Information Technology Management Office

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Information Technology Management Office

• We Make Government Better Through Innovative
  Procurements

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Solutions-Based Procurement

• A Business Approach to Procuring Information
  Technology

Another Innovative Procurement Technique by ITMO
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History

• 2002 - Gartner Forrester
• 70 - 75 of all IT Projects Fail
• Success Criteria
• On Time
• Within Budget
• All originally specified functionality
• What causes these high failure rates?

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History

• Consolidated Procurement Code 1981
• Low Bid
• RFP After thought
• 1994
• Request for Qualification
• Cost Not a Factor
• Negotiation
• Matters affecting the scope so long as you dont
  change the overall nature and intent of the
  solicitation.

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What Factors Contribute to these Failure Rates?

• Detailed Specifications
• Firm Fixed Price Contracts
• Poor Contract Management
• Poor Project Management
• Scope Creep
• Poor Change Management
• How Does the procurement process contribute?

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Traditional RFP Approach

• Identify Problem
• Research as many solutions as possible in the
  time allowed
• Hope you dont miss the really good one
• Usually takes 4 - 6 months
• Write Specifications
• Define Existing Automated or Manual System
• Specify a particular product
• Specify something that does not exist
• Can anyone say PROTEST?
• Establish minimum acceptable requirements
• Boss wants to know what is taking so long
• Send to Procurement as a RUSH
• Is There A Better Way?

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Solutions-Based Approach(Overview)

• Preparation
• Define Problem
• Define Current Environment
• Perform an Agency Risk Analysis
• The Solicitation
• Vendor contact prohibited
• Service Level Agreement (SLA)
• Request for Qualifications (if applicable)
• The Request for Proposals
• Schedule and Contract Terms
• Bidder Qualifications
• Business Proposal
• Evaluation Criteria
• Offeror Guidelines for Responding to Solicitation
• Pre Proposal Conference
• Amendments
• Prospective vendors have 15 days to protest
  contents of amendments
• Proposals and the Evaluation Process (4 6
  months)
• Oral Presentations of Proposals

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Define the Problem

• Define the Problem, Not the Solution
• Many protests are based on restrictive
  specifications, Potential vendors have 15 days
  from the release of the solicitation to protest
  specifications.
• All Problems are Business Problems or Business
  Process Problems
• Financial Problems, Business Processes Problems
  (BPR), New Business Products
• Business Output and Analysis Problems (Data
  Reports)
• What are the Business problems?
• What are the consequences of failing to resolve
  the problem?
• Any mandatory specifications should be business
  requirements
• Define the Problem not Symptoms, Solutions, or
  Current Processes
• Symptoms
• Symptoms indicate a problem, they are not THE
  problem
• It is easy to misidentify a symptom as the
  problem
• A problem may have more than one symptom
• A symptom may be the result of more than one
  problem
• Fixing one symptom may magnify other symptoms
• Fixing a symptom may be appropriate if supported
  by a business case
• Solution
• May not be the best solution
• Solution may not solve problem

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Define the Current Environment

• Define the Current Business
• Define current business requirements
• Legal mandates
• Reporting Requirements
• Project Budget Parameters
• Define current business processes
• Define program inputs and outputs
• Define Current Technical Environment
• Applicable Hardware Inventory
• Identify current usage and availability
• Identify any planned changes or upgrades
• Applicable Software Inventory
• Operating system(s)
• Applicable database and applications software
• License type and usage
• Include manufacturer and versions levels
• Applicable Communications Inventory
• Telecom and data connectivity and capacity
• Include any current hardware and software
  performance data that a vendor may require to
  develop a solution

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Perform an Agency Risk Analysis

• Identify any internal or external threats that
  may affect the successful completion of the
  project (on time, within budget)
• Business
• Legal
• Political
• Technical
• Create a mitigation plan for each identified risk
• Ignore risk
• Eliminate risk
• Change Laws or Regulations
• Manage expectations
• Include Performance Incentives
• Shift risk
• (back)

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Service Level Agreement

• An Agreement between ITMO and the Agency
• Identify evaluators and any technical or business
  resources that will be required
• Schedule Request for Qualifications
• Schedule two meetings with RFQ evaluators
• Schedule RFP issue date and pre proposal date
• Schedule resources necessary to respond to pre
  proposal questions
• Schedule Amendment issue date
• Schedule date for Offerors to return proposals
• Schedule three meetings with evaluators,
  technical resources, and business resources
• Schedule Award Posting Date
• Failure to adhere to schedule will result in
  procurement being removed from priority
  processing status
• (back)

