents two bids received: 100 Samples $98.00 $9,800.00 $100.00 $10,000.00 10 hrs. Review $1,000.00 $50.00 $500.00 10 hrs. Testimony $200.00 $2,000.00 Total $12,800.00 $11,500.00 Using the method of award stated, Vendor A would have been awarded the contract; however, Vendor B’s total contract value was lower. Optional/additional items should be incorporated into the method of award to ensure the State is obtaining the best price.

Step #3 – develop your ifb Step #3A – Administrative Process Step #3B – IFB and/or Contract Terms and Conditions, including but not limited to – price adjustment clauses, renewals, termination, site visits, appendices

Step 3A – administrative process Date, time and place of bid opening Requirements for submitting electronic, faxed or sealed bids Timeline for process Name, phone, fax and email address of the contact person(s) for questions, Lobby Law and debriefings Timeframe for submitting and responding to written questions relating to the IFB, if applicable Description of how bidders will be informed of potential addendums to the IFB

Step 3B – Price Adjustment Clauses Increases for contractors’ costs but also allows for the State to realize savings if costs decrease Price adjustments will affect bids; therefore, must be included in the solicitation document in order to be included in the contract

Step 3B – Price Adjustment Clauses Must be clearly defined Must identify frequency of increases/decreases Consumer Price Index (CPI) must include the index, region, base period and item Producer Price Index (PPI) must include the proper series ID CPI/PPI indices must be relevant to the item/service being procured May use other items such as prevailing wages, fuel indices, etc. Contracts utilizing de-escalation/escalation for both services and materials should include a proportional breakdown of the cost in the bid document

Example escalation clause Vendor, or the State, may request a price increase or decrease based on changes in the CPI. CPI to be used is CPI - All Urban Consumers – Northeast All Items for the 12 months ended 90 days prior to the anniversary date of the contract. Requests for changes must be initiated 60 days prior to the anniversary date of the contract. Only one price adjustment per year will be granted on the anniversary date of the contract.

Step 3b – renewals and termination provisions Contract term and subsequent renewals Cannot exceed five years total Termination Provisions Unilateral termination by the vendor is unacceptable (Guide to Financial Operations (GFO), Chapter XI, Section 2. I. – Unilateral Termination Provisions) Consequences of Default (i.e. liquidated damages) Lobby Law Violations Agency’s convenience Cause ST220 violations Iran Divestment Act violations

Step 3b – site visits If the site visit is mandatory, it cannot be waived for any vendor Provide OSC with a sign-in sheet for verification Bids received from vendors who did not attend the mandatory site visit must be rejected Site visits should be conducted on one day at one time so all vendors have the same information Questions and answers generated as a result of the site visit must be distributed to all attendees

Step 3b – IFB and/or contract terms and conditions Prevailing wage schedules, if applicable Mandatory requirements Order of Precedence clause Vendor Responsibility documentation Tax Department Certification Procurement Lobbying documentation Appendix A Iran Divestment Act language Proof of Workers’ Compensation and Disability coverage

Step #4 - advertising Step #4A – Contract Reporter Advertisement Step #4B – Discretionary Advertising Step #4C – Exemptions Step #4D – Single/Sole Source

Step 4a – contract reporter advertisement Must appear in the Contract Reporter at least 15 business days prior to the proposal due date NYS Agencies are required to publish: Bid solicitations over $50,000 Annual anticipated procurements up to $50,000 based on date of first purchase (SFL §163 (6)(b)) Contract Reporter exemptions must be approved by OSC prior to publishing the exemption Make sure to include an “or equal” in your advertisement to avoid restricting competition Agencies must use due diligence to identify potential bidders GFO Chapter XI, Section 14.A. – Publication of Procurement Opportunities

Step 4b – discretionary advertising Discretionary purchases under $50,000 SFL §163 (6)(b) Obligates state agencies to aggregate expected purchases for the same commodities or services within twelve months from the date of purchase to determine whether the procurement falls within the discretionary threshold Expressly prohibits split ordering A change to or a renewal of a discretionary purchase shall not be permitted if the change or renewal would bring the aggregate amount of all purchases of the same commodity or service from the same provider within the twelve month period over the discretionary threshold and should have been reasonably expected prior to the date of first purchase

