masbo february 2010. information to purchase services information to purchase construction

PURCHASING SERVICES & CONSTRUCTION

MASBOFebruary 2010

INTRODUCTION

Information to purchase Services

Information to purchase Construction

PURCHASING LAW MISS CODE § 31-7-13 All agencies and governing authorities shall

purchase their commodities and printing; contract for garbage collection or disposal; contract for solid waste collection or disposal; contract for sewage collection or disposal; contract for public construction; and contract for rentals…..

Other than what is listed above, the Purchasing Law does not mention Services, only Construction.

SERVICES

State purchasing laws do not make mention of “Services”; therefore, for governing authorities, there is no statutory requirement for obtaining bids to acquire services.

Be sure to follow your District’s Policies and Procedures when purchasing a service.

WHAT IS A SERVICE?

“Service” can best be defined as “the furnishing of labor, time, or effort by a contractor to meet a demand, especially work that is not connected with a manufacturing process or the delivery of a specific product other than reports or other items which are merely incidental to the required performance.”

Therefore, a “Service Contract” could be defined as a “contract that calls for the contractor’s time and effort rather than a concrete end product or commodity.”

DETERMINING FACTORS…

The difficulty develops in defining what a service is and when does a service become a construction project or a commodity purchase.

EXAMPLES TO ILLUSTRATE DIFFICULTY:

If you hire someone to paint a building on a non-routine basis, it would be considered a construction project, and bidding would be required.

EXAMPLES TO ILLUSTRATE DIFFICULTY: (CONTINUED)

When you hire a janitorial firm to clean the building, you are receiving the benefits of the various cleaning chemicals and supplies; however, since you are contracting for a service (the time & effort), there is no requirement to comply with the statutory bidding requirements.

EXAMPLES TO ILLUSTRATE DIFFICULTY: (CONTINUED)

If you have staff which is qualified to apply water treatment chemicals for the boiler and cooling towers, you could follow the statutory bid procedures to procure chemicals.

EXAMPLES TO ILLUSTRATE DIFFICULTY: (CONTINUED)

On the other hand, if advantageous to the District, you could enter into a personal services contract with a vendor to provide the time & effort required to provide the treatment service to keep your system operating efficiently.

GOOD PURCHASING PRACTICES

Even though we are not required to comply with the bid laws for Services, it should not be construed to mean that an entity could not obtain bids/quotes for services.

Good purchasing practice would indicate that the buying entity obtain the lowest and best possible price for the services required.

HOW TO PURCHASE SERVICES

Basic Quote Requests

Competitive Sealed BidsIs practicable, when specifications can be clearly defined and cost is the primary factor and negotiations are not allowed.

Request for Proposals (RFP’s)Allows a general scope of work to be specified and permits negotiations.

DIFFERENCES IN BIDS AND RFP’S

Competitive Sealed Bids includes:

Instructions

Detailed Purchase Descriptions/Specification

DIFFERENCES IN BIDS AND RFP’S(CONTINUED)

General Terms and Conditions

Special Terms and Conditions

Bid Form for Pricing

DIFFERENCES IN PROCESSES (CONTINUED)

Public Bid Open - Bids are publically read and unconditionally accepted without alteration or correction. No negotiations.

Bids must meet detailed specifications

DIFFERENCES IN PROCESSES (CONTINUED)

Awarded to the lowest responsive and responsible bidder

Cost is primary factor in determining award

DIFFERENCES IN PROCESSES (CONTINUED)

Request for Proposals – (RFP) includes:

Instructions

Detailed Scope of Work

General Terms and Conditions

DIFFERENCES IN PROCESSES (CONTINUED) Special Terms and Conditions

Evaluation Factors/Criteria (We like to qualify our bidders by asking specific questions pertaining to the service , as well as questions relating the companies ability to supply the service. This makes it easier to evaluate and score each proposal. )

DIFFERENCES IN PROCESSES (CONTINUED)

Sample Contract showing Terms and Conditions

Proposals are not opened publicly.

DIFFERENCES IN PROCESSES (CONTINUED)

Permits discussions and negotiations with competing offerers.

Allows comparative judgmental evaluations to be made when selecting among acceptable proposals for award of the contract.

DIFFERENCES IN PROCESSES (CONTINUED)

Awarded to the offerer to be the most advantageous to the District taking into consideration price and the evaluation factors set forth in the RFP.

