Editorial: GARBAGE IN < > GARBAGE OUT by Terry Finefrock
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Low Bid Procurement Process Concepts:
The Low Bid procurement process that the County is authorized to use is very similar to that utilized by most other public procurement agencies. To generate optimal results and assure the prudent expenditure of public funds the process requires a clear and complete statement of all specifications and value to be received by the County and active participation and competition between many qualified bidders.
Free and full competition will provide the best price that the current market conditions can offer.
The award of contract is usually made to the responsible and competent Supplier that submitted the lowest price and ALSO satisfies all stated requirements. If the public procurement process requirements are fully supported it can generate similar pricing and quality results as private sector procurement processes.
The Pima County Procurement code, Board of Supervisor (B.O.S.) Policies and Procurement procedures jointly define organizational responsibilities for the tasks and information required to conduct the procurement process. They designate the Procurement Department as the central authority for establishing practices and contracts that satisfy the requirements defined by the using departments.
The Relationship between Specifications & Contract Price & Quality
BOS Policy D29.2. XIII Specifications designates that the using Departments are assigned the responsibility for defining contractual requirements and functional performance specifications necessary to perform their assigned objectives in a manner that promotes maximum competition. These specifications become an integral part of a contract.
In some instances such as Information Technology, Fleet, Facilities and Graphic Services/Products the County has designated a particular Department to plan and implement standards and contracts to support the County’s requirements for those items. For other solicitations/contracts the major using Department(s) are responsible for developing specifications that satisfy their and minor using Department requirements.
To promote contract performance and “quality” by assuring that only bids from competent and responsible suppliers are evaluated the specifications may also define minimum supplier qualifications, such as licenses, certifications and experience.
Specifications that are excessive or are not reasonable and necessary for the County to perform its responsibilities can restrict competition and result in higher pricing. Excessive specifications can reduce the number of suppliers that can participate, reducing competition, or add to costs (price) as Supplier bids include the costs for a supplier to accept risk, provide warranties, inventories or air freight to satisfy defined delivery response times, performance bonds, insurance, etc. Ambiguous item or general specifications can also result in higher, “just-in-case” pricing.
The Procurement Department creates Supplier Offer Agreement documents utilizing the specifications provided by the requisitioning department and standard terms and conditions developed by the Procurement Department and County Attorney. The Offer Agreement document eventually becomes a primary part of the Contract. Suppliers complete the Unit Pricing and submit their certified offers to the County. Procurement and the Requesting department evaluate the submittals as defined by the published solicitation for offers, determining responsiveness and competency to satisfy the requirements, and recommend award to the Low responsive and responsible Bid.
The Supplier has no obligation to provide any performance not documented by the Contract as per mutual agreement their Unit Prices included only those costs, values and risks defined by the specifications and other contract terms.
Summary
Clear and comprehensive specifications are critical for optimal Supplier and contract quality and pricing performance and can eliminate or allow rapid resolution of disputes.
The Procurement Department has developed Specification Development forms and guides to facilitate the definition of typical specifications. They are posted at the Procurement Intranet. Suppliers, Consultants and Internet may also provide sources for the development of comprehensive specifications.
Although it may require a considerable amount of work to identify all contractual specifications the up-front investment of time and effort can avoid the risk of subsequent performance and cost issues and provide great benefit. It is important to consider that the resulting contract may be used for up to five years…. a classic “Pay Me Now, or Pay Me Later” value proposition.
Terry Finefrock is the Chief Contracts & Procurement Manager for Pima County Procurement. He can be reached at terry.finefrock@pima.gov