LEAGUE JOINT SESSION MUNICIPAL CLERKS ASSOCIATION OF NEW JERSEY AND THE GOVERNMENTAL PURCHASING ASSOCIATION OF NEW JERSEY

Transcription

1 LEAGUE JOINT SESSION MUNICIPAL CLERKS ASSOCIATION OF NEW JERSEY AND THE GOVERNMENTAL PURCHASING ASSOCIATION OF NEW JERSEY UNDERSTANDING THE RFQs AND RFPs IN PURCHASING 96 th Annual Conference Joyce Miller- Franklin Twp. Somerset Atlantic City Convention Center Purchasing & Gen. Services Admin. Room 403 Debra Sopronyi- Hightstown Boro. November 16, 2011 Mun. Clerk & Purchasing Agent Joseph A. Valenti- Retired Division of Local Govt. Services

2 DISCLAIMER The written material used and information provided in this session is for general guidance only. Given the changing nature of the laws, corresponding rules and related laws and rules, judicial decisions and the time limitation of the session, the presenters warrant that the written material and information were carefully prepared. The written material is not intended to be used as legal advice in any general or particular sense. Individuals are encouraged to directly consult with their own legal counsel regarding compliance with applicable laws to particular circumstances.

3 I. Local Public Contracts Law A. Its Origins and Revisions 1. Modern legislative history of contracts law revisions began in Resulted in P.L. 1971, c. 198 (40A:11-1 et seq.) 3. A comprehensive legislative movement started in 1998 (Treasury Task Force) resulted in P.L. 1999, c. 440 B. Basic Building Blocks of P.L. 1999, c Balancing administrative efficiency vs. public accountability and responsibility 2. Eliminating non-competitive practices that result in higher prices, uncertain contract delivery, and questionable performance 3. Promoting competition by having a common set of standards, practices, and procedures 4. Encouraging professionalism and applying sound procurement principles C. A New Technique in c Competitive Contracting 1. Certain goods and services 2. Exempt from receipt of bids 3. Identified as impractical to specify 4. Were suitable for competition 5. Can utilize a RFP model instead of the traditional lowest responsible bidder award criteria, and 6. The never fully understood extraordinary unspecifiable services (EUS) provision 7. Many of the competitive contracting services were drafted from the EUS examples D. Request for Proposals (RFP)- The Generic Textbook Definition 1. Utilized to solicit competitive proposals 2. Utilized when it is expected that negotiations with proposers may be required with respect to any aspect of proposal requirements 3. Other factors, in addition to price, will be considered in the selection of the successful contractor E. Request for Qualifications (RFQs) 1. Statement of generic requirements in the first step of what should be a multi-step process 2. Such requirements have far less meaning when adopted as the only criterion in the selection of a vendor 1

4 3. If more than one vendor meets the stated qualifications criterion how does a government entity make its contract award determination? 4. Some view a qualifications criterion as a substitution for other specific selection criteria F. Request for Information (RFI) 1. Even less formidable than the RFQs 2. RFI is without definition what type of information? 3. A RFI has far less meaning as the only vendor- selection criterion since the term can easily satisfy the selection of certain vendors 4. A RFI is what a truly developed and comprehensive RFP is seeking information to be carefully evaluated II. The RFP Process A. Before Receipt of Proposals 1. Resolution of Governing Body to advertise (optional) 2. Published differently than bids - notice on website is considered legal notice 3. Recommendation - publish 30 days in advance of receipt of proposals 4. Notice - include title, how, when and where proposals are to be received 5. Special Requirements included in notice (if applicable) 6. Pre-submission meeting (strongly recommended, not required) 7. Addendum published notice vs. website notice B.Submission Requirements/Options 1. Insurance errors and omissions submitted by successful Proposer 2. Guarantee risk or exposure shall determine 3. Business Registration Certificate - submitted by successful Proposer 4. Statement of Corporate Ownership 5. References like projects and prior experience 6. Adoption and use of Municipal P2P/Fair & Open Ordinances if you have them, know the requirements C. After Receipt of Proposals 1. Resolution of Governing Body to award (contract in excess of $17,500) 2. Publication of award in newspaper who, purpose, duration and amount 3. Execution and filing of contract Retention period dependent upon project III. Practical Application Following Comptroller Office s Summary of Guidance 2

