Navigating the Professional Services Contracting Maze

1. Navigating the Professional Services Contracting Maze Department of Administration Division of Administrative Services

2. What Will We Learn Today? • The Decision Process (and initial considerations) • How to Start the Professional Services Contracting Process • Developing a Scope of Work • Competition Requirements • Contract Administration • Contract Amendments

3. Definitions RFPRequests For Proposals PECProposal Evaluation Committee Offeror The respondent to the RFP-also sometimes (incorrectly) referred to as the bidder Contractor The successful offeror with whom the State signs a contract. Responsive Proposal that meets all of the minimum requirements in the RFP as well as the material terms (price, quantity, quality, and delivery). BAFOBest and Final Offer

4. Procurement Officer Role • Ensures compliance with the laws, including all requirements of written determinations. • Consults with AG’s Office as needed. • Issues the solicitation. • Coordinates the pre-proposal conference. • Reviews proposals for compliance with solicitation requirements. • Guides the PEC through the evaluation process. • Tabulates scores. • Issues the Notice of Intent to Award. • Responds to protests, if any.

5. Alaska’s Procurement CodeAS 36.30 • Establishes the statutory authority for procurement and control of goods and services. • Based on the model procurement code. • Regulations are found in Administrative Code, Title 2, Chapter 12. • The purposes of the procurement code include: • Provides for increased public confidence. • Fair and equitable treatment of all persons. • Maximize purchasing value of State funds. • Provides for effective broad-based competition within the free enterprise system. • Provides safeguards for the maintenance of a procurement system of quality and integrity.

6. Ethics in Procurement Government officials must always aim for what is best for the public, not merely for what may be “okay.” Every public official has a duty of loyal, faithful and honest service which is clearly inherent in the responsibilities of public office at all levels.

7. Code of EthicsAlaska Statute Title 39 Equates public office to public trust, any effort to benefit a personal or financial interest through official action is a violation of that trust. Conduct procurements in a fair and impartial manner. Notify supervisor of potential conflicts. Avoid even the appearance of a conflict of interest.

8. WWID? WHAT WOULD I DO (IN MY PERSONAL LIFE)? Applying this principle usually gets you to the right choice. • Avoid the appearance of unethical or compromising situations. • Avoid any outside employment or activity in conflict with your official duties. • Identify and avoid making decisions where a potential conflict of interest may exist. • Never solicit or accept anything of value from suppliers or potential vendors. • Treat everyone equally.

9. First Things First! There are a few items to consider before we start the professional services contracting process…. Is it a professional service? Task Order? Employee or contractor? Is it an exempt (from the Procurement Code) service? Is it an exception? What is the dollar value?

10. Task Order System Definition The intent of the Task Order system is to provide qualified firms that can provide for a variety of temporary information technology and management consulting professional services at highly competitive rates without having to go through the normal solicitation process. They may be very limited in scope and duration, or they may be broad and long-lasting. They are anticipated to vary in size from $5,000 - $500,000, from a few days to many months in duration, and may include a variety of technology and management services. The Task Order system is a non-mandatory form of procurement. http://www.state.ak.us/local/akpages/ADMIN/info/taskorder/new/

11. Employee? Contractor? AAM 81.010 cautions against this. An employer/employee relationship may exist when: • The person is subject to the control of the State, not only as to what will be done, but when, where, and how it will be done. It is not necessary that the State actually direct or control the manner in which services are performed, if the State has a right to do so; • The State has the right to discharge the person; • The State furnishes the tools, equipment, and a place to work for the individual performing the services; • If the State allocates funding and requires adherence to a line item budget.

12. Employee? Contractor? • People are independent contractors if: • They are subject to control or direction of the State only as to the result to be accomplished and the work to be done, not as to the means and methods for accomplishing the result. • They are in business providing a service to the public from which they may derive a profit or suffer a loss. • They are paid directly for the performance of a particular service or services at a specified price.

