MAXIMIZING COMPETITION & EXPANDING OPPORTUNITIES FOR SMALL BUSINESS

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1 Los Angeles County One Gateway Plaza Tel Metropolitan Transportation Authority Los Angeles, CA metro.net Metro SYSTEM SAFETY, SECURITY AND OPERATIONS COMMITTEE MARCH 19, 2015 SUBJECT: ACTION: MAXIMIZING COMPETITION & EXPANDING OPPORTUNITIES FOR SMALL BUSINESS RECEIVE AND FILE RECOMMENDATION Receive and file a report in response to the January 2015 Board Motion #45 by Directors Garcetti, Dupont-Walker, Knabe and Solis concerning Metro's plan of action to maximize competition of its procurements and expand opportunities for small business participation. ISSUE At the January 2015 Board meeting, Directors Garcetti, Dupont-Walker, Knabe and Solis requested that staff take action on four solicitation elements that the Board believes will help to improve Metro's performance in maximizing competition, and expanding contracting opportunities for small businesses. Specifically, the Board requested that staff assess the following initiatives: 1) Develop specific recommendations for increasing competition for Inventory, Maintenance and Professional Services solicitations; 2) Consult with the Federal Transit Administration (FTA) on whether the definition of adequate competition should have a higher threshold; 3) Examine the suitability of posting Metro's informal solicitations on the Metro website; and 4) Examine the feasibility of mandatory goals for Request for Proposals subject to the SBE Program. In addition to the four initiatives in the Board motion, Vendor/Contract Management identified its own action plan at the January 2015 Board meeting for achieving adequate competition by obtaining at least two formal responses on 99% of all formal solicitations. DISCUSSION Based on data gathered over the past five years, Metro has obtained two or more bids/proposals in 88% of its formal procurements. 12% of Metro's formal procurements received only one bid or proposal. Receiving at least two bids/proposals provides the agency with the best method for Maximizing Competition and Expanding Small Business Opportunities 1

2 obtaining goods and services at a fair and reasonable price. Competition also produces public trust and transparency by having a procurement process that has access to as many qualified sources as possible. ACTION PLAN In order to improve on its current record for more than one bid/proposal, Metro's Vendor/Contract Management unit has begun specific initiatives in its FY15 Action Plan that should positively affect the rate at which adequate competition is consistently achieved. Implement a Vendor Portal for one stop service for the vendor community to improve our outreach for open solicitations and other items in regards to doing business with Metro. (Completed February 2015) Implement an online 12-Month Look Ahead that identifies all potential formal solicitations and task orders agency wide to provide as much advance notice as possible to the vendor community so that they can better prepare to submit a bid/proposal (Completed February 2015) Develop an internal User Manual for Metro staff to improve acquisition planning and project definition. (To be completed March 2015) Provide ongoing functional & technical training for all Metro staff involved in the acquisition process to: o Improve acquisition planning o Eliminate requirements that are unduly restrictive o Consider the unbundling of larger projects to encourage more participation of small businesses The recent implementation of the Small Business Enterprise (SBE) Prime, Metro's Set-Aside Program creates opportunities to identify qualified small businesses that can compete and perform. (Completed 2014) Address changes to contract terms and conditions to help attract a greater number of potential bidders/suppliers. (To be completed March 2015) Include adequate competition as a key performance indicator (KPI) and maintain on-going metrics with quarterly reporting to the Board. (Completed February 2015) INCREASING COMPETITION FOR INVENTORY. MAINTENANCE & PROFESSIONAL SERVICES SOLICITATIONS In an effort to increase competition for solicitations for professional services and maintenance, staff now has two new tools to improve its communications with Metro's Maximizing Competition and Expanding Small Business Opportunities 2

3 Transportation Business Advisory Council (TBAC) and the business community for notifying firms of upcoming procurements. The advent of Metro's Vendor Portal and the 12-Month Look Ahead will allow businesses (small, medium, and large) to have greater insight into future procurements and to improve their business plans to participate in those solicitations. Vendor/Contract Management will continue meeting with internal clients and project offices to populate and review the 12-Month Look Ahead to ensure information stays current and up to date. A key element to improving participation in formal solicitations is an effort to expand the base of suppliers, contractors and consultants. In April/May 2015, staff will launch the Countywide Small Business Campaign, a 12-month effort designed to increase the number of certified small business. Currently, the number of Metro certified SBE/DBEs is 1,495. The campaign seeks to increase the number of certified SBE/DBE firms by 10% in order to increase competition to support the SBE Prime Set Aside Program. Staff will research the possibility and resources required to integrate the use of various social media websites (i.e. Facebook, Linkedln) into the Vendor Portal allowing increased access with new firms that may be interested in doing business with Metro to increase competition. Social media can prove to be a beneficial way to notify firms of new procurements as well as provide the opportunity for small businesses to connect to large prime firms and offer their specialties and services. In addition, the Supply Chain Management Inventory group will continue to further implement and administer our Supplier Management Program which was established and implemented in Staff will also seek opportunities for supplier technical product development and re-engineering efforts to foster alternative local sources. These activities will be coordinated with the Metro technical engineering team. Lastly, staff will continue to partner with our supplier base and participate in outreach programs at DEOD outreach events. Site travel to potential new suppliers for the purpose of qualifying those firms from a technical/business standpoint will enhance the supplier base and lead to more competitive bids. Furthermore, Vendor/Contract Management staff will w0rk closely with project managers to review scopes of work and minimum qualifications to ensure they are not unduly restrictive. This will help to ensure a fair and competitive environment for all firms interested in proposing. In addition, Vendor/Contract Management staff will work with project managers to determine opportunities to unbundle certain services, for example, based on geographic regions or smaller elements of larger projects, to encourage more competition and participation of small businesses. CONSULTATION WITH FTA ON THE DEFINITION OF ADEQUATE COMPETITION Staff has been in communication with the FTA Region 9 Assistant Regional Counsel's office regarding refinement of the definition of adequate competition. The exchange included a description of the efforts staff is taking to improve its record of obtaining more Maximizing Competition and Expanding Small Business Opportunities 3

