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Understanding Procurement and Contracting

COPS 2007 Technology Program Kickoff Conference. Understanding Procurement and Contracting. William Romesburg Scott Came . Our Agenda . Challenges to Successful Technology Acquisition Procurement Planning Creating Proposal Documents Vendor Selection Contract Development

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Understanding Procurement and Contracting

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  1. COPS 2007 Technology Program Kickoff Conference Understanding Procurement and Contracting William Romesburg Scott Came

  2. Our Agenda • Challenges to Successful Technology Acquisition • Procurement Planning • Creating Proposal Documents • Vendor Selection • Contract Development • Troubleshooting and Q & A

  3. Challenges to Successful Technology Acquisition • Overall Complexity • Grant Requirements • Unusually High Degree of Project Visibility • Inter-Agency Rules of Procurement • Communication Barriers

  4. You Can’t Avoid It, But You Can Manage It… • Procurement Planning • Defining the Purpose • Governance Structure • Sourcing Strategy • Scope Definition • Project Budgeting • Projecting Timelines • Project Risk Assessment • Communications

  5. Enhancement Utility CAD/RMS/Radio Projects Transformation 4% Business Value 16% Effectiveness-Focused Efficiency-Focused 80% Relationship Impact

  6. IJIS Projects Transformation 10% Enhancement Business Value 45% Effectiveness-Focused Utility 45% Efficiency-Focused Relationship Impact

  7. Governance • Governance Structure • Leverage Existing Resources • Multi-Agency Concerns • Primary Roles • Executive Sponsor • Steering Committee • Project Manager • Evaluation and Selection Committees • Employees (Users) • Subject Matter Experts

  8. Sample Procurement Structure

  9. Determine Sponsor Agency • Select Procurement Methodology • Sponsor Agency Considerations • Purchasing Ordinances • Statutory Guidelines • Alignment with Enterprise Standards • Fiscal Limitation for Sole Source Expenditures • Determine Allowable Procurement Tools

  10. Identifies Vendor Qualifications Detailed SOW Down Select Vendors More Formal Explicit Response Requirements ContractualIssues RFQ RFP Prelude to RFP Competitive Responses Developing a Sourcing Strategy Identifies Vendor Capabilities Less Formal RFI RFI Brief Description Prelude to RFP

  11. RFP Approaches Linear Approach Down Select Low Bid Contract Negotiations RFP Award Evaluation Combined Approach Contract Negotiations Confidential Discussions RFI RFP Award BAFO Iterative Scope Definition Confidential Discussions Contract Negotiations RFI SOW Award Pricing

  12. What about agile? • If your project is about building or assembling (versus buying) consider: • How much can you afford to invest in getting all the requirements right up front? • What if business needs or circumstances change? • Your responsibility continues after the contract is signed 12

  13. Agile Project Management • Short iterations • Customer steers • Lean • High discipline • Transparency

  14. When agile may not pay • When there is low risk • Time • Scope • Cost • Quality • Buying COTS with standard requirements • Static domain • Simple problem Time Cost Scope Quality

  15. Agile Procurement • Focus on vendor qualifications and experience • Many small fixed-price iterations (monthly) • Be ready to write tests! • Short releases (six months) with renewal option

  16. Consider This When Selecting a Sourcing Strategy How many vendors do agencies include in initial evaluations? About 70 percent started evaluation processes with four or more vendors, working towardtwo to three for oral presentations How often do agencies precede RFPs with RFIs? About 65 percent precede RFPs with an RFI, phone screening or informal letter Top selection criteria for Transformational Initiatives Trust; prior relationship; industry, technical, and process expertise Top selection criteria for Utility Services? Functional expertise, price, references All respondents included oral presentations as part of evaluation process, up to 30 percent changed the vendor selected after orals Importance of oral presentations Statistics Source: Gartner

  17. Procurement Plan Elements • Scope Statement • Identifies the Boundaries • Included vs. Excluded • Items to Identify • Hardware, Software, Services, Interfaces, Ancillary Systems • Scope Considerations • Size of Initiative • Available Human and Financial Resources • Sponsoring Agency Considerations

  18. Open Source • Factors to consider with open source software: • Ensure that the bidder/vendor is accountable for performance • Same “non-functional” requirements: reliability, availability, performance, security, standards conformance • Ensure it is really open source • Do your homework • Check references: Do you want to be the first? • Understand the benefits • Open Source does not equal free!

