Procurement 101
Monica Wilkes
NASPO Honorary Member
CPPO, CPPB
Tom Blaine
Senior Research Associate, Public Procurement
Research Center
NASPO Honorary Member
CPPO, FCPM, FCPA
Doing Business with State Government
• Why do business with government
₋
₋
₋
₋
₋
-
Open Competitive Opportunities
Fair and Reasonable Treatment
Reliable Customer
Good Payment Practices
Transparency
Ethical, Efficient, and Effective public procurement
Types of Purchasing
Centralized contracts – generally statewide contracts
Agency contracts - delegations granted to agencies to
purchase under the same procedures as Central Purchasing
– dollar value, time frame, specific need
Discretionary - generally under a certain dollar threshold
without the need for formal competition
Sole source - item is unique and possesses specific
characteristics that can be filled by only one source requires written justification from using agency
Single source - products or services available from two or
more sources of supply but agency chooses a single source
based on the best interests of the state. (e.g. – equipment
maintenance required from a certain vendor to maintain
the warranty)
Contract Types
Piggyback contracts – One or more organizations bid their
requirements which includes language that allows the ability
for others to participate in the contract.
Cooperative contracts – Two or more governmental entities
combine their requirements and solicit bids for their
requirements. Commonly used by government entities:
federal, state, county, local government.
Emergency contracts - used in an urgent and unexpected
situation where health and public safety or the conservation
of public resources is at risk.
Note: Other state agencies may have authority to perform
centralized procurement functions (e.g. construction
contracts)
Sole and Single Source
Documentation required
• Is product or service unique and easily established as
one of a kind?
• Can program requirements be modified so that
competitive products or services may be used?
• Is product available from only one source and not
merchandised through wholesalers, jobbers or
retailers?
• Must items be interchangeable or compatible with
substantial in-place inventory?
Cooperative Agreement Benefits
Aggregate Volume
• Reduces administrative expenses
• Reduces advertisement (solicitation) &
development acquisition time
• Increased competition
• Reduces product cost
Set Aside/Preference Programs
• Correctional Facilities
• Blind, Disabled Workshops
• Certified or non-certified Minority or Women
Owned Business
• Small Business
• Veteran Business
• Instate Preference – (Be aware of reciprocal
legislation)
Types of Bids
• Request for Quotation (RFQ)
• Invitation for Bid (IFB)
• Multi-Step Competitive Sealed Bid, definite
specs, low dollar
• Request for Proposal (RFP)
• Request for Information (RFI) to survey the
market
IFB vs. RFP
• Invitation for Bid (IFB): Used in the
procurement of commodities and awarded to
the responsive and responsible bidder on the
basis of lowest price; and
• Request for Proposals (RFP): Used for
procurements when factors in addition to cost
are weighed. The contract is awarded to the
responsive and responsible proposer offering
the best value.
Extension of Use of Contracts
Understand the breadth and depth of contract users or
whether they are exempt from centralized
procurement
• State authorities and public benefit corporations;
• Local governments and municipalities;
• Public and private elementary and secondary
schools; universities and colleges
• Volunteer ambulance and fire companies;
• Libraries; and
• Other authorized users
Types of Contracts
•
•
•
•
•
•
•
Commodities
Technology
Services
Telecommunications
Construction
Consulting Services
Professional Services
Pricing Methodologies
• Firm Fixed Price
• Percentage Discount with or without price
adjustments due to changing price lists
• Percentage Upcharge (cost plus)
• Firm Price with pre-established price
adjustment points (up or down) based on
changing indexes or price lists (e.g. NYMEX)
• Labor and materials
Contract Types
• Term Contracts - establishes a “source of supply” for the
purchase of goods and/or services made over a specified
period of time.
– Usually one or more years, dependent on external factors (commodity,
market conditions, compatibility)
– Multi-year contracts may provide for yearly extension options
– Estimated purchase requirements - based on prior purchases, agency
data, survey, vendor reports, eprocurement systems
– No purchase guarantees – estimated quantities
– Definite quantity for a definite period
– Indefinite quantity for a definite period
• Other equivalent terms are “Open-ended (estimated quantity)
Contracts, Blanket Contracts, Requirements Contracts, or
Purchase Agreements.”