13. Is It a Professional Service? Administrative Manual 81.430 “The provision of a service by a professional does not define that service as a "professional service." Professional services are any professional, technical, or consultant services predominantly intellectual in character. They include analysis, evaluation, prediction, planning, or recommendation, and result in the production of a report or the completion of a task. A professional services contract requires specialized knowledge and training (often through long and intensive academic preparation) or in-depth experience in a particular field or discipline. “

14. Governmental agencies Certified employment programs Youth education programs Correctional Industries Book binding services Periodicals Advertising Audio visual materials Medical doctors and dentists Newspapers/subscriptions Network information services access Books Is It Exempt From the Requirements of the Procurement Code? Examples of exemptions include purchases of these types:

15. Exceptions to the Procurement Code An exception is a situation that prevents you from obtaining the desired service through normal competitive methods because: • Only one source exists or is acceptable or suitable to meet the State’s needs. • The procurement process is impractical or contrary to the public’s interest and result in restricting the procurement to a limited group of potential contractors. • An unanticipated amendment to a procurement/contract exceeds the amendment limitation in the Administrative Manual. • An emergency situation exists in which a timely decision (generally less than 72 hours) must be made to prevent loss of life, damage to property or facilities, or to mitigate an imminent threat to public health.

16. Request for Alternate ProcurementRAP What does the law require us to provide in order to obtain approval of a RAP? • An explanation that thoroughly describes the situation. • Findings of fact that summarizes all the pertinent details surrounding the procurement. • And supporting evidence that verifies that the explanation given and the findings of fact listed are true and accurate. Even if we provide a good explanation of the situation, if we don’t include evidence to support the claims, the RAP cannot be approved!

17. Determining the Dollar Value First, are there funds available? If so…. • We must consider the total value of all similar requirements for supplies and services during the same time from the same group of vendors, including any options to renew or extend the contract. For Example: If the resulting contract is for $200 a month and will last one year, but also includes three one-year renewal options, you must seek the level of competition for a $9,600 procurement: $200 X 12 months=$2,400 annually $2,400 X 4 (years)=$9,600

18. What is Artificial Fragmentation? AS 36.30.320 (d) precludes “artificial division or fragmentation” in order to purchase under small procurement procedures. There is no definition of artificial fragmentation that can address every circumstance. When deciding if a division is artificial or natural, we consider: • Price • Similarity of Services • Predictability

19. Combining Services • Price-the higher the price of a group of procurements, the more likely they should be consolidated. We are required to look at our annual costs for a group of procurements to determine the appropriate level of competition. • Similarity of Services-the more similar the type of services or the availability of services from one type of vendor, the more likely that the services should be consolidated and made part of a single procurement. • Predictability-the more predictable the procurement of similar services is, the more likely that the services should be consolidated and made part of a single procurement.

20. Procurement Levels The estimated dollar value of the procurement will determine what solicitation process we follow. Four distinct levels of competition and requirements: $0-$5,000 Reasonable & adequate competition $5,000-$25,000 Letter of Solicitation (3 quotes or posted) $25,000-$50,000 Request for Informal Proposals (3 quotes or posted, notice of award, protest period, no minimum advertising period) Over $50,000 Request for Proposals (RFP) process (post on OPN minimum 21 days, notice of intent to award, ten day protest period) The minimum number of solicitations required must be obtained from Alaskan vendors for all types of solicitations, regardless of dollar amount.

21. What is Reasonable & Adequate Competition? Reasonable and adequate procedures means procedures that ensure fairness to potential offerors and competition commensurate with the circumstances of the procurement, considering price, mission requirements, and available competition. Reasonable and adequate competition includes contacting one potential offeror in appropriate circumstances.

22. Into the Maze….

23. The Process • Division works on solicitation using the latest shell. • Division submits to Procurement Specialist for review/suggestions. • Division revises solicitation. • If RFP, Procurement Specialist coordinates review by DOA’s RFP review committee. • If over $10,000 Procurement Specialist conducts procurement. • Division provides evaluators, Procurement Specialist receives proposals, determines responsiveness.

