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Elements of a Successful Proposal

Elements of a Successful Proposal. Office of Transit Ohio Department of Transportation June 28, 2007. ?. Why Submit a Proposal?. Maximize Use of Existing Resources Expand Revenue Base and Spread Fixed Costs Generate Local Match Become Viable Player in Local Community.

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Elements of a Successful Proposal

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  1. Elements of a Successful Proposal Office of Transit Ohio Department of Transportation June 28, 2007

  2. ? Why Submit a Proposal? • Maximize Use of Existing Resources • Expand Revenue Base and Spread Fixed Costs • Generate Local Match • Become Viable Player in Local Community

  3. How Do We Let Agencies Know We Are Interested? • Networking • Normal interactions with agencies • Speeches to community groups • Attendance at Pre-Bid Meetings • Participation in Community Groups • Working through Board Members and Government Officials • Newspaper Articles

  4. ? Self Assessment: Can We Do It? • Legal Restrictions — Service Area, Type of Service, Funding Program Limitations • Vehicles — Number, Type, Utilization • Facilities — Size, Capability • Staff — Number, Capability, Flexibility • Type of Service — Is It New or More of the Same?

  5. ? Self Assessment: Do We Want to Do It? • Agency Mission • Board Direction • Management • Interest • Capability • Local Political Realities

  6. What are the Keys to Successful Proposing? • Understanding the Solicitation • Preparing a Good Response • Developing a Good Business Plan • Planning for Start-Up and Operation

  7. Understanding the Solicitation

  8. Understanding the Solicitation • Understand the Environment • Reading the Solicitation

  9. Key Transportation Actors • Transportation Agency • Director • Board • Local Governments • Ohio Department of Transportation • Federal Transit Administration • Potential Contractors • Private • Human Service Agencies

  10. Labor May Also Be An Important Actor Be Aware of What You May be “Inheriting”: • Existing employees • Wages and fringe benefits • Past employees practices

  11. Key Laws and Regulations • Ohio Revised Code • ODOT Review Schedule • Federal Transit Administration

  12. The Public Process is Slow! • Everything is a Process • Publicly-Funded Agencies Cannot Make Snap Decisions • They are not allowed to! • Conclusion: Follow the Rules!

  13. ODOT Review Schedule

  14. ODOT Review Schedule (Cont’d)

  15. Federal Transit Administration • Many Required Contract Clauses • Outlines in FTA Circular 4220.1C

  16. Typical Procurement Methods • Invitation for Bid (IFB) • Request for Proposals (RFP) • Multi-Step Strategies

  17. Invitation for Bid (IFB) • Requires Complete and Comprehensive Specifications • Involves Two or More “Responsive and Responsible” Bidders • Award Based on Price (Low Bid)

  18. IFB Requires High Degree of Agency Certainty • High Risk for Contractors Since Few Agencies Can Do This Well! • Contractor Must Be Proactive to Seek Clarification at the Beginning of the Process

  19. Request for Proposals (RFP) • Prefer General Description of Service Specifications • May Need Oral/Written Discussions With Prospective Contractors • Award Based on Comparative Evaluation of Price, Quality, Contractual Factors • Primary factor need not be price Preferable Approach Due to Increased Flexibility and Opportunity for Creative Responses

  20. Invitation for Bids Bidder Submissions Bid Evaluation and Award IFB and RFP Steps Invitation for Bid (IFB) Request for Proposal (RFP) Composite Evaluation and Award Request for Proposal Additional Negotiations Cost Evaluation Proposer Submissions Technical Evaluation

  21. Multi-Step Strategies • Pre-Qualify Responsible/Responsive Bidders • Invite/Evaluate Different Technical Approaches • Conduct Discussions to Select Best Technical Approaches • Award Contract to Lowest and Best Contractor in Accordance with Sealed Bid Process Incorporates RFP Flexibility into IFB Process

  22. Invitation for Technical Bids Request for Pricing Bid Bidder Submissions Technical Evaluation Multi-Step Strategy Steps Two-Step Invitation for Bid Bid Evaluation and Award Request for Qualifications (RFQ) IFB Process or Two-Step IFB Process Qualifications Evaluation and Selection Bid Evaluation and Award Request for Qualifications Biddor Submissions

  23. Considerations By Procurement Method: IFB, RFP and Multi-Step

  24. Considerations By Procurement Method: IFB, RFP and Multi-Step (Cont’d)

  25. Typical Solicitation Outline • Cover Page • Overview of Contracting Agency • Statement of Need • Service Specifications • Contractor Qualifications • Contract Mechanics • Agency Protections • Required Clauses • Evaluation Methodology • Format of Submission

  26. Service Specifications • Start-Up Date and Performance Period • Service, Routes, and Operating Hours • Fare Collection and Recordkeeping • Required Vehicle Maintenance • Performance Reporting • Capital Items Can You Do It and What Will It Cost You?

  27. Service, Routes, and Operating Hours Issues • Make Sure You Know Definitions • Understand the “Service Profile” of Demand • Time of Day • Day of Week • Are There Service Guarantees? • Minimums? • Maximums?

