Construction Warrant Program

1. Construction Warrant Program Warrant Level I Training Ira Rosen, PE

2. Warrant Level I Training This is the first course in the DOT&PF Construction Contracting Warrant System Training.

3. Who Cares? The DOT&PF Construction Contracting Warrant System applies to all employees responsible for encumbering Department or delegated operating agencies via procurement of professional services and construction related activities. If you will be involved in any construction related procurement activities, this means you.  

4. Learning Objectives After completing this course You should understand the rules for purchasing construction related supplies and services.   You will know where to go for more detailed information. You will know when to seek advice from someone with more experience Construction related procurement is not difficult but every procurement action is unique.  It is always better to make sure you are proceeding correctly than to have to go back and correct a flawed procurement.

5. Topics This short course will introduce you to the rules for Small Construction related Procurements. Although the rules for small procurements apply to procurements up to $100,000, this course focuses on procurements up to $25,000. The topics covered will be: Overview of the Warrant Program Overview of Procurement Small Procurement for Construction Small Construction Contract Management Alternative Procurement Methods Professional Services Agreements If you will be responsible for procurements over $25,000 you will be required to take additional training.

6. Class Materials Disc • Forms • Links • PP Slideshow • Small Procurement Manual PP Notes

7. Important References • The Construction Contracting Warrant Manual • The DOT&PF Small Procurement Manual • DOT&PF Small Procurement Forms • Wage & Hour Administration, Pamphlet #600 • The Professional Services Manual

8. Purpose The purpose of this course is to provide guidance to State of Alaska – Executive Branch employees (excluding agencies exempt from AS 36.30) who need to purchase construction related goods and services. The guidelines provided are in accordance with Alaska Statute 36.30, 2 AAC 12, DOT&PF's Policy & Procedures and the delegation of authority issued to each agency.

9. Definitions Let's begin with some definitions so we all agree on what the words mean. Even more definitions can be found on page 68 of the DOT&PF Small Procurement Manual for Construction

10. Procurement Everything that goes into buying, purchasing, leasing, or otherwise acquiring supplies, equipment for the State fleet, services, or construction.  That includes developing requirements, preparing, evaluating and selecting contractors and all phases of contract administration and management.

11. Construction “The process of building, altering, repairing, maintaining, improving, or demolishing a public highway, structure, building, or other public improvement of any kind to real property other than privately owned real estate leased for the use of agencies; it includes services and professional services related to planning and design required for the construction.  It does not include the routine operation of a public improvement to real property nor does it include the construction of public housing.” If your procurement action matches this definition and the value is less than $100,000, use the DOT&PF Small Procurement Manual. If it doesn't match this definition, it can't be procured under the DOT&PF's statutory authority for construction.

12. Overview of the Warrant System The Warrant System is the DOT&PF procurement training and certification program required to exercise a delegation of authority for construction related procurement.

13. Construction Warrant Warrants are certificates of appointment to employees delegated procurement authority to support the Department and Delegated Agencies Warrants certify the holder has met the requirements for procurement authority up to a certain monetary level and show the warrant holders written delegation amount.

14. Professional Services “Professional, technical, or consultant’s services that are predominantly INTELLECTUAL in character, result in the production of a report or the completion of a task, and include analysis, evaluation, prediction, planning, or recommendation.” Remember, DOT&PF's authority only covers construction related professional services.

15. Chain of Delegation Under AS 36.30.015 and 2 AAC 12.740, the Commissioner of the DOT&PF delegates authority to contract for construction related  procurements. This authority is delegated to the Chief Contracts Officer (CCO).  The CCO further delegates to the Department's Regional/Division Directors and to certain Delegated Operating Agencies. In order to legally procure goods or services for the State of Alaska, your link in the chain of delegation must be established in writing.

