NC Administrative Code Affecting Procurement

1. NC Administrative Code Affecting Procurement Presented by Sam Byassee, State Purchasing Officer Angie Dunaway, P&C Compliance Officer April 24, 2012

2. NC Administrative Code, www.pandc.nc.gov/admcode

3. 01 NCAC 05B .0208 Qualified Products List • Prequalification of brands/models by P&C • Only products on the QPL may be offered in response to a solicitation Qualified Products List (QPL)

4. 01 NCAC 05B .0301 Contracting Requirements More than $5,000 – not purchased from state term contract • Must solicit competition • Must obtain competition on the state‘s solicitation form, including the state‘s terms and conditions • Forms are located on the Division of Purchase and Contract (P&C) website, www.pandc.nc.gov/divforms • Required to post solicitation to the Interactive Purchasing System (IPS) • Agencies over $10,000 • Universities over $25,000 • Good verses Service process • Over the Agency delegation or University benchmark forward to P&C

5. 01 NCAC 05B .0307 Error/Clarification When Can Clarification be Sought? • Obvious error • Suspected error • Offer substantially in accordance; but, intent not entirely clear • Particular fact not entirely clear • Ambiguities Clarification may be sought/considered; however, NO CHANGE in PRICE is Permitted.

6. 01 NCAC 05B .0312 Lack of Competition • Reason shall be ascertained by the solicitation issuing agency • Reason shall be made part of the procurement file Single Offer, or Single Acceptable Offer

7. 01 NCAC 05B .0314 Solicitation Documents Types of Solicitation Documents, When to Use • eQuote (NC E-Procurement System) • Request for Quotation (RFQ) • Invitation for Bid (IFB) • Request for Proposal (RFP) • Request for Information (RFI) - no contract will be awarded More than $25,000 • Required to use Invitation for Bid (IFB) or Request for Proposal (RFP)

8. 01 NCAC 05B .0315 Division of Requirements .0315 Division of Requirements • Shall not divide requirements to keep below Agency delegation or University benchmark • Dollar value refers to TOTAL cost, not to a single item or line item .0701 Removal of Certain Items from General Construction • Construction/renovation project shall remove any items non-related to the actual construction/renovation of the building. I.e. carpet, office panel systems, furniture. • If Agency determines such type commodity purchases are best suited for inclusion in the construction/renovation project, agency shall justify the reason and make it part of the procurement file.

9. 01 NCAC 05B .0317 Mandatory Conference / Site Visits If Only One Vendor Attends a Mandatory Conference/Site Visit • Conference/Site visit may be conducted • Solicitation canceled immediately following the conference/site visit • Solicitation issuing agency • Investigate why only one vendor attended • Determine if competition is available If Competition is Available • Seek competition – issue new solicitation, post to IPS If Competition is Not Available • Handle as a waiver – waiver of competition justification letter, quote on state’s solicitation form

10. 01 NCAC 05B .0503 Negotiation When Can I Negotiate • Solicitation issued no satisfactory offer received, all offers rejected, and the solicitation issuing agency determines soliciting offers again would serve no purpose • Waiver of Competition –negotiate to obtain the best price, delivery, terms and conditions What Can I Negotiate • Specifications / minor variations to scope • Price • Delivery • Terms and conditions

11. 01 NCAC 05B .0503 Negotiation (continued) With Whom May You Negotiate • Up to all known sources of supply capable of satisfying the requirement How to Conduct a Negotiation • In writing, including the state’s terms and conditions (any offer or response that changes original solicitation) • If negotiations are conducted with only one source, or, only one source responds to the negotiations, the reason for lack of competition shall be documented in writing and made part of the procurement file • Negotiation tips/techniques

12. 01 NCAC 05B .0905 Specifications Authority to Revise a Contract • The agency who awarded the contract • But, if over the Agency’s delegation or University benchmark, then the Division of Purchase and Contract or the Statewide IT Procurement Office • May only revise specifications (and any price change caused thereby) Contract Revision Exceeds Delegation/Benchmark • If original contract was awarded by the agency (under its delegation/benchmark); however, if contract revision results in exceeding delegation/benchmark, prior written approval shall be obtained from the Division of Purchase and Contract