  28. Vehicle Requirements Should Be Reviewed Carefully! • Vehicles Provided by Contractor • Do you have the vehicles? • Where and how quickly can you get them? • Can you meet safety and other requirements? • Vehicles Provided by Public Agency • What are the condition of the vehicles? • When will you take possession? • Will you have to supplement the fleet? • Contingency Plan • You need one!

  29. Contractor Qualifications • Proposed Personnel • Experience • The firm as a whole • Proposed personnel • Total professional experience • Experience with firm • Financial Capability • Agency wants to make sure you are viable • Cash Flow — Adequate working capital • Capital — Funding of vehicles and facilities

  30. Contract Mechanics • Contract Length • Amendment Process • Reporting Requirements • Payments

  31. Contract Length Options • Single Year • Does not address high start-up cost factors • Start-up operations costs • Equipment amortization • Transition costs from prior contractor • Avoid if equipment acquisition is required or other longer-range opportunities are available • Multi-Year • Addresses high start-up cost factors • Should address how service changes are handled

  32. Multi-Year Contracts Are Most Common • Often Structured as Minimum Time Frame Plus One-Year Renewals • e.g., Three years plus two one-year renewals • Maximum Contract Length Limited by Federal, State, and Local Regulations

  33. Typical Amendment Issues • Changes (±) in Required Service • Amount • Vehicles required • Changes in Commodity Prices • Insurance • Fuel • New Government Requirements

  34. Monthly Contractor Reports: Keep Them Informed! • Operations • Revenue/total hours and miles, missed trips, schedule performance • Passengers and Fare Revenue • Financial Results • Accident and Safety Information • Maintenance Activities • Preventive maintenance inspections, warranty work, major repairs • Driver/Mechanic Training Activities • Anticipated Issues for Coming Month

  35. Basic Payment Options: Fixed Price • Price set for performance period • Contractor assumes risk for cost and service increases Conclusion: Avoid if Possible

  36. Basic Payment Options:Fixed Unit Price • Most Common • Price tied to output measures • Service provided — revenue/total hours (miles) • Passengers served • Contractor preference: 1) total 2) revenue 3) passengers • Contractor assumes risk for cost increases • Also ridership if price based on passengers carried Conclusion: Reasonable, But Do Your Homework If Based on Passengers

  37. Basic Payment Options: Cost Plus Fixed Fee • Accounts for allowable changes in contractor costs • Agencyassumes risk for cost increases Conclusion: Good Approach, But Few Agencies Willing to Take These Risks

  38. Pass-Throughs Can Reduce Contractor Risk and Cost • Approach • Agency agrees to pay exact cost for specified items regardless of increases • Fuel and Insurance Common Pass-Throughs • Risk: Need to Specify How Costs Can Be Disallowed • Other Option is to Provide Items Directly • e.g., fuel at agency fueling island Conclusion: Discuss with Agency Before and During Solicitation

  39. Payment Terms • Key To Cash Flow • Key Provisions • Required invoicing format • Invoice approval process • Payment timeline • Guarantee is desired

  40. Agency Protections • Insurance • Bonding • Key Personnel • Approval of replacements • Subcontractors • Approval of replacements • Agency Provided Equipment and Assets • Required maintenance program • Required maintenance records

  41. Objectives of Bond Requirements • Agency Protection • Assures contractor will enter into contract (bid bond) • Guarantees service performance will meet terms of contract (performance bond) • Credit/Financial Screen

  42. Performance Alternatives • Holdbacks (1-5%) • Penalties and Incentives • Post Cash

  43. Incentives • Must be: • Important • Measurable • Reasonable • Under contractor control Conclusion: Do Not Count Your Chickens Before They Hatch! — Generally Do Not Include in Your Budget

  44. Penalties • Must be: • Important • Measurable • Reasonable • Under contractor control • Should Be Proportional to “Offense” Conclusion: Count Your Chickens Before They Hatch! —Include in Your Budget (Things Do Happen Even in the Best Systems)

  45. ? Why So Many Contract Clauses? • Public Safety • Good Public Fund Stewardship • Employee Protections

  46. Required Contract Clauses(Standing in the Agency’s Shoes) • FTA Circular 4220.1C • ODOT Rural Transit Program Manual The Key Clauses Are Covered Next

  47. 1. Remedies for Breach of Contract • Available Remedies to the Grantee if Contractor Violates or Breeches Contract Terms • Administrative • Contractual • Legal Remedies • Provision for Appropriate Sanctions and Penalties Ideally, We Should Never Get This Far

  48. 2. Contract Termination (>$10,000) • Conditions Under Which the Grantee May Terminate the Contract for: • Default: Contractor fails to comply with terms of the contract • Convenience: Contractor cannot comply due to circumstances beyond contractor’s control

  49. 3. Equal Employment Opportunity (>$10,000) • Contractor Agrees to Take Positive Action to Insure that Persons Employed or Seeking Employment Are Treated Without Bias Regarding: • Race • Religion • Color • Sex • National origin • Contractor Required to Conspicuously Post Notices

  50. 4. Contract Work Hours and Safety Standards Act • Contractor Must Pay Overtime (1.5 x wage rate) to Laborers and Mechanics for Work Exceeding 8 Hours per Day • Prohibits Requiring Workers to Work in Unsanitary, Hazardous, or Dangerous Conditions as Defined by Secretary of Labor • Applies to: • Construction contracts > $2,000 • Other contracts > $2,500

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