SPO 105 Part 1 of 2 Competitive Sealed Proposals

Good morning I’m Donn with the State Procurement Office and today’s training is on the request for competitive sealed proposals, which is also known as, the RFP process So along with the PowerPoint handouts you’ve been given a template of the RFP so you may also refer to it for the sequence that I’m going to go over as far as preparing a request for proposals So my training today will provide you with actual samples from RFP’s that have been solicited Today is part 1 of a 2 part training workshop that will continue on Friday I will be going through the PowerPoint and training, which should take about an hour So this is something new that was passed last session Act 239 amended HRS 103D-301 Originally in 301, it required that all procurement begin with competitive sealed bidding However, what this act did is now allow the procurement officials the authority to choose the appropriate source selection, but what we advise is that you should still document to the file your justification in selecting the particular procurement method and have it approved by the individual procurement officer because things to consider is if you do receive a protest to challenge your decision as to why you chose that method there would be documentation in the file If you don’t have it, then it might jeopardize your ability to prevail if the protester files for administrative hearing So what I would like to provide for you is in the next few slides, explanations or reasons for selecting the competitive sealed proposal method of procurement so that you can use this in your justification in selecting the procurement method even though now it does not require HOPA approval As I mentioned to you, it does not require HOPA approval but what we’re recommending is at least Procurement Officer approval is that it’d be justified and approved and documentation placed in the file in selecting the RFP method of procurement Because now of the act, everything in HAR, the rules, does not support the requirements But as I mentioned to you, it is best to document So what you’re going to need to determine is why it is not practicable even though it is advantageous to use the RFP process So here’s some factors to consider in determining whether bidding is not practicable If you determine that price is not the only consideration, then you may want to consider the RFP process when selecting the contract type So if you’re planning on doing other than a fixed price type, say perhaps cost incentive, cost plus percentage of cost, cost reimbursement, performance incentive, time and materials, then you may want to consider utilizing the RFP method of procurement And as I’d mentioned earlier if you cannot describe exactly what the specifications are or the scope of work and you’re asking the offeror to propose it, then again the RFP method of procurement may be the better method to choose Other things to consider is that whether you need to hold oral discussions In the IFB process, you cannot have oral discussions unlike the RFP process In the IFB process, the offer is submitted once and they are not allowed to revise their

offer as opposed to the RFP process And then lastly, award would be based on evaluation or criteria in the RFP process versus IFB which is strictly meeting the minimum qualifications and low bid winning So another thing to think about in making your determination in selection of method of procurement is to consider whether sealed bidding is not advantageous even though it’s possible to do You could talk to other folks who have done similar procurements and find out if they’ve done the IFB process and hasn’t been successful Again if you need to have discussions once proposals are received and then we allow the offeror to revise their proposal So if you answer yes to these factors, these factors may be used to support your determination in using the RFP method of procurement So here’s a quick snapshot of a comparison between the two methods: sealed bid versus sealed proposal If you look at the IFB process, you’re going be awarding to the lowest bid RFP process, you’re going to be awarding to the highest scored proposal IFB, you’re going to describe what the scope of work is RFP, the offeror will propose how to perform Obviously you’re going to put your requirements there but they’re going to propose to you how to achieve the deliverable In the IFB they’re going to deliver as you described In the RFP process, delivery will be based on what the offeror is proposing And then IFB, you would put all the terms and conditions There would be no opportunity to take exception, allow for exception As opposed to RFP where there’s opportunity for the offeror to propose changes to the terms and conditions that is agreeable So that’s a quick snapshot between the two methods of procurement So in the HAR currently the Procurement Policy Board may approve certain types of procurement that does not require approval, but as I mentioned to you now because of the new Act and HOPA requirement, HOPA approval is not required This is here merely to make reference, but the Procurement Policy Board may review additional and we can add it to the list and we can use that as part of our justification in determining whether to use the RFP process So currently there are four kinds of procurements that have been approved by the Procurement Policy Board and these are the four So if you’re procuring for any of these four goods or services, you can refer to the HAR, this section, as part of your approval So just a quick note about who the Procurement Policy Board is in case any of you are wondering It is a seven member board who adopts, amends, or repeals administrative rules to carry and effectuate the purpose and provisions of HRS Chapter 130D, which 103D governs procurement management control and disposal of any and all goods, services, and construction and they also consider and decide on matters of policy So this is one area as far as the different types of procurement that does not need to