13. 01 NCAC 05B .1101 Use – Term Contracts Agency Specific Term Contract • Factors in determining whether to establish an agency specific contract: • Volume • Nature of the product • Repetitiveness of use • Relative stability of prices • Transportation costs • The agency may establish an agency specific term contract if: • The contract will only be used by their agency • There is no statewide term contract for the commodity, printing, or service • The expenditure over the term of the contract is under the Agency delegation or University benchmark

14. 01 NCAC 05B .1401 Policy – Waiver of Competition01 NCAC 05B .1402 Approval and Documentation Waiver Overview • If competition is waived – agency should negotiate the best price, delivery, terms and conditions (if under delegation/benchmark) • Waiver of competition justification required to be in procurement file • Quote required to be obtained on the state’s solicitation form, with the state’s terms and conditions Waiver of Competition Justification • On agency letterhead; include date, typed name, signature of requestor • Cite condition in 01 NCAC 05B .1401 upon which waiver is based • Indicate why the item is the ONLY one that meets requirements (brand specific) • Indicate why the vendor is the ONLY vendor that can provide the required item (vendor specific) • DO NOT merely recite the relevant category

15. 01 NCAC 05B .1505 Funds from Different Sources Article 3 of G.S. 143 and P&C Rules Apply • Irrespective of funding source – special, federal, local, gifts, bequests, receipts, fees, or State appropriated • This means: • Competition shall be sought when more than $5,000; and the state’s solicitation form shall be used, including the state’s terms and conditions (01 NCAC 05B .0301 Contracting Requirements) • Advertise solicitation on IPS – agencies $10,000; universities $25,000 (01 NCAC 05B .0301(2)(b) Contracting Requirements) • Waiver of Competition justification (01 NCAC 05B .1400 Waiver of Competition)

16. 01 NCAC 05B .1506 Conditional Grants Purchase from Grantor • When grant, donation or special discount is predicated upon making a purchase from the grantor • Shall be explained in writing • Shall have prior approval of the State Purchasing Officer Purchase from Specific Source • When donation from a private source is predicated upon making the purchase from a specific source other than the grantor • State Purchasing Officer approval is NOT required

17. 01 NCAC 05B .1508 Purchases for Across the Counter Resale Across the Counter Resale – Bookstores • “Across the counter” resale items are not forwarded to P&C; even if the total acquisition cost exceeds the agencies delegation/benchmark • The agency is responsible for adhering to the Administrative Code, unless a specific exemption exists in the General Statutes • Purchase from state term contract • Seek competition (if not purchased from state term contract) when more than $5,000; use state’s solicitation form, including the state’s terms and conditions • Advertise solicitation on IPS – agencies $10,000; universities $25,000 • Waiver of competition documentation (if competition is not sought)

18. 01 NCAC 05B .1513 Cooperative Purchasing What is Cooperative Purchasing • The Government Contract Reference Book1 defines cooperative purchasing as two or more governments purchasing under the same contract. • The ABA Model Procurement Code for State and Local Governments2 defines cooperative purchasing as, “ . . . procurements conducted by, or on behalf of, one or more Public Procurement Units . . .” • G.S. 143-129(e)(3) – “[A] competitive bidding group purchasing program … is a formally organized program that offers competitively obtained purchasing services at discount prices to two or more public agencies.” 1Ralph C. Nash Jr., Steven L. Schooner, Karen R. O’Brien. Published 1998 by George Washington University 2American Bar Association, 2000, pg 79

19. 01 NCAC 05B .1513 Cooperative Purchasing (continued) When May an Agency Participate in Cooperative Purchasing • When the agency is a participant in an authorized cooperative project with another governmental activity, or with a charitable non-profit organization. • To acquire goods and services necessary to the project (Rare) • “If the interest of the State would be served thereby.” G.S. 143-49(17) • S.L. 2011-338 • In what is the State interested? • Competition in contracting – (Was co-op contract competed when entered?) • Low prices – (Is price offered reasonably competitive compared to alternative sources?)

