1 Follow Up Items  What are Unbalanced Bids?  What are Best Value Contracts?  Analysis of Contract Approval Limits

2 Unbalanced Bids Bid is based on prices significantly less than cost for some work and prices which are significantly overstated for other work.  Not necessarily a bad practice  We review for this in our bid evaluations  Helps a bidder conceal his pricing strategy from his competitors  May help a bidder recover larger sums for earlier preformed work  May help a bidder become the lowest evaluated bidder and obtain award of the contract, speculating on the accuracy of the government’s estimates

3 Unbalanced Bids (cont’d)  Unbalanced bids can be mathematically and/or materially unbalanced.  Mathematical evaluation determines if each bid item carries its share of the cost of the work plus profit, or if each bid item carries its share of the cost of the work plus profit, or whether the bid is based on nominal prices for some work and enhanced prices for other work whether the bid is based on nominal prices for some work and enhanced prices for other work Can still be awarded to the bidder Can still be awarded to the bidder

4 Mathematically Unbalanced Bid Example ItemBidder 1Bidder 2Gov’t Est. Mob/demob$127,498$30,000$22,600 Clearing & Grubbing$120,505$592,000$202,600

5 Unbalanced Bids (cont’d)  Material unbalancing involves an assessment of the cost impact of a mathematically unbalanced bid Must have a reasonable doubt that award to the bidder will result in the lowest ultimate cost to the government Must have a reasonable doubt that award to the bidder will result in the lowest ultimate cost to the government Most often occurs Most often occurs o as a result of deficient structuring of the Invitation For Bid, or o improper estimated quantities to be used in evaluation, These are not awarded to the bidder These are not awarded to the bidder

6 Materially Unbalanced Bid Example IFB Est. QtyActual Prior YrBidder 1 16,0000$0 (N/C) 10426$249 ea

7 BEST VALUE PROCESS  A best value process is appropriate when it may be in the best interest of the procuring agency to consider award to other than the lowest priced offeror or other than the highest technically rated offeror. Where the requirement is clearly definable and the risk is minimal, cost or price may play a dominant role in source selection. Where the requirement is clearly definable and the risk is minimal, cost or price may play a dominant role in source selection. Most of our work is in this category and low bid is preferred. Most of our work is in this category and low bid is preferred. The less definitive the requirement, the more development work required, or the greater the performance risk, the more technical or past performance considerations may play a dominant role in source selection. The less definitive the requirement, the more development work required, or the greater the performance risk, the more technical or past performance considerations may play a dominant role in source selection. We do not use this often We do not use this often

8 Best Value Process (cont’d)  Uses factors such as: the probable life of the item selected, the probable life of the item selected, environmental and energy efficiency considerations, environmental and energy efficiency considerations, technical qualifications of vendors, technical qualifications of vendors, the special features of the supply or service required for effective program performance, such as the special features of the supply or service required for effective program performance, such as  trade-in considerations,  warranty considerations and  maintenance availability.

9 Steps in the Process  Develop Meaningful Evaluation Factors and Proposal Submission Instructions High quality evaluation criteria High quality evaluation criteria  Linked to high value and risk assessment  Will yield meaningful discrimination  Independence  Qualitative vs. Quantitative Use of market research data Use of market research data Detailed proposal submission instructions help to ensure a streamlined process Detailed proposal submission instructions help to ensure a streamlined process

10 Steps in the Process (cont’d)  Technical Team’s Evaluation of Proposals Maintaining consistency with RFP factors and sub-factors Maintaining consistency with RFP factors and sub-factors Definitions of strengths, weaknesses and deficiencies Definitions of strengths, weaknesses and deficiencies Evaluation criteria weighting and relative orders of importance Evaluation criteria weighting and relative orders of importance

11 Steps in the Process (cont’d)  Evaluating Past Performance Past performance rating scales and definitions Past performance rating scales and definitions  Evaluating the Cost Proposal Definitions of reasonableness, completeness and realism Definitions of reasonableness, completeness and realism

12 Steps in the Process (cont’d)  Making the Best Value Award Decision Integrating the final proposal evaluation results Integrating the final proposal evaluation results Comparative assessment of offerors Comparative assessment of offerors Key considerations in the cost-technical tradeoff process Key considerations in the cost-technical tradeoff process  Much more time involved in reaching conclusion than in Invitation for Bid (low price) solicitation  Much more subjective in the evaluation

13 Evaluation of Commission Review and Approval Process  We are Refining Processing Time for Procurements From Requisition to Award  Goal is to Award Contracts Under $250k in Two Weeks from Bid Opening  Majority of Procurements, However, Now Go to the Commission for Award  Summary of Current Situation Follows

14 POs Reviewed by Commission by Fiscal Year  Comparing FY07 to FY08, Commission reviewed essentially the same number of Purchase Orders but at half the value.  Much of what you review is routine work for WSSC For FY06, Commission reviewed 30% of the total number of Purchase Orders issued but was 68% of the total value ($110M) of the Purchase Orders For FY06, Commission reviewed 30% of the total number of Purchase Orders issued but was 68% of the total value ($110M) of the Purchase Orders For FY07, Commission reviewed 34% of the total number of Purchase Orders issued but was 85% of the total value ($244M) of the Purchase Orders For FY07, Commission reviewed 34% of the total number of Purchase Orders issued but was 85% of the total value ($244M) of the Purchase Orders For FY08, Commission reviewed 38% of the total number of Purchase Orders issued but was 75% of the total value ($139M) of the Purchase Orders For FY08, Commission reviewed 38% of the total number of Purchase Orders issued but was 75% of the total value ($139M) of the Purchase Orders

15 % Total Purchase Orders Reviewed

16 % Water and Sewer Contract Values over $750K

17 Water and Sewer Contract Reviews  Commission review and approval of water and sewer projects has gone from 60% in FY06 and FY07 to 90% in FY08  Projects over $1.5M have gone from 20% in FY06 to over 33% in FY07 and FY08

18 Approval Process Timeline I_____3 wks__I A B I_______4 wks______I_____3wks____I A B C I__________________I_____________I_1 wk__I A B C D I__________________I_____________I_______I_____4 wks__I___4 wks__I A B C D E E Bid Opening (A) Bid Opening (A) Acquisition Director (B) ($250k) Acquisition Director (B) ($250k) PORC (C) ($ K) PORC (C) ($ K) GM (D) ($ K) GM (D) ($ K) Commission (E) (>$750K) Commission (E) (>$750K) Best Value (add 3-6 mos) Best Value (add 3-6 mos)

19 Summary  Contract Values are Increasing Annually Requiring More Commission Approvals  Delegated Level of Authority to the General Manager is not Consistent with the Current Work Flow and does not Reflect Current Market Conditions and Commission Objectives  Taking More Projects to the Commission Impacts Procurement Execution Time  We are seeing Contractors Unwilling to Extend Bids, Effectively Raising the Cost to the Commission

20 Recommendations  Increase the Delegated Authority to the General Manager to $1.5M  Establish a Sub-committee within the Commissioners to Review Projects in Advance of the Voting Meeting  Review and Approve Projects Presented to the Commissioners in One Meeting