go through an approval process because it’s already been determined that these types of procurements would best be procured through the RFP method of procurement But just because this list is here and you determine that it’s better to do an IFB, that would be your business decision or in the case of design build, if you choose to do design then you would actually follow Professional Services and then do a separate competition for the construction portion of your procurement So again this just allows you to use this method without getting now that it’s at that level, procurement officer approval So as I mentioned to you, for construction when it’s determined to do a design/build for construction, you may use the RFP process But the RFP would include the price for both design and construction if not again as I mentioned you would be doing it separately Professional Services for the design portion and IFB for the construction portion Okay so you’ve made your decision and your justification to utilize the RFP, or competitive sealed proposal method of procurement, so your next step is to determine who will be conducting the evaluation So it can either be done by the procurement officer or the procurement officer may determine that it should be done by a committee If it will be done by a committee, then the persons serving on the committee would need to be involved with the procurement as far as prepping the RFP, coming up with the criteria, and that the Procurement Officer would approve of these committee members, and that the names of the committee members will be placed in the contract file along with the justification to serve as committee members So I’m going to go into more detail about the evaluation committee and the process on Friday so I’m not going to talk too much about it here But just so you know that the RFP method of procurement allows evaluation by either PO or committee, but certain things need to happen if it’s going be done by the committee So you’ve determined your need, you’ve determined you’re going to use the RFP process, so things to keep in mind as you and your committee are preparing the solicitation document So you’ve decided that you’re doing the procurement through the RFP process because you don’t want to only consider price to make the award You want to consider who the offeror is, have others had good experiences with these companies, and what kinds of solutions do they have to offer So you may not know exactly how you will get to your goal but you should at least know what the goal is So a lot of times you may be rushing into a purchase However sometimes you need to take a step back, do some research and find out really what’s out there, what’s achievable before you just kind of dive right in and put an RFP out Lastly, you may be provided alternate solutions But how will you decide which one is the best one? So as we’re going through this morning in packaging the RFP, I’m going to make a note to you that this is your checklist item So at minimum, when you’re packaging an RFP document, all the items bulleted here must be someway in your solicitation packet The template that I provided, the training that I provide for you today as far as packaging

are all just guidelines If you don’t like the way we’ve presented it to you, by all means package it however you want, but most important to be compliant with the 103D-303 process, at minimum all the items listed here must be included in your RFP document or if it ever gets protested, it will obviously be thrown out because we did not comply So again, maybe keep this slide as a checklist and then before you release your RFP check to see that all these items are included somewhere So again as we go through the typical RFP solicitation document, I’ll point out each of these items to you So the first section is the proposal format This is the format in order that may be used and I’ll be going over each of these sections as we walk through a typical solicitation So you can follow along with the template if you want to see how this is all packaged So the first page is the title page Normally includes all of these items And the authorized signature would be by the Procurement Officer This is the person authorized to enter into and administer contracts So here’s a sample of the title page This is the procurement that I did for the Aloha Stadium for an advertising program So on the title page you’ll find the name of the issuing department So in this case it was us, the State Procurement Office So this is us here So it would be your department The date of the notice This is the date you would be releasing your solicitation and this is the date you would be posting to the procurement notices site You should include a title So in this case it was Advertising Program for Aloha Stadium And normally give it a number so then if you get a call or if you get a email, then at least you can quickly reference a number So in this case, we elected to call our RFP documents by the method So in this case, RFP If we do IFB, we call it IFB We usually use the fiscal year, and this is a running number And then we recognize what island this procurement is for So again you don’t need to follow how we’ve come up with our title page here, but again just guidelines to help you since we’ve been doing this for a while now So the bottom part of the title page, and again this is your first checklist item, you must include the date, time and location So this is right in here The date, this is the date And the time is sort of cut off here, but it’s 2:00 The location so in this case it had to be delivered to our office Although now we’re doing everything electronic so now everything comes through the e-system And to where the proposals are to be received So that’s your first checklist item You need to at least indicate those three items: the date, the time, and the location where the proposals are to be received And then again, this is by your choice, it may include the name of the individual issuing the RFP So in this case it was our Procurement Officer, Ruth Yamaguchi And if you want you can have her signature here That would be at your choice And in the past when we didn’t have electronic, we used this cover sheet as part of the contract document So when the offeror submitted their offer we would have them submit the name of the company here as part of their proposal packet Again because this page becomes the cover sheet to the contract document

