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Central Puget Sound Regional Transit Authority Procurement and Contract Administration Manual Mission: Making a difference through exceptional procurement services. Vision: To be the premier provider of procurement services in the region. Issued by Sound Transit Procurement and Contracts Division March 2010 THIS PAGE INTENTIONALLY LEFT BLANK .-sOUNDTRANSIT PREFACE PREFACE This Manual is a guide to policies and procedures for purchasing and contracting for materials, supplies, equipment, services, architect-engineer services, and construction services through a public procurement and contracting process. It applies to all acquisitions by Sound Transit except for real property acquisitions. The Manual is consistent with Sound Transit procurement and contracting policies; all applicable laws and regulations; Federal Transit Administration (FT A) Circulars and the Best Procurement Practices Manual (BPPM) published by the FT A. Our goal is to procure materials, supplies, equipment, services, general and professional services including architect-engineer services, and construction services in a timely, efficient, and cost-effective manner while ensuring full and open competition. We will provide transparency of decisions to the public regarding our procurement and contracting actions, while constantly delivering value added services to our customers to maximize the use of taxpayer funds. This Manual describes the functions of the Procurement and Contracts Division in an endeavor to deliver a cradle-to-grave value added service to its customers. The Manual's scope covers the overall responsibilities, accountability, and managerial activities of the acquisition and contracting process currently adopted and utilized by Sound Transit. Pertinent functions, roles, and responsibilities of various ST departments and divisions providing support to or receiving support from the Procurement and Contracts Division is covered along with relevant federal and state regulations, guidelines, and procedures. Sound Transit have invested in strong internal procurement and contracting discipline in order to have the professional expertise available to assist Sound Transit staff in complying with procurement rules and regulations and optimizing value for tax funded dollars. Accordingly, adherence to these processes and procedures will assure our funding sources, our partners, and the public, that Sound Transit will judiciously use the scarce resources and that the their trust is well placed. Sound Transit may periodically update this Manual to reflect the changes to procurement and contracting policies, procedures, and processes. Every effort is made to ensure that the information contained in this Manual is current, accurate, and useful, but no legal responsibility or claims of negligence or other legal injuries, is accepted for any errors, omissions or misleading statements in the information contained herein. The Manual does not claim to offer definitive procurement or contracting or legislative authority, or to act as a substitute for any Federal or Washington State procurement regulations. Readers of the Manual who are not officers or employees of Sound Transit are advised to obtain their own professional ~y~ arising from the gUidanceC00~ 2-010 Ron Tober Kunjan Dayal Deputy Chief Executive Officer Director, Procurement and Contracts ACKNOWLEDGEMENT Special thanks to the following Procurement and Contracts Division staff who participated in the writing and formation of this document! April Alexander David Maxwell Ted Baduria Al McCutchan Barbara Buck Donielle Nevels David Christianson John Oreiro Diane Cognetta Connie Pham Sue Craven John Santiago Mara Elberts Laura Sharp Johanns Fernandez Susana Sison Raymund Fernandez Cheryl Starkey Don Fitzthum Linda Thomas Jim Hanon Linda Winter TABLE OF CONTENTS TABLE OF CONTENTS A. DEFINITION OF TERMS AND APPLICABILITY .................................................................................. 6 B. PARAMETERS ................................................................................................................................... 11 C. COMPLIANCE AND MANAGEMENT CONTROL ............................................................................. 12 1.0 PROCUREMENT METHODS OVERVIEW .............................................................. 13 2.0 CONTRACT TYPES.................................................................................................. 15 3.0 POLICY AND GENERAL REQUIREMENTS ........................................................... 18 4.0 AUTHORIZATION AND REPORTING LEVELS ...................................................... 25 5.0 CONFLICT OF INTEREST ....................................................................................... 26 6.0 INDEPENDENT COST ESTIMATE .......................................................................... 28 7.0 DISSEMINATING INFORMATION ........................................................................... 30 8.0 DEBRIEFING PROCEDURES.................................................................................. 31 9.0 PROTESTS ............................................................................................................... 32 10.0 REJECTION OR ACCEPTANCE OF OFFERS ....................................................... 34 11.0 WITHDRAWAL OF OFFERS .................................................................................... 35 D. PROCUREMENT METHODS INSTRUCTIONS ................................................................................. 37 1.0 MICRO PURCHASES ............................................................................................... 38 2.0 DIVISION PURCHASE ORDER ............................................................................... 39 3.0 SMALL PURCHASES ............................................................................................... 40 4.0 COMPETITIVE BIDS ................................................................................................. 42 5.0 NEGOTIATED PROCUREMENT OVER $100K ...................................................... 47 6.0 A&E NEGOTIATED PROCUREMENTS .................................................................. 51 7.0 A&E SMALL PURCHASE NEGOTIATED PROCUREMENTS................................ 55 8.0 TWO STEP PROCUREMENT .................................................................................. 58 9.0 EMERGENCY PROCUREMENT ............................................................................. 61 10.0 DESIGN-BUILD PROCUREMENT ........................................................................... 64 11.0 SMALL WORKS ROSTER ........................................................................................ 65 12.0 SOLE SOURCE......................................................................................................... 67 13.0 BLANKET AGREEMENTS........................................................................................ 71 14.0 PIGGYBACKING ....................................................................................................... 72 15.0 PROCUREMENT CARD ........................................................................................... 74 16.0 CONTRACTING OPPORTUNITIES WEBSITE E-BID............................................. 78 17.0 VENDOR DATABASE MAINTENANCE ................................................................... 79 E. CONTRACT ADMINISTRATION ......................................................................................................... 81 APPENDIX A. PROCUREMENT ACTIVITY LISTS ......................................................................... 91 March 2010 Procurement and Contract Administration Manual Page 5 of 100 DEFINITION OF TERMS AND APPLICABILITY A. DEFINITION OF TERMS AND APPLICABILITY This section briefly defines the terms and words frequently used in this Manual. For more precise definitions and compliance requirements, readers should rely on applicable state and federal procurement laws and regulations including 49 U.S.C. Section 5302. Addenda/Addendum -Written modifications issued by ST that makes changes to the solicitation document. Advance Payments - A payment made before performance of work under the contract. No advanced payments shall be made except for customary payments for FTA-funded projects described in FTA Circular 4220.1F IV.2.b.(5)(b). Agreement - Written agreement executed by ST and another legal entity that sets forth the rights and obligations of the parties in connection with the Work. Architectural vs. Architectural Engineering - As distinguished from architecture as a design art that focuses on the aesthetics or the functional or spatial layout or design of buildings; architectural engineering incorporates engineering principles to the design and construction of buildings and light rail systems that integrates various disciplines, including architecture, environmental, structural engineering, mechanical engineering and electrical engineering. Bid - A formal offer, tendered by an individual, firm, partnership, corporation, joint venture, or combination thereof, to provide goods or services at a specified price. Bidder - An individual, firm, partnership, corporation, joint venture, or combination thereof, includes all entities submitting a bid/proposal. Cardinal Change Order - A contract change which is outside the scope of the original contact, and thus not within the authority of the changes clause. Such changes are "sole source procurements" and must be processed accordingly. Central Puget Sound Regional Transit Authority or Sound Transit or ST - The public transit authority organized under the laws of the State of Washington charged with developing light rail, bus service, commuter rail and other public transit facilities in the Central Puget Sound Region. CEO/ Chief Executive Officer – A Chief Executive Officer appointed by the governing body of ST to manage the day-to-day functioning of the organization. Change Order - A written document signed by an authorized ST member that directs the Contractor to make a change pursuant to the Changes clause. The change order authorizes ST to exercise its contractual right to issue a change order with or without the Contractor's consent (i.e. option or administrative change). A modification (always bilateral) is issued when a change requires a Contractor's signature or the nature of work is outside the scope of contract (i.e. unforeseen subsurface conditions, acts of god, emergency, errors, or omissions, constructive change). CS is responsible for ensuring that appropriate change clause is included in all third-party solicitations and contracts. Cooperative Agreement – An instrument by which FTA awards Federal Assistance to a specific recipient to support a particular project in which FTA takes an active role or retains substantial control, as described in 31 U.S.C. Section 6305. Common Grant Rules – Federal grants rules of DOT that is based on regulation 49 CFR Part 18 and referred to as Uniform Administrative Requirements for Grants and Cooperative Agreements with State and Local governments and Non-Profit Organizations. Consultant/Contractor/Vendor/Supplier - The person(s), partnership, joint venture, or firm entering into a Contract for the performance of services or delivery of goods or equipment to ST. Contract Documents - The documents and plans expressly incorporated by reference into the executed agreement between ST and the Contractor that sets forth the legally binding obligations between ST and the Contractor for performance and completion of the Contract. March 2010 Procurement and Contract Administration Manual Page 6 of 100 DEFINITION OF TERMS AND APPLICABILITY Contract Administration - The post-award administration of Contracts to ensure that Contract deliverables are fulfilled by the Contractor pursuant to contract terms and conditions. These responsibilities are normally delegated to a Project Manager (PM) serving as the point of contact with the Contractor, but depending on contract type, complexity, and resource availability, some of these functions may be retained by a CS. The CS is responsible for ST's contract oversight and has the ability to intervene and advise the PM or project owners in all aspects of contract administration and compliance (e.g. cardinal change, modification, invoice, claims, partnering, and contract closeout). Contract Amount or Contract Price - The amount payable to the Contractor under the terms and conditions of the Contract and identified in the Contract, as may be adjusted by Contract Modification/Change Order for successful completion of the work under the contract. Contract Manager/CM - The individual responsible for the Goods and Services Procurement section or the Engineering and Construction Contracting section of the Procurement and Contract Division of the Executive Department. The Contract Manager reports to the Director, Procurement and Contracts. Contract Specialist or Senior Contract Specialist (CS) - The person responsible for ensuring that assigned procurements and contracts are properly solicited, formed, and administered in partnership with stakeholders, pursuant to all applicable ST policies and procedures, WA State and Federal procurement laws and regulations. A Contracts Manager reviews and approves the work performed by the CS. Cost Analysis - A cost analysis entails the review and evaluation of the each cost element and the proposed profit or markup of a bidder's or Contractor's cost or pricing data and the judgmental factors applied in estimating the costs. Design-Build - A contract between ST and a vendor, consultant or contractor in which the vendor, consultant or contractor agrees to design and build the equipment, facility, portion of the facility, or other item specified in the contract subject to the procedure and requirements stipulated in both FTA Circular 4220.1.F and Chapter 39.10 RCW, "Alternative public works contracting procedures." Director, Procurement and Contracts/Director – The position responsible for the functions of the Procurement and Contracts Division. The Director supervises the Contract Managers and other staff of the division. The Director reports to the Deputy Chief Executive Officer. Diversity - Diversity Program Office. DPO – Division Purchase Order. E-Bid – ST's public website for contracting opportunities. All formal procurements are posted at this webpage. This webpage enables vendors to register with ST for business opportunities whereby they receive e-mail or fax notification of procurement activity and they can download solicitations and documents. The site is located at www.SoundTransit.EBidSystems.com. Equitable Adjustment - An equitable adjustment is the difference between the reasonable cost of contract performance without the change or changes and the reasonable cost, actual or estimated, of contract performance with the change or changes. It is not the difference between the proposed or negotiated cost of contract performance and the actual or reasonable cost of contract performance with the change or changes. The purpose of an equitable adjustment is to fairly compensate a contractor for the change order. It is not a vehicle for increasing a contractor's profit or reducing its loss for reasons unrelated to a change. Emergency Contract - Emergency means unforeseen circumstances beyond the control of ST that either: (a) Present a real, immediate threat to the proper performance of essential functions; or (b) will likely result in material loss or damage to property, bodily injury, or loss of life if immediate action is not taken. A letter contract, a Notice to Proceed, or Purchase Order may be issued as a written preliminary contract instrument pending the formation of a fully defined Contract. Federal Acquisition Regulation/FAR - The Federal Acquisition Regulation, 48 CFR Chapter 1, does not apply to federally assisted procurements, absent Federal laws or regulations to the contrary. In the case of FTA programs, FAR cost principles Part 31 apply to grants and cooperative agreements with private for-profit entities. Audits of A&E services listed in 49 U.S.C. Section 5325 must be carried out under FAR Part 31 cost principles. Nevertheless, in the absence of other guidance, FAR standards may prove useful if Sound Transit's circumstances are suitable for application of the specific FAR provision under consideration (i.e., procurement planning, method and type). Final Acceptance - Written notice by ST acknowledging that Contractor has fulfilled all of its obligations under the Contract and that ST has accepted the Work or goods as of the date stated in the Notice. Final Acceptance is a condition precedent to Final Payment. March 2010 Procurement and Contract Administration Manual Page 7 of 100 DEFINITION OF TERMS AND APPLICABILITY Final Inspection - Inspection performed by ST to determine the actual status of the Work in accordance with the terms of the Contract. Final Pay - Following Final Acceptance of Work, including Punch List items and release of claims, ST makes final payment. FTA - Federal Transit Administration. General Contractor/Construction Manager (GC/CM) - A firm with which ST has negotiated a maximum allowable construction cost to provide services during the design