4 than one offer in its formal solicitations. Staff described its action plan intended to obtain more competitive offers, and the Assistant Regional Counsel expressed a positive view of our current record of obtaining more than one response to RFPs and IFBs. In addition, the Assistant Regional Counsel recommended that Metro focus on increasing outreach to the bidder/proposer community, and to increase visibility of its procurements in any way possible. The FTA Regional Counsel believes its current grant rules for competition is well defined in 2 CFR and FTA Circular F, including the procedure for evaluating single bids, and expressed the opinion that the guidelines do not require redefinition. The FTA views each solicitation the agency issues as requiring competition, and it is the obligation of grantees to validate that adequate competition was achieved for all solicitations. The absence of such a determination requires that the agency view the procurement as a Sole Source procurement, and requires the agency to justify that noncompetitive procurement. However, if the agency can validate that the solicitation does not contain any restrictive elements, including excessive qualifications; there is no collusion among suppliers; and it can be proven that there are more than one willing and able firm in the marketplace; the procurement can be deemed to have achieved adequate competition. This high threshold for establishing adequate competition must be vigorously applied to every solicitation issued by Metro. In order to assure adherence to existing FTA guidelines, Vendor/Contract Management procurement staff will participate in mandatory training at various sessions beginning in March through the end of FY15 on the actions needed to achieve adequate competition, including outreach of interested firms, especially small businesses; and the required steps be to taken when only one offer is received. This training will cover a detailed understanding of the FTA guidelines for adequate competition, such as the obligation to assure that solicitations do not contain restrictive requirements or qualifications. The training will also cover the elements of a sound market survey, and the requirement to perform cost or price analysis to determine a fair and reasonable price when only one offer is received. POSTING INFORMAL SOLICITATIONS ON THE VENDOR PORTAL Staff has reviewed and determined it is suitable to post informal solicitations on our Vendor Portal. We have researched the process used by other transit agencies (Southeastern Pennsylvania Transportation Authority (SEPT A), MTA Harris County Houston, and Sound Transit) to post informal solicitations, and Vendor/Contract Management will implement a similar process. Metro has a defined threshold for informal solicitations and will post solicitations greater than $3,000 for seven calendar days on the Vendor Portal. If the informal solicitation is Maximizing Competition and Expanding Small Business Opportunities 4

5 a SBE Set-Aside and a quote is not received, the solicitation will be opened to all bidders for an additional seven calendar days. In FY14, Metro processed approximately 6,098 Informal Solicitations. As a result of the volume of informal entries, Metro determined that an automated process would better facilitate the efficiency of the process by eliminating the manual data entry presently administered by staff. Additionally, automation should minimize the risk of missing pending/new entries. To manage the volume of informal activities, Procurement will implement a time-phased approach with the next steps as follows: April Phase I - Issue a solicitation to automate the process - Modify Metro Procurement Policies and Procedures - Notify our vendors and Metro Business Units of the change May Phase II - Manually Post Professional Services and Construction Solicitations September Phase II- Manually Post Inventory Solicitations November Phase Ill- Automated posting of all solicitations MANDATORY SBE GOALS FOR REQUESTS FOR PROPOSALS Metro has determined that it is feasible to make SBE commitments a condition of award for non-federal competitively negotiated Requests for Proposals (RFPs). To facilitate this change, RFP solicitation language will contain a mandatory SBE goal for both SBE and Disabled Veterans Business Enterprise participation. The new requirement for RFPs with an SBE goal will be implemented by mid-march To be responsive to the SBE goal, Proposers must meet or exceed the goal. If the goal is not met, the Proposer must demonstrate that it made Good Faith Efforts (GFE) to meet the goal, although unsuccessful. Proposers that fail to document GFE will be deemed non-responsive and will not be considered for contract award. The impact of this change will be significant. Last fiscal year, 55 of contracts were awarded through the RFP process with a SBE goal. Of those awarded, 7.27% had SBE goals where the recommended firm had a 0% commitment and 14.54% had a commitment less than the recommended DEOD goal. This change to the SBE program cannot be applied to non-federal competitive Invitation for Bids (IFBs). The SBE goals for non-federally funded IFBs are prohibited by State of California law from being a condition of award. Transitioning IFBs to mandatory SBE goals will require amendment to the State statutes. Prepared by: Carolina Coppola, Executive Officer, Vendor/Contract Management, (213) Julie Ellis, Deputy Executive Officer, Vendor/Contract Management Maximizing Competition and Expanding Small Business Opportunities 5

6 (213) Robert New, Deputy Executive Officer, Vendor/Contract Management (213) Tashai Smith, Deputy Executive Officer, Diversity & Economic Opportunity (213) Victor Ramirez, Deputy Executive Officer, Vendor/Contract Management, (213) Maximizing Competition and Expanding Small Business Opportunities 6

7 Stephanie Wiggins Executive Director, Vendor/Contract Management Maximizing Competition and Expanding Small Business Opportunities

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