The next section is the table of contents This sections off the main areas So typically the attachment would include the offer form pages, wage certificates, any sections that need to be filled out Appendix would be any additional data expanding for substantiating data presented I know when I did the procurement for the EUTF they provided the organizational chart, issues required to be resolved during the upgrade, customizations, etc And then lastly the exhibits would be broken out as far as any particular rules of the agency, budget forms, evaluation sheets, schedule of events, flowcharts, etc You can include general provisions here, general conditions Again, it’s really up to you on how you want to package your particular solicitation And at this time we also recommend attaching a copy of your contract document So if you’re using the AG contract forms, the blank form would also be attached as part of an exhibit So here’s an example of the table of contents This particular procurement perhaps was for the Office of Elections If you look at the exhibit, this procurement required a surety bond and a performance bond So this may be something you’ll be adding to your procurement packet And I’ll talk a little about the bonds further on into the training So in the first section normally you would put in the introduction and key dates, terms or acronyms that will be referenced throughout the RFP And then give a little intro about the purpose of the solicitation What is the contract for? You might want to include a cancellation provision here to protect you in the even that you need to cancel for whatever reason And then lastly are your significant dates So these are the dates that you would inform the potential bidders or offerors as to how much time they have to ask questions, when proposals are due, etc So in the case of the proposal due date, you need to allow a minimum of at least 30 calendar days from when you released it So for example, if your release date was on June 1st, the proposals would be due on July 2nd So you need to allot 30 days between the day you released it and the day that proposals are due at minimum So here’s a sample of some terms and acronyms This is a procurement that I did for the Department of Agriculture Animal Quarantine Branch So they have their list of certain terms that were used in this particular solicitation So you would have your own applicable terms And then a little blurb here about what they were trying to procure And these were for services for inspection of animals coming through the Lihue Airport And there’s that cancellation clause that I mentioned to you So here’s an example of significant dates Again, pre-proposal conference is not mandatory However if you are planning to have one then you would include it here in your list of significant dates If you’re allowing for questions, which we highly recommend And then allowing time for the committee to go through and respond to them and lastly proposal due date After all the proposals are evaluated, a priority list will be determined and it is with those priority-listed offerors that discussions may be held And then if a best and final is necessary, then you will call for a best and final to

the priority listed offerors Review will be made again on the BAFO and then the contractor will be selected an awarded So the next section is on background and scope of work So normally the background would give you a little bit of a history of the procurement It’s a little more thorough briefing other than that first section of the intro So here’s an example that I did for the Aloha Stadium They talked a little bit about when the Aloha Stadium installed the scoreboard This procurement was for advertising and they wanted someone to help do some advertising on the jumbo-tron And so they gave a little history as far as what had been done in the past using the jumbo-tron So here’s your next checklist item and this is your specifications or your scope of work So this is an important section This is where you’re describing to the offerors what the expectation is As a result of this scope of work will be what you’re contracting for This is what they will be performing for you in order to meet your goals So it is here that you’ll describe what you’re trying to achieve, what services you really need, you’re going to tell them a little bit about what you have existing, and how you plan to either replace, upgrade, or maybe add to or enhance to what you already have So what you want to do is put out your minimum requirements and really just have that separate from your desireables So here’s an example This was a procurement that I did for the Department of Health and these were for advertising services which they wanted to do through educational campaigns So here they describe exactly the scope of work and they put all there bulleted items here And then include the implementation component So not only develop, but how would they put it in place and then how will it be evaluated So again this is just going to be really up to you, what your needs are, and how you develop your scope of work If you want to include strategy, then you would also include that Take a look at the example that I did for the EUTF when they were determining to upgrade the Peoplesoft system So they had a timeline They had some milestones that they were trying to achieve and so they wrote this all out as part of their RFP package So again you want to describe exactly what the minimum requirements are Again the more you put here, the more thoroughness, the more you describe without being so restrictive, however you need to keep that in mind that you’re limiting competition, but again ultimately you’re trying to achieve the best contract for your department So however you describe it would be the result The more work you put into the upfront part obviously will be the outcome And at the same time how you manage it, contract administration, and how you mange it, and how it will be measured as far as achievement goes, that also comes into play, but at the front end you need to describe all of this so that the offeror can put together the best

