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NEGOTIATIONS IN FLORIDA. Florida Association of Public Purchasing Officers Jacksonville November 5, 2004 Russ Rothman, CPPO, FCPM Chief Purchasing Operations Officer Florida Division of State Purchasing [email protected] NEGOTIATIONS IN FLORIDA.

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Negotiations in florida
NEGOTIATIONS IN FLORIDA

Florida Association of Public Purchasing Officers

Jacksonville

November 5, 2004

Russ Rothman, CPPO, FCPM

Chief Purchasing Operations Officer

Florida Division of State Purchasing

[email protected]


Negotiations in florida1
NEGOTIATIONS IN FLORIDA

  • This presentation is about

    • The use of the Invitation to Negotiate defined in section 287.057 Florida Statutes,

    • Some idea of the differences with the two other formal solicitation types (ITB, RFP) addressed in that section,


Negotiations in florida2
NEGOTIATIONS IN FLORIDA

  • And some of the processes and steps required or recommended for conducting formal negotiation processes in Florida government procurement.


Negotiations in florida3
NEGOTIATIONS IN FLORIDA

This presentation is NOT about

  • Preparing for negotiations through market research

  • Developing goals

  • Preparing discussion materials

  • Meeting tactics

  • Resolving impasses or “BATNA”

    BUT you will need to address these matters in your negotiation processes!


Negotiations in florida4
NEGOTIATIONS IN FLORIDA

FORMAL COMPETITIVE PUCHASES: ITB, RFP, ITN


Formal competitive processes itb rfp itn
FORMAL COMPETITIVE PROCESSES : ITB, RFP, ITN

  • Section 287.057, Florida Statutes, and Rule 60A-1.002(4), Florida Administrative Code, require formal competitive solicitations for purchases exceeding Category Two (287.012 FS).


Formal competitive processes itb rfp itn1
FORMAL COMPETITIVE PROCESSES : ITB, RFP, ITN

  • Exceptions include exempt purchases, and single source and emergency purchases.


Formal competitive processes itb rfp itn2
FORMAL COMPETITIVE PROCESSES : ITB, RFP, ITN

  • The methods are

    • Invitation to Bid

    • Request for Proposal

    • Invitation to Negotiate


Formal competitive processes itb rfp itn3
FORMAL COMPETITIVE PROCESSES : ITB, RFP, ITN

  • These methods are ranked in order of preference.

    ITB is the first choice, with written justification required for one of the other choices.


Formal competitive processes itb rfp itn4
FORMAL COMPETITIVE PROCESSES : ITB, RFP, ITN

  • RFP is the second choice, and is in fact the second most price-driven solution.

  • Price is one of the factors considered, but not the only one.

  • All respondents “stay in the game” until evaluations are completed.


Formal competitive processes itb rfp itn5
FORMAL COMPETITIVE PROCESSES : ITB, RFP, ITN

ITN is the third choice and often the least price driven.

  • As with the RFP, price is one of several factors used to compare respondents to each other and determine best value.

  • Ranking of initial respondents may exclude or limit price as a factor.

  • Final price offers may be considered for only one or a few respondents.


Greatest flexibility itn
GREATEST FLEXIBILITY: ITN

  • Note that while ranked from most to least price driven, the ranking also moves from least to greatest flexibility!

  • Note also that they are ranked from least to most complex, and least to most time consuming!


Legal requirements of florida statutes
LEGAL REQUIREMENTS OF FLORIDA STATUTES

  • The decision to use an ITN must be justified in writing.

  • At least three knowledgeable persons must be appointed to evaluate proposals.

  • The agency must evaluate and rank the responsive replies.


Legal requirements of florida statutes1
LEGAL REQUIREMENTS OF FLORIDA STATUTES

  • At least three knowledgeable persons must be appointed to conduct negotiations.

  • The agency will select one or more vendors with which to commence negotiations.

  • And the eventual basis for selection and how it provides the best value will be explained in writing.


Requirements of florida administrative code
REQUIREMENTS OF FLORIDA ADMINISTRATIVE CODE

An agency shall consider which form of competitive solicitation will result in the best value for the State and document the decision (Rule 60A-1.041, FAC).


