ITS Procurement Workshop

1. ITS Procurement Workshop Module 3: Selecting a Contracting Approach

2. ITS Projects • Products • Vehicle detectors, CCTV, lane control signals, DMS, communication medium and devices, traffic management building, conduit, pull boxes, foundations, structures, poles, hardware, computers, software, and traffic controllers • Systems • Incident management systems; emergency dispatch systems; freeway management system and associated metered ramps; and arterial traffic signal systems • Services • Architectural, surveying, mapping, engineering, design, construction, construction management, software development, system testing, and system integration.

3. Mini-Cases Product? Services? System?

4. Procurement Approach Model Project Characteristics Agency Characteristics Work Structure Enabling Legal Framework Method of Award Contract Type Other Tools

5. Work Structure • Work Structure • Phased • One Step • Multi-Contract • Combinations Project Characteristics Agency Characteristics Work Structure Enabling Legal Framework Method of Award Contract Type Other Tools

6. Design Build M & O Develop Implement M & O Basic Work Structure • Steps in Traditional Project Acquisition Plan • Typical Steps in ITS Acquisition Plan

7. Plan Develop Implement M & O ITS Acquisition • Vision • Goals • Schedule • Cost • Procurement Method • High Level Requirements • Maintenance and Operations • Contract Staff • Privatize • Requirements • Refine Cost and Schedule • Development • Install • Test

8. Plan Develop Implement M & O Agency (or Contractor) Contractor 1 Contractor 2 Phased Work Structure • One Contract for Each Step

9. Plan Develop Implement M & O One Contractor One-Step Work Structure • One Contract Encompasses All Steps

10. Multi-Contract Work Structure • Multiple Contracts On-Going at the Same Time Sub-Contractor 1: Software System “System Manager” Contractor Sub-Contractor 2: Communications System Sub-Contractor 3: Field Device Installation

11. Why Is Work Structure Important? • Ensure you have the proper prime contractor • Ensure you get the help you need

12. Inputs to Deciding Work Structure • Consider the Type of ITS Project • Majority OTS • Field devices • Communications • Majority new software/integration • Combinations Note: Consider degree of software development

13. Inputs to Deciding Work Structure • What are the other elements of the project beyond ITS? • Structures? • Trenching? • Remodeling?

14. Inputs to Deciding Work Structure • How should the work be managed? • Should an ITS Prime manage a “construction” sub? Vice-versa? • Perhaps the ITS work should be separated?

15. Work Structure - Key Points • Many ways to “slice it” • Consider the ITS elements - should they be contracted separately? • You will have to change your concept of the agency as project manager and devote more time no matter how you structure a project

16. Mini-Cases Phased? One Step? Multiple Contractors?

17. Project Characteristics • Project Characteristics • Determine Need For Flexibility in Contract Management Project Characteristics Agency Characteristics Work Structure Enabling Legal Framework Method of Award Contract Type Other Tools

18. Project Characteristics • Need for Flexibility • Maturity of technology • Size/Scope/Complexity • Coordination with other work • Goals are fixed or not • Final product is stable, known, seen or not

19. Project Characteristics Rating

20. Agency Characteristics • Agency Characteristics • Determine Need For Support Project Characteristics Agency Characteristics Work Structure Enabling Legal Framework Method of Award Contract Type Other Tools

21. Agency Characteristics • Need for Support • Experience with similar work • Staff Skills • Workload • Funding

22. Agency Characteristics Rating

23. Mini-Cases Project Characteristics Agency Characteristics

24. Enabling Legal Framework • Enabling Legal Framework • Construction • Engineering and Design Services • Common Rule • Services • Goods • SEP 14 • Design/Build • Others Project Characteristics Agency Characteristics Work Structure Enabling Legal Framework (FARs) Method of Award Contract Type Other Tools

25. Enabling Legal Framework • Federal-aid procurement regulations – Code of Federal Regulations (CFR) Title 23 Parts 172, 635, 655 and Title 49 CFR Part 18 • The laws that govern the use of Federal-aid highway funds • If you use Federal funds for your ITS project - at any proportion - procurement is guided by the Code

26. Enabling Legal Framework • Construction • Engineering and Design Services • Common Rule • Goods • Services • Construction • SEP 14

27. Lessons Learned About Frameworks • The Traditional Model - Engineering and Design Services and Construction • Contractor manages the subcontractors, rather than the agency. • However, ITS subs are often inaccessible under many layers of subcontractors (e.g. WSDOT) • Construction is low bid, and usually not suitable for ITS.

28. Lessons Learned About Frameworks • The Traditional Model - Engineering and Design Services and Construction • Imposes an artificial break between “design” and “construction”. • System Manager or Integrator contracts work well when risk is appropriately shared between client and contractor. • Past failures have been due to lack of shift in client/contractor relationship.