phase and to act as construction manager and general contractor during the construction phase subject to the procedure and requirements stipulated in both FTA 4220.1 as amended and Chapter 39.10 RCW, "Alternative public works contracting procedures." Grantee – a government or public organization including Sound Transit receiving the FTA funding subject to the Common Grant Rule and Master Agreement. IFB - Invitation for Bids Independent Cost Estimate (ICE) - The ICE is ST's independent and initial estimate of the cost of the Scope of Work ("SOW") for a project or services. Integrated Procurement Team (IPT) - A cross-functional procurement team formed for the specific purpose of delivering a product or service. An IPT is intended to plan, integrate, and manage all essential procurement and contract administration activities through the use of multi-disciplined teams to focus on overall project performance rather than the performance of individual functional areas. Liquidated Damages - For each and everyday any portion of the work remains incomplete after the contract Time or for each and every day that any designated Milestone is not met, the amount the Contractor will pay to ST. Local Governmental Authority - As defined in 49 U.S.C. Chapter 53, the term "Local Governmental Authority" includes Sound Transit for the purpose of Federal Transit Administration (FTA) assistance. DBE - Disadvantaged Business Enterprise Manufacturer - The builder or producer supplying materials, equipment, or apparatus for installation or use. Materials - Materials, equipment, products, and articles incorporated or to be incorporated into the Work. Micro-Purchases - A method of procurement without obtaining competitive quotations for goods and services valued at $3,000 or less, if federally funded, and $5,000 or less if no federal funds are used. For FTA funded projects, the Micro-Purchases are exempt from FTA's Third Party Contract clauses except for construction contracts exceeding $2,000. Notice - Whenever provision is made to provide or issue any notice, instruction, consent, approval, certificate, or determination by any person or party to the Contract, unless otherwise specified, such communication shall be in writing and shall not be unreasonably withheld or delayed. Notice of Award/NOA – A written notice by ST to the successful Bidder that ST will sign and deliver the Contract subject to the conditions stated in the bid document and Notice of Award. Notice to Proceed/NTP – A written notice issued by ST to a Contractor directing the start of Work. Any Work performed prior to Notice to Proceed shall be at Contractor's own expense and risk. Owner Controlled Insurance Program/OCIP - An owner controlled insurance program under which commercial general liability, excess liability, professional liability, contractor's pollution liability, pollution legal liability, railroad protective liability and builders risk insurance are purchased and administrated by ST. OCIP provides insurance coverage for ST, its contractors and subcontractors while they are performing the work at designated ST Project sites. See OCIP Site: http://www.willis.com/abcxyz/soundtransit/html/index.htm. Offeror – The term "offeror" includes "quoter", "bidder", and "proposer" in response to a RFP, IFB, or RFQ, as used in this Manual. March 2010 Procurement and Contract Administration Manual Page 8 of 100 DEFINITION OF TERMS AND APPLICABILITY Option - A unilateral right in the Contract by which ST may elect to purchase, at a predetermined price, additional equipment, supplies, or services called for by the Contract. Payment Bond - A payment bond or "labor and material payment bond" executed in connection with a contract to assure payment, as required by law, to all persons supplying labor and material in the execution of the work provided for in the contract. Performance Bond - A surety or bond required of a consultant, vendor, or contractors, which secures their obligation to properly complete the work. Plans - Includes the drawings, standard drawings, profiles, typical cross-sections, general cross-sections, elevations, diagrams, schedules, and details that show the locations, character, dimensions, and details of the Work. The Plans include the Contract Drawings. Prevailing Wage – The government mandated minimum hourly wage, benefits, and overtime, paid to the workers, laborers, and mechanics in a public works contract. Prevailing wages are established by the Washington State Department of Labor and Industries, pursuant to RCW 39.12, for each trade and occupation employed in the performance of public work. It is established separately for each county, and is reflective of local wage conditions. For FTA funded construction contracts, 49 U.S.C. Section 5333(a), Davis-Bacon Act prevailing wage protections apply to workers, laborers and mechanics. Price Analysis - A price analysis involves examining and evaluating a proposed price without evaluating its separate cost and profit elements. At ST, every award must include a determination that the price is fair and reasonable. The extent of the analysis depends on the value and nature of the contract. Procurement Activity Lists/PAL – ST's primary procurement checklists which identifies the processes and provides instructions and references in acquiring goods and services pursuant to State and Federal procurement laws and regulations. A snapshot of the Procurement Activity List is provided as an appendix. Procurement of Architectural Engineering (A&E) Services – Chapter 39.80 RCW and 49 U.S.C. Section 5325(b)(1) require the use of the qualifications-based procurement procedures. The "Brooks Act" 40 U.S.C. Sections 1101 through 1104 is applicable to A&E services that covers program management, construction management, feasibility studies, preliminary engineering, design, architectural, engineering, architectural engineering, surveying, mapping and related services. Procurement by Competitive Proposals/Request for Proposals - The use of competitive proposals is a generally accepted procurement method when the nature of the procurement does not lend itself to sealed bidding and more than one source is expected, willing, and able to submit an offer or proposal. Procurement Lead Time/PLT - The time taken to award a contract or purchase order. It usually begins with the submission of a purchase requisition and ends with awarding a purchase order or contract. Depending on dollar value and complexity, typical PLT activities may include development or conduct of: statement of work, independent cost estimate, market research, insurance requirements, diversity goal, contracting method and type, sole source justification, selection of solicitation and contract clauses, advertisement, solicitation issuance, pre-bid conference, cost and technical proposal review, evaluation team, negotiation, cost/price analysis, organizational review, legal review, contractor's acceptance and signature, and ST's approval, and contract award documentation, See Procurement Lead Time for detail and guidance. Progress Payment - Partial payment request for acceptable work performed and materials received. Project Manager/PM - The individual designated by ST to manage the project on a day-to-day basis. Proposal – A formal plan for the provision of goods or services, tendered by an individual, firm, partnership, corporation, joint venture, or combination thereof. Proposals are evaluated on qualitative technical factors in addition to price. For Architecture and Engineering project proposals, price is not a competitive factor. Protest – It allows any actual or prospective proposer, bidder, offeror, or contractor ("Interested Party") who is aggrieved in connection with a solicitation, evaluation, or award of a contract, an opportunity to state their dispute and have a right to seek resolution of any concerns, issues, or perceived wrongs associated with the procurement process. All ST's administrative procedures must be exhausted and followed prior to raising the issue to the Federal Transit Administration (FTA). March 2010 Procurement and Contract Administration Manual Page 9 of 100 DEFINITION OF TERMS AND APPLICABILITY Quality Assurance/QA - All those planned and systematic actions necessary to provide confidence that all Work complies with the Contract and that all materials incorporated in the Work, all equipment and all elements of the Work will perform satisfactorily for the purpose(s) intended. Resident Engineer/RE – Reports to a third party Construction Management Consultant and ST's Construction Manager and is charged with the professional administration of the construction contract as ST's authorized representative. Recipient – The Recipient for this Manual is Sound Transit. The term is used for any public entity to which FTA awards Federal assistance through a grant, cooperative agreement, or other agreement. A recipient must comply with Common Grant Rules 49 CFR Part 18 and 19. Request for Information/RFI - A written request by a vendor, consultant or contractor requesting clarification or additional information concerning the solicitation and/or contract documents. Revenue Contract - A contract in which ST provides access to vendor, consultant or contractor to public transportation assets for the primary purpose of either producing revenues in connection with a public transportation related activity, or creating business opportunities involving the use of its property or other assets. Revised Code of Washington/RCW – The RCW is the compilation of all permanent laws currently in force. It is a collection of Session Laws (enacted by the Legislature, and signed by the Governor, or enacted via the initiative process), arranged by topic, with amendments added and repealed laws removed. It does not include temporary laws such as appropriations acts. The official version of the RCW is published by the Statute Law Committee and the Code Reviser. Title 39 RCW governs public contracting and indebtedness in the State of Washington. RFP - Requests for Proposals. RFQ - Requests for Qualifications or Requests for Quotes or Quotations. Selection Committee/Selection Panel – Group of individuals that evaluate Proposals received and recommends the Proposer(s) to whom the contract(s) should be awarded. Contract Specialist leads and facilitates this group to ensure evaluation process is compliant with the process stated in the solicitation document and this Manual. Solicitation Document - The document sent out or posted by ST requesting quotes, proposals, or bids for needed goods or services. Sound Transit/ST - See Central Puget Sound Regional Transit Authority. Specifications - Part of the Contract containing written directions and requirements for completing the Work and/or providing the goods or services. Standards or portions thereof cited in the Specifications by reference shall have the same effect as if physically included in the Contract in their entirety. State - The state of Washington including its departments and its agencies. Subcontractor - Any person, firm, partnership, corporation, or other entity, other than employees of the Contractor, that contracts with the prime Contractor to furnish labor, or labor and Materials, or goods or services, under a specific Contract. Substantial Completion - Completion of the Work, or a designated portion thereof, to a point where ST certifies that the Work or the designated portions can be used for the purpose for which it was intended. Third Party Contract - Refers to a contract with a third party such as a vendor, supplier, consultant, or contractor, where the first party is the federal government and the second party is ST. March 2010 Procurement and Contract Administration Manual Page 10 of 100 PARAMETERS B. PARAMETERS This Manual provides an overview of the procurement and contracting process with emphasis on important State and Federal requirements relating to the procurement of goods and services including public works, professional services, and construction projects. This Manual is not intended to be an "all-inclusive" source of information or a detailed list of mandatory procurement and contracting steps. Procurement and Contracts Division's staff shall utilize best business skills and judgment in their decisions and actions. For procurement activities or contract administration situations not addressed in this Manual, readers should review the following: o ST Board Resolution No. 7898-1578-1 and 81 and revisions • Applicable "Revised Code of Washington (RCW), including Titles 39 and 42." • 49 CFR Part 18 and Part 19 (Common Grant Rules) • FTA Master Agreement (MA 15) 10-1-2008 • 49 U.S.C. § 5302 : US Code - Section 5302: Definitions • FTA "Circular 4220.1F (Third Party Contracting Guidelines) and revisions" • FTA "Circular 5010.1D (Grant Management Requirements) and revisions" • FTA "Circular 5200.1A (Full Funding Grant Agreement and Master Grant Agreements) and revisions" • FTA, "49 CFR Part 611 – Major Capital Investment Projects" • FTA, "Project and Construction Management Guidelines – 2003 Update" • FTA "Construction Project Management Handbook (Revision 1 – April 2007)" • ST Motions 17 and 29: Guiding Principles for Employment and Contracting and Policies Implementing the Guiding Principles for Employment and Contracting. Available for internal use only: • ST Procurement Activity Lists (PAL): contains necessary procurement procedures, forms, and checklists. See Appendix A for general outline of the lists. • ST Program Management Plan and Project Management Plans • ST Construction Manual(s) • ST Resident Engineer Manual(s) • ST Project Control Policies and Procedures • Applicable ST Department or Division Policies and Procedures • Procurement Process Flow Charts Available online at: http://intranet.soundtransit.org/STB/Contracts/Pages/default.aspx Best practices: • FTA's "Best Practices Procurement Manual" • Applicable Federal Acquisition Regulations March 2010 Procurement and Contract Administration Manual Page 11 of 100 COMPLIANCE AND MANAGEMENT CONTROL C. COMPLIANCE AND MANAGEMENT CONTROL Contract Specialists (CS) are required to conduct procurements in accordance with applicable local, state, and federal requirements, and ST procurement policies and procedures, utilizing best business and purchasing & contracting practices and the highest standard of ethics. A system of procurement checklists has been instituted to provide built-in quality control to substantiate and validate the quality of all procurement and contracting actions at ST. This management control procedure is designed to substantiate how each procurement or contracting process is conducted, and to ensure that each file contains appropriate documentation to support the process. The primary management control system is Procurement Activity Lists (PAL). The PAL establishes procurement and contracting process standards, ensures consistency of decisions and actions, and provides general direction to Procurement and Contracts Division (PCD) staff to negotiate steps and complete activities of the procurement and contracting process consistent with ST requirements as well as any applicable local, state, and federal procurement laws and regulations. Not all items of the PAL are required in each procurement action, but the rules and procedures contained therein shall be observed. Any deviation that significantly alters the PAL requirements shall be approved in advance by the Contract Manager(CM) or Director, Procurement and Contracts (Director). CMs shall supervise PAL activities in all procurement actions and approve the completed PAL. The CM's signature indicates that all the contents of the procurement document and supporting file documentation are accurate, compliant, and complete. The PAL includes a checklist titled Compliance of Document to FTA that mirrors the contents of FTA Circular 4220.1F Appendix C, "Third Party Contracting Checklist". This checklist shall be completed by CS for all FTA-funded procurements. The Director shall ensure that the PAL's comply with all applicable Federal requirements including the latest edition of FTA's Master Agreement. This Manual is written to: • Satisfy Procurement and Contracts Division's internal customers in terms of cost, quality, and timeliness of the delivered products and services; • Minimize administrative operating costs; • Conduct business with consistency, integrity, fairness, and openness; • Lay the framework of necessary flexibility for ST to manage risks and opportunities in a business transaction; • Facilitate management of integrated procurement team; and • Fulfill public policy objectives of Sound Transit. March 2010 Procurement and Contract Administration Manual Page 12 of 100 PROCUREMENT METHODS OVERVIEW 1.0 PROCUREMENT METHODS OVERVIEW ST utilizes several different procurement and contracting methods to procure materials, supplies, equipment, services, general and professional services including architect-engineer services, and construction services and enter into agreements in accordance with applicable State and Federal laws and regulations. 