Digression recommendations on teams
DIGRESSION: RECOMMENDATIONS ON TEAMS

  • The statute speaks to two phases of the process, evaluation & negotiation, and requires a team for each phase.

  • Recommendation: Preserve continuity in the three phases:

    • Solicitation development

    • Proposal evaluation

    • Negotiation


Recommendations on teams
RECOMMENDATIONS ON TEAMS

  • Negotiation is usually carried on by teams representing each organizational entity which will have some responsibility for the process and/or the outcome.


Recommendations on teams1
RECOMMENDATIONS ON TEAMS

  • Teams therefore generally include members with differing focuses or areas of expertise, authority and responsibility.


Recommendations on teams2
RECOMMENDATIONS ON TEAMS

  • Examples:

    • Administrative perspective (e.g. purchasing, finance),

    • Business Process perspective, (e.g. operating bureau, division or program representative),


Recommendations on teams3
RECOMMENDATIONS ON TEAMS

  • Technical perspective (e.g. information technology),

  • Legal perspective (the purchasing officer often represents this in the day-to-day work).


Recommendations on teams4
RECOMMENDATIONS ON TEAMS

  • Ancillary/support roles are not prohibited and can be quite useful

  • That is, while the evaluation/negotiation team may have 3 or 4 members, the team may consult experts for advice


Justification for use
JUSTIFICATION FOR USE

  • The ITN requires justification as to why neither of the other methods (ITB, RFP) will result in best value [287.045(3)].

  • “Best value” is defined as “the highest overall value … based on objective factors … not limited to price, quality, design, and workmanship.” [s.287.012(4)]


Formal competitive processes itb rfp itn6
FORMAL COMPETITIVE PROCESSES: ITB, RFP, ITN

Let’s consider

  • Considerations in choosing ITB, RFP or ITN (recommendations, not law)

  • Specifications/Statement of Work

  • Vendor input

  • Evaluation criteria and their weights, including price & other factors


Reasons for choosing an itb
REASONS FOR CHOOSING AN ITB

  • Standard off-the-shelf products are known to meet the need

  • Standard services of a usual commercial type and price structure are known to meet the need, especially technical or non-professional services, such as custodial or waste removal services, or equipment maintenance


Reasons for choosing an itb1
REASONS FOR CHOOSING AN ITB

  • Filling an immediate need one or a few times, or fulfilling a long term requirement with repetitive deliveries of same or similar products/services


Reasons for choosing an itb2
REASONS FOR CHOOSING AN ITB

  • Wide competition is available.

  • The agency desires to fulfill the requirement at the lowest possible price consistent with at least meeting its minimum standards.


Reasons for choosing an itb3
REASONS FOR CHOOSING AN ITB

  • The vendor’s experience, education, understanding of your mission, etc., don’t greatly impact the agency’s results.


Reasons for choosing an itb4
REASONS FOR CHOOSING AN ITB

  • Any concerns about vendor qualifications can be easily addressed by a simple submittal with the bid.

    Examples: Copy of occupational license, certification by the manufacturer that vendor is a trained/authorized provider, three satisfactory references, etc.


Reasons for choosing an itb5
REASONS FOR CHOOSING AN ITB

  • Satisfactory offers are expected, without a need for further modification through discussion.


Specifications statement of work itb
SPECIFICATIONS/STATEMENT OF WORK, ITB

  • Specs/SOW designed to avoid restrictive specifications and obtain maximum competition

  • Deliverables are clearly and unequivocally spelled out

  • Any product or service from a responsible vendor, meeting or exceeding the requirements, will be considered for award based on price


Vendor input itb
VENDOR INPUT, ITB

  • Any necessary market research is conducted prior to solicitation

  • Vendor conferences are more the exception than the rule

  • Vendors have a limited time period to ask questions (up to 10 days before bid opening or as otherwise specified)

  • Disputes must be noticed within 72 hours of public posting of the ITB


Evaluation criteria weights
EVALUATION CRITERIA & WEIGHTS

  • Bidders are compared to each other only as to price.

    The low responsive bid from a responsible bidder gets the award.


Reasons for choosing an rfp
REASONS FOR CHOOSING AN RFP

  • It is not practicable to specifically define the scope of work, and the vendor will propose his solution [287.012(22)].