proposal package and in the end the State will be happy with the contract and the contractor’s services So this is a procurement that I did for the Office of Elections So here you can see, this was for the direct recording system And so here they described at minimum what this equipment had to do in order to comply with the federal requirements So again, just examples that other departments have done and other procurements that this office has provided as far as procurement services So if you want to include functionality, then you would include this into your procurement specifications So factors again what you’re requiring this contractor to provide as far as working hours, overtime, where is it going to be located (onsite/offsite) What you want to be careful with is terminology And I’ll give you an example in the next slide so when you’re using the term contractor, normally you’re referring to the awarded company or person because you’ve already awarded So you’re expecting the contractor to do these certain things versus the offeror, which is the potential respondent So as an offeror, they should have a license, they should have so many years of experience, so keep in mind of the terms you are using And the same goes for mandatory versus optional So if you require them to do something, then you want to say mandatory or shall versus may And here’s the example So in this case the contractor with the approval of the Executive Director So in this case, this is the expectation of the awarded contractor and they shall provide investigation services This is a procurement that I did for the Campaign Spending Commission and the scope of work here, the contractor shall obtain written approval, shall be supervised, so again to be careful with the particular terminology as far as who you’re referring to and whether you require the work or whether it’s not mandatory So when you’re writing specifications, we want to ensure we’re not being so restrictive This is actually referring to goods, commercial products So you want to write something generic so that there is opportunity for competition and not call out a brand name If you are planning to use the brand name as the guideline, then you want to ensure that you include a “or equal” clause so that you ensure the competition can also submit and that you list your minimum requirements and as long as they meet you will still consider them for award So as I had mentioned to you, not being so restrictive and as you’re allowing for optional you need to describe how you plan to test to meet the minimum requirements if this is applicable So there’s different kinds of specs The design specs would be any details of the characteristics that an item must possess So again you’re not going to really name a brand or product, but it allows for competition by making it more generic Performance is describing what is required to do, capabilities the product must meet And here as I mentioned to you if you do list a brand name then you will require CPO approval

if you’re going to restrict a particular brand or trade name So that’s why we encourage if you’re set on using the brand as a basis that you include “or equal” Or the opposite would be to name the particular brand as a qualified product or pre-approved, but if you go this route then what you need to do is allow for substitution So you must allow the Offeror to submit in addition to those products that you qualified as pre-approved, allow for them to submit something for your approval to also be named as a qualified product So, the next section in your solicitation, department responsibilities if you want to, again not necessary in this case, the Stadium Authority indicated that they would be providing certain things in order to complete the contract So again, it really just depends on your particular procurement and whether this section would be applicable The next section is on the term of contract and here is your next checklist item So normally you would describe in the solicitation the term of your contract (12 months from this date to this date with the option to extend for a number of additional 12 month periods But you would describe this in your solicitation So if you’re planning to do a multi-term contract as shown as an example in this case which is 24 months, it does require a HOPA written determination So what the multi-term is is that it extends over more than one fiscal period, the funds are only available for the initial fiscal period, and that subsequent extensions are also subject to availability of funds So normally contracts are for 12 months with additional 12 month periods so if you’re choosing to exercise the multi-term then again you will require HOPA approval The next section is on the proposal format and content This is your next checklist item And this is where you’re going to be describing to the Offeror how to package their proposal So again this is just a sample It’s in the template You’re more than welcome to use some of this Again it’s really up to you on how you want to have the Offeror package their proposal, but basically what you’re going to be doing is describing how the proposal should be organized for ease of evaluation and scoring And you want to describe each section in detail to help actually you as the eval committee member So really this is really for your benefit as an eval committee member so that once you’re going through the 20 proposals you received that there’s some standardization so that you can go through it and make your comments and give your score So again, this is a sample for EUTF and they’re just describing what they expect the proposal to be complied of: project approach, work plan schedule, etc And then here’s your next checklist item This is the price So you would need to describe the manner the prices are to be submitted So here’s an example again for the EUTF They wanted pricing for the upgrade and one month of support plus additional five months of support and then additional 12 months

