doing business with the port of tacoma and government...

Doing Business with the Port of Tacoma and Government Agencies

Doing Business

with the

Port of Tacoma

and

Government Agencies

Mark Little MAOL, CPPO

Dale Colbert BA, CPPB, CPPO

Darrell Sundell MBA, CPCM, CFCM

Procurement Technical Assistance Center (PTAC)

Sponsored by the


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Table of contents

• Public Agencies’ Contracting Dilemma

• Port of Tacoma Information and Statistics

• Rules and Regulations

• Processes and Procedures

• Public Agency vs Private Sector Contracting

• Responsive Bids & Responsible Contractors

• Solicitation Types

• Best Value

• Finding and Pursuing Opportunities

• Agency Expectations


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Public Procurement Dilemma

Phillip Cooper, in his book Governing by Contract, explains the public procurement professionals’ challenge in their interactions with the private sector. The public procurement professional can only do what the law allows while the private sector can do whatever the does not prohibit. This interaction is depicted below.

Governance and Authority

Negotiation and Contract

Based on Free Market Principles and Mutual Benefit

Based on the Governing Constitution,

Legislative Laws, Administrative Procedures, Political Processes and Equal

Treatment

From Phillip Cooper


Governing by Contract

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Port of Tacoma

History

The Port of Tacoma (Port) was created in 1918 by Pierce County voters to

ensure regional business would have access to markets.

This fundamental purpose, equitable access to markets and business opportunities through a publically owned port, remains important today and is embodied in the Port’s Mission statement – “To deliver prosperity by connecting customers, cargo, and community with the world.”

What the Port Buys

The Port buys all the supplies and materials needed to support an organization of over 230 employees with a $ 107 million operating budget. In addition the Port buys technology and services to operate a world class transportation system and terminals.

The Port engages contractors in construction, improvement, and public works projects.

Annual Spend

The Port’s buy is typically 80% public works, 20% goods and services.

How the Port Buys

Much of the goods are sourced through the Washington State Master contracts. Most of the remainder is purchased through the Solicitation process. These opportunities are published on the Port’s website.

Other agencies have similar processes and posting sites. A list of some of these can be found in the appendix.


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Small Business

The Port and most public enterprises, seek small business participation in meeting the needs of their operations. Goals are in place and efforts are made to engage small businesses and to provide them educational opportunities. This class is one in a series being conducted to assist small businesses in preparing for these opportunities.

Rules and Regulations

Executive and Nonexecutive Organizations. Agencies of the State of

Washington, such as the “Department of Licensing,” are executive agencies, subject to laws and policies established specifically for them.

Other organizations, such as the Port, cities and counties, are subject to local policies, established by their boards or governing bodies. Rules established for executive agencies may or may not apply to these other political organizations.

When considering participation in a solicitation, be sure to read the document completely, as it will reflect the rule set that applies. If there are questions, be sure to ask them.

For the Port of Tacoma, state statute (RCW) title 53 and the Personal Services

Contracting Manual for Washington Ports apply.

See http://app.leg.wa.gov/RCW/default.aspx?cite=53 and

www.mrsc.org/publications/ports09.pdf .

For the City of Tacoma, Tacoma Municipal Code applies. See

http://www.cityoftacoma.or/government/city_departments/CityAttorney/City

Clerk/TMC and

http://www.cityoftacoma.org/cms/One.aspx?portalId=169&pageId=898

http://app.leg.wa.gov/RCW/default.aspx?cite=53


http://www.mrsc.org/publications/ports09.pdf

http://www.cityoftacoma.or/government/city_departments/CityAttorney/CityClerk/TMC







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And for Pierce County, consult the Pierce County Purchasing Guide materials:

http://www.co.pierce.wa.us/DocumentCenter/View/1249 and

http://www.co.pierce.wa.us/index.aspx?NID=1605

For state agencies, state statute (RCW) title 39 and Enterprise Services Policies 0120, through 0140 apply . http://app.leg.wa.gov/RCW/default.aspx?cite=39

As a guide, state statute (RCW 39.26) Chapter 120 provides ….”Insofar as practicable, all purchases of or contracts for goods and services must be based on a competitive solicitation process. This process may include electronic or web-based solicitations, bids, and signatures. This requirement also applies to procurement of goods and services executed by agencies under delegated authority…”

Processes and Procedures

It is a good strategy to do some research on one perspective customer. Brief

yourself on how this customer goes about establishing contract awards.

