2009 Annual EdPAC Buyer’s Workshop Kent D. Beers Director State Purchasing

1. 2009 Annual EdPAC Buyer’s WorkshopKent D. Beers Director State Purchasing • Architect/Engineer Selection Process • Contractor Selection Process • Project Management 2008 Legislative Audit Report Procurement Best Practices Text: Audit, Utah Code, Admin. Rule

2. Audit Statement of LawSelection of A/E & Construction Services Antitrust Laws Help to Protect Competition Utah Code 76-10-912 identifies the purpose of antitrust laws The Legislature finds and determines that competition is fundamental to the free market system and that the unrestrained interaction of competitive forces will yield the best allocation of our economic resources, the lowest prices, the highest quality and the greatest material progress, while at the same time providing an environment conducive to the preservation of our democratic, political, and social institutions. The purpose of this act is, therefore, to encourage free and open competition in the interest of the general welfare and economy of this state by prohibiting monopolistic and unfair trade practices, combinations and conspiracies in restraint of trade or commerce and by providing adequate penalties for the enforcement of its provisions. Procurement Best Practices: Agree

3. Audit RecommendationSelection of Architect & Construction Services We recommend that school districts competitively bid the procurement of architectural and construction services for each new design or construction project. • Nine of 21 school districts surveyed (43%) have not adequately fostered competition in procuring architectural services for large purchases costing over $80,000. • The lack of competition can be attributed to the following practices: • not bidding each new project, • maintaining the same architectural firm for multiple years, • accepting dated prequalified firms, and • bundling dissimilar projects.

4. Procurement Best PracticesArchitectural Services Not bidding each new project Architectural Services are Not bid. Architectural firms are selected based on qualifications. Fees are negotiated after selection is made (63G-6-701). A selection should be conducted for Architectural services on each project above the “small procurement” limit. Maintaining the same architectural firm for multiple years A selection should be conducted for Architectural services on each project above the “small procurement” limit (R33-5-530). Accepting dated prequalified firms Qualifications for Architects should be submitted on each project or annually for small projects. Bundling dissimilar projects Bundling of Architect services should only be used for “similar” type projects

5. Procurement Best PracticesArchitectural Services A/E Selected on Qualifications – Fee Negotiated Utah Code 63G-6-701  It is the policy of this state to publicly announce all requirements for architect-engineer services and to negotiate contracts for architect-engineer services on the basis of demonstrated competence and qualification for the type of services required, and at fair and reasonable prices. Statement of Interest and Qualifications (SOIQ)

6. Procurement Best PracticesArchitectural Services R33-5-530 Small Purchases of Architectural Services When the procurement of Architect-Engineer Services is estimated to be less than $50,000, the procurement officer may select the provider directly from either the list of firms who have submitted annual statements of qualifications and performance data, or from other qualified firms if necessary. If the procurement is estimated to exceed $50,000 then the selection method prescribed by the following sections [SOIQ] apply. Note: Each District should verify their Small Purchase limit

7. Procurement Best PracticesArchitects Selected by SOIQ R33-5-560 Request for Statements of Interest A request for statements of interest (SOI) shall be prepared which describes the state's requirements and sets forth the evaluation criteria. . . The request for statements of interest (SOI) shall include notice of any conference to be held and the criteria to be used in evaluating the statements of interest, qualifications and performance data and selecting firms, including: (a) competence to perform the services as reflected by technical training and education, general experience, experience in providing the required services and the qualifications and competence of persons who would be assigned to perform the services. (b) ability to perform the services as reflected by workload and the availability of adequate personnel, equipment, and facilities to perform the services expeditiously, and (c) past performance as reflected by the evaluations of private persons and officials of other governmental entities that have retained the services of the firm with respect to factors such as control of costs, quality of work, and an ability to meet deadlines.

8. Procurement Best PracticesArchitects Selected by SOIQ R33-5-525 Annual Statement of Qualifications and Performance Data (a) the name of the firm and the location of all of its offices, specifically indicating the principal place of business, (b) the age of the firm and its average number of employees over the past five years, (c) the education, training, and qualifications of members of the firm and key employees, (d) the experience of the firm reflecting technical capabilities & project experience, (e) the names of five clients who may be contacted, including at least two for whom services were rendered in the last year, (f) any other pertinent information regarding qualifications and performance data requested by the Procurement Officer. A standard form or format may be developed for these statements of qualifications and performance data. Firms may amend statements of qualifications and performance data at any time by filing a new statement.

9. Procurement Best PracticesConstruction Not bidding each new project 53A-20-101(2)(a) School Districts should use competitive procurement for new construction projects “if the total estimated accumulative building project cost exceeds $80,000. Each project should be bid out separately via (a) Low Bid, (b) RFP Process, or (c) Multi-Step Sealed Bidding. Bundling dissimilar projects Bundling should only be used for “similar” type projects

10. Procurement Best PracticesConstruction R33-3-1 Competitive Sealed Bidding (Low Bid) Low Bid With Minimum Requirements • 5-Years Experience Similar Type of Project • References • Qualifications/Certifications • Acceptable Past Performance Rating • Bonding Capability • Etc.