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Request for Qualification

• When do you use a RFQ?
• Complexity of Problem to be Solved
• Number of potential vendors
• The RFQ solicitation must
• contain at a minimum a description of the goods
  or services to be solicited by the request for
  proposals
• the general scope of the work
• the deadline for submission of information and
  how prospective offerors may apply for
  consideration
• The solicitation may only require information
  about their qualifications, experience, and
  ability to perform the requirements of the
  contract
• Perspective offerors shall be ranked from most
  qualified to least qualified on the basis of the
  information provided
• Proposals shall then be solicited from at least
  the top two prospective offerors by means of a
  request for proposals
• Failure of a prospective offeror to be selected
  to receive the request for proposals shall not be
  grounds for protest
• Recommended for Solutions-Based RFPs
• (back)

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Schedule Contract Terms

• The previously agreed to schedule will be
  imbedded in the solicitation
• The posting date will appear on cover of the
  solicitation
• Standard contract terms and conditions will be
  added to the solicitation
• Limitation of Liability, Indemnification, and
  Warranty are negotiable
• Any special terms or conditions will be added to
  the solicitation
• Federal Requirements, Penalties, Liquidated
  Damages, etc.
• (back)

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Offerors Qualifications

• Include the following information for the offeror
  and any subcontractor that will contribute more
  than 10 of the performance requirements of the
  contract
• Include a brief history of the offerors
  experience in providing solutions of similar size
  and scope
• Financials
• Audited
• Public Corporations, Private Corporations,
  Private Companies, and LLCs
• Corporate References
• Customer Lists A complete customer list is
  requested
• Failed Projects, Suspensions, Debarments,
  Litigation (past and present)
• (back)

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Business Proposal

• Business Proposals
• Total Cost of Ownership What is the anticipated
  cost of purchasing, owning, operating,
  maintaining, and supporting the proposed solution
  for the total potential term of the contract?
  Provide a detailed accounting
• Risk Analysis What internal, external,
  business, legal, political, or technical factors
  could significantly impact the probability of
  completing this project on time and within
  budget?
• Risk Mitigation What actions can be taken to
  mitigate the identified risks?
• Risk Sharing Are there opportunities for
  mutually beneficial risk sharing?
• Performance Incentives Are there opportunities
  for performance-based incentives?
• Financial Options - Are there alternative
  financing options available to the State?
• Implementation Schedule
• Milestones and Deliverables
• Staffing Deployment Schedule
• Payments tied to Deliverables
• (back)

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Evaluation Criteria

• Evaluation Criteria There are a few standard
  criteria
• Functional Capabilities How well does the
  proposed solution meet the needs of the State as
  identified herein.
• Technical and Performance Capabilities How well
  do the technical and performance capabilities of
  the proposed solution meet the needs of the
  State.
• Business Plan - The impact of the proposed
  systems on the business and financial operations
  of the Agency.
• Installation and Support The degree to which
  the proposed installation and support
  capabilities meet the needs of the State.
• Implementation Plan Is the plan complete,
  reasonable, and does it meet the objectives
  outlined in the offerors proposal?
• Qualifications References (corporate and/or
  personal), resumes, financial statements, and
  evidence of ability to conduct business in the
  State.
• Risk What is the level of acceptable risk
  associated with the proposed solution.
• Demonstrations (next page)

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Evaluation Criteria (cont)

• Demonstrations
• Completeness, robustness, and ease of use of the
  proposed system.
• There are three methods of including
  demonstrations in the evaluation process
• The apparent successful vendor is asked to
  demonstrate its product so that the State may
  verify the claims made in the vendor's proposal.
  This is a pass/fail evaluation.
• All vendors submitting proposals are asked to
  demonstrate their products, and each evaluator
  scores each demonstration.
• A short list of vendors are asked to demonstrate
  their products. This is accomplished through a
  two-part evaluation process. Two sets of
  evaluation criteria are included in the RFP.
  Each proposal received is evaluated against the
  first set of criteria which does not include the
  demonstration. The vendors receiving the top
  three scores are asked to demonstrate their
  products. If there are less than three vendors
  offering proposals, then all vendors will be
  asked to demonstrate their products. Each of
  these vendors is evaluated against the second set
  of evaluation criteria. The second set of
  criteria should include all the first-part
  evaluation criteria plus the demonstration.
• (back)

