NEGOTIATIONS IN FLORIDA

1. 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 russ.rothman@myflorida.com

2. 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,

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

4. 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!

5. NEGOTIATIONS IN FLORIDA FORMAL COMPETITIVE PUCHASES: ITB, RFP, ITN

6. 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).

7. FORMAL COMPETITIVE PROCESSES : ITB, RFP, ITN • Exceptions include exempt purchases, and single source and emergency purchases.

8. FORMAL COMPETITIVE PROCESSES : ITB, RFP, ITN • The methods are • Invitation to Bid • Request for Proposal • Invitation to Negotiate

9. 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.

10. 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.

11. 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.

12. 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!

13. 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.

14. 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.

15. 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).

16. 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

17. 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.

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

19. RECOMMENDATIONS ON TEAMS • Examples: • Administrative perspective (e.g. purchasing, finance), • Business Process perspective, (e.g. operating bureau, division or program representative),

20. RECOMMENDATIONS ON TEAMS • Technical perspective (e.g. information technology), • Legal perspective (the purchasing officer often represents this in the day-to-day work).

21. 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

22. 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)]

23. 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

24. 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

25. 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

26. 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.

27. REASONS FOR CHOOSING AN ITB • The vendor’s experience, education, understanding of your mission, etc., don’t greatly impact the agency’s results.

28. 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.

29. REASONS FOR CHOOSING AN ITB • Satisfactory offers are expected, without a need for further modification through discussion.

30. 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

31. 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

32. EVALUATION CRITERIA & WEIGHTS • Bidders are compared to each other only as to price. The low responsive bid from a responsible bidder gets the award.

33. 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.

34. 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.

35. 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]

36. 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.

37. 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)].

38. 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

39. VENDOR INPUT, RFP • Vendors are invited to submit questions prior to and during a pre-proposal conference.

40. 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.

41. 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.

42. 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.

43. 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.

44. 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.

45. 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.

46. 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.

47. 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)].

48. 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.

49. 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.

50. 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.