Questions to ask in doing this research

• What are their Socio-economic voluntary goals • Do they have an outreach program for small businesses • What purchasing thresholds apply • Do they utilize market research efforts • Where does the customer advertise opportunities • What strategic sourcing initiatives are in place • How do they established vendor relationships • What special agency terminology applies

http://www.co.pierce.wa.us/DocumentCenter/View/1249







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The Public Purchasing Process

Public agencies go through several steps in fulfilling their needs:

• Identify the need;

• Develop the requirements and specifications;

• Determine how they will buy the product or service;

• Advertise the opportunity as required;

• Receive competitive bids;

• Evaluate the bids according to evaluation criteria listed in the bid notice;

• Determine awardee;

• Issue the purchase order or contract;

• Receive product or service and accept or reject;

• Issue payment based on terms of contract and receipt of a properly submitted invoice; and

• Contract closeout;


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Public Agency vs Private Sector Contracting

Working with a public enterprise like the Port or a city is different from working with a private firm. On nearly every point in the selection and contracting process, private and public are different processes!

Private Sector Purchasing

Cost Evaluation

A private company can evaluate vendor options in any fashion it wants. It can select the most expensive option if it can demonstrate internally that the option can be made successful. It can consider the relationship it has, or wants to have, with potential providers.

Strategic Partnerships

A private company looks for long term relationships and partners that can be good, long term strategic partners. Selection may be based on salesmanship, messaging, or positioning.

Small Group of Vendors

Private companies strive to simplify. One way to reduce effort is to focus on a small group of dedicated vendors who are aware of coming needs and can be counted on to provide goods and services on time. Private companies do not change suppliers more often than needed.

Select Business Partners

Private companies need not make their intent to change suppliers public knowledge and may go about the process of consideration and selection without industry input. Buyers may select new suppliers to address changes in company strategy, repositioning in the market place, or simply to improve bottom line performance.


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Anything that is not illegal

Private companies are able to do anything that they think of that is not expressly illegal.

Accountable to Management and Shareholders

Buyers in private companies are accountable for “results.” That may mean profitability or market positioning. Sometimes it is desirable to make less profit in order to capture a greater market share. Any outcome seen by managers and shareholders as advantages is desirable.

Can buy from whomever they want

Private sector buyers can literally choose to buy from any vendor they want. Selection can be based on a relationship sell.

In Contrast- Public Sector Purchasing

Price evaluation

A public agency in Washington is much like the private sector for small purchases; those below $10,000. Agencies can evaluate vendor options in any fashion they want for small these small, one time purchases. The agency must maintain records of its actions, which are open for public scrutiny and audit review. A public agency must be able to show that care was taken with public money to ensure value to taxpayers and reasonable processes were employed.

Small purchases need not be awarded to the lowest cost available, but both the cost and the process must be seen as reasonable to an average person.

Larger purchases are more structured and are dictated by statute and policy. These policies direct agencies to use fair and reasonable processes to determine the most advantageous contractor. The process is open to public review and audit.

Agencies may not make these purchases with whomever they like. Selection is not based on a relationship; rather, it is the result of success in a process.


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Vendors: an Arms-Length Relationship

In the selection process, public agencies keep an arms-length relationship with the provider community to avoid the appearance of favoritism. For strategic commodities, the needed long term partnerships are established through a formal and open competitive contracting process.

Large Group of Potential Bidders

Other than for small purchases, public agencies are unable to limit their opportunities to a small group. They are required to publish these and provide a way for industry to become aware of them. This results in participation from a large segment of industry providers. Public agencies must make contracted opportunities available for competition periodically.

Most of the Process is in the Public Eye

Public records and transparency laws make the purchasing process largely an open process. Buyers are often required to make evaluation documents available after selection is complete. This makes them accountable to the taxpayers who fund the purchase.

Public agencies cannot pay for goods that do not meet the specifications published. They also cannot pay for goods or services they have not received.

Competition

Despite the occasional “Sole Source” purchases and small “Direct Buys,” the competitive process is the most utilized method of spending public money.

Even some small purchases that could be made directly, without process, often are done with three quotes and an evaluation.


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Only What the Rules and Laws Provide

One of the key differences between private and public sector purchasing is the element of “authority.” A private company may do anything that is not outright illegal but a public entity can only do those things provided or authorized by law. Authority may come in the form of a legal delegation, statute or directive policy, but must provide a clear basis for any action taken. This is far more restrictive than the private enterprise environment.

Considers Social Responsibility

Public agencies consider their effects on the surrounding community. They have established responsible goals to assist them with recognizing when they are or are not interacting in a responsible manner with their communities.