Step 4b – discretionary advertising Discretionary purchases between $50,000 and $200,000 Best Practices Language #1 [Agency x] intends to purchase [1,000 widgets] pursuant to its discretionary authority under State Finance Law Section 163 (6). Interested parties should contact [agency contact person] to discuss this opportunity. Best Practices Language #2 [Agency x] intends to purchase [1,000 widgets] pursuant to its discretionary authority under State Finance Law Section 163 (6), which authorizes purchases without a formal competitive process in certain circumstances, including purchases from New York State small businesses, from businesses certified pursuant to Article 15-A of the New York State Executive Law and, if applicable, from businesses selling commodities or technology that are recycled or remanufactured. Interested parties should contact [agency contact] to discuss this opportunity.

Step 4b – discretionary advertising Discretionary purchases between $50,000 and $200,000 Best Practices Language #3 [Agency x] intends to purchase [1,000 widgets] pursuant to its discretionary purchasing authority under State Finance Law Section 163. This procurement opportunity is limited to NYS Small Businesses, businesses certified pursuant to Article 15-A of the NYS Executive Law and, if applicable, businesses selling commodities or technology that are recycled or remanufactured. This language can only be used when no formal solicitation has been made using an IFB or RFP.

Step 4c - exemptions Exemption requests must be submitted to and approved by OSC prior to entering into a contract Request must include: Justification of need Justification for the selection of the vendor Justification for reasonableness of price

Step 4c - exemptions State agencies shall conduct formal competitive procurements to the maximum extent practicable Shall be used only when a formal competitive process is not feasible Shall minimize the use of single source procurements Shall only be made under unusual circumstances Shall include a determination that the specifications have been designed in a fair and equitable manner

Step 4d – single/sole source exemptions Subparagraph ii was added to Section 163 (10)(b) to limit the use of single source procurements to circumstances where a formal competitive process is not feasible and provide that the term of the single source contract shall only be for a period of time until such circumstances are ameliorated. Furthermore, state agencies must document in the Procurement Record why competition is not feasible and publish these reasons on its website within 30 days of awarding a single source contract. This is in addition to the requirement that single source contracts be let only in unusual circumstances where material and substantial reasons exist.

Step #5 – Bid tabulations Bid Opening Submission to OSC

Step #5 – bid tabulations At the time of the bid opening: Ensure all bids are available to be opened Reflect all bids received Signed and certified by the agency on the day of the bid opening Before sending it to OSC: Indicate any rejections Indicate the winning bidder based on the method of award

Step #6 – Agency responsibility Step #6A – Awarding the Contract Step #6B – Vendor Responsibility Step #6C – Exceptions/Deviations Step #6D – Bid Protests and Debriefings Step #6E – Rejected Bids Step #6F - General

Step 6A – awarding the contract Award to the lowest responsive and responsible bidder Award in accordance with the method of award Ensure the product/service being offered meets the minimum specifications of the bid Compare the minimum specifications of the product offered with those of the brand name referenced, if applicable Verify the vendors’ calculations

Step 6b – vendor responsibility Verify the vendors meet the minimum requirements stated in the IFB Investigate large variations in bid prices to ensure the low bidder understands the scope of work Review vendor responses/questionnaire and analyze results Conduct other independent research to identify undisclosed issues Verify the vendor is not present on the Workers Compensation or Labor Law debarred lists http://www.labor.state.ny.us/workerprotection/publicwork/PWDebarmentInformation.shtm

Step 6c – exceptions/deviations Exceptions/deviations to the bid specifications should be acknowledged and included in the procurement record Include a memo for OSC and the procurement record indicating the following: How the agency determined the exceptions/deviations are immaterial How were other bidders and potential bidders not harmed by accepting the exception or deviation

example Regarding the qualifications of the vendor, the agency indicates the following: “Vendor must have a minimum of 5 years experience.” “Vendor will provide evidence of licensing.” “Vendor shall possess the necessary equipment to perform the required service(s).” The agency received only three bids – two with less than 5 years experience and one with 6 years experience. The vendor with the most experience was the highest bidder.

discussion Are the qualifications mandatory? Can the agency deem the lack of experience a minor deviation? What problems might this present? What could the agency have done to avoid this?

solution Prior to release of the IFB, scan the document for the words must, shall and will which indicate mandatory requirements. An agency can determine a qualification or specification is a minor deviation if the agency can document that inclusion of the mandatory requirement did not advantage the winning vendor, cause any qualified potential vendor to refrain from submitting a bid, and did not otherwise disadvantage any bidder or potential bidder. When qualified potential bidders are referred to, this includes any vendor in the entire field of potential vendors, not only those submitting bids.