20. 01 NCAC 05B .1513 Cooperative Purchasing (continued) • Do you have the authority to enter into the contract (SPO approval) • Is there a statewide term contract for the items • Was the contract competitively bid • Is the price reasonable • Terms and conditions must be carefully reviewed (does contract require vendor to accept State’s Ts & Cs?) Things to Consider Before Entering into a Cooperative Purchasing Agreement

21. 01 NCAC 05B .1523 Procurement Cards • No other charge cards that obligate payment by the agency or the State shall be used. • Requests for exceptions to this rule shall be submitted in writing to the State Purchasing Officer. • Very high justification standard • Reduces rebate offered through p-Card program • Reduces spend visibility • One-off cards difficult to administer and control

22. 01 NCAC 05B .1601 Exemptions Not Exempt from Article 3 of G.S. 143 and P&C Rules • The items listed in this rule are exempt from forwarding to P&C (even if it exceeds the agencies delegation/benchmark); however, this does NOT mean the agency is exempt from following Article 3 of G.S. 143 and P&C Rules. • This means: • Competition shall be sought when more than $5,000; and the state’s solicitation form shall be used, including the state’s terms and conditions (01 NCAC 05B .0301 Contracting Requirements) • Advertise solicitation on IPS – agencies $10,000; universities $25,000 (01 NCAC 05B .0301(2)(b) Contracting Requirements) • Waiver of Competition justification (01 NCAC 05B .1400 Waiver of Competition) Note: G.S. 143-53(a)(5) requires all waivers and sole source requests above $10,000 must be approved by the SPO.

23. 01 NCAC 05B .1601 Exemptions (continued) • Item 11 exemption, “Services provided directly by an agency of the State, federal or local government, or their employees when performing the service as a part of their normal governmental function.” When the “S” is capitalized in State it refers to North Carolina State agencies. If does not mean other states. Except for multi-state cooperative purchasing agreements or some other unique service that only that particular state provides, it is highly unlikely that an agency of another state will, as part of its normal governmental function, directly provide services to an agency in another state.

24. 01 NCAC 05B .1602 Emergencies Under Delegation/Benchmark • Emergency or pressing need, as defined by rule, agency handles in accordance with Article 3 of G.S. 143 and P&C Rules • Competition shall be sought when more than $5,000 (unless circumstances prevent) • State’s solicitation form shall be used, including the state’s terms and conditions • If circumstances do not allow seeking competition, document the procurement file; negotiate best price, delivery, terms and conditions Exceeds Delegation/Benchmark • Prior verbal approval from P&C required (if time permits) • Written explanation shall be provided to P&C, who reports this information to the Board of Award as a matter of record

25. 01 NCAC 05D .0100 Consultants • Service contract – A contract in which the completion of work or tasks is the main purpose (even if tangible “deliverables” are required for successful performance). • Consulting contract – A contract for “work or task(s) performed by State employees or independent contractors possessing specialized knowledge, experience, expertise and professional qualifications to investigate assigned problems or projects and to provide counsel, review, analysis or advice.” • Personal services contract – A contract for the services of a particular individual or business entity for a period of time, in which the completion of specific tasks or duties is generally secondary to the performance of services by the contracting party.

26. 01 NCAC 05B .1518 Board of Award What Goes to the Board of Award • Purchase, lease or lease/purchase of commodities/printing that exceeds the agency’s delegation/benchmark • Reporting of emergency or pressing need purchases over the agency’s delegation/benchmark What Does NOT Go to the Board of Award • Services

27. 01 NCAC 05B .1518 Board of Award (continued) When Does the Board of Award Meet • Typically every Thursday morning What Are the Board‘s Recommendations • Award, cancel, approve, negotiate, require additional information – present again the following week, etc. What Happens if the Board Does Not Meet • In cases of an emergency, or in the event the Board does not meet, the Secretary of the Department of Administration has the authority to award contracts. • In such cases, contracts awarded without Board review shall be reported at the next Board meeting as a matter of record.

28. THANK YOU for attending the conference! www.pandc.nc.gov State of North Carolina Department of Administration Division of Purchase and Contract 116 W Jones Street, Raleigh NC 27603