1998 Initiative 200 /RCW 46.60.400

An initiative was presented by the citizens of the state, directing legislatures to modify state statute to prevent any set aside or preferential treatment on behalf of disadvantaged communities. The state legislature established the following directive; “The state shall not discriminate against, or grant preferential treatment to, any individual or group on the basis of race, sex, color, ethnicity, or national origin in the operation of public employment, public education, or public contracting.”

Membership in a disadvantaged group does not ensure or aid in any contract award.

The Law Did Not Remove

The initiative and resulting statute left some functions intact. It did not remove:

• Outreach to small businesses, including M&WBE firms;

• Voluntary purchasing and contracting goals; and

• The duty for public agencies to remove barriers to equal participation in contracting and purchasing.


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Responsive Bids & Responsible Contractors

Preparing a Submittal

One key to success is ensuring that your submittal is responsive and responsible. Responsive A bid submittal that conforms in all material respects to the terms and conditions, the specifications, and other requirements of a solicitation. Responsiveness means compliance with the requirements of the solicitation.

When determining responsiveness, the responses must be evaluated

consistent with the solicitation requirements, including specifications and

contractual terms and conditions.

Absolute conformity may or may not be required but at a minimum the

response must substantially comply with the material aspects of the

solicitation. A response that fails to conform to any requirements of the

solicitation may be rejected.

The Bidder is to be notified of the reasons for such rejection. However, the

Purchasing Authority at its discretion may waive informality in a response.

An informality is defined in rule as an “immaterial variation from the exact

requirements of the competitive solicitation, having no effect or merely a

minor or negligible effect on quality, quantity, or delivery of the supplies or

performance of the services being procured, and the correction or waiver of

which would not affect the relative standing of, or be otherwise prejudicial to

bidders.”


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Responsible

The State Legislature in Statute provided guidance with respect to acceptable levels of responsibility in RCW Title 39.26.160. In Item 2 the statute provides “…. In determining whether the bidder is a responsible bidder, the agency must consider the following elements: • (a) The ability, capacity, and skill of the bidder to perform the contract or provide the service required; • (b) The character, integrity, reputation, judgment, experience, and

efficiency of the bidder; • (c) Whether the bidder can perform the contract within the time specified; • (d) The quality of performance of previous contracts or services; • (e) The previous and existing compliance by the bidder with laws relating to the contract or services; and • (f) Such other information as may be secured having a bearing on the decision to award the contract. In addition buyers may consider supplemental responsibility criteria published in the solicitation and local or municipal code. If Federal funds are involved,

compliance with FAR Part 9.102 may be required.

Common mistakes that result in a nonresponsive determination include:

• Bidder fails to provide or submit all information as required;

• Bidder does not possess the required credentials, qualifications, certifications, personnel, equipment, or resources to be eligible for consideration;

• Bidder fails to meet the minimum specification requirements;


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• Bidder fails to accept the terms, conditions, or requirements of the Solicitation; • Bidder will not accept an award unless the solicitation terms and conditions are modified or altered;

• Bidder indicates that it will only accept an award for all line items when the solicitation allows award by line item or aggregate grouping of line items;

• An authorized signature page is not signed and there is no satisfactory evidence submitted prior to due date and time which clearly indicates the Bidder’s desire to be bound by his/her bid such as a signed cover letter; and • The item bid does not meet the stated specifications and the Bidder has not indicated the item bid is an alternate. Common problems that result in a non-responsible determination include:

• Bidder is not a licensed business;

• Bidder does not have appropriately skilled dedicated employees;

• Bidder has little prior experience;

• Bidder has a history of poor performance; • Quality of the product offered has been problematic; • Bidder has a history of poor financial capacity; • Bidder has a history of previous violations of law; and • Bidder has a history of violations of safety regulations


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When federal funds are involved and FAR requirements apply, problems that may arise. A prospective contractor must:

• Have adequate financial resources to perform the contract, or the ability to

obtain them;

• Be able to comply with the required or proposed delivery or performance

schedule, taking into consideration all existing commercial and

governmental business commitments;

• Have a satisfactory performance record;

• Have a satisfactory record of integrity and business ethics;

• Have the necessary organization, experience, accounting and operational

controls, and technical skills, or the ability to obtain them (including, as

appropriate, such elements as production control procedures, property

control systems, quality assurance measures, and safety programs

applicable to materials to be produced or services to be performed by the

prospective contractor and subcontractors);

• Have the necessary production, construction, and technical equipment and

facilities, or the ability to obtain them and; and

• Be otherwise qualified and eligible to receive an award under applicable

laws and regulations.


