Procurement

1. Procurement Gene Shawcroft, P.E. Central Utah Water Conservancy District April 29-30, 2013

2. Part 6: Bidding • The bidding procurement process is appropriate to use when cost is the major factor in determining the award of a procurement (63G-6a-602). • The bidding procurement process begins when the procurement unit issues an invitation for bids. The invitation must include specific items which are listed. The invitation must be published in accordance with63G-6a-406 (seven days minimum notice) 63G-6a-603.

4. Part 6: Bidding (con’t) 63G-6a-604 Bid Opening and Acceptance • The bids shall be opened publicly at the time included in the invitation. The bids shall be accepted unconditionally (see exceptions). The procurement officer shall reject a bid that is not responsive or responsible. Bids submitted after the time for submission may not be accepted. After the bid is awarded, the list of the bidders and their bids is available for public disclosure.

5. Part 6: Bidding (con’t) 63G-6a-605 Correction or Withdrawal of Bids – Cancellation of Award • Correction or withdrawal of “inadvertently erroneous” bids maybe made in accordance with rules. • The following changes may not be made after the bid opening: • Bid pricing • Cost evaluation formula • Changes that are prejudicial to fair competition • A decision to permit the correction or withdrawal of a bid shall be supported in a written document, signed by the procurement officer.

6. Part 6: Bidding (con’t) 63G-6a-606 Evaluation of bids – award – cancellation – disqualification • Each bid shall be evaluated using the objective criteria described in the invitation for bids, which may include a long list of criteria. • If the criteria were not mentioned in the invitation, they may not be used in the evaluation process. • The bid is to be awarded as soon as practicable to the lowest responsive and responsible bidder. • A bidder may be disqualified in writing by the procurement officer, stating the reasons.

7. Part 6: Bidding (con’t) 63G-6a-607 Action when all bids are over budget • If all the bids exceed the “available funds” and the lowest responsive and responsible bidder does not exceed the available funds by more than 5%, the procurement officer may negotiate an adjustment of the bid price and bid requirements with the lowest responsive and responsible bidder.

8. Part 6: Bidding (con’t) 63G-6a-609 Multiple stage bidding • This is a new procurement practice. It allows a bid to be conducted in multiple stages to narrow the number of bidders who will progress to a subsequent stage, prequalify bidders, enter into a contract for a single procurement or award multiple contracts for a series of upcoming procurements.

9. 63G-6a-403 Prequalification of Potential Vendors • Vendor can be: Bidder Offeror Contractor (including architect or engineer) • Specify Type of procurement Scope of work Instructions to be responsive Minimum criteria for prequalification Period of prequalification (limited to 18 months) Invitation limited to prequalified vendors • Notice those not meeting qualification Public notice of qualified vendors

10. Part 6: Bidding (con’t) 63G-6a-610, 611, & 612 Contracts awarded by reverse auction • This is also a new procurement practice. It can be used if the procurement officer determines in writing that reverse auction bidding will provide the best value to the procurement unit. It is appropriate to use when there are multiple prequalified providers of a procurement item. • An invitation to bid is sent to the list of prequalified bidders. At the time of the reserve auction, the prequalified biddersare allowed to bid against each other for the lowest price to do the job. Each bidder gets the opportunity to lower its bid (the reverse of a regular auction where the item is sold to the highest bidder).

11. Part 6: Bidding (con’t) Unique challenges to water agencies Limited suppliers Limited acceptable products • Chemicals for treatment plants • Valve manufacturers • Electronic equipment suppliers/installers • Security equipment • Software providers

12. Cost vs. Quality

13. Design Fee vs. Overall Cost

14. Total Value

15. Part 7: Request for Proposals 63G-6a-702 Contracts awarded by request for proposals • For a request of proposals (RFP), the procurement process may be used instead of bidding if the procurement officer determines, in writing, that the RFP process will provide the best value to the procurement unit. • The RFP process is appropriate to use for procurement of professional services, a design-build procurement, when cost is not the most important factor, or when factors in addition to cost are highly significant. • There are many important new provisions and requirements in Part 7 that require close attention of districts.