So again, you should have a separate workbook, worksheet if necessary, in which the pricing can be evaluated And then lastly, you need to give the Offerors the opportunity to take exception to any sections in the RFP, but it would still be at the committee’s discretion whether to accept or not accept any of their exceptions And this is your next checklist item This is the section on the evaluation criteria and contractor selection So as I had mentioned to you, we’re going to go into more detail on Friday about the evaluation criteria and then the process once all the proposals are received This morning’s purpose was to go over more about the packaging of the RFP document And then the last section are any other requirements that you need to include in your bid package So there’s proposal security, which requires a bond, pre-proposal conference, confidential information, and your terms and conditions So we can talk a little bit about the security So if you are requiring a security with your particular procurement, the RFP shall include a statement concerning whether the proposal shall be accompanied by a proposal security or other evidence of financial security The purpose of the security is to ensure the Offeror is submitting a proposal in good faith and will enter into contract if awarded And what it does is it protects that State from delaying the whole procurement And so it’s just an extra security, but you need to keep in mind that with that bond is a price attached to it so normally that’s just passed on to us as a State If you’re doing, a construction procurement, security bond is required for any procurement $250,000 or more And then for goods and services it would be at your option, which does require CPO approval If you’re an Executive Department, the CPO has delegated this approval to the HOPA And then lastly, if you’re federally funded, contracts require you to include a bond then you would include it and make note of that in your solicitation So this is kind of like what it looks like as far as the provision in your solicitation So you’re describing to the Offeror that the proposal would be accompanied with some kind of guarantee and then you would give examples as to what would be acceptable So in the case of the surety Surety is when a bonding or insurance company provides the guarantee So what does the bid bond amount need to be or the surety? At least 5% of the base and any additive alternatives or anything that the federal funding requires you In the case of the performance bond, again, this would be optional if you’re doing goods and services, but again what the performance bond is, what it does it secure the State from any loss or damage in failure or refusal of a contractor to perform a contract And then the payment bond protects those furnishing labor and materials such as subcontractors So in the case of construction, if it’s over $250,000, a performance bond is required Goods and services it would be at your option However if you choose to require a performance or payment bond, it does require HOPA approval For Executive Departments, the CPO has delegated the approval to the HOPA

And again same with Federal funds If it requires that you have a performance or payment bond, then you need to include it in your solicitation So for construction, performance and payment bonds shall be in the amount of 100% of the amount of the contract price And for goods and services, not to exceed 50% So normally what happens is if there’s a bid bond or a surety that would be submitted with the proposal Once all the proposals are received and reviewed and award is made then the bond is returned if it’s not utilized or exercised and then in exchange for the bid bond then the awarded company would submit a performance bond at the time of award upon execution of the contract So in those cases where the contract price cannot be determined, the amount of the performance bond, you would state it in the solicitation So it would be a specific dollar amount Say performance bond will be $500,000 or maybe based on some figure, say some industry leader So that would need to be justified And then saying if it’s a federally funded contract, it would be whatever the feds require as part of them giving you the money So then if there is a performance bond, once some of the work has been performed, the bond amount can be reduced So say completion of work Based on that percentage of work the bond can be reduced for that amount And there will be a swap out I guess if you want to call it on the bond so that the State’s not holding a bond for work that’s already been performed So that was a quick lesson on bonds Pre-proposal conference So again if you’re planning to have a pre-proposal conference, you’re going to include any instructions and information to the Offerors as to where it’s going to be held, time, and the place What you do need to include in all your solicitations is a statement that says discussions may be conducted with priority listed offerors pursuant to section 3-122-53, but that proposals may be accepted without discussion So you need to include this provision or this clause in your solicitation And the example, and I’ll highlight it here So you need to include this provision right here Sorry Anyway that particular sentence or similar needs to be included in all your solicitations You also need to include a statement that Offerors may designate in writing those portions of the unpriced proposal that contain trade secrets or proprietary data that are to remain confidential subject to section 3-122-58 You need to put something similar to this here So this is important Referring to this section that if there’s anything confidential in their proposal, that they’re going to designate it as confidential, but be readily separable from the proposal in order to facilitate inspection of non-confidential portions of your proposal Because what’s going to happen is at the end of your procurement, after you made award, there may be interested parties that want to see proposals as part of the OIP process