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Solicitation Types

Types of Purchasing

Sole Source purchases are those in which a contractor is providing goods or

services of such a unique nature or sole availability at the location required

that the contractor is clearly and justifiably the only practicable source. State

law; RCW 39.26 Chapter 140 requires agencies to “… provide documented

justification for sole source contracts to the Department (of Enterprise

Services) … and must include evidence that the agency posted the contract

opportunity at a minimum on the state's enterprise vendor registration and

bid notification system.”

Emergency purchases are those in which an agency must make an immediate purchase, and has inadequate time to perform the normal process. An emergency is a set of unforeseen circumstances beyond the control of the agency, and which present a real, immediate, and extreme threat to the proper performance of essential functions; or may reasonably be expected to result in material loss or damage to property, bodily injury, or loss of life, if immediate action is not taken.

Such a purchase must be one which avoids unacceptable consequences. RCW 39.26 Chapter 130 advises “… the agency head (to) submit written notification of the purchase within three business days of the purchase to the director (of Department of Enterprise Services). This notification must contain a description of the purchase, a description of the emergency and the circumstances leading up to the emergency, and an explanation of why the circumstances required an emergency purchase.”


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Direct Buy purchases are those which are small dollar buys…$10,000 or less per year … (or if the seller is a small business…$13,000) RCW 39.26 Chapter 010 advises Small business means an in-state business, including a sole proprietorship, corporation, partnership, or other legal entity, that:

(a) Certifies, under penalty of perjury, that it is owned and operated independently from all other businesses and has either:

(I) Fifty or fewer employees; or (ii) A gross revenue of less than seven million dollars annually as reported on its federal income tax return or its return filed with the department of revenue over the previous three consecutive years; or (b) Is a certified small business with the office of women and minority

business enterprises.

Contract purchases are those conducted using contracts which were conducted under Washington State Purchasing Policies and applicable local purchasing policies, such as the Port of Tacoma Purchasing Policies.

RCW 39.26.101 defines several contracting elements.

• "Competitive solicitation" as a documented formal process providing an equal and open opportunity to bidders and culminating in a selection based on predetermined criteria.

• "Bid" means an offer, proposal, or quote for goods or services in response to a solicitation issued for such goods or services.

• “RFQ, a request for quotation, is a standard business process whose

purpose is to invite suppliers into a bidding process to bid on specific products or services.


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• An RFQ seeks an itemized list of prices for something that is well-defined

and quantifiable, such as hardware. Another type of document, called a request for proposals (RFP), is customarily used when the requesting organization's requirements are more complex.

• Alternately, occasionally an RFQ can be a request for qualification, seeking providers with specific capabilities

• IFB, an invitation for bids, or (an ITB, an invitation to bid) is utilized to solicit pricing on well-defined needs.

• RFP, a request for proposal is utilized to solicit written proposals from

potential suppliers. Both cost and non-cost factors are evaluated in addition to conditions of responsiveness and responsibility to achieve best value.

Best Value

State Statute RCW 39.26.160 addresses best value. Item (3) notes that; In determining the lowest responsive and responsible bidder, an agency may consider best value criteria, including but not limited to:

(a) Whether the bid satisfies the needs of the state as specified in the solicitation documents;

(b) Whether the bid encourages diverse contractor participation;

(c) Whether the bid provides competitive pricing, economies, and efficiencies;

(d) Whether the bid considers human health and environmental impacts;

(e) Whether the bid appropriately weighs cost and non-cost considerations; and

(f) Life-cycle cost.


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Clearly note that the Port and most local government buyers do not follow FAR requirements except when federal funds are involved.

Further note: agency contracting process involves consolidation of criteria and

tradeoffs to emphasize best value rather than the lowest price. Price is always a

factor but other factors include: economy, efficiency, effectiveness, equity,

business objective, responsiveness, and responsibility.

These criteria are often in conflict; therefore, agencies need a process to guide

them through evaluation of the tradeoffs among the factors. This guide is found

in the evaluation criteria listed in the solicitation.


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The FAR defines several contracting elements.

Efficiency = amount of output per unit of resources invested

Effectiveness = assessment of the degree to which a contract actually delivers the

services needed to a high level of quality

Bid responsiveness = bid must be responsive to the service requested

Bidder responsibility = bidder must be responsible in that the bidder must be able

to provide the product or service at the quoted price

Obtaining a good deal for the public requires an effort to maximize each of the

criteria in order to produce contracts that are economical, efficient, effective,

responsive, responsible and equitable throughout the contracting process.


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Public contracts are a public policy tool to achieve public purposes.

Idea behind best value is to reduce risk of non-performance from low bid offers

and to maximize value received.

FAR Part 2 “Best value” means the expected outcome of an acquisition that, in

the Government’s estimation, provides the greatest overall benefit in response to

the requirement.

