Understanding Procurement and Contracting

1. COPS 2007 Technology Program Advanced Training Workshops Understanding Procurement and Contracting Susan McDonald Project Director, Information Services Division Seattle (WA) Police Department

2. Discussion Topics • Challenges to successful technology acquisition • Procurement planning • Creating proposal documents • Vendor selection • Contract development • Troubleshooting and Q & A

3. Challenges to Successful Technology Acquisition • Overall complexity • Unusually high degree of project visibility • Inter-agency rules of procurement • Communication barriers

4. You Can’t Avoid It, But You Can Manage It… • Procurement planning • Defining the purpose • Governance structure • Sourcing strategy • Scope definition • Project budgeting • Projecting timelines • Project risk assessment • Communications

5. Enhancement Utility CAD/RMS/Radio Projects Transformation 4% Business Value 16% Effectiveness-focused Efficiency-focused 80% Relationship Impact

6. IJIS Projects Transformation 10% Enhancement Business Value 45% Effectiveness-focused Utility 45% Efficiency-focused Relationship Impact

7. Governance • Governance structure • Leverage existing resources • Multi-agency concerns • Primary roles • Executive Sponsor • Steering Committee • Project Manager • Evaluation and Selection Committees • Employees (users) • Subject-matter experts

8. Sample Procurement Structure

9. Determine Sponsor Agency • Select procurement methodology • Sponsor agency considerations • Purchasing ordinances • Statutory guidelines • Alignment with enterprise standards • Fiscal limitation for sole source expenditures

10. Identifies Vendor Qualifications Detailed SOW Down Select Vendors More Formal Explicit Response Requirements ContractualIssues RFQ RFP Prelude to RFP Competitive Responses Developing a Sourcing Strategy Identifies Vendor Capabilities Less Formal RFI RFI Brief Description Prelude to RFP

11. RFP Approaches Linear Approach Down Select Low Bid Contract Negotiations RFP Award Evaluation Combined Approach Contract Negotiations Confidential Discussions RFI RFP Award BAFO Iterative Scope Definition Confidential Discussions Contract Negotiations RFI SOW Award Pricing

12. Selecting a Sourcing Strategy: Considerations How many vendors do agencies include in initial evaluations? About 70% started evaluation processes with four or more vendors, working towardtwo to three for oral presentations How often do agencies precede RFPs with RFIs? About 65% precede RFPs with an RFI, phone screening or informal letter Top selection criteria for Transformational Initiatives Trust; prior relationship; industry, technical, and process expertise Top selection criteria for Utility Services? Functional expertise, price, references All respondents included oral presentations as part of evaluation process; up to 30% changed the vendor selected after orals Importance of oral presentations Statistics Source: Gartner

13. Procurement Plan Elements • Scope Statement • Identifies the boundaries • Included vs. excluded • Items to identify • Hardware, software, services, interfaces, ancillary systems • Scope considerations • Size of initiative • Available human and financial resources • Sponsoring agency considerations

14. Open Source • Factors to consider with open source software: • Ensure that the bidder/vendor is accountable for performance • Same “non-functional” requirements: reliability, availability, performance, security, standards conformance • Ensure it is really open source • Do your homework • Check references: Do you want to be the first? • Understand the benefits • Open source does not equal free!

15. Procurement Plan Elements • Procurement Timeline • Research may be required • Internal purchasing staff • Vendor information • References • Create milestone-based Gantt Chart • Realistic and achievable • MS Project, SureTrak, others • Include contingency

16. Procurement Plan Elements Risk Management Risk identification Risk quantification Risk response development Risk response control Risk Management Plan Checklists Contingency plans Reserves Contractual terms 16

17. Procurement Plan Elements • Communications Plan • Information receipt and distribution • Performance reporting • Communications Plan inclusions • Project records • Performance reports • Evaluation/Selection documents • Vendor demonstration results • Final scoring sheets • Lessons learned

18. Creating Proposal Documents • Standard Proposal Structure • 6 Sections • I. Introduction • II. Background • III. Rules of Preparation • IV. Volumes • V. Vendor Response • VI. Functional Specifications

19. Section I: Introduction • What should it include? • Description of your organization • Purpose • Objectives • Statement of the need • Expected Statement of Work (SOW) • Who should write it? • Project Manager • Consultant

20. Section II: Background • What should it include? • Summary of needs analysis • Description of Project Team and approach • Description of the current environment • Who should write it? • Project Manager • Consultant 20

21. Section III: Rules of Preparation • What should it include? • Technicalities of the procurement • Key project dates • Vendor instructions • Anticipated agreement document • Evaluation and selection criteria • Who should write it? • Project Manager, attorney, purchasing agent, Steering Committee 21

22. Section IV: Volumes • What should it include? • Summary • Transaction data • Existing equipment and anticipated equipment counts • Who should write it? • Project Manager • Resources • Project Manager • Radio Technician 22

23. Section V: Vendor Response • What should it include? • Historic company questions • Reference requests • Open-ended technical questions • Warranty or support/maintenance/ operations • Pricing Information • Hardware and software • Implementation • Optional • Cost summary 23

24. Section VI: CAD/RMS/Radio Functional Specifications • What should it include? • Your organization’s requirements • Derived from focus groups • Exact product specifications • Avoid “equal to,” “and/or,” “approximate” • Categorize key concepts • Hardware, software, input/output • Will be used later for acceptance testing • Clearly formatted numbering system • Standardize the method of response 24

25. Section VI: Requirementsfor Information Sharing • Requirements • Design • Implementation • Standards • NIEM Conformance • Enterprise standards • Non-functionals

26. Section VI: Functional Specifications • Who should write it? • Assess your abilities • Review an existing proposal document • Time considerations • Risk factors • Don’t reinvent the wheel • Templates • http://www.search.org • Consider outsourcing this section

27. Contract Development • Contract negotiations • Negotiate favorable contract • Single points of contact • Contract elements • Conditions from proposal document • Statement of Work (SOW) • If you don’t write it down, you won’t receive it! • Payment plan linked to milestones in timeline • Warranty and maintenance agreements • Other specifics (system acceptance test plans, etc.)

28. Contract Building Blocks • Agreement • Liability • Confidentiality and security • Change • Performance • Account management • Statement of Work • Ownership • Transition • Financial Not understanding the intent behind the deal or particular contract clauses is often cited as one of the top problems that enterprises encounter in their deals

29. How to Invite a Bid Protest 1. Overbundled procurements 2. Insufficient marketplace analysis 3. Unclear (or missing) Statement of Work 4. Too many requirements 5. Inflexible pricing models 6. Draconian contract conditions 7. No evaluation criteria AT ALL 8. Insufficient due diligence 9. Flawed evaluation criteria 10. No Communications Plan

30. Troubleshooting • The bid protest • Legal process • Requires public organizations to reveal selection process • Solution: Carefully craft evaluation/selection criteria • Follow your rules! • Competing priorities among participants • Solution: Comprehensive advance agreements

31. OpenQuestions