5 A. Pool of contractors should be expansive as possible 1. Notice is published 2. There is sufficient time between notice and receipt of proposals 3. Specification is broad enough to encourage competition but detailed enough to support critical evaluation of proposals 4. There are no restrictive requirements (residency, etc) 5. Background information (such as previous related reports) is available to all B.Statement of work (or statement of services or specifications) should be drafted in clear, unambiguous terms. SOW includes: 1. Outline of project 2. Itemization of contract requirements and timeline for the completion of the project 3. Proposal submission requirements C. Proposals should be judged on basis of pre-determined merit-based criteria 1. Criteria is listed in proposal 2. Weight of each criterion is included (optional) 3. Criteria is realistic D. Criteria judged by qualified evaluation committee 1. Evaluation committee members are familiar with project 2. Each committee member signs certificate that there is no conflict of interest 3. Each committee member completes evaluation form E. Evaluation process is explainable to evaluators and competing vendors and withstands scrutiny under protest 1. In purchasing, everybody is watching. Let them. 2. Minutes are taken at evaluation committee meeting 3. Committee members completed evaluation forms are tallied. Summary and recommendation of award is written by committee chair. F. Scoring process and award recommendation are well documented and retained 1. Evaluations and summary are sent to governing body with recommendation to award; they become part of the record and reflect the final action of the governing body 2. Resolution is passed and published 3. All files and correspondence are maintained per DARM. 3

6 SELECTED NON-BID PROCUREMENT METHODS* Procedural Steps and/or Requirements** Competitive Contracting Request for Proposals*** Pay-To-Play Fair/Open Non-Fair/Open**** Request for Qualifications***** Request for Information***** *Competitive Contracting, Request For Proposals, Pay-to-Play s Fair and Open, and Alternative Fair and Open, Request for Qualifications (RFQs) and Request for Information (RFI) were selected since they are the most familiar to local elected and appointed officials as non-bid procurement methods. **The statutory and regulatory competitive contracting basic procedural steps and requirements were used for the purposes of comparison and discussion between competitive contracting and request for proposals since many local purchasing practitioners are familiar with these non-bid methods. An examination of these two methods in chart form follows. The presenter does not represent that all statutory steps have been included in the competitive contracting process. ***The basic statutory scheme of the State Division of Purchase and Property, the Department of the Treasury, uses a Request for Proposals methodology to award various types of services contracts. ****The New Jersey Local Unit Pay-to-Play Law does not provide a comprehensive and complete statutory scheme on how to purchase services and related goods. It does not address many of the public procurement issues created by the application of the law. *****A specific statutory basis of law, generally, could not be found by the presenter to substantiate a comprehensive process for RFQs and RFI similar to the LPCL s competitive contracting process. How a local contracting entity applies RFQs or a RFI, as RFP applications, should be carefully reviewed with legal counsel. 4

7 SELECTED NON-BID PROCUREMENT METHODS Procedural Steps and/or Requirements Competitive Contracting Request for Proposals Governing Body Authorization to Initiate Competitive Contracting Publication Notice Charge for Documents Over/Under Bid Threshold Yes, 40A:11-4.3a., Not required if previously procured Yes, 40A:11-4.5a., official newspaper at least 20 days prior Yes, 40A:11-4.5a.; not to exceed $50. or cost of reproduction, whichever is greater 40A:11-4.1, used when exceeding bid threshold If a state agency, notify department contracting officer of purchasing need If a state agency, prepare a formal needs statement, and conduct research if there is a public notice requirement Charge or fee could vary Application of a threshold could vary Preparation of a RFP Document(s) Yes, 40A:11-4.4a and N.J.A.C. 5:34-4.2(a) Yes Administration of Process Preparation of RFP Documents (i.e. Scope of Work, Scope of Services, Specs, etc.) Basis for Contract Award Yes, 40A:11-4.3b., by a QPA, legal counsel or administrator of contracting unit Yes, 40A:11-4.4a., formal preparation with a methodology for evaluating and ranking proposals Yes, 40A:11-4.4b.; evaluation and ranking of, but not limited to, technical, management and cost related criteria, may also include weighting of criteria; at option of contracting unit the weighting of each criteria may be disclosed to vendors prior to receipt of 5 If a state agency, establish a program management team Yes, development of specification requirements (SOW, SOS, etc.) Yes, evaluation criteria may include but not be limited to: proposer s general and detailed approaches satisfying RFP requirements, qualifications and experience of assigned personnel, proposer s documented successful experience in completing such contracts,