1.1 Competitive Bidding: A formal procurement method that maximizes price competition by basing contractor selection among responsive and responsible bidders on price alone, without use of subjective evaluation criteria. This process includes the following elements: • Defines the conditions for competitive bidding; • Requires public advertising; • Allows sufficient time to prepare bids prior to bid opening; • Requires awards to be made to the lowest, responsive and responsible bidder; and • Documents sound business reasons if any bid(s) are rejected. This is the preferred procurement method and is employed unless certain conditions make it infeasible or impractical. It is also referred to as sealed bidding or Invitation for Bid (IFB) method. This is best suited to lump sum and unit-price contracts rather than cost reimbursement contracts. 1.2 Negotiated Procurement: A formal procurement method involving the evaluation of proposals and negotiation of a contract. It is intended to permit competition on quality and other qualitative factors, and price (excluded when Brooks Act applies). It is also referred to as the competitive proposal process, best value procurement, or Request for Proposal (RFP) method. 1.3 Micro Purchase: An expedited method of procuring goods and services valued at $3,000 or less, if federally funded, and $5,000 or less if no federal funds are used. A micro purchase does not require obtaining competitive quotations if the purchaser documents and makes a determination that the price is fair and reasonable. Micro purchase authority is widely delegated due to extremely low risk. 1.4 Small Purchase: A simplified method of procuring services, supplies or other items that costs less than $100,000. Competitive quotes must be obtained prior to making a purchase. Small purchase authority is partially delegated due to low risk. 1.5 Sole Source Procurement (including Proprietary Procurements): A method of procurement by a noncompetitive process. Sole source procurements are accomplished through solicitation or acceptance of a proposal from only one source, or after solicitation of a number of sources, competition is determined inadequate. Sole source is typically used when the goods or services are proprietary to one company and not easily obtained elsewhere. A sole source justification must be made in writing and a cost analysis must be prepared verifying the proposed cost data, the projections of the data, and the evaluation of the costs and profits. Note: All change orders outside the scope of contract are considered sole source procurement action. ST's Board Motion 78-1 permits use of Proprietary procurements where only local funds are applied. Proprietary procurements may only be used when the award of a competitive contract is infeasible under Micro Purchase, Small Purchase, Sealed Bidding, or Competitive Negotiation procedures. FTA does not permit proprietary procurements unless it meets the sole source justification criteria stipulated in FTA 4220.1.F. March 2010 Procurement and Contract Administration Manual Page 13 of 100 PROCUREMENT METHODS OVERVIEW 1.6 Two-Step Procurement: The first step of a Two-Step procurement method consists of a technical or pre-qualification phase in which bidders submit un-priced technical or qualification proposals that is evaluated, and a second step in which those bidders whose technical offers or qualifications are determined to be acceptable during the first step have their priced bids considered. 1.7 Piggybacking: Public agencies that have executed an Intergovernmental Cooperative Purchasing Agreement (ICPA) with each other may make purchases from each other's contract awards, if the Vendor has agreed to such participation. The awarding agency does not accept any responsibility for orders placed by other public agencies. 1.8 Qualification-based Procurement: Unlike the two-step bidding methods in which price is an evaluation factor, in a qualifications based method of procurement only an offeror's qualifications are evaluated to determine contract award. Price is always excluded as an evaluation factor under this procurement method. Sound Transit shall use this method when contracting for A&E services, and also for other services listed in 49 U.S.C. Section 5325(b)(1) that are directly in support of, directly connected to, directed related to, or lead to construction, alteration, or repair of real property. However, if the A&E services described above are not directly related to, or lead to construction, the use of this procurement method is prohibited. 1.9 Federal Supply Schedule: Federal Law authorizes Sound Transit to use Federal Supply Schedules to acquire all information technology (IT) products and services (GSA Schedule 70). Only for major disaster or emergency recovery situations as defined in 40 U.S.C. Section 502(d), Sound Transit may use any GSA Federal Supply Schedule to acquire property and services in advance of a major disaster declared by the President of the United States, as well as in the aftermath of an emergency event. Contract Specialist shall ensure that an FTA Buy America certification is obtained before entering into the purchase order. 1.10 Joint Procurement: It allows two or more government purchasers to agree from the outset to use a single solicitation document and enter into a single contract with a vendor for delivery of property or services in a fixed quantity, even if expressed as a total minimum and total maximum. March 2010 Procurement and Contract Administration Manual Page 14 of 100 CONTRACT TYPES 2.0 CONTRACT TYPES Procurements can be developed utilizing a variety of contract types. A contract type reflects the level and timing of the responsibility and risk assumed by the contractor for the cost of performance. ST will consider all relevant factors and ensure the right type of contract is utilized. Detailed guidance is provided in FAR Part 16. CS shall document the rationale for the contract type in the procurement file. The following table provides an overview and a point of reference for this subject. Contract Category Characteristics Characteristics Cost-Reimbursement Fixed-Price Promise Best effort Shall deliver Risk to contractors Low High Risk to ST High Low Cash flow As incurred On delivery Progress payment None % of actual Administration Max for ST Least for ST Fee or profit Max: 6/10 % No limit CPFF contract 2.1 Fixed Price Contracts – A Fixed Price Contract provides for performance of specified work or supply of goods in consideration of a fixed price, and the contractor bears the risks of uncertainty. Such contracts provide maximum incentive for the contractor to control costs and perform effectively and imposes minimum administrative burden upon contracting parties. A fixed price contract type is recommended for materials, equipment, and construction. 2.1.1 Firm Fixed Price Contracts: A Firm Fixed Price Contract provides for performance of specified work or supply of goods in consideration of a firm and fixed price, and the contractor bears all risks of uncertainty. Such contracts do not permit for price adjustments under normal business circumstances. 2.1.2 Fixed Price with Escalation Contracts: In a fixed price with escalation contract, the contractor bears all contract cost risk except the part covered by the escalation provision. A fixed-price incentive contract is used when the parties can negotiate a target cost, target profit, and a ceiling price that provides for the contractor to assume an appropriate share of the risk. 2.1.3 Fixed Price with Award Fee Contracts: Award-fee provisions may be used in fixed- price contracts when ST wishes to motivate a contractor and other incentives cannot be used because contractor performance cannot be measured objectively. Such contracts shall establish a fixed price (including normal profit) for the effort. A fixed price will be paid for satisfactory contract performance. Award fee earned (if any) will be paid in addition to fixed price. 2.1.4 Firm-fixed-price, level-of-effort term contract requires that a contractor provide a specified level of effort, over a stated period, on work that can be stated only in general terms and that ST pay the contractor a fixed dollar amount. 2.2 Cost reimbursable contracts provide for the payment of allowable costs incurred in the performance of the contract and establish a ceiling on cost that the contractor cannot exceed. These are best when uncertainties exist which prevent the preparation of precise work scope and cost estimate. This type is also appropriate for professional service contracts. In all March 2010 Procurement and Contract Administration Manual Page 15 of 100 CONTRACT TYPES cases, the cost reimbursable contract type requires the contractor to have an acceptable cost accounting system. 2.2.1 Cost-plus-fixed-fee: This cost-reimbursement contract provides for payment to the contractor of a negotiated fee that is fixed at the inception of the contract. The fixed fee does not vary with actual cost, but may be adjusted because of changes in the work to be performed under the contract. This contract type permits contracting for efforts that might otherwise present too great a risk to contractors, but it provides the contractor only a minimum incentive to control costs. 2.2.2 Cost-plus-incentive-fee and award-fee: A cost plus incentive fee (CPIF) is a cost- reimbursement contract that provides for an initially negotiated fee to be adjusted later by a formula based on the relationship of total allowable costs to total target costs. A cost-plus-award-fee (CPAF) contract is a cost reimbursement contract similar to CPIF, but the fee adjustment is based on subjective technical evaluation rather than cost control. Increases in fee will be possible when contractor exceeds the technical and management parameters. CPAF requires much greater administration effort than in either CPIF or CPFF. Use of CPAF is only permitted when other contract delivery system is not suitable. Since it requires ongoing collaboration and administration effort, CS shall ensure that the contract values, contract period, and expected results warrant that additional management effort. 2.2.3 Time-and-material (T&M) contract is used to procure supplies and services at specified fixed hourly or unit rates (fully burdened) and/or material at cost. The labor- hour (LH) contracts are a variation of the T&M excluding materials supplied by the contractor. The common grant rule for government recipients permits the use of time and material contracts only when it is not possible to estimate the extent or duration of the effort or cost involved and the contract provides a not-to-exceed ceiling price that the contractor may not exceed except at its own risk. Both T&M and LH provide no incentive for contractors' cost control or labor efficiency; therefore, both CS and PM should monitor that the contractor is performing efficiently and using effective cost control measures. The following diagram provides a spectrum according to the degree of risk in the determination of the type of contracts for a procurement action. The risk to ST increases as the contract type moves from Lump Sum Firm Fixed Fee to Cost plus Fixed Fee. The former is the easiest to administer, but the risk to the contractor increases. The latter involves the highest uncertainty and the contractor does not guarantee to deliver the product or finish the project at the contract award price. Goods & Services, Facility Risk to Phone Construction, Equipment Lump Sum, Firm Fixed Price Government is Low Fax (e.g. buses, rail cars, spare Fixed-Price with Escalation Quote parts), A&E Small Purchase, Fixed-Unit-Price IFB and Public Works. Fixed-Unit-Price with Escalation Fixed Price Incentive Fee Fixed Price Award Fee A&E, Design, Professional Fixed Price Level-of-effort Services (e.g. Audit, Cost-Plus-Award Fee Consultant Managed Cost-Plus-Incentive Fee RFP Construction, Legal), Cost-Plus-Fixed Fee Prototype, R&D, Design- Time and Material Risk to Build Government RFQ Labor is High March 2010 Procurement and Contract Administration Manual Page 16 of 100 CONTRACT TYPES As discussed in FAR Part 16, the factors that should be considered in determining appropriate contract types are: price competition, realistic pricing standard, degree of uncertainty and impact on cost evaluation, type and complexity of the work, urgency, period of performance, contractor's technical qualification, contractor's financial responsibility, past performance, concurrent contract work load, extent of subcontracting, availability of procurement history, and contract administration. The Federal Common Grant Rules expressly prohibit the use of the cost plus a percentage of cost and cost plus a percentage of construction cost methods of contracting. March 2010 Procurement and Contract Administration Manual Page 17 of 100 POLICY AND GENERAL REQUIREMENTS 3.0 POLICY AND GENERAL REQUIREMENTS 3.1 Policy: ST will endeavor to conduct all procurement transactions in a manner that provides for full and open competition. When conducting procurements that are funded with FTA grants, Sound Transit will manage the entire procurement and contract administration process in compliance with FTA Circular 4220.1F 3.2 Implementation: The Procurement and Contracts Division will maintain Procurement Activity Lists (PAL) that provide systematic instructions for acquisition planning, solicitation preparation, source selection, negotiations and contract award including the specific third party contract provisions and requirements to form a sound, complete, and compliant agreement consistent with applicable RCW and federal laws and regulations. Each activity item in the list covers specific guidelines and procedures in detail. Procurement activities commence with development of project plans or annual procurement plans, and end at project closeout. ST will use the FTA Best Procurement Practices Manual as its guiding procurement document consistent with ST Resolution 78-1 and applicable local, state, and federal procurement laws and regulations. Some of the situations that are considered restrictive of competition include: • Unreasonable requirements placed on firms in order for them to qualify • Unnecessary experience and excessive bonding and/or insurance requirements • Noncompetitive bidding practices between firms or between affiliated companies • Noncompetitive awards to any person or firm on retained contracts • Organizational conflicts of interest. An organizational conflict of interest means that because of other activities, relationships, or contracts, a contractor is unable or potentially unable to render impartial assistance or advice to ST; a contractor's objectivity in performing the contract work is or might be otherwise impaired; or a contractor has an unfair competitive advantage • The specification of only a "brand name" product without listing its salient characteristics and not allowing an equal product to be offered • Contract modifications or change order actions outside the original contract scope • Any arbitrary action in the procurement process 3.3 Mandatory requirements: The following procurement requirements shall apply to all procurement and contracting actions at ST: 3.3.1 Written record of procurement history: A written record of procurement history (procurement summary memo) for purchases exceeding the small purchase threshold (currently $100,000) shall be included with the documentation for all procurements. The extent of documentation shall vary depending on the complexity of the procurement. For small purchases less than $100,000, a simplified memo will be sufficient. At a minimum, the following information shall be included: • Rationale for the method of procurement • Selection of contract type • Reasons for contractor selection or rejection • Basis for the contract price • Rationale for the period of performance (contract term) 3.3.2 Time and Material Contracts: The use of time and material type contracts shall be permitted only after a determination that no other type of contract is suitable and the contract shall specify a ceiling price that the contractor shall not exceed except at its own risk. March 2010 Procurement and Contract Administration Manual Page 18 of 100 POLICY AND GENERAL REQUIREMENTS 3.3.3 Period of Performance: The time of delivery or performance is an essential contract element and shall be clearly stated in solicitations. CS shall ensure that delivery or performance schedules are realistic and meet the requirements of the procurement. Periodic re-competition of contracts preserves competition and keeps prices competitive. Without periodic competition, the vendor or supplier will not have the pressures of a competitive market to keep prices reasonable or an incentive to maintain satisfactory performance. ST may form a contract for goods and services for a period based on business need and consistent with the intent of the "full and open competition" principle, as indicated in RCW and FTA Circular 4220.1.F. ST will contract only for its current and reasonably expected business needs. For rolling stock and replacement parts funded by FTA, ST will not enter into contracts with a period of performance exceeding five years inclusive of options without prior written FTA approval. 3.3.4 Geographic Preferences: 49 U.S.C. Section 5325(i) prohibit the use of statutorily or administratively imposed state or local geographical preferences in the evaluation of bids or proposals, except in cases where applicable federal statutes expressly mandate or encourage geographic preference. This prohibition does not preempt state licensing laws. Geographic location may be a selection criterion on procurements for architectural and engineering services if its application leaves an appropriate number of qualified firms to compete for the contract. 