  • Professional and technical expertise and quality of the vendor and proposed offering are critical to success.


Reasons for choosing an rfp1
REASONS FOR CHOOSING AN RFP

  • Requirements include non-standard products/services, with some flexibility in what is ultimately purchased.

  • The agency seeks to balance price and quality to achieve the best value.


Reasons for choosing an rfp2
REASONS FOR CHOOSING AN RFP

  • There are believed to be more than two or three vendors equally capable of submitting a satisfactory offer.

  • The agency does not anticipate a need to revise the solicitation and proposals after initial receipt.

    Document the reason an ITB was not used [287.057(2) FS]


Specifications statement of work rfp
SPECIFICATIONS/STATEMENT OF WORK, RFP

  • Specs/SOW designed to avoid restrictive specifications and obtain maximum competition.

  • Objectives, outcomes, performance specifications and measures are set forth, in addition to any commodity specifications or service outputs.


Specifications statement of work rfp1
SPECIFICATIONS/STATEMENT OF WORK, RFP

  • A proposal from a responsible vendor, meeting or exceeding the requirements, will be considered for award based on price and other factors which make it the most advantageous to the state [287.057(2)].


Vendor input rfp
VENDOR INPUT, RFP

  • Market research is conducted prior to solicitation

  • Disputes must be noticed within 72 hours of public posting of the ITB

  • Vendor conferences are more the rule than the exception


Vendor input rfp1
VENDOR INPUT, RFP

  • Vendors are invited to submit questions prior to and during a pre-proposal conference.


Vendor input rfp2
VENDOR INPUT, RFP

  • Vendor questions and tentative answers are discussed:

    • to learn from the vendors of any ambiguities, omissions, contradictions, or possibly better terms and conditions that can improve the RFP,

    • and to assist the vendors to understand the agency’s requirements and objectives.


Vendor input rfp3
VENDOR INPUT, RFP

  • A written addendum providing official answers and changes to the solicitation will be published following the conference.

  • Following the receipt of proposals, discussions may be held to clarify offers, if allowed by the terms of the RFP.


Evaluation criteria weights rfp
EVALUATION CRITERIA & WEIGHTS, RFP

  • Respondents are compared to each other as to price and other criteria identified in the RFP, such as qualifications and proposed processes, equipment and services (solutions). The highest scoring responsive proposal from a responsible vendor gets the award, as the most advantageous to the state.


Reasons for choosing an itn
REASONS FOR CHOOSING AN ITN

  • Negotiations may be necessary to receive the best value [287.012(17)]. The use of an ITB or RFP will not result in the best value[287.057(3)].

  • Non-standard or customized products/services or systems.

  • High complexity.

  • Emphasis on technology.


Reasons for choosing an itn1
REASONS FOR CHOOSING AN ITN

  • Process re-engineering may be included.

  • Innovative solutions may be required.

  • Performance based contract may be sought.

  • Outsourcing of governmental functions is included.


Reasons for choosing an itn2
REASONS FOR CHOOSING AN ITN

  • Highly professional service requirements.

  • Limited availability of competition.

  • Multiple options for achieving the desired results.

  • Uncertainty of how much of the “wish list” can be had within budget or time requirements, and willingness to adjust.


Reasons for choosing an itn3
REASONS FOR CHOOSING AN ITN

  • Mission critical for the agency.

  • Significant portion of the agency’s procurement budget.

  • Long term relationship with the contractor.

  • A very flexible process may be necessary to best achieve the agency’s goals.


Reasons for choosing an itn4
REASONS FOR CHOOSING AN ITN

  • Price is important but not enough by itself to select from among the responsive offers.

    A written determination for selecting an ITN process is required [s.287.057(3)].


Advertising the itn
ADVERTISING THE ITN

  • Like an ITB or RFP, the ITN must be made available simultaneously to all vendors [287.057(3)].

  • Like an ITB or RFP, advertising is required for a minimum of 10 calendar days [s.287.042(3)], unless the agency determines in writing that a shorter period is necessary to avoid harming the interests of the state.

  • A longer period may be advisable to assure adequate competition. 42-60 days may be reasonable.


Ten days are not enough
TEN DAYS ARE NOT ENOUGH…

  • Typically, competitive negotiations are a two-step process. In the first step, respondents are ranked, and a “short list” of firms to participate may be developed.