This is the Office of Information Practices and everything becomes public after the award is made So you want to be able to make sure that anything that is marked confidential can be removed from the public inspection file so that anyone asking for access to public information can do it in a timely manner since I think OIP has certain requirements as far as being responsible in complying The last would be your T’s and C’s and these are all contractual terms and conditions applicable to the procurement As I mentioned to you the AG General Conditions can be included as an exhibit And again these are just examples So again it would just really depend on your particular procurement You might want to be working with your AG as to what kinds of T’s and C’s you want to include to protect you and your procurement So the last section is the attachments Here’s a sample of a offer form Again you can design it to however you want it to be Really all you’re asking is that you want something in writing that they understand that by responding to this solicitation that they understand And if you had a bond requirement then this would be part of your OF-1 So, where do you begin? Where do you begin in packaging a procurement? So what I like to do is get my eval committee together and we just do a little brainstorming session and we come up with a list of expectations of this contractor Who do we want them to be, what level, what kind of qualifications, and what do we expect this contract to do, what are our requirements as far as their services or even goods for that matter We just kind of put all our ideas together and make that a starting point You can also take a look at some previous RFP’s to see how they packaged it You can check out our awards reporting site to see other procurements and maybe contact those agencies for samples And then maybe come up with a timeline and schedule because obviously you need to work backwards in getting to your end goal So there’s nothing wrong with talking to vendors at this point You can put out a request for information and gather information in putting together your solicitation So as I mentioned to you really whatever you put into it upfront will be the end result And then being realistic What is out there that is achievable? Because you really don’t want to put out a solicitation and get no responses because we’re asking for too much or if we’re not clear and we’re skimpy on our requirements then basically that’s what we’re going to be back Because if you don’t spend the time upfront what’s going to happen is that you might have to cancel and start all over again You may end up paying way too much more than what you budgeted for, and you may also end up with some legal problems if it’s not packaged properly and compliant So after you’ve packaged your solicitation document you need to check out who may be

interested in responding to this solicitation and come up with a list as this list will be placed in the procurement file You need to put out a public notice This is to ensure competition So the procurement notices site is your starting point If you choose to put it in the newspaper, that is not mandatory, however if you do put it in the newspaper we do have a publication or newspaper contract which is mandatory so you need to check that out Basically the public notice is going to give a description of what it is you’re procuring, who to contact to pick the solicitation document up, how long it will be available on the street, and any other information such as pre-proposal conference information So currently the procurement notices site is utilized by all jurisdictions except the City and County So as I mentioned to you at minimum it just needs to be put up on the PNS or another internet site and then as an option if you want to put it in other publications specific to perhaps your trade, then you may do so Any changes made to the RFP would be issued via addendum The purpose of the addendum is to include any material changes, it would make reference to those sections in the RFP that’s being changed, it would provide clarifications and also the Q&A portion as part of the procurement process The use of the addendum is to correct any defects or ambiguities and to provide as much information to the Offeror in providing their package or proposal What’s important is that everyone receives the same information and that’s why it’s done through the addendum If you get a phone call, you need to advise the inquirer to submit their questions in writing and to make sure that all the answers to inquiries be made to all potential offerors So that’s why it’s important that if you do get a phone call or an email that you not answer them individually you want to ensure that if there’s a problem with the solicitation or there’s a question that you publish it via addendum for clarification so that everyone has the same information and that one party will not be privy to more information than any other If you need to cancel the RFP, that’s why you had that clause in there, then you can exercise that right You would need to issue a cancellation notice and explain the reasoning and document it to your file So proposals can be modified at any time before the proposal due date it can be withdrawn and if you decide to cancel again letters need to go out The cancellation needs to go out on the notices site But if you cancel after proposals are due then you’re going to need to somehow submit letters to those that have responded in addition to the notice that you’re going to be putting out on the notices site Especially if the due date has dropped Ok so I ran a little over time I’m sorry But hopefully you got an idea of, because this is really an overview of packaging your RFP So I’m going to take a break here and then when I come back we can go over any of the

questions that have been submitted