3.3.5 Options: ST may include options in its contracts to ensure future availability of equipment, property, or services, when business purpose exists. An option is an unilateral right in a contract where ST may, within a specified period of time, elect to purchase additional equipment, supplies or services called for by the contract or may elect to extend the term of the contract. CS shall document the determination of the need to exercise contract option and that the option price is fair and reasonable based on cost and price analysis. Options will be priced, evaluated, negotiated, and documented as part of original contract award. ST must have unilateral right to exercise the option. If a contract contains options, the following shall apply: 18.104.22.168 Review of Options: CS shall review the options in the solicitation documents to ensure that proposers or bidders are required to provide prices for required options or that the contract provisions identify an index and procedures for pricing and exercising the options in future years before authorizing, advertising or issuance of solicitation. 18.104.22.168 Evaluation of Options: The option quantities or periods contained in the offer must be evaluated in order to determine contract award. CS shall ensure that prices for options included in the offers are evaluated before the CS makes a determination on award of a contract. Evaluation Not Required: ST need not evaluate bids or offers for any option quantities if there is a determination that evaluation would not be in ST's best interests. 184.108.40.206 Exercise of Options: CS must ensure that the exercise of an option is in accordance with the terms and conditions of the option stated in the original contract award. An option may not be exercised unless it has been determined that the option price is fair and reasonable and in ST's best interest. If a contract has one or more options and those options were not evaluated as part of the original contract award, exercising those options after contract award will result in a sole source award. March 2010 Procurement and Contract Administration Manual Page 19 of 100 POLICY AND GENERAL REQUIREMENTS 126.96.36.199 Negotiating a Lower Option Price: Prior to exercising the option, ST shall perform market survey and evaluate the option. ST may offer a price reduction due to changes in market conditions and execute a bilateral modification to the contract reflecting lower pricing before the options are exercised. Caution: Exercising an option after ST has negotiated a lower or higher price will result in a sole source award unless that price can be reasonably determined from the terms of the original contract, or that price results from Federal actions that can be reliably measured, such as changes in Federal prevailing labor rates. 18.104.22.168 Option Piggybacking: It is essential that there be an assignment clause in the contract issued by the originating agency. If the contract contains an assignment clause, then the originating agency must agree to assign the contract options, together with all the terms and conditions of the contract, to ST. The preferred method would be a contract modification between the original contracting parties (i.e., the vendor and the originating agency) or a new contract may be issued. Thereafter, ST will issue a contract exercising the option. ST may include FTA's third party contract clauses, if required. 3.3.6 Prohibition: Use of cost plus a percentage of cost and cost plus a percentage of construction cost methods of contracting is expressly prohibited by the federal common grant rules 49 CFR part 18. 3.3.7 Advance Payments: As a principle, ST will not make advance payments. The FTA does not authorize and will not participate in funding payments to a contractor for FTA funded projects prior to the incurrence of costs by the contractor unless prior written concurrence is obtained from FTA. However, FTA recognizes that advance payments are typically required for, but are not limited to, public utility connections and services, rent, tuition, insurance premiums, subscriptions to publications, software licenses, construction mobilization costs, transportation, hotel reservations, and conference and convention registrations. Accordingly, the recipient may use FTA assistance to support or reimburse the costs of such acquisitions. FTA concurrence is required only when such advance payment or payments customarily required in the marketplace exceed $100,000. 3.3.8 Progress Payments: ST may use progress payments if progress payments are only made to the contractor for costs incurred in the performance of the contract and that ST obtains adequate security for progress payments. Adequate security may include taking title, letter of credit, or equivalent means to protect ST's interest in the progress payment. See FTA Circular 4220.1.F for more information. Adequate security should reflect the practical realities of different procurement scenarios and factual circumstances. FTA acknowledges the practical reality that taking title to work in progress may not be desirable in some circumstances. Sound transit should always consider the costs associated with providing security (for example, the recipient may need to acquire bonds or letters of credit in the commercial marketplace) and the impact of those costs on the contract price, as well as the consequences of incomplete performance. Sufficient documentation is required to demonstrate completion of the amount of work for which progress payments are made. The common grant rules require that any progress payments for construction contracts be made on a percentage of completion method described therein. The recipient, however, may not make progress payments for other than construction contracts based on this percentage method. 3.3.9 Liquidated damages: Liquidated damages may be used if ST reasonably expects to suffer damages through delayed contract completion, and the extent or amount of such damages would be difficult or impossible to determine. The rate of the liquidated damages must be specified in the contract. If federally funded, any liquidated March 2010 Procurement and Contract Administration Manual Page 20 of 100 POLICY AND GENERAL REQUIREMENTS damages recovered shall be credited to the project account involved unless FTA permits otherwise. The procurement file shall include documentation as to the methodology used to calculate liquidated damages. 3.3.10 Bonding for public works or construction contracts: The Federal Common Grant Rules require bonds for all construction contracts with FTA assistance, exceeding the small purchase threshold (currently $100,000) unless FTA determines that other arrangements adequately protect the federal interest. FTA's bonding policies are as follows: 184.108.40.206 Bid Guarantee: FTA and the Common Grant Rule generally require each bidder to provide a bid guarantee equivalent to 5 percent of its bid price. The "bid guarantee" must consist of a firm commitment such as a bid bond, certified check, or other negotiable instrument accompanying a bid to ensure that the bidder will honor its bid upon acceptance. 184.108.40.206 Performance Bond: FTA and the Common Grant Rule require the third party contractor to obtain a performance bond for 100 percent of the contract price. A "performance bond" is obtained to ensure completion of the obligations under the third party contract. 22.214.171.124 Payment Bond: The Common Grant Rule requires ST's contractor to obtain a standard payment bond for 100 percent of the contract price. A "payment bond" is obtained to ensure that the contractor will pay all subcontractors supplying labor and material. FTA, however, has determined that payment bonds in the following amounts are adequate to protect FTA's interest and will accept a local bonding policy that meets the following minimums: o Less Than $1 Million. Fifty percent of the contract price if the contract price is not more than $1 million, o More Than $1 Million but Less Than $5 Million. Forty percent of the contract price if the contract price is more than $1 million but not more than $5 million, or o More Than $5 Million. Minimum $2.5 million dollars if the contract price is more than $5 million. 22.214.171.124 The Contractor shall provide a Performance Bond and a Labor and Material Payment Bond for all public works or construction contracts, each in the amount of 100 percent of the Contract Price (plus any increases thereto) in a form acceptable to Sound Transit and in compliance with RCW 39.08. These bonds shall serve as security for the faithful performance of the Work and as security for the faithful payment and satisfaction of the persons furnishing materials and performing labor on the Work. These bonds shall be issued by a corporation duly and legally licensed to transact surety business in the State of Washington. The scope of these bonds shall be prescribed in each solicitation and contract documents. 18.104.22.168 Pursuant to RCW 39.08.010, on all public works or construction contracts of $35,000 or less, at the option of the contractor the respective public entity may, in lieu of the bond for 100 percent of the contract price, retain 50 percent of the contract amount for a period of 30 days after date of final acceptance, or until receipt of all necessary releases from the Department of Revenue and the Department of Labor and Industries (L&I) and settlement of any liens filed under chapter 60.28 RCW, whichever is later. 3.3.11 Retainer for public works or construction contracts: Pursuant to RCW 60.28.011, Sound Transit will retain 5 percent of all progress payments, excluding retail sales tax, as a trust fund for the protection and payment of any person or persons, mechanic, March 2010 Procurement and Contract Administration Manual Page 21 of 100 POLICY AND GENERAL REQUIREMENTS subcontractor, or material provider who performs labor upon the contract or work hereunder, and all persons who shall supply such person or persons or subcontractors with provisions and supplies for carrying on such work, and the state with respect to taxes imposed pursuant to chapter 82 RCW which may be due from the contractor. Such funds ("retention") shall be deemed as public funds under RCW 39.58. In the event that during the performance of the contract and prior to the expiration of the claim period as provided in RCW 60.28.011, the amount retained is reduced to an amount below 5 percent, then Sound Transit may retain additional sums from monies earned by the contractor so as to maintain at all times a 5 percent retained trust fund, unless otherwise reduced or excused by provisions of chapter 60.28 RCW. 3.3.12 Duplicative or unnecessary purchases: The Procurement and Contracts Division will conduct regular reviews of procurement actions to identify duplicative or unnecessary purchases. Small and micro purchases will be reviewed to determine if and how purchases can be consolidated to obtain purchases that are more economical for ST. These reviews will include Purchase-card (P-card) and Division Purchase Order transactions. 3.3.13 Breaking Out Purchases: For procurements with large scopes of work, ST will review the scope to determine if the procurement would be more beneficial to ST if it were to be broken out into two or more separate contracts. The ability to provide more contracting opportunities to small businesses shall be a part of this consideration. 3.3.14 Sound and Complete Agreement: Contract Specialists shall ensure that precise language is used in describing the Order of Precedence or Contents of the Contract. All agreements, attachments, forms, and documents shall be identified by dates and reference numbers. To the extent that there are different provisions in Contract Documents that address the same matter or subject and these different provisions conflict, the document listed first that addresses the matter or subject shall control. If additional conflicting provisions exist within the same level of Contract Document, ST's decision shall be binding. 3.3.15 Cost/Price Analysis: A cost or price analysis must be performed for every procurement action. The degree of analysis is dependent on the facts of the particular procurement but as a starting point, the initiating department must prepare an independent cost estimate before receiving bids or cost proposals. PM, Project Control, and CS may use the following resources as guidance in performing cost or price analysis: • FTA's "Best Practices Procurement Manual" • The National Transit Institute Course, "Cost or Price Analysis and Risk Assessment" • Pricing Guide for FTA Grantee, FTA Website: http://www.fta.dot.gov/documents/Helpline_Price_Guide.doc • FAR Part 31, Contract Cost Principles and Procedures 3.3.16 Cost Analysis: A cost analysis will be necessary when adequate price competition is lacking and for sole source procurements including contract modifications or change orders, unless price reasonableness can be established on the basis of a catalog or market price of a commercial product sold in substantial quantities to the general public or on the basis of prices set by law or regulation. A cost analysis must be performed when the offeror is required to submit the elements (i.e., labor hours, overhead, materials, etc.) of the estimated cost (i.e., professional consulting and architectural and engineering services contracts). A cost analysis includes verifying the proposed cost data, the projections of the data and the evaluation of specific elements of cost and profit. March 2010 Procurement and Contract Administration Manual Page 22 of 100 POLICY AND GENERAL REQUIREMENTS 22.214.171.124 Cost Analysis for Competitive Proposal: This method is most often used to contract for professional, consulting, and architect/engineering (A/E) services. (See 24 CFR 85.36(d)(3) for a definition.) To determine the reasonableness of proposed costs, CS shall obtain cost breakdowns from the offerors showing all the elements of their proposed total costs and perform a cost analysis of each proposal. 22.214.171.124 When awarding a contract using the competitive proposal method, the type of contract (e.g., firm fixed-price or cost-reimbursement) the CS proposes to award does not affect the requirement for a cost analysis. For example, if a firm fixed-price contract via the competitive proposal method is intended, CS must analyze all of the proposed costs contained in each offeror's price. However, CS is not required to negotiate each individual cost element in arriving at an agreement on total price. The final price CS negotiates with the contractor on a fixed-price contract normally reflects agreement only on the total price. Therefore, the overall objective should be to negotiate total prices that are fair and reasonable. 188.8.131.52 In certain cases, the contract may specify separately priced items. This is commonly done in indefinite- delivery (e.g., indefinite-quantity, sometimes called job order, or "open ended") contracts. Under these contracts, the CS orders pre-priced items on an as-needed basis, up to a stated maximum quantity. For these contracts, agreement must be reached on each item's price before award and the prices included in the final contract document. 220.127.116.11 Cost Analysis for Noncompetitive Proposals: These are sometimes called sole source contracts and are different from single bids. No competition is present, and usually, there is no market to help set the price or estimated cost. Since there is no price competition to indicate if the price or estimated cost is reasonable, CS must obtain a breakdown of the proposed costs and perform a cost analysis. The cost analysis shall be performed for all change order situations, as each change order likely will be unique (i.e. differing subsurface or site conditions, design errors and omissions, etc). 184.108.40.206 Cost Analysis for Construction and Construction Management Contracts: This includes all contracts and contract modifications negotiated based on cost for construction management or construction, alteration or repair of buildings, bridges, roads, or other kinds of real property. It does not include contracts for equipment, or other kinds of personal property. Construction contracts awarded using sealed bidding do not require cost analysis (see Price Analysis for Sealed Bidding under 22.214.171.124.2), but construction contracts awarded using any method other than sealed bidding, and all modifications to construction contracts require cost analysis. 184.108.40.206 Price Analysis: A price analysis may be used in all other instances to determine the reasonableness of the proposed contract price. CS shall annotate a finding of fair and reasonable pricing and state the most common reasons why this was so, such as catalog or market price offered in substantial quantities to the general public, regulated price, or a comparison with recent prices for similar goods and services. 