Ten days are not enough1
TEN DAYS ARE NOT ENOUGH…

  • In the second step, negotiations are conducted with one or more firms and/or short-listed firms to arrive at the award of a contract. This requires additional time, usually 3 or more meetingsat weekly intervals.


Specifications statement of work itn
SPECIFICATIONS/STATEMENT OF WORK, ITN

  • Specs/SOW designed to avoid restrictive specifications and obtain maximum competition.

  • Objectives, outcomes, performance specifications and measures are set forth, in addition to any commodity specifications or service outputs.


Specifications statement of work itn1
SPECIFICATIONS/STATEMENT OF WORK, ITN

  • A best-and-final offer (BAFO) from a responsible vendor, meeting or exceeding the requirements, will be considered for award based on price and other factors which make it the most advantageous to the state [287.057(3)].


Vendor input itn
VENDOR INPUT, ITN

  • Market research is conducted prior to solicitation

  • Disputes must be noticed within 72 hours of public posting of the ITN


Vendor input itn1
VENDOR INPUT, ITN

  • Vendor conferences are more the rule than the exception

  • Vendors are invited to submit questions prior to and during a pre-proposal conference.


Vendor input itn2
VENDOR INPUT, ITN

  • Vendor questions and tentative answers are discussed at a pre-proposal conference, with the aim of learning from the vendors of any ambiguities, omissions, contradictions, or other possibly better terms and conditions that can be considered to improve the ITN.


Vendor input itn3
VENDOR INPUT, ITN

  • A written addendum providing official answers and changes to the solicitation will be published following the conference.


Vendor input itn4
VENDOR INPUT, ITN

  • Vendor debriefing: After the vendors are selected for participation in negotiations, it may be useful to hold a “debriefing” meeting with each in turn, more fully explaining the state’s view of their initial proposal, how it may be improved, and asking any questions the team has that may lead to revisions of our requirements or the vendor proposals.


Vendor input itn5
VENDOR INPUT, ITN

  • Meet with each selected vendor for fact finding and proposal development. And, be open to further revisions of the requirements document.

  • During one of these negotiation process meetings, there’s nothing wrong with taking a break during a meeting for the parties to confer separately, “call home,” or whatever, and then reconvene.


Vendor meetings public meetings
VENDOR MEETINGS, PUBLIC MEETINGS

  • Current interpretations of the Silver Express case, third DCA, 1997, and other cases make vendor meetings public meetings, in spite of the inhibiting effect this may have on discussions, or the questionable equity in allowing competitors to listen.


Vendor meetings public meetings1
VENDOR MEETINGS, PUBLIC MEETINGS

  • Judge Fletcher: “…the (Miami-Dade Community) College violated section 286.011, Florida Statutes (1995), popularly known as the “Government in the Sunshine Law…”


Vendor meetings public meetings2
VENDOR MEETINGS, PUBLIC MEETINGS

  • “The (evaluation) committee met to conduct its evaluation of the responses, doing so without notice to the public, and voted to recommend…a contract…be awarded…”


Vendor meetings public meetings3
VENDOR MEETINGS, PUBLIC MEETINGS

  • “The law is quite clear. An ad hoc advisory board, even if its power is limited to making recommendations to a public agency and even if it possesses no authority to bind the agency in any way, is subject to the Sunshine Law.”


Vendor meetings public meetings4
VENDOR MEETINGS, PUBLIC MEETINGS

  • “The purchasing director’s committee is governed by the Sunshine Law. Its closed selection meeting violated that law, thus its actions taken at the meeting are void ab initio.”


Vendor meetings public meetings5
VENDOR MEETINGS, PUBLIC MEETINGS

  • S. 286.011: “All meetings of any board or commission of any state agency or of any agency or authority of any county, municipal corporation, or political subdivision, except as otherwise provided in the Constitution, at which official acts are to be taken are declared to be public meetings open to the public at all times…”


Vendor meetings public meetings6
VENDOR MEETINGS, PUBLIC MEETINGS

  • “…and no resolution, rule, or formal action shall be considered binding except as taken or made at such meeting. The board or commission must provide reasonable notice of all such meetings.”


