Drafting the Request for Tender Offers: Important Terms and Conditions –

1. Drafting the Request for Tender Offers: Important Terms and Conditions – Charles Rumbaugh Guest Lecturer Naval Postgraduate School IDARM International Defense Acquisition Resource Management Program

2. Goal(s) of the Request for Offers • Meet end user requirements • Specifies proposed conditions of the sale • Requests that prospective contractors submit an offer • Other goals could include… • Maximize competition • Seek (alternative) solutions to a mission requirement • Quick response • Minimize price to be paid • Other? May be multiple/ conflicting purposes

3. Long Term Goal(s) • May be negatively impacted in achieving the immediate goal. For example: • Limiting competition can have a serious consequence related to life cycle/ownership costs • Using commercial/“off-the-shelf” items • Others?

4. Maximize Competition • Clearly, accurately, and completely describe requirement(s) • Exclude unnecessary restrictive specifications • SOW • Provisions that are generally acceptable to the industry • Role of Market Research • Benchmarking • Reasonable time for submission of tender offers • Clear evaluation methodology that will result in fair evaluation and selection of the best offer.

5. Quick Response • Adequate Market Knowledge of Potential Sources • Existing Contractual “vehicle?” • Past Performance a factor? • Predefined Bidding Limitations • Specification/SOW issues • Legal Right to Exclude Sources • Problems with this Goal • Pricing issues • Lack of competition • May affect quality • Influences contract type • Other approaches available? “Alpha Contracting” • And others…..

6. “Must Haves” • Price • Period for Validity of Offer • Responsive Offer from Responsible Offeror • Compliant with Request except for… • Certifications • Representations/Warranties—What are they? • Identification of Authorized Negotiators • Others?

7. “Nice to Haves” • Alternative Offers • Negotiable Items • You may be willing to eliminate these items • Relationship to Price • Options • “Nice to have” and “must have” provisions can impact price

8. Functions of the Contract • Record of “the” agreement • Document which frames and facilitates contract administration activities • Risk allocation among the parties • Defines Payment Terms • Performance Incentive to Contractor Request for Tender Forms the Foundation For the contract

9. First Steps—RFT • Identify the approved requirement • Ensure specification and SOW is clear • What is the estimate? • Ensure that funds are/will be available • The contract will create a legal obligation to pay Funding over the near and long term

10. Next…Organization of Information • Uniform assembly of information that permit interested suppliers ease of access to information necessary to submit an acceptable tender offer. • Web/electronic posting • Systemic approach is preferred

11. Pricing Information • What information is necessary to determine a fair price? • What information may be available to determine a fair price? • Market Research • Reverse Engineering • To what extent does the request for tender provide you the flexibility to obtain the necessary pricing information?

12. Next Steps • Selection of the contract type • Consideration of • Risk • Payment mechanism • Maturity of requirement • Clarity of requirement • Urgency Cost Type Hours Fixed price Unpriced

13. Next Steps • How to conduct the procurement…. Competitive.. Restricted..

14. Next Steps • How to Identify and Solicit Potential Sources • Trade Associations Market Research Advertisements www.thomasregister.com Embassies Other Customers

15. Next Steps • The Team….who is on the team Who does not belong on the team?

16. Dealing with Interested Parties What are the ground rules for communication?

17. Terms & Conditions • Tender/proposal submission requirements • Provisions that must be included in the subsequent contract • How capabilities will be evaluated Changes that are required after release impact schedule/price

18. Provisions……. Ethics Inspection Insurance Data Disputes Quality Options Security Delivery Notifications Warranty Modifications Record Keeping Terminations Payments

19. Inspection Acceptance Criteria Intellectual Property Rights Software Quality Terms/Processes Payment Provisions Security Warranties-Expressed/Implied Evergreen Changes/Modifications Delivery Terms INCOTERMS Bill of Ladings Indemnification Insurance Limitation of Liability Terminations—Default/Convenience Delays/Force Majeure Liquidated Damages Dispute Resolution Arbitration New York Convention on Enforcement of Awards Provisions…….

20. Recordkeeping and Reports Notifications Countertrade and Offset agreements In-Country sources of supply Key Personnel Language Taxes Subcontractors Import/Export law— Licenses ITAR Applicable Law Foreign Corrupt Practices Act Ethics/Bribery UN Convention on Contracts for the International Sale of Goods (CISG)/Treaties Uniform Commercial Code (UCC) More Provisions…….

21. And Even More Provisions……. • Additional Terms Assignment Environmental Nondisclosure/Publicity Severability Integration clause Other…

22. RFT Summary/Best Practices • Conduct Market Research/Benchmark • State with clarity, accuracy, & completeness the desired goods/services • Identify Risks & Select Right Contract/Pricing Approach • Develop Quality Request for Tenders • Plan Selection and Negotiation Strategy • Use (appropriate) consultants • Create Contract Provisions “Favorable” to Buyer!