18.104.22.168.1 Price Analysis for Micro-Purchases: for purchases of $3,000 (FTA funded), $5,000 (locally funded), or less, CS will simply annotate how the CS made its price fairness and reasonableness determination (e.g. professional market experience, market trend, previous purchase, and catalog price). FTA does not require the rationale for the procurement method March 2010 Procurement and Contract Administration Manual Page 23 of 100 POLICY AND GENERAL REQUIREMENTS used, selection of contract type, or reasons for contractor selection or reject, required of the purchase exceeding the Micro- Purchase threshold. 184.108.40.206.2 Price Analysis for Sealed Bidding or Competitive Quotes: As the preferred method for contracting for supplies, equipment and construction, the competitive pricing forces of the marketplace determine the reasonableness of the low price obtained through sealed bidding. Nevertheless, the CS should always compare the independent cost estimate to the low competitive bid received. In the event they are significantly different, the CS will need to examine to verify that either the estimate or the market price is valid. Otherwise, no further price or cost analysis is required under sealed bidding. 188.8.131.52 Indirect Cost Rates: For contracts other than A&E contracts, if a contractor does not have a current approved audit report or agreement, CS may use the report prepared by the contractor's public accountant, or indirect cost information if contained in the contractor's annual statement to their stockholders, shareholders, or owners, or examples of acceptance of their rates by other government agencies within the last six months for contracts of $5 million or less. For contracts exceeding $5 million, the DCAA, another Federal audit agency, or an accounting firm approved by the Federal Government, must verify the contractor's rates. 220.127.116.11 Profit: FTA expects ST to negotiate profit as a separate element of the cost for each contract in which there has been no price competition, and in all contracting situations in which the recipient performs or acquires a cost analysis. 220.127.116.11 Audits and Indirect Costs: As required by 49 U.S.C. Section 5325(b)(3), all FTA assisted contracts and subcontracts including program management, architectural engineering, construction management, feasibility studies, preliminary engineering, design, architectural, engineering, surveying, mapping or related services must be performed (i.e. a contractor cannot incur and invoice ST any unallowable, unallocable, or unreasonable costs prohibited by the FAR and/or the contract terms and conditions) and audited in accordance with FAR Part 31 cost principles. The recipient and the third party contractor, its subcontractors and sub-recipients must accept FAR indirect cost rates for one-year applicable accounting periods established by a cognizant Federal or State government agency, if those rates are not currently under dispute, and these established rates will apply for purposes of contract estimation, negotiation, administration, reporting, change order, options, and payments, not limited by administrative or de facto ceilings. 184.108.40.206 Buy America: Buy America regulations apply to FTA assisted procurements exceeding $100,000, Buy America regulations require the contractor to provide goods produced or manufactured in the US, unless FTA has granted a waiver authorized by those regulations. Goods that the contractor acquires to perform its construction activities for ST, such as tools, machinery, and other equipment or facilities, is not covered by Buy America Act unless ST intends to take possession of that property upon completion of the project. March 2010 Procurement and Contract Administration Manual Page 24 of 100 AUTHORIZATION AND REPORTING LEVELS 4.0 AUTHORIZATION AND REPORTING LEVELS This section documents the approved authorization and reporting levels needed for various procurement types. The following table shows the procurement threshold currently approved for ST employees and Board Committees. AWARD APPROVAL LEVELS Contract Threshold Required Approval Level Notes Up to $3,000 (FTA) or $5,000 Administrative Support staff With signed signature (local funds) authorization form. Up to $25,000 Division/Program Managers With signed signature authorization form. Up to $50,000, not within Deputy Directors Can sign purchases not included current budget authorization in current budget authorizations. Up to $100,000 Deputy Executive Directors, Directors, Board Administrator. Up to $150,000 Executive Directors, Up to $200,000 Chief Executive Officer or Deputy Can approve purchases included Chief Executive Officer in current budget authorizations. Up to $5,000,000 Capital or Operations & Admin Committee $5,000,000 or greater Board Sole Sources up to $25,000 Executive Directors Sole Sources up to $100,000 Chief Executive Officer or Deputy Sole Source Justification must be Chief Executive Officer pre-approved by Director Sole Sources greater than Board Procurement and Contracts. $100,000 The following table shows the reporting levels required for all procurements. The notifications cited below (reports) are to be reported no less than quarterly. REPORTING LEVELS Price Threshold Who is Notified Notes Contracts Greater than Reported to Board Must be reported no less $100,000 frequently than quarterly. Sole Sources Greater than Reported to Board Must be reported no less $10,000 frequently than quarterly. The following table shows the procurement process required at various dollar levels. These requirements must be followed before a contract can be awarded or a Notice to Proceed issued. PROCUREMENT LEVELS Price Threshold Method of Procurement Notes Up to $3,000 Micro purchase May be purchased by credit card, $3,001 to $5,000 Micro purchase, if no federal Division Purchase Order or funds are used purchase order $5,001-$100,000 Local funds Small Purchase Competitive quotes required. $3,000-$100,000 FTA funds Greater than $100,000 Competitively procured Must be formally advertised. March 2010 Procurement and Contract Administration Manual Page 25 of 100 CONFLICT OF INTEREST 5.0 CONFLICT OF INTEREST 5.1 Purpose ST business shall be conducted in a manner above reproach and, except as authorized by statute or regulation, with complete impartiality and with preferential treatment for none. Transactions relating to the expenditure of public funds require the highest degree of public trust and an impeccable standard of conduct. ST is responsible to guard against an actual, potential, or appearance of a conflict of interest in its procurement and contracting practices. In order to protect the integrity of the procurement process, the Contract Specialist will ensure that members of the project team, technical review committee, or Selection Panel, as well as any proposer or bidder do not have a conflict of interest, or even the appearance of a conflict of interest, which may compromise the integrity of a solicitation or contract or related work. While laws and regulations may place restrictions on the actions of personnel, their official conduct must, in addition, be such that they would have no reluctance to make full public disclosure of their actions. The Federal Common Grant Rules require ST to be aware of conflict of interest issues a prospective contractor might have, including lack of impartiality, impaired objectivity, or unfair competitive advantage, as discussed more fully in FTA Circular 4220.1.F Chapter VI, paragraph 2.a(4)(h). For additional information including penalties and disciplinary action for violation of such standards, see Sound Transit Resolution 81-2. 5.2 Conflict of Interest Definitions 5.2.1 Personal Conflicts of Interest A personal conflict of interest arises when an ST employee (including contractor employees), officers, board members, or agents (including outside consultants) involved in the selection, award or administration of a contract or sub-agreement - or a member of his or her immediate family, partner, or outside employer or prospective employer -- has a financial interest in the entity selected, or competing, for the contract. A personal conflict of interest also arises where any employee, officer, board member, or agent solicits or accepts gifts, gratuities, favors, or anything of monetary value from a contractor, potential contractor, or party to a sub-agreement. In addition, a personal conflict of interest arises where any such person uses his position, or non-public information gained during his work for ST, for personal gain, including gain inuring to an immediate family member, partner, or current or potential employer. These scenarios can result in potential organizational conflicts for employers, or personal conflicts of interest for the individual. An employee, officer, or Board member shall not be deemed to have an interest in conflict with his or her official duties for purposes of this Manual if the interest is remote. A remote interest means: 1. that of a non-salaried officer of a nonprofit corporation; 2. that of a landlord or tenant of a contracting party; and 3. a creditor, debtor or ownership interest of less than $1,500 in a business entity which is a contracting party or as a holder of less than 1 percent of the shares of a corporation or cooperative which is a contracting party, whichever is less. 5.2.2 Organizational Conflicts of Interest Organizational conflicts occur when because of other activities, relationships, or contracts, a consultant or contractor is unable or potentially unable, to render impartial assistance or advice to ST; a contractor's objectivity in performing the contract work is or might be otherwise impaired; or a contractor has an unfair competitive advantage. March 2010 Procurement and Contract Administration Manual Page 26 of 100 CONFLICT OF INTEREST 5.3 Procedure 5.3.1 Personal Conflict of Interest 188.8.131.52 The CS will instruct and secure agreement from the Project Manager, to disclose any real, potential, or appearance of a Personal Conflict of Interest, which may exist at the beginning of the procurement process. The Project Manager will also agree to immediately notify the CS of any real, potential or appearance of a Personal Conflict of Interest, which may arise during the procurement process. 184.108.40.206 Selection Panel members and the Project Manager will sign a "Declaration of Confidentiality and No Conflict of Interest Form" prior to receiving proposals to evaluate. 22.214.171.124 Statements and Declarations will be placed in the procurement file. 126.96.36.199 If a real, potential or appearance of a Personal Conflict of Interest arises, the CS will notify the CM and/or the Director. The CS will record and place in the file all correspondence regarding the Personal Conflict of Interest. 22.214.171.124 The CM and/or Director will determine whether the Project Manager or Selection Panel member will be excused from further participation in the procurement process. 5.3.2 Organizational Conflict of Interest 18.104.22.168 The CS will secure agreement from the Project Manager, to report any concerns that a real, potential or the appearance of an Organizational Conflict of Interest exists at the beginning of the procurement process. The Project Manager will immediately notify the CS of any real, potential or appearance of an Organizational Conflict of Interest that may be identified during the procurement process. 220.127.116.11 If a real, potential or appearance of an Organizational Conflict of Interest is identified, the CS will notify the CM and the Director. The CS will record and place in the file all correspondence regarding the real, potential or the appearance of the Organizational Conflict of Interest. 188.8.131.52 The CM and/or Director will issue a determination as to the impact of the real, potential or the appearance of an Organizational Conflict of Interest on the procurement, and provide guidance to the CS on the steps to take to mitigate the real, potential, or appearance of an Organizational Conflict of Interest. 220.127.116.11 Contractors/Consultants may protest Organizational Conflict of Interest determinations or mitigation measures by following the protest procedures set forth in the underlying procurement document. March 2010 Procurement and Contract Administration Manual Page 27 of 100 INDEPENDENT COST ESTIMATE 6.0 INDEPENDENT COST ESTIMATE 6.1 Purpose Before ST receives a bid, or a proposal that includes price, or a cost proposal either as a submittal or for negotiating a contract, contract amendment, or sole source contract; the initiating department shall prepare an Independent Cost Estimate (ICE). The ICE is an estimate of the cost of performing the work. This estimate will be used as a basis of comparison for evaluating the proposed price received. An Independent Cost Estimate (ICE) is required for every procurement action that requires a price or cost analysis. A Micro Purchase is exempt from the ICE requirement. 6.2 Implementation The establishment of an ICE in advance of receiving a bid or proposal is necessary for the following reasons: • ensures a clear basis for determining the benefits of the procurement; • provides essential procurement and financial planning information; • provides a basis for cost/price analysis Although it may seem self-evident that ST has at least implicitly prepared a cost estimate in deciding to proceed with procurement, many projects can change in scope without clear communication among the individuals responsible. An ICE prepared when ST first undertook the project could alert all involved that the project had grown beyond the scope originally intended. A deliberate decision to reduce the scope or revise the cost estimate can be made at each step of the project's development. An ICE is essential information for procurement planning. It gives the project owners and CS some indication of the complexity of the project and the degree of investment that offerors will want to make in the procurement process, thus allowing planning of procurement time and personnel. It is also a key factor in determining which procurement method will apply to the procurement. If the cost estimate exceeds $100,000 for a construction project, for example, sealed bids are required in addition to a more complex bid package. Similarly, certification and bonding requirements are triggered based on the value of the contract. (See FTA Circular 4220.1F, FTA Master Agreement, and RCW 39.08.) However, the application of these and most other requirements depends finally not on the ICE, but on the contract amount. Therefore, if, for example, the estimate for a construction contract is $80,000, unless everyone involved agrees otherwise, the CS should employ procurement practices that will result in a valid contract in case all bids exceed $100,000. Otherwise, ST may have to cancel the procurement and begin again with sealed bids, because the bids exceeded the ICE. Another purpose of the ICE is for cost/price analysis. Either a cost or a price analysis is required for every contract and every change order so that a fair and reasonable price is assured. The adequacy of the price or cost analysis is a critical responsibility of the CS. In many contract awards, multiple bids alone may not be adequate to assure a fair and reasonable price. In these circumstances, the independence of the estimate from any of the bids is essential. Any price analysis or data collection performed after receipt of the offers, in addition to consuming valuable time during the limited validity of the offers, will not be as probative as data collected before the receipt of the offers. An ICE prepared before the receipt of the offers cannot raise the question of whether the particular data and analysis was consciously or otherwise intended to justify the bid received. 6.3 Procedure The independent cost estimate does not have to be complicated, but it should be reasonably accurate. The ICE should be broken down for each bidding schedule item. Sources of information March 2010 Procurement and Contract Administration Manual Page 28 of 100 INDEPENDENT COST ESTIMATE for putting together the ICE are: prior bids or contracts for similar scopes of services; published price lists; hourly rates from similar service providers; prior bids or rates received from other agencies; and industry standards such as design as a percentage of construction. Whatever sources ST used to put its budget in place to begin with may also be used when appropriate. A requesting department shall develop an ICE for all purchases BEFORE the procurement process begins and submitted with the requisition. A CS should request source information used for developing the ICE to validate its currency, accuracy, completeness, and relevancy when the ICE appears "inadequate". Disciplined cost estimating ensures that the ICE is credible, dependable, and complete, as it is used as input to the budget planning process, future procurement, and cost saving measurement. Merely comparing the ICE with the bid or proposal price will not be considered an acceptable cost/price analysis, if the difference is large. If the ICE is not immediately available such as in certain construction projects, the CS shall ensure that the requestor provides the ICE BEFORE bids are opened. March 2010 Procurement and Contract Administration Manual Page 29 of 100 DISSEMINATING INFORMATION 7.0 DISSEMINATING INFORMATION 7.1 Purpose The CS shall ensure information is provided to all potential competitors at the same time. Knowing in advance when procurement is being issued or that an addendum will be issued, can give a firm a competitive advantage. 