8 Release of Proposer s Information Amendment to RFP Document(s) by Contracting Unit Compliance with Other Applicable Laws (Includes but not limited to) Services Provided by Contracting Unit s Employees proposals No, 40A:11-4.4c., would confer an unfair advantage Yes, 40A:11-4.4c., potential vendors who received the RFP shall be notified Yes, 40A:11-4.4d: < Statement of Corporate Ownership (N.J.S.A. 52: ) < EEO/Affirmative Action Exhibit A (N.J.S.A. 10:5-31 et seq.) < Americans With Disabilities Act of 1990 (42 U.S.C. S12101 et seq.) < Non-Collusion - Optional (N.J.S.A. 52:34-15) < Guarantee to accompany proposal strongly recommended, but not required (40A:11-21) < Various insurance coverages, as applicable and required 40A:11-4.5c., employees or representatives can submit recommendations and proposals proposer s cost, reference checks, management overview, technical approach, etc. Hopefully not proposal confidentiality is paramount If not required by law or rule, a policy should be adopted If it is a state agency, some of the laws under competitive contracting would also apply. However, if it is not a state or local contracting unit governed by State law or LPCL, research would be required. If it is a state agency, some of the laws under competitive contracting would also apply. However, if it is not a state or local contracting unit governed by State law or LPCL, research would be required. If a state agency, similar insurance coverage requirements would apply May not be required for other contracting units, research would be needed Receipt of Proposals N.J.A.C. 5: (a) & (b); public opening Yes Evaluation Process < Yes, 40A:11-4.5d; proposals evaluated by QPA, legal counsel or administrator 6 Yes, proposal evaluation committee (agencies representatives or combined with outside consultants)

9 Report Part of Public Record, Reflects Final Action of Governing Body Negotiation of the Contract or Any Part Thereof Right to Reject All Proposals < Evaluation Committee Appointments [N.J.A.C.5:34-4.3(c)2] optional, unless required by law or rule < Committee s Conflict of Interest & Certification Statements [N.J.A.C. 5: (e) & (f)] < Vendors can provide clarification of their proposals [N.J.A.C. 5:34-4.3(c)3] < Report documenting the entire RFP process (clear reasons/recommendations for award, ranking, terms, conditions, SOW, fees, etc.) (40A:11-4.5d) < Report available to governing body and general public (40A:11-4.5d) Yes, 40A:11-4.5f Not under any circumstances (40A:11-4.5b) By governing body pursuant to 40A:11-4.5d & 40A: If a state agency, general principles of conduct (perceived conflict of interest) apply Should be authorized, but research is required to verify Evaluation committee members prepare reports with their scores and recommendations If a state agency, final report submitted to supervisory personnel Report is the official statement of the decision-making process If a state agency, final negotiation of the RFP may be authorized, research required If a state agency, research required Award of Contract (Contract in Writing) By resolution of governing body within 60 days of receipt of proposals (40A:11-4.3b & 40A:11-4.5e) If a state agency, contract award approved and executed by authorized officer or department head Contract Duration For a term not to exceed five (5) years, or longer as permitted by law (40A:11-4.2) If a state agency, appropriate law would apply Certification of Availability of Funds Yes, 40A:11-4.5h Yes, acknowledgment that funds are available 7

10 Publication of Notice of Contract Award Yes, 40A:11-4.5g; in official newspaper; Yes, some form of notification, but not necessarily a newspaper Available for Public Inspection Yes, 40A:11-4.5g; Office of Clerk or Secretary Yes, when available would depend on public entity s policy and applicable, if any, laws Adoption of Administrative Rules Yes, 40A:11-4.5i & N.J.A.C. 5: et seq. Yes, this is especially true if it is a state agency 8