Agency Contracts
Agency Term Contracts - established for
individual agencies which have a specific need
for a product or service which may not be
applicable to other state agencies.
• Golf Equip (Parks Department)
• Uniforms (Correction)
• Guard Rails (DOT)
• Advertising/Marketing
Methods of Awarding Term Contracts
•
•
•
•
•
•
Single Award
Groups of Line Items (By Lot)
Award by Line Item to multiple contractors
Percentage Discount from Catalog or Price List
Geographic Location
Multiple Awards
Other Contracting Methodologies
•
•
•
•
•
Strategic Sourcing
Reverse Auctions
Cross-organization Projects
E-procurement Strategies
GSA Contracts – ability to purchase from GSA
may require statutory authority
Public Advertisements
Bid notifications generally required by law
• Newspapers
• State publications
• Online notifications
• Social media
• Paid or free systems
Program Funding Models
• Appropriation
• Self-funding using administrative fees that
range between .5% to 2% (commonly 1%) may
be added to contract prices to support
procurement programs
• Combination
Contract Participation
• Subcontractors, authorized resellers, dealers,
distributors, or agents.
• Promote and provide opportunities for small,
minority, or women-owned businesses.
• Contact the manufacturer or contractor directly for
participation opportunities.
• Sales through an authorized contract reseller, dealer,
distributor, or agent must be made in compliance
with the contract’s terms and conditions, and are
limited to the commodities and services approved
under the contract.
Responsive
A bidder whose bid meets or exceeds administrative
requirements, technical specifications, and
contractual terms and conditions.
•
•
•
•
•
•
•
Specifications and terms and conditions
Signing bid and any other documents
Bonding and/or insurance requirements
Delivery time
License requirements - Current and Active
Product testing (meeting specifications)
Samples
Responsible
Vendor responsibility (Acronym FLIP)
• Financial and organizational capacity;
• Legal authority to do business with the state;
• Integrity of the
owners/officers/principals/members and contract
managers; and
• Past performance of the bidder on prior
government contracts
Become a Successful Bidder
•
•
•
•
•
•
•
•
•
Read entire bid/proposal;
Review submittal for accuracy and completeness;
Submit a timely bid (one minute late, bid may be rejected);
Be responsive to all bid requirements;
Submitting a signed bid package complete with all the
mandatory forms;
Pricing the bid competitively;
Demonstrating vendor responsiveness and responsibility;
Submit questions for clarification. NOTE: Inquiries generally
are required in writing;
If applicable, attend pre-bid and/or post award conferences
Evaluation of Bids or Proposals
•
•
•
•
Don’t assume proposals will be negotiated
Ask questions about process prior to bid opening
Make use of “inquiries” format
Avoid protests by fully understanding
requirements; must versus should specifications
• RFP evaluations are not public until award
announcement
• If unsuccessful, request a debriefing
Tips for Winning Contracts
• Use NASPO website as a resource
• Register with state(s) – Check out their
websites
• Visit State procurement officer(s)
• Meet with state agencies(s)
• Daily review of solicitations
• Active in user groups - trade shows
Debriefing
• A debriefing will detail the shortcomings of a
bid submission
• Unsuccessful businesses should request a
debriefing
• During a debriefing, businesses should take
notes and ask questions for future
improvement opportunities
• Review winning competitor’s bid or proposal
Marketing
• Know your buyer
• Understand the procurement laws, and
policies that pertain to the procurements
• Determine timing of next requirement
• Market your products or services, including
green products
• Market your firm’s qualification of small,
minority or woman owned business
• BE PROACTIVE AND INFORMED
Technical Assistance
Free technical assistance is available
• Procurement Technical Assistance Centers
(PTACs), funded by the US Department of
Defense and state and local entities
• Help businesses seeking to compete
successfully in federal, state and local
government contracting
NASPO RESOURCES
Publications
• Survey of State Government Purchasing Practices
– excellent resource of states’ policies
• Supplier Guide CD: How to Do Business with
States
• State and Local Government Procurement: A
Practical Guide – comprehensive guide for public
procurement