16. Part 7: Request for Proposals (con’t) 63G-6a-703 Request for Proposals – Notice – Contents • Bidding and RFP processes are the standard mode for public procurement. • The RFP process begins when an RFP is issued. • The RFP shall include (among other things): • A description of the procurement item sought • A description of the subjective and objective criteria that will be used to evaluate the proposal. • The relative weight that will be given to each score for the criteria. • The formula that will be used to determine the score awarded for the cost of each proposal. • Publish an RFP in accordance with 63G-6a-406 (at least seven days prior).

17. Part 7: Request for Proposals (con’t) 63G-6a-704 Opening of Proposals and Acceptance • Ensure that proposals are opened in a manner that avoids disclosing the contents to competing offerors during the evaluation process. 63G-6a-705 Discussions – Best and Final offers • The procurement unit may conduct discussions with offerors to receive best and final offers. • The procurement unit shall ensure that each offerorreceives fair and equal treatment.

18. Part 7: Request for Proposals (con’t) 63G-6a-707 Evaluation of Proposals – Evaluation Committee • Each proposal shall be evaluated using the criteria described in theRFP. • A lot of flexibility is given in this section for criteria. All the criteriafor evaluation has to be statedin the RFP, including the formula and weight given to each. Includes “other subjective or objective criteria specified in the RFP”. • A committee of at least three persons to evaluates the proposal. The evaluation committee members may not have a conflict of interest with any of the offerors. • Committee members are prohibited from knowing, or having access to, any information relating to cost until after the evaluation committee submits its final recommended scores. • An exception may be issued by the procurement officer, prior to opening proposals, with a written statement that, due to the nature of the proposal, it is in the best interest of the procurement unit to waive the exclusion to access cost information.

19. Part 7: Request for Proposals (con’t) 63G-6a-708 Cost-benefit analysis • If the difference between the lowest cost proposal and the cost of the highest scored proposal exceeds the greater of $10,000 or 5% of the lowest cost proposal, the procurement unit shall make an informal written cost-benefit analysis that explains the advantage of going with the higher cost proposal. • If the informal cost-benefit analysis does not justify award of the contract to the offeror that received the highest score, the procurement unit may not award the contract to the highest scored offeror; but may award the contract to the next highest scored offeror. • If an informal cost-benefit analysis is required for the next highest score, because the difference between that cost proposal and the lowest cost proposal still exceeds $10,000 or 5%, and the informal cost-benefit analysis does not justify award to the next highest scored offeror, then the process is continued until an informal cost benefit analysis does justify award.

20. Part 7: Request for Proposals (con’t) 63G-6a-709 Award of Contract – Cancellation – Disqualification After the evaluation and scoring of proposals is completed, the contract should be awarded as soon as practicable to the responsive and responsible offeror with the highest total score.

21. Part 7: Request for Proposals (con’t) 63G-6a-709.5 Publication of award and scores The issuing procurement unit shall make available to each offerorand to the public a written statement, on the day of contract award, including: • the name of the successful offerorand the total scoreawarded to that offeror • the total score awarded to each of the other offerors, without identifying which offerorreceived which score. • Any cost-benefit analysis made.

22. Part 7: Request for Proposals (con’t) 63G-6a-710 Multiple stage process The RFP process can be conducted in stages, where an earlier stage is used to qualify offerors for subsequent stages. This is like creating a “short list” of offerorswho are actually interviewed.

24. Part 4: General Procurement ProvisionsSmall Purchases • Districts may make rules governing small purchases. • The rules should establish: • Annual cumulative threshold • Individual procurement threshold • Single procurement aggregate threshold • Procurement requirements relating to the thresholds • Expenditures by a procurement unit may not exceed a threshold established by rules unless the head of a procurement unit (the board or designee) gives written authorization, including the reasons for exceeding the thresholds. • It is unlawful for a person to intentionally or knowingly divide into one or more smaller procurements to qualify as a “small purchase”. • Criminal penalties come into play. • This procedure will be “red flagged” on any audit. Districts should give special focus to small purchases.

25. Part 4: General Procurement ProvisionsSmall Purchases (cont’) • Current state rules: Up to $1000 – “the agency may select the best source without seeking competitive quotes.” $1000 - $5000 – “agencies shall obtain price competition, and shall purchase the item from the vendor offering the lowest quote.” $5000 - $50,000 – “Insofar as it is practical ….. no less than two businesses shall be solicited to submit electronic, telephone or written quotations.  Award shall be made to the business offering the lowest acceptable quotation.”