Training Module 9 Bidding, Purchasing, and Leasing

transcript

Training Module 9Training Module 9Bidding, Purchasing, and Bidding, Purchasing, and

LeasingLeasing

Prepared by RCAP Solutions Prepared by RCAP Solutions for the PA Department of for the PA Department of Environmental ProtectionEnvironmental Protection

Smallville Smallville

vs.vs.

Middleville Middleville Construction Construction

Course OverviewCourse Overview

• Goals of the purchasing processGoals of the purchasing process

• Purchasing options and proceduresPurchasing options and procedures

• ContractsContracts

• Understand legal requirements and avoid Understand legal requirements and avoid conflicts of interestconflicts of interest

Goals of the Purchasing Goals of the Purchasing ProcessProcess

• Buy only what you needBuy only what you need

• Stick to your budgetStick to your budget

• Use competitive purchasing as much Use competitive purchasing as much as possibleas possible

Additional Government Additional Government Procurement GoalsProcurement Goals

• Know the law and comply with itKnow the law and comply with it

• Understand the intention of the lawUnderstand the intention of the law

Do you have a process?Do you have a process?

• Who decidesWho decides

• Identify needs versus wantsIdentify needs versus wants

• Limit the ability to spend among Limit the ability to spend among employeesemployees

• Avoid unnecessary inventories of parts, Avoid unnecessary inventories of parts, supplies and office materialssupplies and office materials

Paying the BillsPaying the Bills

• Time purchases to fit cash flow Time purchases to fit cash flow constraintsconstraints

• Know or negotiate terms of payment Know or negotiate terms of payment before finalizing a purchasebefore finalizing a purchase

• Pay bills only when value is received, but Pay bills only when value is received, but once it is received, pay them on timeonce it is received, pay them on time

Procurement OptionsProcurement Options

• BuyBuy

• RentRent

• LeaseLease

• Lease-PurchaseLease-Purchase

• Services and Contracted WorkServices and Contracted Work

BuyingBuying

• Funds must be available at time of Funds must be available at time of purchase from:purchase from:

• General Funds Savings or CheckingGeneral Funds Savings or Checking• Capital Reserve AccountCapital Reserve Account• Borrow the moneyBorrow the money

RentingRenting

• Reasons to rentReasons to rent

• Disadvantage – high costDisadvantage – high cost

• Rental optionsRental options

LeasingLeasing

• AdvantagesAdvantages

• DisadvantagesDisadvantages

• Examples of when leasing works bestExamples of when leasing works best

Lease-PurchaseLease-Purchase

• Little or no money upfrontLittle or no money upfront

• Equity in the endEquity in the end

• More costly than buying outrightMore costly than buying outright

ContractorsContractors

• One time or infrequent projectsOne time or infrequent projects

• During busy times when there is not During busy times when there is not enough manpowerenough manpower

• For skilled or specialized tasksFor skilled or specialized tasks

Exercise 1: Smallville needs a Exercise 1: Smallville needs a cranecrane

To Bid or Not to Bid…To Bid or Not to Bid…

• Usually, government purchases over Usually, government purchases over $10,000 require bidding$10,000 require bidding

• Bidding can be used below $10,000Bidding can be used below $10,000

• Once you start the bidding process, Once you start the bidding process, you must stick with ityou must stick with it

QuotesQuotes

• Minimum three written or telephone Minimum three written or telephone price quotations required for all price quotations required for all contracts between $4,000 and contracts between $4,000 and $10,000$10,000

• Not required for purchases under Not required for purchases under $4,000, but may be a good idea, $4,000, but may be a good idea, especially if the item or service will be especially if the item or service will be ordered more than onceordered more than once

Exceptions to the Bidding Exceptions to the Bidding RuleRule

• Public works maintenance or repairsPublic works maintenance or repairs

• Any work municipal employees can Any work municipal employees can do themselvesdo themselves

• ““Sole source” purchasesSole source” purchases

Exceptions to the Bidding Exceptions to the Bidding RuleRule

• Professional services such as engineers or Professional services such as engineers or lawyerslawyers

• Disaster emergency purchasesDisaster emergency purchases

Although these are allowable exceptions, biddingAlthough these are allowable exceptions, bidding

should be used if possible to ensure the best useshould be used if possible to ensure the best use

of taxpayer dollars.of taxpayer dollars.

Exercise 2: Exercise 2:

Which purchases are Which purchases are exempt from bidding?exempt from bidding?

Bidding ProceduresBidding Procedures

• Prepare “RFB “ Request for Bids Prepare “RFB “ Request for Bids documentsdocuments

• AdvertiseAdvertise

• Review proposals or bids after deadlineReview proposals or bids after deadline

• ““Conform” the bids, ask for clarifications if Conform” the bids, ask for clarifications if neededneeded

• Check referencesCheck references

• Select and award bidSelect and award bid

Government Bidding Government Bidding ProceduresProcedures

• Government must follow certain bidding Government must follow certain bidding proceduresprocedures

• Bids must be published in a local newspaper of Bids must be published in a local newspaper of general publicationgeneral publication

• Check municipal codes for advertising Check municipal codes for advertising requirementsrequirements

• Goes to the lowest Goes to the lowest responsibleresponsible bidder bidder

Bidding DocumentsBidding Documents

• SpecificationsSpecifications

• Terms and ConditionsTerms and Conditions

• Bid format and contract instructionsBid format and contract instructions

• Directions for SubmittalDirections for Submittal

Specify What You NeedSpecify What You Need• Common standardCommon standard

• What is needed by providing project or equipment What is needed by providing project or equipment specificationsspecifications

• Detail! Detail! Detail!Detail! Detail! Detail!