16. How does it work? Legal Support for the Warrant Program is called: Law of Agency An Agent is a person authorized to act under the control or benefit of a principal party Any acts of the agent obligate the principal The delegation is the legal document that authorizes the agent relationship A Warrant Officer is an agent of DOT Any acts of the Warrant Officer obligate DOT

17. What does it really mean? The Warrant says the holder has the training and experience to handle procurements up to a certain dollar level The Warrant says exactly what the warrant holder is authorized to do as the “agent” of the Department

18. Delegation Who is allowed to make purchases or procure services on behalf of the State of Alaska? The authority to make purchases is given (delegated) to you by someone who has a higher level of authority. Reference: 2 AAC 12.740

19. Procurement Actions Prior to performing any procurement you must receive a written procurement delegation from your Agency Under the Revised Construction Warrant System, the Warrant will provide the written delegation. Your Construction Contracting Warrant should be appropriate for the type of procurement involved. If your job actions are limited to administering existing contracts, you do not need a Construction Warrant. If you solicit new contracts or procure construction related supplies, you must have a Procurement Warrant.

20. DOT&PF Warrant System  The Warrant System assures that people who have the authority for procurement also have the training for procurement.

21. How authority is passed down The Commissioner of Transportation and Public Facilities has all rights, powers, duties, and authority to procure (AS 36.30.005(b)): • Construction • Equipment or Services for State Equipment Fleet He can also delegate to other agencies and individuals (2 AAC 12.740)

22. Just Construction? DOT&PF has also been delegated authority to procure non-construction supplies and services by the Department of Administration and the Chief Procurement Officer (AS 30.36.010) (Delegation of Authority, Feb 1, 2002)

23. Delegation of Authority The DOT&PF Commissioner has delegated his authority to the Chief Contracting Officer (CCO). The CCO has authority to further delegate contracting authority to: Warranted Contracting Officers Regional/Division Directors Commissioners of delegated agencies AND YOU!!

24. Who Recommends you for a Warrant and Delegated Authority? Most likely your boss, who is authorized by the Regional or Division Director, or Commissioner if you are in a delegated agency. An Appointing Officer in your DOT&PF Region or delegated agency issues your warrant and forwards your application to the CCO for tracking The Appointing Officer manages and oversees warrants issued under their authority

25. What is a Warrant? The Warrant is a certificate that says an individual is trained in certain procurement actions For example, a Level 1-ProcurementWarrant says you are trained in small procurement methods, up to $25,000. The Delegation shown on the Warrant will determine how much authority you have, up to $25,000.   It could be less. Warrants are issued to individuals, not positions.  If you are hired, promoted, or your job duties change you may need to apply for a new Warrant.

26. What are the maximum Warrant levels? Warrant LevelAuthority Level Level  1                 Up to $25,000      Level  2                 Up to $100,000     Level  3                 Over  $100,000 The Warrant levels are intended to align with the dollar levels in the State Procurement Code.   This course will focus on Level 1, small procurements up to $25,000.

27. Overview of Procurement Small Procurements for Construction related projects are divided into 3 procurement categories: Less than $5,000 From $5,001 to $25,000 From $25,001 to $100,000

28. State Procurement Code:AS 36.30   Comprehensive State statutory rules for the regulation of procurement of goods and services Based on premise that goods and services should generally be procured through competition Prescribes who has procurement authority Essential rules of the road

29. Key Sections Small Procurement (AS 36.30.320) Architectural, engineering, and land surveying contracts (AS 36.30.270)

30. Alaska Administrative CodeChapter 12: Procurement It supplements and clarifies AS 36.30.   It  is more detailed and specific. Small Purchase Authority:  2 AAC 12.400 Architect/Engineer/Land Surveyor  Procurement Authority: 2 AAC 12.320 Maintained by the Department of Administration

31. DOT&PF Policy & Procedure Manual DOT&PF governing policy and procedures for small procurements

32. DOT&PF Small Procurement Manual for Construction Projects This is the "How To" guide to small construction procurements. Use this manual to make sure you are in line with State Procurement Rules DOT Small Procurement Manual

33. DOT & PF Professional Services Agreements (PSA) Manual Everything you need to know to procure Professional Services. PSA Manual

34. Small Procurement for Construction Procurement can be broken down into several areas: Solicitation Award Contract Administration Protests and Claims Alternate and Innovative Procurement Record Keeping These are the major chapter headings in the DOT&PF Small Procurement Manual for Construction Projects

35. Solicitation The rules for solicitation are determined by the estimated cost of the contract.  The small procurement cost categories for construction related solicitations are: less than $5,000 from $5,001 to $25,000 from $25,001 to $100,000 An award may not be made in excess of the specific procurement category initially used.  This is because each successive monetary level has more stringent solicitation requirements.

