1. Contract Formulation and Administration
MODULE I

2. The Contracting Cycle and Advance Contract Planning
Chapter 1
The Contracting Cycle and Advance Contract Planning

3. Essential elements of a contract
“A contract is an agreement that is legally enforceable and reflects the relationship between two or more parties for a specific time period.”
A contract must:
Identify potential risks.
Be a meeting of the minds between the parties.
Include an offer, acceptance, consideration, competent parties, and a legal purpose.

4. Attributes of contracts for services
Contracting for services differs from contracting for materials.
Contracting for services include:
Janitorial, pest control, landscape maintenance, trash collection, recycling, security, vehicle maintenance, professional services, etc.
Solicitation document for procurement services is the Request for Proposals (RFP).
Contractors for services are normally selected on the basis of price and other factors.

5. Participants in state and local government contracting process
Participants in public contracting consist of the:
Public Sector
State government (e.g. principal government offices and decentralized state government agencies).
Local government agencies (e.g. counties, cities and special districts).
Private Sector
Corporations, partnerships, sole proprietors, joint ventures, etc.
Constituency
Voters and all other residents of applicable jurisdictions.

6. Phases of the contracting cycle
Pre-Solicitation/Management of Pre-Proposal Communication
Solicitation.
Proposal Evaluation.
Contract Award.
Contract Administration.
Contract Closeout.

7. Advance contract planning
Helps to ensure that the solicitation, source selection process, and selected contract instrument best address the project needs.
Advance contract planning leads to:
Superior RFP.
Insightful source selection practices.
Less chance of protest.
Superior contractual document.
Selection of best-qualified contractor.
Best work environment for contractor performance.
Effective project management.
A multidisciplinary team is needed in order to have a successful project.

8. Implementations of best practices
Develop list of qualified contractors.
Provide agency website.
Manage pre-proposal communications through website.
“Proposal” and “Bid” not used synonymously.
Refrain from referring to “Bidders” in RFP.
Use appropriate word to compel contractor performance.
Assign weights to proposal evaluation criteria.
Disclose criteria weights in RRP.

9. Implementations of best practices
Specify proposal format in RFP.
Set page limit for proposals.
Include model contract in RFP.
Include terms and conditions in RFP.
State price as one criterion.
Assign weight to price criterion.
Disclose price criterion weight in RFP.
Use formulas to weigh proposal scores.

10. Implementations of best practices
Open proposals in confidence.
Describe confidential treatment of proposals in RFP.
Use one- or two-page format for variable information.
Prohibit cost-plus-a-percentage-of-costs contracts.
Specify unallowable costs in RFP.
Clearly define responsible parties in scope of work.
Define responsive proposal in RFP.
Define responsible contractor in RFP.

11. Implementations of best practices
Describe proposal scoring process in RFP.
Score proposal numerically.
Describe criteria for scoring proposals in RFP.
Ensure that proposals are scored according to criteria.
Describe contractor debriefing process in RFP.
Describe contractor protest process in RFP.
Employ tool to measure contractor performance.

12. Competition and Socioeconomic Contracting
Chapter 2
Competition and Socioeconomic Contracting

13. Introduction to competition in contracting
Competition tends to:
Decrease opportunities for corruption.
Justifies fairness and reasonableness of prices.
Facilitates documentation process.
Provides equal opportunities for all parties.
Produces high-quality services.
In an effort to have fair and open competition, agencies should publish the release of an RFP in a newspaper of general circulation. (Some agencies
use on-line posting services rather than newspapers. This sometimes requires changes to
agency codes).

14. Disadvantages of sole source contracting
Creates a noncompetitive environment (eliminates competition).
Higher initial pricing.
Excessive price escalation over time.
Lack of commitment.
Lack of producing high-quality services.
Increases the possibility of corruption (e.g. noncompliance with applicable law).

15. Challenges to and benefits of embracing competition
Benefits of competitive environment:
Lower pricing.
Improved quality service.
On-time service delivery.
Challenges of noncompetitive environment:
Increase lobbying.
Increase pressure to continue awarding, extending, or renewing contract.
“A state or local code or ordinance and a contracting policy requiring competition for services contracts that exceed a specified dollar-value threshold are essential".

16. Justification for sole source contracts
When only one contractor can provided the required service, the ordinance or contracting policy should provide a basis for contracting on a sole source basis.
Source Justification/Approval Form can be an effective tool to document the decision to approve/disapprove a sole source contract.
Approvals are based on a determination that the recommended sole source contractor is the “only” contractor that can provide the needed service.
Two reasons that should not constitute justification:
Lowest-price contractor.
Lack of sufficient time to award the contract on a competitive basis.

17. Introduction to socioeconomic contracting programs
Socioeconomic contracting programs are based on either equal opportunity or affirmative action.
Equal opportunity programs increase contracting participation from targeted companies through outreach efforts, and full and open competition.
Targeted companies include:
Small businesses.
Minority-owned small businesses.
Women-owned small businesses.
Veteran-owned small businesses.
Service-disabled veteran-owned small businesses.
(This SDVOSB terminology is used by the federal government. The State of California uses
"Disabled Veteran Business Enterprise (DVBE)." Note that the State of California does not
include "Small" prior to "Business." Large businesses in California can be DVBEs)

18. Equal opportunity techniques for developing a successful socioeconomic contracting program
There are 8 measures that help increase the number of contracts and dollar value of contracts awarded to targeted companies.
These measures are categorized as equal opportunity tools because they do not provide price, quality, or schedule advantages to targeted companies.
On the other hand, affirmative action programs limit the benefit of full and open competition.

19. Eight measures to improve success
Establishment of an incentive awards program.
Motivational training for contracts professionals.
Encouragement by managers to use targeted companies.
Agency participation in a supportive organization.
Establishment of rapport with targeted companies.
Provision of direct assistance to targeted companies.
Promotion of internal networking.
Incorporation of program support as part of employee job responsibility.