• All bid packages sent out must be identical, and All bid packages sent out must be identical, and any changes in the specifications need to be re-any changes in the specifications need to be re-advertisedadvertised

Specify What You NeedSpecify What You Need

• Minimum requirements and tolerancesMinimum requirements and tolerances

• Reference codes or industry standards Reference codes or industry standards

• Manufacturers’ standard specificationsManufacturers’ standard specifications

• Brand namesBrand names

Specify What You NeedSpecify What You Need

• Recycled productsRecycled products

• Minority-owned businessesMinority-owned businesses

• Deadline for submitting any questionsDeadline for submitting any questions

Exercise 3: Betty’s ChairExercise 3: Betty’s Chair

AdvertisingAdvertising

• Choose publications, websites, trade Choose publications, websites, trade journals, etc. that suppliers are likely to journals, etc. that suppliers are likely to readread

• Right to reject all bidsRight to reject all bids

Comparing BidsComparing Bids

• Check to make sure all bids fully meet Check to make sure all bids fully meet the specifications, schedule, and terms the specifications, schedule, and terms and conditionsand conditions

• Check references and document the Check references and document the bidder is found to be ‘responsible’bidder is found to be ‘responsible’

• No exceptionsNo exceptions

Bidding ProceduresBidding ProceduresAwarding BidsAwarding Bids

• Award made by public Award made by public announcementannouncement

• Contracts exceeding $50,000 must Contracts exceeding $50,000 must be awarded within 60 daysbe awarded within 60 days

What do you do if no What do you do if no satisfactory bids are received?satisfactory bids are received?

• Re-bid the itemRe-bid the item

• After 45 days of the 2nd After 45 days of the 2nd advertisement, negotiateadvertisement, negotiate

Legal Challenges to Bid Legal Challenges to Bid AwardsAwards

• PA courts have ruled that PA courts have ruled that disappointed bidders have no disappointed bidders have no standing to challenge the bidding standing to challenge the bidding processprocess

• A taxpayer may challenge the A taxpayer may challenge the bidding process if certain criteria are bidding process if certain criteria are metmet

Withdrawal of BidsWithdrawal of Bids

• Withdraw without forfeitWithdraw without forfeit

• Next lowest bidderNext lowest bidder

• Reject all bidsReject all bids

ContractsContracts

• Standard contract forms typically include:Standard contract forms typically include:

• Statement of workStatement of work• Change ordersChange orders• Payment schedule and interest penaltiesPayment schedule and interest penalties• Holdback of paymentsHoldback of payments• Liquidated damages Liquidated damages • Authority of the consultantAuthority of the consultant• SubcontractsSubcontracts

ContractsContracts

• Standard contract forms typically Standard contract forms typically include:include:

• Non-discriminationNon-discrimination• Final cleanupFinal cleanup• Contractor liabilityContractor liability• Licenses, permits, and regulationsLicenses, permits, and regulations• Anti-bid riggingAnti-bid rigging

BondsBonds

• Bid bondsBid bonds

• Performance bondsPerformance bonds

• Payment bondsPayment bonds

Conflicts of InterestConflicts of InterestIn PA, rules permitting officials to have a In PA, rules permitting officials to have a

financialfinancialinterest in suppliers vary by unit of government:interest in suppliers vary by unit of government:

• All officials All officials $500 limit$500 limit• CountiesCounties $0$0• CitiesCities $300$300• BoroughsBoroughs $1,000$1,000• First-class TownshipsFirst-class Townships $300$300• Second-class TownshipsSecond-class Townships $500$500

Other IssuesOther Issues

• Davis-Bacon Act and Pennsylvania Davis-Bacon Act and Pennsylvania Prevailing Wage Act Prevailing Wage Act

• Reverse auctions Reverse auctions

• Create economies of scaleCreate economies of scale

ExerciseExercise

• Take a few minutes to complete the Take a few minutes to complete the exercise in the workbookexercise in the workbook

SummarySummary

ResourcesResources

• Pennsylvania State Association of Township Supervisors, (717) Pennsylvania State Association of Township Supervisors, (717) 763-0930763-0930

• Governor’s Center for Local Government Services, (717) 720-7395. Governor’s Center for Local Government Services, (717) 720-7395. This agency has a free publication called the “Purchasing This agency has a free publication called the “Purchasing Handbook”.Handbook”.

• PA Dept. of Environmental Protection, Technical Assistance and PA Dept. of Environmental Protection, Technical Assistance and Outreach, (717) 772-4058, Dennis LeeOutreach, (717) 772-4058, Dennis Lee

• RCAP Solutions, (814) 861-6093, Don Schwartz, PA/NJ Program RCAP Solutions, (814) 861-6093, Don Schwartz, PA/NJ Program Manager Manager

• National Institute for Supply Management (formerly NAPM) National Institute for Supply Management (formerly NAPM) www.napm.orgwww.napm.org