36. Divided or Fragmented Solicitations A solicitation may not be artificially divided or fragmented to make it fall into a small procurement or to keep it within someone's authority level The cost estimate cannot be manipulated to circumvent the source selection procedures required by AS 36.30.100 - 36.30.320

37. What are the Rules for Procurements under $5,000 Warrants are not required but you still need written delegation.

38. For Procurements under $2,500 You can use a state Credit Card (PCARD) if you have one and have been trained to use it No competition is required Price firmly established in advance No "estimates" or Not to Exceed prices

39. For procurements between $2,501 and $5,000, you must use: "Reasonable and adequate competition 2AAC 12.990(a)(17) Depends on how difficult it is to obtain quotes, and How much time you have One source may be reasonable and adequate Solicitation can be verbal Whatever you do, make sure you Document the Results

40. How do I know the Procurement will be under $25,000 Good Question!! You will need a cost estimate.

41. Methods of Cost Estimating The Cost Estimate can be based on any of the following methods: Published cost guides Detailed cost breakdowns Estimates based on historic construction costs

42. Published Cost Guides This might be a catalog for simple supply purchases It might be the RS Means Cost Estimating Guide for Construction to get costs per square foot You can also find published sources on the Internet

43. Historic Costs If you have had similar projects in the past, they can be a good starting point for your estimate. Decide if the new project is the same, easier or more difficult. Adjust for differences and inflation

44. Detailed Cost Breakdown Cost out the work as if you were quoting on the work yourself: Contact material suppliers, equipment rental yards Calculate delivery costs Estimate the number of labor hours and use the appropriate Labor Rates Include Overhead, Profit and Contingencies

45. What happens if my estimate is wrong? Accurate Project Cost Estimates drive the procurement process A failed procurement results if the wrong category is used.  That means you cannot proceed with the procurement.  Time is lost and problems occur. A failed procurement results in prices being exposed. Rebidding can be compromised if contractors know what the others have bid. If you are not confident in your estimate or are within 20% of the upper limit, you should use the rules for the higher category.

46. Procurements from $5,000 to $25,000 • Prepare a written description of required work • It must be read to or delivered to each prospective offeror • At least three potential contractors must be contacted verbally • The solicitation process must be fully documented • Use Quote Contact Report

47. Procurements from $25,000 to $100,000 At least three potential contractors must be contacted in writing for a written response. So you can see the big difference in the solicitation process is this: If the award will be under $25,000, the contacts and quotes can be verbal. If the award is over $25,000, the contacts and quotes must be in writing. Use Invitation for Quotes for a Small Procurement If the contract might exceed $25,000 with change orders or amendments, use the rules for contracts up to $100,000.  If your Warrant and delegation are only good up to $25,000, someone with higher level authority must be responsible for the procurement.

48. Written Quotes For written quotes, Contractors can use:   Small Procurement Quote Submittal Written quotes may be submitted by mail, fax, email, or hand delivered For contracts over $25,000, the quotes must be in writing. For contracts under $25,000, the quotes may be in writing. Quotes received by fax or email should be folded and stapled to maintain confidentiality.  All quotes should have the date and time received stamped on the outside and initialed.

49. Handling Written Quotes All quotes should be held at a secure location.  This can be a locked drawer or file cabinet. Keep a record of all contractors contacted and all quotes received.

50. Documenting Oral or Written Small Procurements Alaska Statute, Administrative Code and Department P&P's require: All small procurement "records that facilitate auditing" must be placed in the construction project file Include: A list of the contractors contacted The Agency's cost estimate The name of person making the solicitation and the date A copy of the solicitation itself The quotes received Recommendation regarding award, including approval of the procurement Agency