Proposal Evaluation Criteria

When your bid is evaluated each of the elements of your submittal will be

considered. These usually consist of the following:

• Price. Vendors should be prepared to explain how they arrived at their price, know their direct and indirect costs (i.e. variable and fixed) and expected profit;

• Ability to deliver the product or perform the work;

• Capacity;

• Experience of the company and the personnel;

• Reputation;

• Ability to meet delivery or project time limitations as made these clear in the submittal;

• Compliance with solicitation requirements;

• Quality of previous performance;

• Reference evaluations; and

• Any other criteria to address specific requirements.


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Proposal Award Process

State Statute RCW 39.26.160 addresses the award process. It notes that; After bids that are submitted in response to a competitive solicitation process are reviewed by the awarding agency, the awarding agency may: (i) Reject all bids and rebid or cancel the competitive solicitation;

(ii) Request best and final offers from responsive and responsible bidders; or (iii) Award the purchase or contract to the lowest (priced, or highest scoring) responsive and responsible bidder.

Finding and Pursuing Opportunities

Registrations and Applications. Be sure to register, notify and apply to every agency opportunity. This will include:

• Individual agency websites;

• Email notification opportunities;

• Washington’s Electronic Business Solution (WEBS);

• Small Works Rosters;

• Professional / Service Rosters;

• Prime contractors; and

• Bid match services - PTAC

Learn the notification process for your primary target agencies. Not all have

website listings, not all use WEBS. Not all agencies have vendor registration

requirements. The Port does not use WEBS.


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Get to know the right people

End Users Research and identify those who could actually put your project or service to use. Learn their special problems, and details about their work environment. This could help you correctly price a proposal when one is published.

Project Managers Research and identify those who could oversee your project. Agency Small Business Representatives Research and identify these individuals who could assist you in interactions with the buyer.

Contracting Personnel Know who the buyers are for your commodity and have their contact information. Attend trade shows and other events where they appear. Prime contractor Small Business Specialists

It’s important to understand that once a bid or RFP is on the street, there is a "blackout" period where contact with these folks may be prohibited.


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Marketing • Do market research –understand your customer needs.

Marketing is more than just selling. Do some market research and develop a plan.

• Identify and target key buying activities Define your product or service offering. Determine your target market.

• Visit small business specialists, buyers and end users. Know how you add value and why the customer should choose you over your competition; your CVP (Customer Value Proposition). Contact agency and prime contractor small business representatives.

• Be prepared and have promotional materials tailored to targeted

buyers.

• Build relationships. Develop relationship with decision influencers and makers.

• Determine Procurement Cycles. Register on appropriate agency websites and rosters.

• Attend trade shows and events. Attend agency and industry events and networking opportunities.

• Review agency forecasts and budgets. Know your technical capabilities

and your financial and production capacities.

• Go after opportunities, know your costs, and bid appropriately.

• Contact your PTAC for email events notices, bid match and contracting assistance.


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Agency Expectations

Public agencies expect ethical behavior. Doing the right thing, acting with integrity, being trustworthy, being honest, delivering what has been promised, working diligently, and committed to the agreed upon schedule, quality and price. Some areas where this behavior should be seen:

• Management Approach and Competency;

• Communication;

• Attitude of Service and Excellence

• On Time Performance within Budget;

• Quality Products and Services; and

• Contract Compliance.

Important Considerations • Know yourself and your business

• Know your customer

• Know the rules

• Know your competition

• Know your resources


Appendix i

The Washington State Purchasing Manual has not been updated since procurement reform

but it still has value as a reference guide until a new state manual is developed.

To help prepare you for doing business with an agency, research the rules regulations, policies

and procedures of your targeted agency.

Projects funded with Federal dollars may have additional requirements such as DBE goals on

projects funded by the USDOT.

To be clear, the Port does not follow City of Tacoma or Pierce County guidelines but does

loosely follow State guidelines.

Port of Tacoma

www.portoftacoma.com

Washington State Purchasing Manual

http://www.des.wa.gov/services/ContractingPurchasing/Purchasing/Pages/WashingtonPurc

hasingManual.aspx

http://des.wa.gov/services/ContractingPurchasing/Business/Pages/default.aspx

City of Tacoma Municipal Code



Pierce County Purchasing Guide


http://www.portoftacoma.com/

http://www.des.wa.gov/services/ContractingPurchasing/Purchasing/Pages/WashingtonPurchasingManual.aspx

http://www.des.wa.gov/services/ContractingPurchasing/Purchasing/Pages/WashingtonPurchasingManual.aspx










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