Step 6d – bid protests GFO, Chapter XI, Procurement and Contract Management, 17. Protest Procedures Agencies should: Establish their own protest procedures Provide notice of their protest procedures in the solicitation documents Notify non-selected bidders of the contract award If a protest is received, agencies must: Respond appropriately to the protest (uphold or deny) Include all documentation with the procurement package to OSC I Object!

State Finance Law §163 (9)(c) Step 6d - debriefings State Finance Law §163 (9)(c) “The opportunity for an unsuccessful offerer to seek a debriefing shall be stated in the solicitation, which shall provide a reasonable time for requesting a debriefing.” Include your procedures for debriefings in the solicitation document Respond when a debriefing is requested Discussion should be limited to the vendors bid only Include documentation with the procurement package submitted to OSC

Step 6e – rejected bids Rejected bids should: Be supported by a memo Include the reason for the rejection Allow due process for non-responsible bidders Be included with the contract package submitted to OSC Include all correspondence between the rejected vendor and the agency

Step 6f - general Ensure all bidders receive written response to any questions and answers Ensure all bidders receive any addendums issued If less than three bids are received: Canvas no-bids Include price justification

Step #7 – the contract agreement and applicable appendices Step #7A – Contract Agreement Step #7B – Applicable Appendices

Step 7a – the contract agreement Written agreement between the agency and the vendor Mutually agreed upon terms and conditions Formulate the contract based on the IFB and the winning vendor’s bid, including, but not limited to: Contract term including renewals Price Adjustment Clause(s) Terminations Iran Divestment Language must be included in every contract – GFO, Chapter XI, Section 18. F. The Iran Divestment Act of 2012

Step 7a – the contract agreement Required Signatures GFO, Chapter XI, Section 2 Vendor with acknowledgement - XI.2.M Agency – XI.2.K Attorney General OSC – XI.2.L Other required by Law (e.g. Civil Service)

Step 7b – applicable appendices The following appendices may be attached to each contract: Appendix A – mandatory (GFO, XI.2.J.) Agency specific appendices Sales and Compensating Use Tax (ST220CA) (GFO, XI.18.D) Vendor Responsibility (GFO, XI.16) Consultant Disclosure (GFO, XI.18.C) MWBE Utilization (GFO, XI.18.A) Procurement Lobbying Act (GFO, XI.18.B) GFO, Chapter XI Procurement and Contract Management

Step 7b – applicable appendices GFO, Chapter XI Procurement and Contract Management Iran Divestment Act of 2012 (GFO, XI.18.F) Workers Compensation and Disability Insurance Coverage (GFO, XI.18.G) Division of Budget Bulletin B-1184 Attachment A or B (GFO, XI.11.A) Prevailing Wages, if applicable

Step #8A – Encumbrances Step #8B – The Contract Package Step #8 – OSC submission Step #8A – Encumbrances Step #8B – The Contract Package

GFO, Chapter XI, Section 2. C. Encumbering a Contract Step 8a - encumbrances GFO, Chapter XI, Section 2. C. Encumbering a Contract Agencies must be prepared to enter the PO encumbrance when requested by OSC Agency should indicate the intended encumbrance amount on the bottom of the STS or AC340S Calculating the minimum encumbrance amount (in general): Contract value/#of years = y y/12 = monthly amount Monthly amount multiplied by the # of months between start date of contract and end of fiscal year = minimum encumbrance amount

Step 8a - encumbrances EXAMPLE Calculate the minimum encumbrance amount on a $360,000, three year contract beginning August 1st. $360,000/3 = $120,000 $120,000/12 = $10,000 $10,000 x 8 = $80,000 MINIMUM ENCUMBRANCE NEEDED

STEP 8B – THE CONTRACT PACKAGE REFER TO HANDOUT PROVIDED

Step 9 – Contract Approval How to determine your contract has been approved by OSC: SFS Open Book New York What you receive back from OSC upon approval: AC-1552S OSC Transmittal Letter Signature Pages with OSC approval How to determine your contract has been non-approved by OSC: Non-approval notice

Questions