Process time is longer than Competitive Bid process.

DO I BID OR DO I USE THE RFP PROCESS FOR SERVICES?

Competitive sealed bidding may be practicable; that is, reasonably possible but not necessarily advantageous because the RFP might enhance the competition resulting in a more acceptable economical offer, as well as, the ability to negotiate contract terms and conditions.

THE CONTRACT IS DEVELOPED THROUGH THE BID/RFP

Contracts are essential business tools for business relationships.

Without clearly defined and agreed contracts, misunderstanding can develop, expectations of customer and service performance fail to match, and all sorts of problems occur.

HOW TO DEVELOP A GOOD CONTRACTProject Manager must: Have a clear understanding of the

project. (Communication)

Do your homework. What is done up front can stop problems down the road.

Work closely with the end user’s, vendor’s, etc to understand expectations between supplier and customer.

HOW TO DEVELOP A GOOD CONTRACT(CONTINUED)

Definition of Scope of Work:

Identifies both the project deliverables and project objectives

HOW TO DEVELOP A GOOD CONTRACT(CONTINUED)

Scope of Work:

Most critical and is the roadmap for the deal!

Needs to be done in clear and concise terms.

HOW TO DEVELOP A GOOD CONTRACT(CONTINUED)

Developing the Scope of Work:

Do you know what is needed and expected?

HOW TO DEVELOP A GOOD CONTRACT(CONTINUED)

Developing the Scope of Work:

POSSIBLE CONSIDERATIONS

Aspect To Be Addressed: Problem/Issue ASK: What is the problem to be solved or

issue to be addressed? How will you know that the problem/issue is resolved satisfactorily? What do you want to see accomplished?

HOW TO DEVELOP A GOOD CONTRACT(CONTINUED)

Aspect To Be Addressed: Characteristics of persons to be served

ASK: Who has the problem/issue? Who is expected to be served under this contract? What are their characteristics such as geographic location, etc?

HOW TO DEVELOP A GOOD CONTRACT(CONTINUED)

Aspect To Be Addressed: Staff characteristics

ASK: What types of staff will the contract require? (qualifications, availability, etc)

HOW TO DEVELOP A GOOD CONTRACT(CONTINUED)

Aspect To Be Addressed: Facilities & equipment

ASK: What facilities and equipment will be required or expected? Are there specific requirements the facilities or equipment must meet?

HOW TO DEVELOP A GOOD CONTRACT(CONTINUED)

Aspect To Be Addressed: Define the Service and the Tasks

ASK: What types of services will the contract require? What service tasks must be performed?

HOW TO DEVELOP A GOOD CONTRACT(CONTINUED)

Aspect To Be Addressed: Method of delivery

ASK: Are there expectations for how the tasks must be carried out? Are there expectations about how, when, who, how often, what? If so, what are they?

HOW TO DEVELOP A GOOD CONTRACT(CONTINUED)

Aspect To Be Addressed: Service completion

ASK: How will you know the service has been provided and the required tasks completed? Will payment be tied to outputs? Are there reports or meetings you expect? If so, at what time intervals? What are the expectations for those reports or meetings?

HOW TO DEVELOP A GOOD CONTRACT(CONTINUED)

The Scope of Work should hold the Service Provider Accountable…..

Results or performance should be the focus, not procedure or process.

HOW TO DEVELOP A GOOD CONTRACT(CONTINUED)

Work requirements should be in a results-oriented manner and clearly defined performance objectives, work expectations and project milestones.

HOW TO DEVELOP A GOOD CONTRACT(CONTINUED)

Handouts: Showing Standard Contract

language/terms and conditions are available.

CONSTRUCTION Dr. Ronnie McGehee

Deputy Superintendent

Madison County School District

CONSTRUCTION

#1 – Choose wisely on who is your professional

CONSTRUCTION (CONTINUED)

#2 – Contract Be very careful as

mentioned in previous slides – Before execution, read and read again!

CONSTRUCTION (CONTINUED)

#3 – Time Frame This needs to be clearly

stated in your terms and conditions.

CONSTRUCTION (CONTINUED)

#4 – Design

CONSTRUCTION (CONTINUED)

#5 – Code Issues

CONSTRUCTION (CONTINUED)

Handouts:Construction handouts are

available