Texas Building and Procurement Commission Statewide Contracting Program TBPC Brown Bag Presentation Texas State Government Contract Management 101 Presented by Adrian Pineda and Sergio Upton May 9, 2007

Contract Management 101 Contract Planning Contract Procurement Statewide Contracting Processes Contract Administration CATRAD Overview/Demonstration

Contract Management Framework

Contract Planning Five Core Processes: Plan – Identify contracting objectives and contracting strategy Procurement – Fairly and objectively select the most qualified contractors Rate/Price Establishment – Establish processes that are cost-effective and aligned with the cost of providing the goods and services. Contract Formation – Ensure the contract contains provisions that hold the contractor accountable for producing desired results. Contract Oversight – Monitor and enforce the terms of the contract. Add to “Plan” bullet: Mention procurement methodology.

General Contract Planning Needs Assessment (on-going) Communications Plan (Inter-disciplinary) Cost Estimates (Relevant by industry) Risk Management Cover these points very briefly.

Needs Assessment Establishes a clear definition of the contracting objectives and purpose to be accomplished by the contract. Identifies existing statutory requirements, agency rules, policies and business processes The following questions aid the assessment: What does your agency specifically need? What will fulfilling this need do for the agency? How will your agency know when the need has been met? Point for second bullet: The success of many contracts is dependent upon how well business requirements are documented, communicated and understood by the contractor community. It is important to not assume that the contractor community understands the business of your agency.

Communications Plan Manages and controls internal and external communication through: Identifying the stakeholders Determines the type, content and frequency of reporting Choosing the appropriate procurement method (i.e. IFB, RFI, RFO, RFP, RFQ) Point for #1: Each contract management initiative should have an executive sponsor, a contract manager, purchasing department staff and program staff to assist in the contract management process. Question for Audience: What are some various procurement methods used at your agency?

Cost Estimates Estimated cost will provide an idea of the range of commodities/services that can be procured Estimates can be attained through internal subject matter experts or obtaining pricing from vendors Care should be taken to avoid giving potential bidders a competitive advantage Mention David Bennett’s program, Procurement Strategy, is available for market analysis assistance. Question for Audience: What are some examples of how TYC typically attains cost estimates for contract purposes?

Risk Management Defined as the combination of the probability of an event and its consequences. Provides foundation for critical contracting components in later phases Proper risk management can increase likelihood of project success, mitigate chance of project failure and clarify organization objectives of the project Three-part process: Develop and implement a process by which to continually identify and re-evaluate risks. Quantify and analyze the likelihood of potential impact of identified risks Limit, lessen, or abolish risks Point for second bullet: The Level of risk is determined by: The complexity and subject matter, the dollar amount, the anticipated payment methodology, the experience of agency staff, whether results will impact the public or only the agency, and time constraints or duration of contract. Final comment: Assigning weight to these identified areas of risk in the evaluation criteria will ensure solutions and ways to mitigate these risks are included in the response from potential vendors.

Preparing the Solicitation Background and Introduction Statement of Work (SOW) Vendor Qualifications/Financial Background / References Contract Term(s) Evaluation Criteria Deliverables Reporting Payment Method(s) Independent Quality Assurance Program Most Recent Terms and Conditions HUB Requirements / Good Faith Effort / HSP Negotiation Execution of Offer For SOW: As stated in our review of the needs assessment, the success or failure of a contract has also been linked to the adequacy of the planning, analysis and thoroughness of the statement of work. The SOW should be clearly defined, contractually sound, unbiased towards respondents, and encourage innovative solutions to the requirements described. Also mention the Nepotism Disclosure.

Contract Procurement Some External Major Contract Requirements: Quality Assurance Team (QAT) Texas Project Delivery Framework Contract Advisory Team (CAT) Reviews Point for Second Bullet: An example of a DIR Framework Requirement is that a Project Plan must be finalized and submitted to the QAT prior to spending more then 10 percent of the funds allocated to the project and/or prior to issuance of a solicitation for the project. Mention CAT Requirement very briefly since next slide has duplicative information.