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Guidelines for Responding

• Offerors Guidelines for Responding to a
  Solutions-Based Procurement
• Submittal Letter
• Executive Overview
• Technical Overview
• Detailed Explanation of Proposed Solution
• Management
• Implementation Schedule, Project Management,
  Applications Develop Methodologies, sub
  contracting, etc.
• Technical Details
• Design, equipment, performance criteria, data
  conversion, etc.
• Backup
• Intellectual Property
• Staffing
• Service Levels
• Change Management
• Training, Installation and Support
• Offerors proposal becomes basis for contract
• Allow Extra Time for Offerors to Prepare
  Responses
• (back)

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Pre Proposal Conference

• Pre Proposal Conference
• One for RFQ and One for RFP?
• Vendors can seek clarification and additional
  information
• Be careful not to answer questions in terms of a
  potential solution
• Vendors often ask questions to seek a competitive
  advantage over and eliminate competition
• Have Personnel Available to Answer Questions
• Issue Amendments as Appropriate
• (back)

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Proposals and the Evaluation Process

• Receive Proposals
• Evaluation Process (could take 4-6 months)
• Oral Presentations
• Clarification and Through Understanding of
  Proposal
• Can not be evaluated
• Demonstrations
• Short List
• Can Be Evaluated
• Scoring
• Evaluators will provide brief justification of
  scoring
• Demonstration of Highest Scoring Solution
• Negotiation
• Negotiate with the highest ranking offeror on
  matters affecting the scope of the contract, so
  long as the overall nature and intent of the
  contract is not changed. Document Negotiations.
• Determinations are be final and conclusive unless
  they are clearly erroneous, arbitrary,
  capricious, or contrary to law.

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Effective Negotiations

• The Art of Negotiation
• SC Procurement Code Regulations
• Source Selection Rules
• Cancellation and Rejection
• Protest Process
• Case Law
• Intellectual Property
• Types of Licenses
• Public Domain
• License Agreements
• Creating
• Manufacturers
• Negotiating
• Governing Law, Indemnification
• Escrow Agreements
• 11-35-3840. Authorizes License of IT
• License, Ownership, Marketing Rights

• Outsourcing vs. Offshoring
• Service Level Agreements
• Deliverables
• Data Ownership and Security
• Problems
• Time Zone Differences
• Language Barriers
• Cultural Differences
• IT Leasing
• Solicitation vs. Standard Equipment Agreement
• Lessors Standard Lease Form
• State Treasurer's Lease Register
• Lease Terms
• Property Taxes
• Analyzing the Leases
• Lease vs. Purchase
• Capital vs. Operational

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Award and Post Award Processes

• Award a Contract
• Since Vendor Proposed Solution, Vendor is
  completely responsible for performance
• Intent to Award, FOIA, Protest
• 15 Days to Protest
• 16 Days to Award
• Release Redacted Proposals, Evaluator Notes,
  Justifications and Determinations
• Protests
• Protests are a measure of knowledge and
  inefficiency
• Protest hearings cost the State upwards of
  40,000
• Usually, apparent winner did not meet a mandatory
  specification
• Procurement Review Panel will not substitute its
  judgment for qualified evaluators unless
  evaluator was clearly wrong, arbitrary,
  capricious, or acted contrary to law
• Post Award Contract Administration
• Change Orders and Contract Amendments approved by
  Purchasing Officer
• Change orders may be delegated - Change Order
  Delegation of Authority? (attached)
• Contract controversies resolved by ITMO

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Attachments and Links

• Delegation of Authority for Contract
  Administration
• Guidelines for Preparing a Solutions-Based
  Solicitation
• Guidelines for Responding to a Solutions-Based
  Solicitation
• State Portal Specifications www.cio.state.sc.us/i
  tmo/solution/portal.doc
• ARE YOU READY?
• Training and Certification of IT Procurement
  Officials
• Starting January 2005

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How Can We Make It Better?

• Teamwork
• Business Specialists
• Financial Specialists
• Technologists
• Project Manager
• Procurement Officer
• Legal
• Everyone involved from beginning in definition,
  creation of contract, implementation, project
  completion.

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Information Technology Management Office

• We Make Government Better Through Innovative
  Procurements