7.2 Procedure To maintain the integrity and fairness of the procurement process, it is imperative that ST not give out information about a procurement to a potential Bidder/Proposer before the solicitation document is advertised OR during the solicitation period unless ST makes the information available to all Interested Parties. "Same information" means ST shares with all potential Bidders/Proposers the same information at the same time. At the "same time" means within hours, not days. This sounds very simple, but it is very easy to make mistakes that can jeopardize the procurement and could lead to protests or the need to re- issue the solicitation. It may be in ST's best interest to prohibit some information from being issued prior to final selection of a contractor or contract award. This includes the number of proposals received, the names of Proposers, any proprietary information contained in a bid or proposal, copies of other Proposer's proposals, and usually any monetary information. By releasing this information prior to final selection of a firm, ST's negotiating position may be jeopardized. In the situation of bids, all non- proprietary information contained in the bid submittals is public information after the bid opening. March 2010 Procurement and Contract Administration Manual Page 30 of 100 DEBRIEFING PROCEDURES 8.0 DEBRIEFING PROCEDURES 8.1 Purpose Debriefing of successful and unsuccessful offerors provides reassurance to solicitation participants that the solicitation and evaluation were conducted in a fair and equitable manner consistent with applicable laws, procedures, and best practices. It also provides education to offerors that should result in better competition in the future. Debriefing of unsuccessful offerors can be valuable to both the offerors and ST. A debriefing can be helpful for a number of reasons: 1. It communicates a sense of fairness and appreciation to offerors who have made sizeable investments of time and resources in preparing bids or proposals. 2. It may avoid a protest by convincing a disappointed offeror that ST's decision was carefully made, factually well supported, and best for ST. 3. It assists offerors in improving their future proposals, which supports competition. 8.2 Procedure Offerors not selected for award may request a debriefing or the CS may offer to provide a debriefing. A candid explanation of the process can serve the purposes of defusing any potential dispute by the disappointed offerors and encouraging future bids or proposals. If a dispute is already probable, there is no requirement to notify or debrief unsuccessful offerors, but the litigation and other risks must be carefully weighed. Debriefings of both successful and unsuccessful proposers may be conducted orally, in writing, or by any other method mutually acceptable to the proposer and CS. Debriefings conducted in person should be chaired by the CS familiar with the rationale for the selection decision or contract award. The Project Manager or individuals who participated in the evaluations will provide support if requested by the CS. Debriefings shall typically occur after award of contract. In the event that there is likelihood of substantial delay between rejection of a proposal and award of contract, as may occur with "best and final offer", limited debriefing may be provided to firms not included in the competitive range. CS shall prepare minutes of the debriefing session and maintain records of the event in the procurement file. Debriefings should include: • The overall ranking of the debriefed Offeror. • A description of the strengths and weaknesses of the debriefed Offeror's proposal. • Reasonable responses to relevant questions about the selection process. • Competitive range determination and reasons why the offeror was not included in the range. Debriefings should not include: o A point-by-point comparison of the debriefed Offeror's Proposal and other proposals. o Scores given to any or all of the Offerors. o Copies of other Offerors' proposals. o Trade secrets, other proprietary or confidential information if identified on the proposal. Copies of score sheets and other Offeror's proposals can only be provided if requested through the public disclosure request process and only provided after contract execution, pursuant to Administrative Policies and Procedures No. 8, "Access to Public Records". In conclusion, the information provided to the Offeror must be of value to the Offeror. The information must enable the offeror to understand why its proposal was not selected. This type of discussion may require some general comparison of the offeror's proposal with the winning proposal in order to communicate the basis on which the selection decision was made, and to meaningfully communicate the weaknesses in the offeror's proposal. March 2010 Procurement and Contract Administration Manual Page 31 of 100 PROTESTS 9.0 PROTESTS 9.1 PURPOSE The purpose of a protest procedure is to allow an actual or prospective proposer, bidder, offeror, or contractor ("Interested Party") who is aggrieved in connection with a solicitation, evaluation, or award of a contract, an opportunity to state their dispute, pursuant to "Protest Procedure". At Sound Transit, the CS ensures that all solicitations contain appropriate instruction for interested parties to access ST "Protests Procedure". Because ST's response to a protest establishes a precedent, it is important that ST's responses to protests be consistent and takes into consideration the best interests of ST on a long-term basis. Protests are only permissible for contract award amounts exceeding $100,000. 9.2 PROCEDURE A protest must be submitted by an Interested Party no later than 7 business days prior to the date and time designated for submittal of bids or proposals or within 5 business days after the allegedly aggrieved person or party is notified of contract award. All protest must be in writing and shall contain the following: • the procurement title and/or number under which the protest is made; • the name and address of the allegedly aggrieved party; • a detailed description of the specific grounds for the protest and all supporting documentation; • the specific ruling or relief requested; and • the written protest shall be addressed to Director, Procurement and Contracts Division, ST, 401 S. Jackson Street, Seattle, Washington 98104-2826. 9.2.1 Response to Protest: 188.8.131.52 Upon receipt of a timely written protest, the Director will consider the protest in accordance with established procedures and promptly issue a written decision stating the reasons for the action taken and informing the allegedly aggrieved person of his/her right to appeal the decision to the Chief Executive Officer. 184.108.40.206 The decision made by the Director shall be final and conclusive unless appealed in writing to the Chief Executive Officer within 5 business days of receipt by the Protestor. The Chief Executive Officer will consider the appeal and promptly issue a written decision, which shall be final and conclusive. 184.108.40.206 A Protestor may not commence litigation prior to exhausting all administrative remedies. Failure to exhaust all administrative remedies shall constitute an absolute waiver of the protestor's right, if any, to commence litigation. 220.127.116.11 Failure to comply with these protests and appeal requirements will render a protest or an appeal untimely or inadequate and may result in its rejection by ST. 126.96.36.199 After the exhaustion of all administrative remedies, the protestor shall have 10 calendar days to commence litigation. Failure to commence litigation within this limitation shall constitute an absolute waiver of the protestor's right. State laws permit ST to award and execute the Contract during this 10-day period. March 2010 Procurement and Contract Administration Manual Page 32 of 100 PROTEST 9.2.2 Protest at the Federal Transit Administration level: Protests made to the FTA will be limited to ST's failure to have or follow its protest procedures, ST's failure to review a complaint or protest, or violations of Federal law or regulation. Any protest to the FTA must be made in accordance with the following guidelines: o A protest must be filed with the FTA no later than 5 business days after the protester learns or should have learned of an adverse decision by ST or other basis of appeal to FTA; o A protest to FTA must be filed in accordance with FTA Circular 4220.1F, Chapter VII, as amended. o The CS shall submit to the FTA Regional Office a copy of all protests and ST's response. March 2010 Procurement and Contract Administration Manual Page 33 of 100 REJECTION OR ACCEPTANCE OF OFFERS 10.0 REJECTION OR ACCEPTANCE OF OFFERS 10.1 Purpose ST may reject individual or all bids or proposals if such action is in ST's best interest or when there is a compelling reason to reject all bids or proposals consistent with Federal and State procurement regulations. ST may reject individual bids/proposals for several reasons including submission errors, conflicts of interest, non-responsiveness, other changes in conditions, or for its convenience. After bids have been opened, award should be made to the low responsive, responsible bidder unless there is a compelling reason to reject all bids and cancel the solicitation. In all cases, the decision to reject bids or proposals must be approved by the CM. ST may also accept bids or proposals that have minor error or irregularity. A minor informality or irregularity is one that is merely a matter of form and not of substance. It also pertains to some defect in a bid or variation of a bid from the exact requirements of the solicitation that can be corrected or waived without being prejudicial to other bidders. The defect or variation is immaterial when the effect on price, quantity, quality, or delivery is negligible when contrasted with the total cost or scope of the supplies or services being acquired. The CS should give the bidder an opportunity to cure any deficiency resulting from a minor informality or irregularity in a bid or waive the deficiency, whichever is to the advantage of ST. Should delays be encountered after bid opening that may delay award beyond bidders' acceptance periods, bidders should be requested, before expiration of their bids, to extend in writing the bid acceptance period (with consent of sureties, if any) in order to avoid the need for re-soliciting. 10.2 Procedure CS notifies the CM about the nature of the error, irregularity, or mistake in the bid or proposal. 1. CS prepares documentation either to reject one or all bids or to accept the error, irregularity, or mistake in the bid/proposal as minor informality. 2. CM approves the documentation for rejection or acceptance prepared by the CS for compliance and completeness. 3. The CS notifies the individual or all bidders/proposers that their submittals have been rejected or require the bidder/proposer to correct any minor error. The letter shall contain the reasons for the action. Compelling reasons to reject a bid or proposal may include the following: • Materially unbalanced bid/proposal that poses an unacceptable risk to ST. • Incorrect, inadequate or ambiguous specifications were cited in the solicitation; • Specifications have been revised or changed; • Supplies or services being contracted for are no longer needed; • Bids indicate that the needs of ST can be satisfied by a less expensive article/method differing from that for which the solicitation was issued; • All otherwise acceptable bids/proposals received are at unreasonable prices, or only one bid is received and the CS cannot determine the reasonableness of the bid or proposed price; • The bids were not independently arrived at in open competition, were collusive, or were submitted in bad faith; • No responsive bid has been received; • A cost comparison shows that performance by ST is more economical; or • For other reasons, cancellation is clearly in the public's interest. March 2010 Procurement and Contract Administration Manual Page 34 of 100 WITHDRAWAL OF OFFERS 11.0 WITHDRAWAL OF OFFERS 11.1 Purpose Vendors may withdraw their bids or proposals before their offer is accepted, per the conditions provided in the solicitation documents. Some solicitation documents may permit or remain silent on the opportunity to withdraw while others may call for a bid surety to protect ST's interest. Withdrawal of bids or proposals is not a matter of convenience for the vendor. The CM shall evaluate such events to ensure the best interest of ST is maintained. 11.2 Claim of Error Guidance An error in offer documents may be discovered before or after a contract has been awarded. Actions that may be taken in response to the error will depend on the nature and the time of discovery. However, regardless of when or who discovered the error, the situation must be handled immediately and properly to ensure that the integrity of the procurement process is maintained. 11.3 Procedure 11.3.1 Discovery of Error .1a When an error is discovered, before award, the Bidder may request to withdraw its bid by submitting a written Claim of Error notice to the CS. The Claim of Error notice must include supporting documentation, including cost breakdown sheets. A solicitation may provide a timeline within which a Claim of Error may be accepted by ST. .1b CS may require the Bidder to submit additional information, as necessary, to evaluate the Claim of Error. .1c Immediately after a Claim of Error is submitted, CS shall notify the CM of the Error. 11.3.2 Identify and Document the Error .1a CS shall review the Claim of Error to determine the appropriate Error Category (see table below) and the proper course of action. .1b CS shall prepare documentation attaching a copy of the Bid and a Memorandum or Correspondence describing the error. BID ERROR CATEGORIES Below are the 4 generally accepted categories of Bid Errors and permitted actions: Discovered Before Contract Award 1. Minor Informalities or Irregularities Errors that are discovered before Contract Award may be: 2. Obvious or Apparent Clerical Errors • Corrected by the firm; or • Recognized by ST and the bid allowed to 3. Errors Other than 1 and 2 above be withdrawn; or • Not recognized and the bid not allowed to be withdrawn. • In compliance with RCW 39.04.107, a low bidder on a public works project who claims error and fails to enter into a contract is prohibited from bidding on the same project if a second or subsequent call for bids is made for the project. March 2010 Procurement and Contract Administration Manual Page 35 of 100 WITHDRAWAL OF OFFERS Discovered After Contract Award Errors that are discovered after Contract Award, will only be corrected if the Director determines the 4. Any Error Discovered After following: Contract Award • It would be unconscionable not to allow the correction; • The error can be corrected by a Contract Modification or Change Order, without changing the essential requirements of the specifications. The Director may also make the following determinations: • Rescind the contract; or • Reform the contract, deleting the items involved in the error or increase the contract price, as long as the total corrected contract price does not exceed the next lowest acceptable bid; or • Disallow changes to contract. .1c Based on the documentation provided by the erring Bidder/Proposer, the CS will make a determination on whether: 1. The error can be corrected; 2. The error will be recognized and the bid allowed to be withdrawn; or 3. The error will not be recognized and the bid not be allowed to be withdrawn. .1d The CS sends a letter that notifies the Bidder/Proposer of ST's decision including a notification of the Bidder/Proposer's right to appeal and citations to the appeal procedures in the Solicitation document. .1e The CS assembles the Claim of Error documentation that will go into the file, as follows: 1. The original Bid/Proposal 2. The written notice of Claim of Error 3. All supporting documentation to the Claim of Error 4. Documentation of the Error 5. Copies of all internal correspondences regarding the discussion of the Bid/Proposal. 