Vendor meetings public meetings7
VENDOR MEETINGS, PUBLIC MEETINGS

  • “Closed vendor presentations to an agency selection committee were voided as Sunshine Law violations in Port Everglades Authority v. International Longshoremen’s Association… Thus the Sunshine Law applies broadly to the public procurement process, including evaluation team meetings, vendor presentations, and contract negotiations.” Andy Bertron, The Florida Bar, February 2002


Vendor input itn6
VENDOR INPUT, ITN

  • Negotiation offers the greatest flexibility of the three methods discussed, allowing both the requirements of the agency and the proposal of the respondent to be repeatedly improved after the initial solicitation and response.


Vendor input itn7
VENDOR INPUT, ITN

  • The agency may obtain maximum value from the vendors’ expertise, by encouraging vendors to offer suggestions for requirements and solutions, and price/quality trade-offs.


Vendor input itn8
Vendor input, ITN

  • In addition, the purchasing officer guiding the ITN process can craft it so that technical errors of responsiveness or responsibility, which often plague the ITB and RFP processes, resulting in exclusion from consideration of what may be the best offer, or litigation, can be resolved at the negotiation table.


Responsiveness responsibility itn
RESPONSIVENESS & RESPONSIBILITY, ITN

  • “Responsive” proposal or best-and- final offer (BAFO) means a proposal that conforms in all material respects to the solicitation. (Material means offer meets mandatories indicated by must, shall and will {usually}, allows for comparison with other offers, and does not include additional cost to the state or deviations which confer a competitive advantage).


Responsiveness responsibility itn1
RESPONSIVENESS & RESPONSIBILITY, ITN

  • “Responsible” denotes a vendor “who has the capability in all respects to fully perform the contract requirements and the integrity and reliability that will assure good faith performance. [287.012(24)]”


Responsiveness responsibility itn2
RESPONSIVENESS & RESPONSIBILITY, ITN

  • Vendor capability is typically scored, and is a factor in determining the award.


Responsiveness responsibility itn3
RESPONSIVENESS & RESPONSIBILITY, ITN

  • In addition, responsibility can be considered similarly to an ITB process:

    • review suspended and convicted vendor lists

    • use complaints for tie breakers


Responsiveness responsibility itn4
RESPONSIVENESS & RESPONSIBILITY, ITN

  • make certain “responsibility” indicators mandatory, such as, occupational licensing, employee training and certification, certification of years in business, minimum number of verifiable references, location proximate to the work, D & B rating, etc.

  • require bonding and/or insurance if appropriate to mitigate risk


Evaluation criteria weights requirements of ch 287 part i
EVALUATION CRITERIA & WEIGHTS: REQUIREMENTS OF CH. 287 PART I

  • All applicable terms & conditions, including the criteria to be used in determining acceptability, must be stated in the ITN.

  • Include the price for each year for which the contract may be renewed.

  • Evaluate & rank responsive replies.

  • Select one or more vendors to commence negotiations.


Evaluation criteria weights requirements of ch 287 part i1
EVALUATION CRITERIA & WEIGHTS: REQUIREMENTS OF CH. 287 PART I

  • Award shall be to the proposal determined in writing to offer the best value to the state.

  • The contract file must contain a statement that explains the basis for the vendor selection, and sets forth the deliverables and price, and how they provide best value.

    Ref. s.287.057(3) FS


Evaluation criteria weights1
EVALUATION CRITERIA & WEIGHTS I

  • Respondents are compared to each other as to price and the other criteria identified in the ITN, such as qualifications and proposed processes, equipment and services (solutions). The best value gets the award. This would be reflected as the highest scoring responsive best-and-final offer from a responsible vendor.


Summary of steps in an itn process
SUMMARY OF STEPS IN AN ITN PROCESS I

  • 1. Put together a team or teams for development of the solicitation, proposal evaluation and negotiation. Include major stakeholders. Have a chairperson, preferably the purchasing officer, clarify member roles, meet between sessions with vendors.


Summary of steps in an itn process1
SUMMARY OF STEPS IN AN ITN PROCESS I

  • 2. Develop the solicitation. An ITN should contain legal boilerplate, background, objectives, Statement of Work or Scope of Services, performance measures, proposal format, submittal instructions and evaluation criteria, including relative importance (weights). Include a calendar of events.