CAT Review CAT Enabling Legislation: As mandated by the Texas Government Code 2262.101 in subchapter C, The Contract Advisory Team is created to assist state agencies in improving contract management practices by reviewing the solicitation of major contracts by state agencies. Major contracts are defined as any contract that has an estimated value of at least $1,000,000. State agencies are required to submit major contract solicitations to the CAT team for review through CATRAD. The CAT has 30 days upon receipt of solicitation to review the initiating agency's major contract. Final comment: Through the course of performing their procurement audits, the SAO will verify that a CAT and/or a Delegation Reviews has occurred and is documented. Also, per TX Govt Code 2262.101, during the course of our reviews, the CAT takes into consideration the SAO procurement audit suggestions and findings.

Review and Delegation Delegation Requests: For purchases of services estimated to cost more than $100,000, agencies must submit solicitations to TBPC for review and delegation. Texas Government Code 2156.121. TBPC has 14 days upon receipt of solicitation to review the initiating agency's request for delegation.

Advertising the Solicitation Central Master Bidder’s List (CMBL) notifies interested vendors of business opportunities Posting on Electronic State Business Daily (ESBD) for solicitations over $25K Final comment: If a particular procurement is very complex in nature, additional time should be allowed for potential bidders to respond.

Response Evaluation Evaluation Team Evaluation Criteria Scoring Methodologies Interviews and Oral Presentations Score Tabulation

Contract Award/Notification ESBD Major Contract Reporting requirement for contracts over $5M Professional and Consultant Services/Construction Contracts to LBB Points for last bullet: Regarding professional services contracts, pursuant to Texas Government Code Section 2254.006 and 2254.0301, a state agency shall provide written notice to the Legislative Budget Board (LBB) of a contract for professional services over $14K. Also, consulting contracts over $15,000 require approval from the LBB and the Governor's Budget and Planning Office. Also, with the exception of TXDOT, TPWD and some other specific exceptions, Construction Contracts for buildings over $14K must notify the LBB no later than 10 days after contract award.

Contract Administration Vendor Performance Tracking System Monitoring Contractor Performance Types of Contract Reviews/Audits Payment Approval Change Management Dispute Resolution Schedule Issues Quality Assurance Contract Extension and Renewal Contract Closeout Point for Payment Approval: In accordance with § 2251.021. a payment by an agency is overdue on the 31st day after the later of: the date the governmental entity receives the goods under the contract; the date the performance of the service under the contract is completed; or the date the governmental entity receives an invoice for the goods or service. § 2251.042. DISPUTED PAYMENT. (a) A governmental entity shall notify a vendor of an error in an invoice submitted for payment by the vendor not later than the 21st day after the date the entity receives the invoice.

CATRAD Overview (C)ontract (A)dvisory (T)eam (R)eview (A)nd (D)elegation CATRAD Version 1 – Currently available for state agencies to use. Planned CATRAD Version 2 Release – We will continue to log feedback from internal and external users of program and develop the requirements for a second version in spring of 2007.

CATRAD Features The CATRAD application provides agencies with the ability to submit and track online progress of their major contract solicitation requests and delegation requests. Access is administered by designated agency “Superusers”. Agency solicitations and other related documents are uploaded into the CATRAD system by end-user. DIR is electronically notified of solicitations containing a technology component. The submission of the Major Contract Questionnaire (MCQ) is no longer a requirement for CAT reviews.

CATRAD Application Benefits Increased organization Users can provide a preferred response date for the review to facilitate expedited schedules New administrative functions including automated assignment of reviews, system generated responses and customized reporting Increased visibility of solicitation and delegation requests to designated TBPC Procurement Division staff and CAT Team members

CATRAD Application CATRAD Demonstration

CATRAD Application

CATRAD Application

CATRAD Application

CATRAD Application Questions???

CATRAD Application Statewide Contracting Program Contact Information Adrian Pineda adrian.pineda@tbpc.state.tx.us (512) 463-3414 Sergio Upton sergio.upton@tbpc.state.tx.us (512) 463-8169