11. Procurement Best PracticesConstruction R33-3-201 Use of Competitive Sealed Proposals (RFP) Appropriateness. Competitive sealed proposals may be a more appropriate method for a particular procurement or type of procurement than competitive sealed bidding, after consideration of factors such as: (a) whether there may be a need for price and service negotiation; (b) whether there may be a need for negotiation during performance of the contract; (c) whether the relative skills or expertise of the offerors will have to be evaluated; (d) whether cost is secondary to the characteristics of the product or service sought, as in a work of art; and (e) whether the conditions of the service, product or delivery conditions are unable to be sufficiently described in the Invitation for Bids. See: State Purchasing’s RFP Manual

12. Procurement Best PracticesConstruction R33-3-114 Multi-Step Sealed Bidding Definition. Multi-step sealed bidding is a two-phase process consisting of a technical first phase composed of one or more steps in which bidders submit unpriced technical offers [SOIQ] to be evaluated by the purchasing agency, and a second phase in which those bidders whose technical offers are determined to be acceptable during the first phase have their price bids considered. It is designed to obtain the benefits of competitive sealed bidding by award of a contract to the lowest responsive, responsible bidder, and at the same time obtain the benefits of the competitive sealed proposals procedure through the solicitation of technical offers [SOIQ] and the conduct of discussions to arrive at technical offers and terms acceptable to the purchasing agency and suitable for competitive pricing.

13. Audit RecommendationArchitectural Services We recommend that school districts implement the following: Evaluation criteria be weighted to reflect the priority of the information asked for in . . . . statement of interest and qualifications (SOIQ), following the Division of Purchasing guidelines. R33-5-580 to 650 Evaluation criteria, including the criteria weighting, be clearly stated in . . . . SOIQs. Agree Criteria be evaluated consistently by selection committee members based upon a predetermined definition. Agree Architect selection committees have one member who is well qualified in the profession of architecture or engineering. Agree Selection committees have the necessary expertise and skills to evaluate proposals. Agree Selection committee members read and sign a confidentiality and conflict-of-interest statement. Agree

14. Procurement Best PracticesArchitectural Services R33-5-580 Evaluation of Statements of Interest, Qualifications & Performance Data R33-5-590 Selection of Firms for Discussions R33-5-600 Discussions R33-5-610 Selection of the Most Qualified Firms R33-5-620 Negotiation and Award of Contract R33-5-630 Failure to Negotiate Contract with the Most Qualified Firm R33-5-640 Notice of Award R33-5-650 Failure to Negotiate Contract with Firms Initially Selected as Most Qualified

15. Procurement Best Practices Repeat Design Maximum Fee: 4% to 4.3% Bundled Projects Maximum Fee: 3.8% to 4.3%

16. Procurement Best PracticesConstruction Construction Delivery Methods Design/Bid/Build Hire Architect to Design Contractors Bid Project Based on Design Contractor Builds Project Design/Build Architect and Contractor Form Partnership (District contracts with 1 firm) Construction Manager/General Contractor (CMGC) Hire Construction Manager Hire Architect – Construction Manager aids Architect with Design costs Construction Manager Becomes General Contractor

17. Audit RecommendationConstruction We recommend that school districts implement the following: Fee proposals be evaluated objectively and independently from the qualitative proposal. Best Practice: Price = 40% No Less Than 30% Evaluation criteria be weighted to reflect the priority of the information asked for in an RFP . . . . following the Division of Purchasing guidelines. Agree State Purchasing’s RFP Manual & R33-3-201 to 217 Evaluation criteria, including the criteria weighting, be clearly stated in RFPs. . . . Agree Criteria be evaluated consistently by selection committee members based upon a predetermined definition. Agree Selection committees have the necessary expertise and skills to evaluate proposals. Agree Selection committee members read and sign a confidentiality and conflict-of-interest statement. Agree

18. Audit RecommendationConstruction We recommend that school districts provide oversight for the procurement of subcontractors. . . . . school districts should have greater involvement and oversight for the procurement of subcontractors. Even though the procurement of subcontractors is handled by the construction manager or general contractor, school districts should review and approve selected subcontractors.

19. Procurement Best PracticesConstruction Districts Should Oversee “Method” used to Select Subcontractors • Assistant Attorney General for Purchasing/DFCM cautions against over involvement in the Construction Manager’s or General Contractor’s selection of subcontractors • If Purchasing or DFCM becomes so involved in the monitoring and approval of subcontractors, the Construction Manager or General Contractor can claim that the state made the selection of the Subcontractor and is therefore responsible for errors or faulty work committed by a subcontractor. • Purchasing and DFCM can dictate the “method” that the Construction Manager or General Contractor uses to select subcontractors: low bid, two stage selection, RFP, etc. • Districts should consult with their Attorney on this issue.

20. Procurement Best PracticesProject Management Project Management Consultant (Project Controls) Provide oversight throughout all phases (design/construction) of the project • Specialized Project Management Team • Experienced Project Managers, • Professional Engineers (civil, mechanical, electrical, structural), • Cost Engineers/Estimators, • Schedulers, • LEED Consultants (energy efficiency), • Software Engineers. • Cost Control (audit, duplicate pmts, overcharges, C.O.s, etc.), • Quality Control (evaluation of materials and proper installation), • Schedule (ensure projects are completed on time), • Review of Claims & Change Orders • Report saving clients, on average, 10 times fee

21. Procurement Best PracticesProject Management • DFCM uses a Cost Control firm on major projects • DFCM uses a Cost Control firms on all CMGC projects • DFCM reports savings of approximately 3 times fee Cost Control Firm Audit Function Invoices Duplicate Payments Overcharges Change Orders Materials Labor Travel

22. Procurement Best PracticesProject Management Construction Project Management Training and Certification Course Sponsored by Office of Education and Division of State Purchasing One-Day Training Course for District Personnel • Importance of Competition • Procurement of Construction Related Services • Source Selection Methods for Architects and Engineers • Project Delivery Methods • Selection Methods for Project Delivery Methods • Contract Administration