Pitfalls

1

• Pitfalls
• Possible Solutions/Preventive Measures

2

• Pitfall
• Agency identifies a need for contractual services.

3

• Solution or Preventive Measure
• Identify other organizations within your agency
  or other State agencies that have recently faced
  a similar need and how that organization handled
  their procurement.
• What procurement vehicle did they use?
• What method of award?
• What problems did they encounter in procurement
  or managing performance?

4

• Pitfall
• Agency does not have a framework for a
  solution
• It is unknown what products or services the
  vendor community has available
• Solution or Preventive Measure
• Survey current providers through a Request for
  Information (RFI).

5
When an RFI might be used

• If the agency does not know what product, service
  or technology the vendor community has available,
  it may issue a Request For Information (RFI) to
  assess the availability, types, and options of
  goods and services and to help identify potential
  suppliers.

6
Request For Information (RFI)

• The agency prepares a document which
• Provides a preliminary description of the program
  objectives and goals, and
• Solicits input from the vendor community as to
  the availability of products, services and/or
  technology to meet their needs.

7
RFI Mandatory Requirements

• Notification of the RFI must be published in the
  Contract Reporter (Section VII, 14, Procurement
  Guidelines)
• The RFI is mailed to all potential offerors known
  by the agency at the time of mailing (Section
  VII, 14, Procurement Guidelines)

8
RFI Other Requirements

• An open meeting to solicit additional information
  is the recommended approach. All offerors
  responding to the RFI must be notified in writing
  of questions submitted and kept informed of any
  open meetings. (Mandatory Section VII, 14
  Procurement Guidelines)
• No award may be made under the RFI process.

9

• Pitfall
• Agency lacks adequate resources for managing the
  project.
• Solution or Preventive Measure
• Seek outside assistance by identifying
  organizations within your agency or other State
  agencies that may have qualified staff.
• Determine if you need to procure the services of
  a project manager to accomplish your project
  goals.

10

• Pitfall
• Agency incurs large cost overruns during project
• Solution or Preventive Measure
• At outset of the procurement process, agency
  should perform a detailed cost analysis,
  including staff training time, equipment needs,
  contractual costs, set-aside for contingencies
  (unexpected events), etc.

11

• Pitfall
• All available procurement vehicles were not
  evaluated in developing bid documents.
• Solution or Preventive Measure
• Review all procurement vehicles to insure the
  correct fit. Consider Preferred Sources, OGS
  centralized contracts, OGS backdrop contracts,
  discretionary purchasing, IFBs, RFPs, single or
  sole source.

12

• Pitfall
• An RFP was used when an IFB would have fit the
  scope of services, causing
• An unnecessary administrative burden
• Increase to processing time (inception to
  commencement of work)
• Extra cost

13

• Solution or Preventive Measure
• An IFB is the best method if
• Exact specifications are known
• Price is very important
• An RFP is the best method if
• Exact specifications are not known
• A highly complex technical solution is needed
• Technical appraisal outweighs importance of cost

14

• Types of services which should be procured by
  these methods
• IFB Commodity purchases janitorial guard
  duty auditing.
• RFP Modernization of an existing system (Human
  Resources, Payroll, Financial Management, etc.)
  Development of a new system (Electronic Benefits
  Transfer-EBT, Replacement Medicaid System-RMS,
  Connections, etc.)

15

• Pitfall
• An old RFP was used for the current procurement
  which was not in accordance with all applicable
  State statutes and procedures.
• Solution or Preventive Measure
• Review the old RFP to insure that it complies
  with all applicable State statutes and procedures
  and update it, if necessary.