  19. Procurement Plan Elements • Procurement Timeline • Research May Be Required • Internal Purchasing Staff • Vendor Information • References • Create Milestone-Based Gantt Chart • REALISTIC and ACHIEVABLE • MS Project 2001, SureTrak, Others • Include Contingency

  20. Procurement Plan Elements • Risk Management • Risk Identification • Risk Quantification • Risk Response Development • Risk Response Control • Risk Management Plan • Checklists • Contingency Plans • Reserves • Contractual Terms

  21. Procurement Plan Elements • Communications Plan • Information Receipt and Distribution • Performance Reporting • Communications Plan Inclusions • Project Records • Performance Reports • Evaluation/Selection Documents • Vendor Demonstration Results • Final Scoring Sheets • Lessons Learned

  22. Creating Proposal Documents • Standard Proposal Structure • 6 Sections • Introduction • Background • Rules of Preparation • Volumes • Vendor Response • Functional Specifications

  23. Section I: Introduction • What Should Be Included? • Description of Your Organization • Purpose • Objectives • Statement of the Need • Expected Statement of Work • Who Should Write It? • Project Manager • Consultant

  24. Section II: Background • What Should Be Included? • Summary of Needs Analysis • Description of Project Team and Approach • Description of the Current Environment • Who Should Write It? • Project Manager • Consultant

  25. Section III: Rules of Preparation • What Should Be Included? • Technicalities of the Procurement • Key Project Dates • Vendor Instructions • Anticipated Agreement Document • Evaluation and Selection Criteria • Who Should Write It? • Project Manager, Attorney, Purchasing Agent, Steering Committee

  26. Section IV: Volumes • What Should Be Included? • Summary • Transaction Data • Existing Equipment and Anticipated Equipment Counts • Who Should Write It? • Project Manager • Resources • Project Manager • Radio Technician

  27. Section V: Vendor Response • What Should Be Included? • Historic Company Questions • Reference Requests • Open-Ended Technical Questions • Warranty or Support/Maintenance/Operations • Pricing Information • Hardware and Software • Implementation • Optional • Cost Summary

  28. Section VI: CAD/RMS/Radio Functional Specifications • What Should Be Included? • Your Organization’s Requirements • Derived from Focus Groups • Exact Product Specifications • Avoid “equal to”, “and/or”, “approximate” • Categorize Key Concepts • Hardware, Software, Input/Output • Will Be Used Later for Acceptance Testing • Clearly Formatted Numbering System • Standardize the Method of Response

  29. Section VI: Requirements for Information Sharing • Requirements • Design • Implementation • Standards • NIEM Conformance • Enterprise standards • Non-functionals

  30. Section VI: Functional Specifications • Who Should Write It? • Assess Your Abilities • Review an Existing Proposal Document • Time Considerations • Risk Factors • Don’t Re-Invent the Wheel • Templates • http://www.search.org • Consider Outsourcing This Section

  31. Contract Development • Contract Negotiations • Negotiate Favorable Contract • Single Points of Contact • Contract Elements • Conditions from Proposal Document • Statement of Work (SOW) • If you don’t write it down, you won’t receive it! • Payment Plan Linked to Milestones in Timeline • Warranty and Maintenance Agreements • Other Specifics (System Acceptance Test Plans, etc.)

  32. Contract Building Blocks • Agreement • Liability • Confidentiality and Security • Change • Performance • Account Management • Statement of Work • Ownership • Transition • Financial Not understanding the intent behind the deal or particular contract clauses is often cited as one of the top problems that enterprises encounter in their deals

  33. How to Invite a Bid Protest 1. Overbundled Procurements 2. Insufficient marketplace analysis 3. Unclear (or missing) statement of work 4. Too many requirements 5. Inflexible pricing models 6. Draconian contract conditions 7. No evaluation criteria AT ALL 8. Insufficient due diligence 9. Flawed evaluation criteria 10. No Communications Plan

  34. Troubleshooting • The Bid Protest • Legal Process • Requires Public Organizations to Reveal Selection Process • Solution: Carefully Craft Evaluation/Selection Criteria • Follow Your Rules! • Competing Priorities Amongst Participants • Solution: Comprehensive, Advance Agreements • Grant Funds • Expiration of Funding • Links to Social Problem • Solution: Extensions and Contract Inclusions

  35. Attendee Questions Open Questions

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