24. Developing the Scope of Services After determining the appropriate process, the division drafts the scope of services, with assistance from the Procurement Specialist, if necessary. Why are specifications (scope of work) so important? • To ensure a clear understanding of what is expected (if you don’t ask for it, don’t expect to receive it!) • To deliver the service that meets the requirements of the agency; • To allow for maximum, reasonable competition.

25. Developing the Scope of Services First, we decide which type of specification or combination of specifications to use to describe our needs adequately and to ensure full and open competition. We don’t limit the competition through overly (or unduly) restrictive specifications. AS 36.30.060 (c)

26. Developing a Scope of Services Include: Scope: a general (but complete) description of the scope of services required. Describe the expected use of the service-what we expect to “get” from the contract. List of Requirements: any special associations, memberships, licenses. Definitions of terms: ensures necessary proper and mutual interpretation. Expected deliverables, timelines, milestones.

27. Developing a Scope of Services • A scope of services has a requirement for clarity. Scopes of services having more than one reasonable interpretation are considered ambiguous and should be avoided. • Vague or ambiguous specifications do not communicate the requirements to the offerors. • Ambiguous specifications impede full and open competition by failing to ensure that offerors are competing on a “common” or “equal” basis. • A scope of services is not ambiguous when it contains clear performance expectations.

28. Developing a Scope of Services Specifications must be written in the broadest possible sense to encourage competition from the maximum number of sources, yet still meet the needs of the agency.

29. Developing a Scope of Services 2 AAC 12.090 states that specifications must describe the requirements….without having the effect of exclusively requiring a proprietary service from a single source. An “unduly restrictive” specification is one that limits competition by including a requirement that exceeds the needs of the State.

30. Developing a Scope of Service A good scope of service should do five things: • Identify minimum requirements; • Allow for maximum competition; • Utilize standard requirements when possible; • List the methods to be used to assure compliance with the scope of work (progress reports, regular meetings); and • Provide for an equitable award to the highest ranked proposal.

31. Developing a Scope of Service A good scope of service contains: A brief description of the reason the services are required. Describe what you are trying to achieve, not how you want it achieved. A list of deliverables or milestones (and their schedules) to base payments on.

32. Developing a Scope of Service • The goal is clarity-everyone reading the scope of service should have the same understanding. • Scope of services are read and interpreted by a variety of people. The intent of the words must be understood not only by the writer, but by the readers. • Avoid redundant words and phrases that clutter the scope of service. • Be concise, precise, and consistent. Use the same words and phrases to describe the same requirement.

33. Developing a Scope of Service Vagueness and ambiguities are meaningless and unenforceable in a contract: Properly assembled Carefully performed Reasonable Optimum performance

34. Developing a Scope of Service Use “shall” to express something that is mandatory and binding on the Contractor (the Contractor shall provide all necessary equipment…) Use “will” to indicate future requirements or future actions, or when certain requirements are met (the State will compensate…) Avoid using “may” or “should” as they leave the decision for action up to the Contractor (or use them for non-mandatory provisions) Avoid using “any” or “either” unless you want the Contractor to choose what must be done. Avoid “etc.”– the reader has no idea of what is missing.

35. Developing a Scope of Service Use active verbs (analyze, audit, calculate, create, design, develop, interpret, observe, organize, perform) Avoid passive language, which can lead to vague statements (use “the Contractor shall perform” instead of “it shall be performed”) Avoid catch-all and open-ended phrases as they are not universally defined (“subject to approval” should be “at the State’s approval”) Use abbreviations or acronyms only after spelling them out the first time they are referenced. Consider providing an appendix if there are many abbreviations or acronyms.