16

• Pitfall
• Electronic payments process not used for payments
  to vendors

17

• Solution or Preventive Measure
• Payee completes an Electronic Payments
  Authorization Form to enroll in this program.
• Benefits
• Faster access to cash by your vendors
• Direct deposit access within 24 hours
• Less paperwork to process for New York State
• OSC Payment Bureaus volume
• 17.5 million transactions annually
• 15,000 daily payments to vendors, municipalities
  and employees
• Vendor receives e-mail alerts when monies are
  ready to be deposited into their accounts
• Vendors receive one electronic payment for all
  their invoices for that day

18

• Solution or Preventive Measure
• For further information, contact OSCs Bureau of
  Accounting Operations at [phone] or
  e-mail epunit_at_osc.state.ny.us
• Visit OSC website at http//www.osc.state.ny.us
• See Accounting Bulletin A-474

19

• Pitfall
• A cost of living increase for a renewal year was
  negotiated but the original RFP/IFB and contract
  did not allow for an escalation (no contract
  escalation clause).
• Solution or Preventive Measure
• The RFP/IFB or original contract must have an
  escalation clause to allow cost of living
  adjustments.
• The amendment would be rejected and the agency
  would submit a reduced amendment amount.

20

• Pitfall
• Contract performance did not produce a meaningful
  result.
• Solution or Preventive Measure
• RFP/IFB/Contract should, wherever possible, be
  for specific outcomes (deliverables).
• RFP/IFB/Contract should have identifiable
  measures of performance.
• Require liquidated damages, a letter of credit or
  performance bond.

21
Liquidated Damages

• Examples
• Direct Damages
• Termination for cause is exercised and agency is
  forced to re-bid. Any additional contracts
  incurred costs above original contracted amount
  constitute direct damages and the terminated
  vendor should be held responsible.
• Specific dollar limits as to liability must be
  stated in the RFP/IFB contract.

22
Liquidated Damages

• Consequential Damages
• Vendors inability to deliver contract
  deliverables in accordance with specifications
  and timeliness, i.e. non-conformance, which
  causes disruption to agency programs, loss of
  Federal or other reimbursement funds or create
  other negative impacts should be measured and
  assessed against the vendor.
• Up-time of systems, processing of claims,
  inoperable systems, etc. are a few examples of
  what can lead to an agency incurring
  consequential damages.

23

• Pitfall
• Agency develops an unclear specification and/or
  provides insufficient bidding information this
  can result in an insufficient number of firms
  bidding or a bid protest, etc.
• Solution or Preventive Measure
• Develop clear, detailed specifications allowing
  bidders to submit responsive proposals.
• If needed, seek outside assistance
• Identify other organizations within your agency
  or other State agencies for qualified staff
• Solicit outside consultant services
• Section 163.A reminder

24

• Pitfall
• Agency writes restrictive specifications
  resulting in a lack of adequate competition,
  complaints or protests, etc.
• Solution or Preventive Measure
• Restrictive specifications are a reason for
  rejection and rebid of a contract.

25

• Pitfall
• Did not establish criteria prior to the initial
  receipt of bids (lock box), including the use
  of a finalist slate, if applicable.
• Solution or Preventive Measure
• Review Section 163.7 of NYS Finance Law.
• Contract will be rejected.

26

• Pitfall
• A percentage, rather than a number, is used to
  determine who qualifies for the finalist slate
  this might result in an insufficient number of
  qualifying bidders.
• For example, RFP states all bidders within 10
  percent of highest composite score qualify for
  the finalist slate. Only one bidder meets this
  standard. The RFP allows for interviews for
  finalists only. What if the only qualifying firm
  performs poorly at the interview?

27

• Solution or Preventive Measure
• Use a number, for example, the top three highest
  composite scores will qualify for the finalist
  slate this insures adequate competition in the
  final round.

28

• Pitfall
• Did not publish relative weights in bid document
  (technical vs. cost).
• Solution or Preventive Measure
• Review Section 163.9.b of NYS Finance Law.
• The contract will be rejected.

29

• Pitfall
• Price offered should be reviewed objectively.
  The content or level of effort should be
  considered when evaluating the technical
  proposals.
• Solution or Preventive Measure
• Technical proposal should include a manning
  schedule to help determine if the proposed level
  of effort is realistic in regard to achieving the
  end work product.

30

• Pitfall
• Multiple award not in RFP/IFB or without a
  defined selection procedure as to how the work
  will be distributed
• Solution or Preventive Measure
• Review Section 163.10.c of NYS Finance Law.
• You must define the up to number of firms that
  can be awarded a contract.
• You must define your selection procedure for the
  actual work (task orders etc.)