6. A copy of the letter to the Bidder/Proposer of the final decision. March 2010 Procurement and Contract Administration Manual Page 36 of 100 PROCUREMENT METHODS INSTRUCTIONS D. PROCUREMENT METHODS INSTRUCTIONS This section provides instructions on various procurement methods and detailed procedures that must be complied with to maintain a consistent, reliable, and transparent procurement and contract action. The procurement action must be in the best interest of ST while providing firms with full and open competitive environment. It aims to meeting or exceeding the needs of ST departments with a value added customer friendly process. CS is required to conduct procurements in accordance with applicable local, state, and federal requirements, and ST procurement policies and procedures, utilizing best business and purchasing & contracting practices and the highest standard of ethics. A system of procurement checklists has been instituted to provide built-in quality control to substantiate and validate the quality of all procurement and contracting actions at ST. This management control procedure is designed to substantiate how each procurement or contracting process is conducted, and to ensure that each file contains appropriate documentation to support the process. The primary management control system is Procurement Activity Lists (PAL). The PAL establishes procurement and contracting process standards, ensures consistency of decisions and actions, and provides general direction to Procurement and Contracts Division (PCD) staff to negotiate steps and complete activities of the procurement and contracting process consistent with ST requirements as well as any applicable local, state, and federal procurement laws and regulations. Not all items of the PAL are required in each procurement action, but the rules and procedures contained therein shall be observed. Any deviation that significantly alters the PAL requirements shall be approved in advance by the CM or Director. CMs shall supervise the PAL activities through completion and approve the completed PAL. The CMs signature indicates that all the contents of the Procurement Document and supporting Procurement file documentation are accurate, compliant, and complete. The PAL includes a checklist titled Compliance of Document to FTA, which mirrors the contents of FTA Circular 4220.1F Appendix C, "Third Party Contracting Checklist". This checklist shall be completed by CS for all FTA-funded procurements. The Director shall ensure that the PAL's comply with all applicable Federal requirements including the latest edition of FTA's Master Agreement. This Manual is written to: Satisfy Procurement and Contracts Division's internal customers in terms of cost, quality, and timeliness of the delivered products and services; Minimize administrative operating costs; Conduct business with consistency, integrity, fairness, and openness; Lay the framework of necessary flexibility for ST to manage risks and opportunities in a business transaction; Facilitate management of integrated procurement team; and Fulfill public policy objectives. March 2010 Procurement and Contract Administration Manual Page 37 of 100 MICRO PURCHASES 1.0 MICRO PURCHASES 1.1 Purpose To define and establish purchasing requirements for Goods or Services costing less than $3,000 where FTA funds are involved, or less than $5,000 if no FTA funds are involved. 1.2 Minimum Procurement Lead Time: 2 days 1.3 Procedure 1.3.1 Determine Need: This procedure applies to all micro purchase needs of ST departments, except for construction. These purchases are exempt from competition requirements, although the requestor or CS should make a determination prior to purchase that the price is fair and reasonable. 1.3.2 Identify Potential Vendor(s): ST departments are generally responsible for identification of vendors. CS is responsible for assisting the departments. Typical resources are catalogues, yellow books and other publications etc. Even for this micro dollar amount, ST departments must seek Small Businesses or DBEs. Purchaser should avoid splitting larger dollar amount purchases into micro purchases to avoid competition. Purchaser should equitably distribute repeated micro purchases among as many qualified local suppliers as is reasonable. 1.3.3 Determine Method of Procurement: All Micro Purchases can be made by credit card, Department Purchase Order, or ST purchase order up to $3,000, or the purchaser can pay with his/her own funds and seek reimbursement up to $500. For any purchase over $3,000, a Purchase Order is required prior to placing the order for goods or services. 1.3.4 Order: Determine that appropriate authorization has been received to make the purchase. Prior approval to make the purchase is mandatory. 1.3.5 Documentation: Minimum documentation required is statement that the price is fair and reasonable. Purchasers must obtain a receipt or other documentation of the purchase. A record of the transaction must be maintained to match to an expenditures report for credit card purchases, or to match to an invoice for a purchase order. 1.3.6 Exception: The Micro purchases under $3,000 are exempt from FTA's Required Third Party Clauses including Buy America requirements. However, Davis-Bacon Act that requires contractors to pay wages to laborers and mechanics at a rate not less than the minimum wages specified in a wage determination made by the U.S. Secretary of Labor will apply to all FTA-funded construction contracts exceeding $2,000. March 2010 Procurement and Contract Administration Manual Page 38 of 100 DIVISION PURCHASE ORDER 2.0 DIVISION PURCHASE ORDER 2.1 Purpose To provide ST departments a mechanism to directly place their own purchase orders for non- repetitive purchases that are $3,000 or less. *Division Purchase Order is limited to $3,000 or less. 2.2 Minimum Procurement Lead Time: 3 days 2.3 Procedure Purchases up to $3000 that are not performed by use of a Purchase Order or the Purchase Card process may be made using the Division Purchase Order process. Purchases that may be made utilizing the Division Purchase Order include: • Debt or other mandatory payments. • Recurring payments, e.g., utilities, rent and credit cards, warranty claims, account manager expenses, and fiscal agent settlements. • Exceptions as approved by the Executive Director - FIT, relating to claims, real estate transactions, tax payments, and invoice payment discrepancies. Note: Sound Transit uses software titled Enterprise One/E1 for accounting, procurement, and human resources activities. Purchase Orders are entered in E1 and properly coded and approved within the Delegations of Authority. The Division Purchase Order number shall be given to the vendor at the time the order is placed for goods and services and the vendor shall include the PO number on their invoice. The Vendor must be in the E1 Address Book in order for the Division Purchase Order to be issued. If the vendor is not in the Address Book, the Division shall forward a W-9 and new vendor packet to the firm. Upon receipt of the completed W-9, PM forwards to the Procurement and Contracts Division for entry into E1. March 2010 Procurement and Contract Administration Manual Page 39 of 100 SMALL PURCHASES 3.0 SMALL PURCHASES 3.1 Purpose Small Purchase procedures are used to purchase equipment, materials, supplies, and services. These procedures cannot be used for construction-related work or facilities maintenance purchases as Washington State statute requires such work to be procured via a publicly advertised competitive bid or a small works roster bid. Small procurements provide greater opportunities for DBEs and small business enterprises to participate. Absent efforts to foster greater opportunities for DBE and Small Businesses, ST should not split a larger procurement merely to gain the advantages of the simplified acquisition process. 3.2 Minimum Procurement Lead Time: 3 weeks 3.3 Procedure Small purchases are defined as federally funded purchases exceeding $3,000 or non-federally funded purchases that exceed $5,000, but not exceeding $100,000. For small purchases, requestors may solicit quotes directly without the involvement of PROCUREMENT AND CONTRACTS DIVISION. However, all procedures, rules, and regulations must be followed and the CS will review all quotes prior to issuance of a Purchase Order (PO) number. PROCUREMENT AND CONTRACTS DIVISION staff is available to obtain the quotes or provide other assistance on small purchases. For purchases up to $25,000, verbal quotes are acceptable. Small Purchases valued between $25,000 and $100.000 requires the purchaser to obtain written quotes. Detailed procedures are provided below: 3.3.1 The PM and/or CS review the Scope of Work, deliverables or equipment/product specifications and identify at least three qualified suppliers/vendors to provide competition. One of the firms selected to quote shall be a Disadvantaged Business Enterprise (DBE) or Small Business. In the event a DBE or Small Business is unavailable to quote, PM or CS shall document efforts made to locate DBE's and Small Businesses. 3.3.2 CS may review a procurement request to determine if it can be fulfilled by using either an existing State contract or "piggybacking" onto another public agency contract before soliciting quotes. If none exists, the Requestor can either solicit the quotes or have the CS complete this action. CS will include the appropriate state and federal terms, conditions, forms, and certifications to the PO. 3.3.3 After quotes or proposals are received but prior to award, PM/CS will identify the firm that provided the lowest priced responsive offer. The PM/CS will concurrently determine if the offeror is responsible and eligible for contract award. A responsible offer for a small purchase is an offer that meets the following standards: • Able to meet the proposed delivery or performance schedule • Not deficient in current or recent contract performance with ST • Has the requisite organization, experience, quality controls, technical skills or the ability to obtain them • Has the requisite human resources, equipment and facilities or is able to obtain them for construction or public works • Able to meet the required bonding requirements for construction or public works. March 2010 Procurement and Contract Administration Manual Page 40 of 100 SMALL PURCHASES • Is qualified to receive an award under applicable state and federal laws and regulations (i.e. current business and professional licenses and permits) • Not listed on any State and Federal lists of debarred, suspended, or ineligible firms or individual For A&E purchases under the Small Purchase threshold, PM/CS shall comply with Brooks Act by ensuring that price is NOT, an evaluation factor and that only qualifications are evaluated. Detailed instructions are provided in the A&E Negotiation Process section. 3.3.4 The CS will contact the successful firm and request applicable insurance certificates and other mandatory documents. 3.3.5 Upon receipt of such documents, the CS may issue a PO. The PO must state all applicable commercial, technical, and legal terms and conditions, including delivery and contract end dates. 3.3.6 Upon receipt of the products or services, the requestor inspects and accepts the deliverables, approves the invoice for payment and submits it to Accounts Payable for payment. The requestor shall notify the CS if items are not received in the time and manner indicated on the PO, if the wrong items are received or any other concerns. 3.3.7 The CS is responsible for ensuring the vendor abides by the terms of the contract, and to assist the requestor to ensure a value added service. March 2010 Procurement and Contract Administration Manual Page 41 of 100 COMPETITIVE BIDS 4.0 COMPETITIVE BIDS 4.1 Purpose This method will be used to procure goods, services, equipment, materials, non-professional services, and construction contracts when the value of the contract is over $100,000. Award will be made to lowest priced bidder that submits a responsive offer and the bidder has demonstrated capacity to perform the work to be generally considered a responsible bidder. This procurement method does not permit consideration of qualitative factors in a competitive environment or negotiations with bidders. An Invitation for Bids (IFB), also called "Sealed Bids" is the solicitation method. The typical resultant contract type is a firm fixed price, fixed price variation, lump sum, or unit price. 4.2 Minimum Procurement Lead Time: 14-18 weeks 4.3 Procedure Detailed systematic instructions for the CS are included on the IFB Activity List that can be found at Procurement Activity Forms (Procurement and Contracts Division's SharePoint Intranet). 4.3.1 Preparing the IFB. The IFB must describe the requirements of ST clearly, accurately, and completely. Unnecessarily restrictive specifications or requirements that might unduly limit the number of bidders are prohibited. The invitation includes all documents (whether attached or incorporated by reference) furnished to prospective bidders for bidding. 220.127.116.11 The PM submits an approved requisition, Statement of Work or Scope, and ICE to PROCUREMENT AND CONTRACTS DIVISION. This initiates the process within the PROCUREMENT AND CONTRACTS DIVISION and a CS is assigned to lead and facilitate the procurement process, and to deliver a value added service to the PM involving a cradle to grave contract management approach. Depending on the complexity of the requirement, the PM and CS should collaborate at the earliest stages of requisition and scope development (cradle). For extremely complex procurements the partnership should be formed from the time the need is identified by the PM's team or for simpler items a minimal relationship between the PM and CS will be needed. For construction contracts, shortly after 30% design the PM and CS should form a team that is collectively responsible for providing Procurement Strategy that identifies long lead items, owner furnished items, subcontracting opportunities and, other strategies. 184.108.40.206 The CS and PM discuss procurement requirements such as procurement schedule; risk; insurance; subcontracting opportunities; scope and delivery schedule; bid pricing schedule; funding source requirements (e.g. FTA 5309, FRA, FHWA, FAA etc); whether a pre-bid conference is needed and other items of critical nature. These items are recorded in the Purchase Requisitioning and Acceptance Checklist. 220.127.116.11 The PM and Diversity develop a social equity plan by conducting a joint review of subcontracting opportunities. A SB/DBE goal may be established at this time. 18.104.22.168 The CS drafts an IFB, including the clauses required by law or by regulation and any additional clauses expected to apply to any resulting contract including FTA clauses, prevailing wage, etc. The CS conducts a March 2010 Procurement and Contract Administration Manual Page 42 of 100 COMPETITIVE BIDS Bid Readiness Review (BRR) with all key procurement stakeholders to encourage formation of a cohesive contracting team with clear roles and responsibilities. The BRR results in a cross functional review of the contract. The solicitation shall be thoroughly reviewed and approved by the CM before issuance to detect and correct discrepancies or ambiguities that could limit competition or result in the receipt of nonresponsive bids, or result in contract performance issues. 4.3.2 Advertizing the IFB: The CS shall prepare advertisement synopsis for The Seattle Daily Journal of Commerce (DJC) and full IFB packages to publish on ST E-Bid system and ST web portal. CS routes "Approval to Advertise" form with IFB packages to stakeholders for approval. The CS should ensure the advertisement attracts competition. The CS must ensure the advertisement meets any statutory or regulatory requirements, provides adequate time for bidders to submit an offer, and provides clear instruction on how to obtain the full solicitation packet and the due date for submission of offers. 4.3.3 Amending the IFB: All requests for information / questions must be routed directly to the CS; written clarification and addendum will be issued by CS when necessary. The CM shall review and approve all clarifications and addenda prior to issuance. 220.127.116.11 If it becomes necessary to make changes in quantity, specifications, delivery schedules, opening dates, etc., or to correct a defective or ambiguous item of the solicitation, such changes shall be accomplished by amendment of the invitation for bids via addenda. The fact that a change was mentioned at a pre-bid conference does not relieve the necessity for issuing an addendum. Addendums shall be sent, before the time for bid opening, to everyone to whom the IFBs have been furnished. 188.8.131.52 Before amending an IFB, the time remaining until bid opening and the need to extend this period shall be considered. When only a short time remains before the time set for bid opening, consideration should be given to notifying bidders of an extension of time by telephone. Such extension must be confirmed in the addenda. 188.8.131.52 Any information given to a prospective bidder concerning an IFB shall be furnished promptly to all other prospective bidders as an addendum to the invitation (1) if such information is necessary for bidders to submit bids or (2) if the lack of such information would be prejudicial to uninformed bidders. The information shall be furnished even though a pre-bid conference is held. 4.3.4 Pre-bid Conference: A pre-bid conference may be conducted, generally in a complex procurement, as a means of briefing prospective bidders and explaining complicated specifications and requirements to them as early as possible after the invitation has been issued and before the bids are opened. It should not be used as a substitute for amending a defective or ambiguous IFB. 4.3.5 Submission of Bids: Bidders must submit sealed bids to be opened at the time and place stated in the solicitation for the public opening of bids. Bids shall be submitted so that they will be received at the location designated in the IFB and not later than the exact time set for opening of bids. 4.3.6 Bid Opening: Bidders must submit sealed bids to be opened at the time and place stated in the solicitation for the public opening of bids in accordance with the March 2010 Procurement and Contract Administration Manual Page 43 of 100 COMPETITIVE BIDS IFB instructions to be considered "responsive". Bids shall be submitted so that they will be received as designated in the IFB not later than the exact time set for opening of bids. 126.96.36.199 All bids (including modifications) received before the time set for the opening of bids shall be kept sealed and secure. Except as otherwise provided herein, bids shall not be opened or viewed, and shall remain in a safe and secured area. If an invitation for bids is cancelled, bids shall be returned unopened to the bidders. Before bid opening, information concerning the identity and number of bids received shall be made available only to ST employees. Such disclosure shall be only on a "need to know" basis. When bid samples are submitted, they shall be handled with sufficient care to prevent disclosure of characteristics before bid opening. 