29. Lessons Learned About Frameworks • Common Rule • Many agencies have more flexible procurement rules, better suited to ITS (e.g. VDOT). • Some have rules specifically developed for technology (e.g. City of Bellevue, WA, State of Texas).

30. Lessons Learned About Frameworks • SEP 14 • Allows merging of “goods”, “services” and “construction” (e.g. CARAT). • Allows cost and quals combined in selection (e.g. UDOT). • Good alternative if your own processes are rigid (Common Rule)

31. Lessons Learned About Frameworks • SEP 14 • Design/Build allowed under SEP 14 • The term “Design/Build” carries a lot of baggage - use an alternative. • ITS is inherently design/build • Like all ITS, design/build ITS procurements require you to change your view of the client/contractor relationship.

32. Mini-Cases Construction? Common Rule? SEP 14?

33. Method of Award Project Characteristics Agency Characteristics Work Structure Enabling Legal Framework • Method of Award • Qualifications • Cost • Quals and Cost Method of Award Contract Type Other Tools

34. Method Of Award • Qualifications • Standard RFP/Interview • Two-Step Qualifications (LOI or RFQ, then RFP and/or interview) • Competitive Design • Demonstrations and/or Site Visits • Requirements Checklists • Sole Source • Unsolicited Proposals

35. Method of Award • Cost and Qualifications Combined • Two-Step Sealed Bids (Quals then Cost) • Competitive Proposals • Best Value • Life-Cycle Cost • Best and Final Offers • Competitive Negotiations • Sole Source

36. Method of Award • Cost (Low-bid) • Fixed cost works best for fixed outcome projects. • Cost alone is often inappropriate for ITS.

37. When use Quals? When Quals and Cost? • Consider what you are “buying”. • Intellectual property versus real property • Proportions of each • How difficult is achieving the outcome? • Technically • Institutionally (people issues)

38. Method Of Award - Lessons Learned • Match selection method to outcome: • Qualifications and cost combined work well if the product is a combination of services and products. • Qualifications alone works well for software alone, or services. • Beware of low bid for software: only use low bid for items with very little or no software development/integration.

39. Contract Type Project Characteristics Agency Characteristics Work Structure Enabling Legal Framework • Contract Type • Fixed Price • Cost Reimbursement • Incentive Method of Award Contract Type Other Tools

40. Contract Type • Fixed Price • Firm Fixed Price • Variations • Various Price Adjustments (Not scope-based) • Fixed Price Works Best for Fixed Outcomes

41. Contract Type • Cost Reimbursement • Reimburses labor and direct costs, scope often very unclear. • Cost plus Fixed Fee • Time and Materials

42. Contract Type • Incentive • Relates fee to contractor performance • Target cost-based • Award Fee • Others

43. Contract Types - Lessons Learned • Fixed Price is applicable to fixed outcome work – not new software. • Cost Reimbursement is applicable to software-intensive work and other work with flexible outcomes. • Long history of success in IT world. (MDSHA) • Incentive applies to mature technology and software.

44. Other Tools Project Characteristics Agency Characteristics Work Structure Enabling Legal Framework Method of Award Contract Type • Other Tools • Task Order • IQC Other Tools

45. Other Tools • Can be used with most any Contract Type (except, perhaps, construction). • IQC/On-Call Services (MinnDOT, GDOT) • IQC For Goods (UDOT) • Task Order (VDOT) • Independent Validation and Verification Contractor (MdSHA, NJ Turnpike)

46. Other Tools - Lessons Learned • Task Order increases control and flexibility, increases administrative burden. • IQC reduces total time to contract. • Little I,V & V contract experience - rely on DoD methods for conflict resolution.

47. Procurement Approach Model Project Characteristics Agency Characteristics Work Structure Enabling Legal Framework Method of Award Contract Type Other Tools

48. Effective Practice Summary Matrix Most Effective Practices -VS- Least Effective Practices

49. Project/Agency Characteristics Diagram High 5 NOTE: METHODS ARE ARRAYED IN A COMPARATIVE SENSE  Apply Effective Practices Rethink Your Overall Approach Need For Flexibility (Project Characteristics) Compromises In Effective Practice, Carefully Selected May Work Get Help! Perhaps Use I,V &V, or Think about DBOM 1 Traditional Practice OK Low High 5 Low 1 Need For Support (Agency Characteristics)

50. Project Characteristics Agency Characteristics Work Structure Enabling Legal Framework Enabling Legal Framework EffectivePractices Method of Award Method of Award Contract Type Contract Type Other Tools Other Tools Effective Practices Include...