31

• Pitfall
• Points assigned to cost did not represent a
  meaningful worth.
• Solution or Preventive Measure
• Review intent of State Finance Law, Article 11
  (particularly Sections 163.1.j, 163.7 and
  163.9.b) and Procurement Guidelines.

32

• Pitfall
• When using the formula in the Procurement
  Guidelines, a high dollar bid may skew the points
  assigned to the mid-range bids.
• Solution or Preventive Measure
• Use the following recommended formula to provide
  a more balanced assignment of cost points.

33
Recommended Cost Formula

• Low bid / bid being evaluated x maximum points
  for cost cost score

34

• Pitfall
• Agency did not respond to a vendors request for
  debriefing did not notify unsuccessful vendors
  in a timely manner.
• Solution or Preventive Measure
• Review Procurement Guidelines, Section VII, page
  6, number 11 page 45, number 2.
• Debriefing is mandatory.

35

• Pitfall
• The agencys application of evaluation scoring
  differs from their RFP/IFB/evaluation instrument.
• Solution or Preventive Measure
• Review State Finance Law, Article 11, and the
  Procurement Guidelines. A rebid of the services
  may be required.
• Develop the RFP and evaluation instrument at the
  same time.

36

• Pitfall
• Award made to a non-responsive bidder, i.e.,
  vendor did not meet specification requirements or
  submit proper forms, etc.
• Solution or Preventive Measure
• This is not acceptable and is subject to
  rejection and rebid of the services.

37
Example Non-Responsive Bidder

• The RFP/IFB requires unlimited liability on the
  part of the vendor. During negotiation with the
  awarded vendor, the agency negotiates a lesser
  liability, creating a material change to the
  original procurement.
• Agency should carefully consider and weigh the
  importance of its RFP/IFB requirements.

38
Example Non-Responsive Bidder

• For instance, when requiring unlimited liability,
  the agency should carefully weigh
• Reasonableness of this requirement
• Necessity of this requirement
• Are there a sufficient number of vendors who will
  bid on the specific services being procured if
  this requirement is present?

39
Example Non-Responsive Bidder

• Any material change(s) to a procurement document
  (RFP/IFB) may prejudice other offerors as well as
  potential offerors who did not submit a bid.
  These awards are subject to rejection and a
  re-bid of the services.

40

• Pitfall
• Agency awards a reduced scope of work from
  originally requested in the RFP/IFB.
• Solution or Preventive Measure
• This is not acceptable unless it is a minor
  reduction. The agency must be able to defend
  that any bidder or potential bidder was not
  prejudiced.

41

• Pitfall
• Agency submits a contract whose start date is
  prior to OSC review and approval process

42

• Solution or Preventive Measure
• Refer to Comptrollers bulletin G-195 for
  guidance and to State Finance Law, section 112.
• May cause vendor to not receive payments for any
  services rendered prior to OSC approval date.
• Sometimes approving a late contract results in an
  award that may not achieve the optimum result.
• Alternative approaches might have been introduced
  if work had not started (different method of
  award, relative weights, etc. might have been
  recommended to use)

43

• We strongly recommend publishing your mandatory
  contract provisions into the RFP or IFB, since
• This allows potential bidders to raise concerns
  prior to submitting a bid, and
• Eliminates a vendor or vendors unwilling to meet
  these mandatory provisions, thus avoiding
  prolonged and fruitless contract negotiations if
  this vendor is the highest ranked firm thus
  saving the agency time and money, and avoiding
  delay of their program needs being met.

44
In Summary

• Openness
• Questions and answers are disclosed to all
  bidders
• No verbal (one on one) communications with
  vendors
• Debriefing losing vendors upon request

45
In Summary

• Fairness
• Create an even playing field
• Clear, detailed specifications
• No altering of evaluation criteria after bids
  have been received

46
In Summary

• Due Diligence
• Knowledge of applicable rules and regulations
• State Finance Law
• Procurement Guidelines
• Procurement Stewardship Act
• OSC G-Bulletins

47
In Summary

• Achieving Goals
• Communicate your needs/goals and reach a full
  understanding with the awarded vendor

48
In Summary

• Following these outlined steps should produce a
  protest-free procurement and a smooth approval
  process.