Summary of steps in an itn process2
SUMMARY OF STEPS IN AN ITN PROCESS I

  • 3. Issue/Advertise Solicitation. One approach is to solicit an initial statement of qualifications and services offered. Then, responses are ranked and a short list of two or three vendors may be selected to participate in negotiations.


Summary of steps in an itn process3
SUMMARY OF STEPS IN AN ITN PROCESS I

  • 4. A pre-proposal conference following a question period (repeat as necessary). Use at least one pre-proposal conference prior to the initial proposal (technical proposal, or “statement or qualifications and services offered”), and then if needed, one more pre-proposal conference for the short-listed vendors.


Summary of steps in an itn process4
SUMMARY OF STEPS IN AN ITN PROCESS I

  • 5. Rank and perhaps short list selected respondents. Evaluate the “statement of qualifications and services offered” using the criteria you announced in the solicitation! Recommendation: Post your decision to allow a point of entry for protest.


Summary of steps in an itn process5
SUMMARY OF STEPS IN AN ITN PROCESS I

  • 6. Meet with respondents. You may require another submittal, with prices, and some changes to the technical portion prior to the first meeting. Then, team members prepare questions and comments, which are discussed with the vendors. As meetings continue and the positions of both sides evolve (yes, you can modify the state’s requirements) try to submit written discussion topics to vendors prior to the next meeting.


Summary of steps in an itn process6
SUMMARY OF STEPS IN AN ITN PROCESS I

  • Recommendation: Use concurrent rather than serial negotiations in most cases. Both are allowed by law.

  • Serial negotiations may fail to consider a better offer from a competitor and/or fail to achieve all possible and reasonable improvements in the leading offer.


Summary of steps in an itn process7
SUMMARY OF STEPS IN AN ITN PROCESS I

  • 7. Positions evolve. Anticipate revision of both the State’s requirements and vendor proposals as best meets the needs of the state and the capabilities of the vendors, keep communications open, and document any changes or alternatives.


Summary of steps in an itn process concurrent negotiations
SUMMARY OF STEPS IN AN ITN PROCESS: Concurrent Negotiations I

  • Since the process of involving two or more vendors is competitive, each will in effect assist you in evaluating the other’s claims, objections, suggestions and prices, even if your expertise in the area is quite limited.


Summary of steps in an itn process8
SUMMARY OF STEPS IN AN ITN PROCESS I

  • 8. Obtain “Best and Final Offer” (BAFO). It is desirable to get the BAFO in writing before the last meeting, and let that meeting be a presentation and discussion of it, not to indicate acceptance but to be sure everyone understands it. You may want to allow pen-and-ink corrections signed by an authorized representative at that meeting.


Summary of steps in an itn process9
SUMMARY OF STEPS IN AN ITN PROCESS I

  • 9. Evaluate and post intended award. The committee should select the best offer using the criteria that have been announced (and possibly amended). Post your decision to allow a point of entry for protest.

  • NOTE: Evaluation committee meetings must be public in accordance with Ch. 286, FS.


Summary of steps in an itn process10
SUMMARY OF STEPS IN AN ITN PROCESS I

  • Recommendation: Evaluation committee meetings are preferable to the simple averaging of independent scoring by committee members. Failure to discuss scoring before it is final may loose the value of the “synergy” of competencies represented on the evaluation team.

  • It’s better to do the right thing in public than the wrong thing in private...


Reminder
REMINDER I

The contract file must contain a statement that explains the basis for the vendor selection, and sets forth the deliverables and price, and how they provide best value.

Ref. s.287.057(3) FS


Summary of steps in an itn process11
SUMMARY OF STEPS IN AN ITN PROCESS I

  • 10. When the posting period has been completed, award the contract.


Other negotiation processes
Other Negotiation Processes I

  • Informal negotiations may be conducted between competing State Contract or State Purchasing Agreement vendors, or agency contract vendors, or a combination thereof.

  • Informal negotiations may be conducted with single source vendors.

  • Informal negotiations may be conducted with exempt vendors.

  • Informal negotiations may be conducted with incumbent vendors due to changes in circumstances or objectives, or at renewal decision points.


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