11 NEW JERSEY LOCAL UNIT PAY-TO-PLAY LAW Fair and Open Process shall be: The statute, N.J.S.A. 19:44A-20.7, defines a fair and open process as one in which the contract, at a minimum, 1. publicly advertised in newspapers or on the Internet website maintained by the public entity in sufficient time to give notice in advance of the contract; 2. awarded under a process that provides for public solicitation of proposals or qualifications; 3. awarded and disclosed under criteria established in writing by the public entity prior to the solicitation of proposals or qualifications; and 4. publicly opened and announced when awarded The decision of a public entity as to what constitutes a fair and open process shall be final. This determination is subject to meeting the minimum criteria of the P2P Law. The statutory provision does not supersede existing legal recourse for challenges pursuant to the bidding and competitive contracting provisions of the Local Public Contracts Law if such provisions are used for a fair and open process. Furthermore, the P2P Law does not specifically address the requirement of sufficient time to give notice. That requirement is met at a minimum by the standard for newspaper publication for the receipt of bids ten (10) calendar days. This applies for either newspaper or website advertising. It is also important to note that a fair and open process is not the same as conventional public bidding ( lowest responsible bidder ) or competitive contracting ( most advantageous, price and other factors considered ). While both 9

12 methodologies meet the fair and open requirements, their more rigorous procedures are not mandated by law. Local contracting entities can establish their own fair and open process within the parameters of the P2P Law. The provision requiring local contracting entities to establish criteria does not provide statutory guidance that appropriate criteria be developed, used and applied fairly, or document the rationale for vendor selection. It should be remembered that the Local Public Contracts Law s competitive contracting procedures are only an option for a fair and open contracting process, and not statutory or regulatory requirements. Alternative Fair and Open (Non-Fair and Open) Process This process can only be used when goods or services are exempt from public bidding. In the Local Public Contracts Law, N.J.S.A. 40A:11-5 is the primary controlling provision. There are, however, specific exemptions in other statutes. If a local contracting entity wishes to award a contract to a vendor who has not made reportable contributions ($300. or more) pursuant to N.J.S.A. 19:44A-8 and 16 et seq., it may do so without the initial advertisement and through a somewhat vague and undefined negotiation process. There is a great deal of confusion among local elected and appointed officials as to the when and how you use the law. The law s basic requirement is that the goods or services must be a statutory exemption from the receipt of bids. The fact that the potential contractor has not made reportable contributions in excess of the controlling statutes does not provide an exception from statutory and regulatory bidding and competitive contracting requirements, or a truly formidable fair and open process developed by a local contracting entity. 10

13 REFERENCES Division of Local Gov t Services. Guide To The New Jersey Local Unit Pay-To-Play Law, November, Trenton, NJ State of New Jersey Office of the State Comptroller. Procurement Report: Weaknesses In The Pay-to-Play Law s Fair and Open Contracting System, September 15, Trenton, NJ, Office of the State Comptroller, Boxer, Matthew. Open and fair bidding anything but. Asbury Park Press, 6 November B1-B2. 11

14 Request For Qualifications (RFQs) Or A Request For Information (RFI) The State Comptroller s report of September 15, 2011, pointed out some fatal flaws in how local contracting entities apply inappropriate fair and open selection criteria when using RFQs and a RFI. The following excerpt is from the report: OSC contract reviews have found that even when specific fair-and-open criteria are stated in advance, the criteria sometimes are set forth in the form of simple requirements, such as a requirement that the vendor have requisite experience, or employ sufficient staff or maintain the appropriate license(s). This approach appears to stem from historical use in New Jersey of vendor solicitation documents such as a Request for Qualifications (RFQ) or a Request for Information (RFI). While a statement of generic requirements in an RFQ or RFI is entirely appropriate, such requirements have far less meaning when adopted as ultimate vendor-selection criteria, particularly when such requirements are the only criteria stated. Where more than one vendor meets the stated requirements, the government entity is left without true selection criteria through which it may determine which vendor is the most qualified. Nevertheless, it appears that RFI and RFQ methods have become so firmly entrenched among local purchasing officials that many entities view them as a substitute for specific selection factors. By using such easily satisfied, generic requirements, the ability to ultimately select politically favored vendors is maximized. It would appear that the use of RFQs and RFI methods would only serve as an initial or first step of a more comprehensive and detailed fair and open process. Research did not produce the statutory or regulatory basis for RFQs or a RFI. 12