36. Developing a Scope of Service For clarity, use shorter words that mean the same thing. For example: UseInstead of Avoid…………………………………..Circumvent Require………………………………..Necessitate But……………………………………..Nevertheless Begin…………………………………..Commence Changes………………………………Modifications False…………………………………..Erroneous Use…………………………………….Consumption Start……………………………………Initiate Pay…………………………………….Compensate Rank…………………………………..Prioritize Rush…………………………………..Expedite Spread…………………………………Disseminate

37. Developing a Scope of Service Do not use long phrases when it is not necessary. For example: Long Phrase Preferred In the final analysis…………………...Finally Filled to capacity……………………...Full A great number of times……………..Often At regular intervals……………………Regularly In the majority of cases………………Usually Experience has shown……………….Experience shows At the earliest possible moment…….Immediately With respect to………………………..Concerning Prior to, in advance of………………..Before At your earliest convenience………...Soon It is recommended…………………….We recommend In view of……………………………….Because

38. Developing a Scope of Service Scopes of work should be clear and accurate. Scopes of work should be concise. Scopes of work should be verifiable. Scopes of work should be reasonable in their requirements. Scopes of work should be fair. Scopes of work should be definite.

39. Developing a Scope of Service Scopes of service should not be unduly restrictive. Scopes of service should not be ambiguous or vague. Scopes of service should not allow requirements to vary or be undefined. Scopes of service should not redundant. Scopes of service should not be written by a potential offeror. Scopes of service should not contain the solicitation instructions, standard terms and conditions, forms, or boilerplate provisions.

40. Developing Evaluation Criteria 40% required for cost (may be waived in specific circumstances, requires approval by the Division of General Services) 10% is allotted to the Alaska Offeror’s Preference Directly link the remaining 50% to the scope of work. Remember, we cannot score it if it’s not identified in the solicitation. All scoring/evaluation criteria must be published in the solicitation.

41. Helpful Hint to Make the Most of the Scoring Criteria By establishing minimum requirements (remembering to not be too restrictive) we can use the scoring criteria to select the most advantageous proposal. This means only the proposals meeting the minimum requirements and otherwise deemed responsive move on to the scoring round of evaluation.

42. Selling a House??? Minimum requirements are much like when you’re selling a house and you want to only show it to qualified potential buyers.

43. Developing a Scope of Service Potential Minimum Requirements Location/Service Areas Required Licenses/certificates Past Success Specific Prior Experience

44. Minimum RequirementsWords of Caution! The minimum criteria should include every requirement that is necessary to accomplish the task described in the RFP and which offerors must meet in order to be deemed responsive. Any offeror who meets the minimum requirements should be able to accomplish the required tasks. The purpose of the evaluated criteria is to select the best proposal from a group that has already been determined to be responsive. We achieve that by assigning specific weights that are based on the relative importance of the criteria being evaluated with the more important criteria receiving the higher weight. There are NO EXCEPTIONS to the minimum requirements. It’s a simple pass or fail. If the proposal fails, it’s OUT!

45. Standard Evaluation Criteria • Understanding of the project • Methodology • References • Experience and Qualifications

46. Where Are We??

47. Solicitation Stage $5,000-$25,000 Letter of Solicitation (3 quotes or posted) $25,000-$50,000 Request for Informal Proposals (3 quotes or posted, notice of award, protest period, no minimum advertising period) Over $50,000 Request for Proposals (RFP) process (post on OPN minimum 21 days, notice of intent to award, ten day protest period) Division is responsible for background information, scope of work, and evaluation criteria.

48. RFPs Pre-proposal Conference The purpose of holding a pre-proposal conference is to allow the procurement officer to highlight particularly important requirements and encourage vendor participation to ask questions, identify potential flaws, and assure everyone has the same interpretation of the RFP. If questions were asked that require clarification to the solicitation, or if revision is otherwise required, the procurement officer will issue a formal amendment to the solicitation. The procurement officer normally will not answer questions (other then questions in which the answers are contained already in the RFP) directly to the questioning party. The goal is to assure that everyone receives the same information at the same time.

49. Deadline for Receipt of Proposals Once the deadline for receipt of proposals has past, the procurement officer will determine which proposals are responsive. Only responsive proposals move forward to the Proposal Evaluation Committee for evaluation. RESPONSIVENESS: Proposals must comply with the material terms of the solicitation, commonly: price, quantity, quality, delivery, minimum requirements. And now, EVALUATION!!!

50. Where Are We??