18.104.22.168 Envelopes marked as bids but not identifying the bidder or the solicitation may be opened by the CS solely for the purpose of identification. If a sealed bid is opened by mistake (e.g., because it is not marked as being a bid), the envelope shall be signed by the opener, whose position shall also be written thereon, and delivered to the designated CS. The CS shall immediately write on the envelope (1) an explanation of the opening, (2) the date and time opened, and (3) the invitation for bids number, and shall sign the envelope. The CS shall then immediately reseal the envelope. 22.214.171.124 The CS shall announce when the time set for opening bids has arrived. The CS shall then (1) personally and publicly open all bids received before that time, (2) read the bids and the ICE aloud to the persons present, and (3) have the bids recorded. The original of each bid shall be carefully safeguarded, particularly until the abstract of bids required has been made and its accuracy verified. 18.104.22.168 Examination of bids by interested persons shall be permitted if it does not interfere unduly with the conduct of ST business. Original bids shall not be allowed to pass out of the hands of a ST official unless a duplicate bid is not available for public inspection. The original bid may be examined by the public only under the supervision of the CS and under conditions that preclude possibility of a substitution, addition, deletion, or alteration in the bid. 220.127.116.11 A bid opening may be postponed when: 184.108.40.206.1 The CS has reason to believe that the bids of an important segment of bidders have been delayed in the mail, or in the communications system specified for transmission of bids, for causes beyond their control and without their fault or negligence (e.g., flood, fire, accident, weather conditions, strikes); or 18.104.22.168.2 Emergency or unanticipated events interrupt normal ST processes so that the conduct of bid opening as scheduled is impractical. 18.104.22.168 At the time of a determination to postpone a bid opening, an announcement of the determination shall be publicly posted. If practical before issuance of a formal amendment of the IFB, the determination shall March 2010 Procurement and Contract Administration Manual Page 44 of 100 COMPETITIVE BIDS be otherwise communicated to prospective bidders who are likely to attend the scheduled bid opening. 184.108.40.206 Bid abstracts shall be available for public inspection and posted on ST's E- Bid site as soon as practicable after the bid opening. Such abstracts shall not contain information regarding failure to meet minimum standards of responsibility, apparent collusion of bidders, or other notations properly exempt from disclosure to the public. 4.3.7 Evaluation of Bids 18.104.22.168 To be considered for award, a bid must comply with all requirements stipulated in IFB. Such compliance enables bidders to stand on an equal footing and maintain the integrity of the sealed bidding system. 188.8.131.52 Facsimile or bids submitted by electronic commerce bids shall not be considered unless permitted explicitly in the solicitation. 18.104.22.168 Bids should be filled out, executed, and submitted in accordance with the instructions in the invitation. 184.108.40.206 If a single bid is received or if competition is inadequate, the CS shall examine the situation to determine the reasons for the inadequate number of responses. Award may be made notwithstanding the limited number of bids. However, the CS shall initiate, if appropriate, corrective action to increase competition in future solicitations for the same or similar items. If only one bid has been received, the CS and PM have an option follow the sole source procurement procedure discussed in this Manual. 18.104.22.168 The CS shall determine that a prospective contractor is responsible and that the prices offered are reasonable before awarding the contract. A price analysis shall be performed in all cases. The price analysis should reveal whether the bids are materially unbalanced. In evaluating the bids for responsiveness, the CS shall create an abstract of bids, verifying pricing and summarizing the Bidder's compliance with responsiveness issues and the bid prices. The list of debarred Contractors will be checked and a copy printed for the file. For construction bids, CS shall verify that the Contractor was licensed by the State prior to submitting its bid. 220.127.116.11 If applicable, the CS shall issue the standard bid evaluation letter to the apparent low bidder requesting material to be submitted prior to Bid Evaluation Conference. 188.8.131.52 Diversity reviews the apparent low bid for compliance with Diversity Program requirements. If applicable, they work with the low bidder in finalizing its Apprentice Utilization Plan. 4.3.8 Contract Award 184.108.40.206 The CS shall make a contract award by written or electronic notice within the time for acceptance specified in the bid or an extension to that responsible bidder whose bid, conforming to the invitation, will be most advantageous to ST, considering only price and the price-related factors included in the IFB. Award shall not be made until all required approvals have been obtained on the Approval to Issue Notice of Intent to Award March 2010 Procurement and Contract Administration Manual Page 45 of 100 COMPETITIVE BIDS form and pursuant to ST Resolution No. 78-1 and ST Administrative Policies and Procedures No. 5. 220.127.116.11 When signed contract and required documents are returned, the CS routes "Approval to Execute Contract" form to CM, Diversity, PM, Legal, and then to PM's Approval Authority or designee. 188.8.131.52 Upon contract execution, the CS confirms with PM the date work is to begin. The CS issues the Notice to Proceed. The CS then issues the Purchase Order and provides the number to the contractor and PM. 188.8.131.52 If this is a construction contract, the CS forwards original bonds and retainage agreement, if applicable, to Finance Division of the Finance and Information Technology Department for safekeeping. A copy of these documents is placed in the contract file. Upon contract execution, the CS returns bid bonds to unsuccessful bidders. March 2010 Procurement and Contract Administration Manual Page 46 of 100 NEGOTIATED PROCUREMENT OVER $100K 5.0 NEGOTIATED PROCUREMENT OVER $100K 5.1 Purpose This process may be used to procure all goods and services, professional services, equipment, materials where competitive bidding method is not appropriate. Separate procedures are provided for the procurement of A&E services or public works services. 5.2 Minimum Procurement Lead Time: 9 to 12 weeks 5.3 Procedure 5.3.1 A PM drafts a Pre-Procurement Strategy Plan, which identifies subcontracting opportunities, budget and schedule implications, and potential conflicts of interest. The PM also begins drafting a Scope of Work, which includes all requisite analysis, deliverables, skills, standards of performance and performance milestones. CS provides procurement assistance as needed. 5.3.2 The PM prepares requisition with dollar estimate for contract and obtains appropriate approvals before forwarding to the Procurement and Contracts Division with the independent cost estimate, estimated schedule, and draft scope of work. The CS receives an independent cost estimate from the Project Manager before receiving Proposals. The CS shall not permit Proposals to be evaluated or considered if the independent cost estimate was not submitted before Proposals were received. 5.3.3 The PM and CS discuss needed services so that the CS has the information needed to put together the solicitation document. Topics for discussion include: procurement schedule, inherent risk for determining insurance requirements, and all contractual and performance risks; where to advertise; subcontracting opportunities; appropriate evaluation criteria categories (price shall be one of the evaluation criteria); weight or points given to the evaluation criteria to determine their relative importance; submittals needed to evaluate based on those criteria; scope and schedule; federal or non-federal monies; selection panel members; legal or other issues that may affect the procurement. 5.3.4 The CS discusses with the PM any anticipated changes to the contract to ensure that they fall within the original scope. The PM needs to know that he/she will have to carry out a separate procurement for changes that lie outside the original scope or work (i.e. a "cardinal change"). 5.3.5 The CS drafts a procurement schedule for review by the PM. The schedule is negotiated between and agreed upon by both the CS and the PM. 5.3.6 The CS initiates preparation of the draft solicitation document. The PM continues to develop the Scope of Work. The CS forwards a copy of the solicitation document to the PM. The CS shall include technical and price evaluation factors, such as technical capability of the item offered to meet ST requirements: e.g. past performance; management; key people; delivery terms; QA/QC and safety; project management; and evaluation points or the relative order of importance of the evaluation factors in the solicitation document. 5.3.7 The CS discusses project with Legal, Risk, and Diversity and other stakeholders as needed in order to draft the solicitation document. 5.3.8 The PM provides the final Scope of Work and cost estimate to CS. March 2010 Procurement and Contract Administration Manual Page 47 of 100 NEGOTIATED PROCUREMENT OVER $100K 5.3.9 The PM and CS finalize the Pre-Procurement Strategy Plan, including the procurement schedule, subcontracting opportunities, outreach plan, and conflict of interest mitigation plan. The Diversity Analysis Worksheet is completed by the PM, CS and Diversity. The CS incorporates the information provided in the Worksheet into the Solicitation Document. The CS forwards the procurement schedule to all stakeholders (e.g. Project Management, Diversity, Legal, Risk, etc.). The PM provides an internal distribution list to the CS. 5.3.10 The CS prepares the entire solicitation package and routes it to the PM to review. 5.3.11 The PM and CS incorporate any comments into their respective portions of the document to arrive at a "final" solicitation document. PM and CS conduct a Proposal Readiness Review conference with all stakeholders, if appropriate, to discuss changes to the document. 5.3.12 If necessary, the CS sends out advance notice to potential proposers and/or interested parties letting them know of the upcoming solicitation. 5.3.13 The CS prepares the final solicitation for review. The PM reviews the Scope of Work for quality assurance (the PM may have others review the Scope of Work to ensure the appropriate quality assurance check has been done). A CM reviews the entire document for quality assurance. The Procurement and Contracts Division shall ensure that all solicitations include a clear, accurate, and complete scope before soliciting or advertising for Proposals, evidence such review by receiving a signed form or checklist from the PM, and include the Approval to Advertise form or checklist in the procurement file for the contract. 5.3.14 The CS prepares Solicitation Document for distribution (prints hard copies, make CDs, make PDF files, etc.). CS places advertisement in the appropriate publications (including ST's external website), places documents on E-Bid system, notifies interested parties of the document's availability, and distributes copies of solicitation to the PM, Diversity, and those on the internal document distribution list. 5.3.15 The CS will make certain that appropriate advertising (at a minimum once a week for two consecutive weeks with the first publication not less than ten days before the due date established for proposals) occurred before receiving Proposals, evidence such actions with an affidavit of publication or other proof of advertisement, and include the proof of advertisement in the Procurement file for the contract. 5.3.16 The CS develops an evaluation procedure for the selection panel to follow when evaluating Proposals and conducting interviews (if held). The procedure is completed prior to receiving proposals. 5.3.17 At the Pre-Proposal Conference the CS, PM, Diversity and stakeholder ST staff present material regarding the solicitation to prospective Proposers. The CS coordinates with Diversity to determine whether or not a Networking Session and/or a Diversity Training Session will be conducted after the Pre-Proposal Conference. The CS ensures that the pre-proposal conference is recorded (i.e. take notes of the pre-proposal conference) for distribution to all document holders. The CS records any questions that cannot be answered by referencing the solicitation document or with information that is generally known. These questions are answered in clarification document issued after the Conference. 5.3.18 The CS receives RFIs from prospective Proposers and distributes to appropriate parties for answers. CS incorporates answers into a written clarification document March 2010 Procurement and Contract Administration Manual Page 48 of 100 NEGOTIATED PROCUREMENT OVER $100K and/or addendum and issues to document holders. E-Bid is the preferred method of receiving RFIs. The E-Bid RFI system is more accurate than receiving RFIs via FAX, which should be discouraged. All addenda and clarification documents should also be distributed via E-Bid. 5.3.19 The CS receives the proposals, reviews them for completeness, and distributes to the selection panel members along with the Evaluation and Selection Procedures Manual to be used in evaluating the proposals. 5.3.20 Selection panel evaluates the proposals against the stated evaluation criteria using the guidelines provided in the Evaluation and Selection Procedures Manual. If necessary, the Selection Panel may decide to interview one or more of the proposing firms/teams in person prior to making a decision. The final ranking of firms will be based upon the evaluation process described in the Evaluation and Selection Procedures Manual. CS notifies firms if they are no longer being considered, and arranges interviews with firms if interviews are requested by the Selection Panel. "Best and Final Offers (BAFO)" or multiple interviews may be held if deemed necessary to make a final selection. At least one member of the selection panel should be from a department different from the Project Manger's department. 5.3.21 The CS may provide debriefings to those proposers that do not qualify for BAFO. 5.3.22 Upon determination of the top ranked firm, the CS and PM evaluates price or cost proposal to determine whether proposed level of effort and prices are fair and reasonable. The CS and PM will jointly determine if the price or cost proposal is acceptable or needs negotiation. CS shall ensure an appropriate cost or price analysis is conducted before the CS makes a determination on award of contract. 5.3.23 The CS and PM will jointly develop a written negotiation position. CS will create an initial draft Contract for use as the starting point for negotiations. PM and CS negotiate a Contract with the top ranked firm. Before or during negotiations, PM shall confirm certification of DBE firms (Diversity will assist with this upon request). If a satisfactory Contract cannot be negotiated, negotiations maybe conducted with the next ranked firm. 5.3.24 The CS continues to follow the procedures in the Activity List by drafting a Procurement Summary Memorandum. 5.3.25 The CS routes final Contract to Legal for approval if there are material modifications to important provisions. 5.3.26 Once terms are satisfactorily negotiated, the PM and CS obtain approval per award authority. The CS obtains a copy of the motion and includes it in the Procurement file for the Contract, where a Board approval is received. 5.3.27 The CS will obtain signatures on the contracts from the Consultant, and any other required certification (such as federal forms) or documents. Appropriate ST execution of contract will only occur after all required documents are obtained. 5.3.28 The CS ensures that Consultant is signed onto the OCIP program, if applicable, reviews Certificates of Insurance, and forwards originals of Certificates to Risk Management Division. 5.3.29 Once the Contract and certificates of insurance are approved, CS will obtain appropriate signature on Contract. March 2010 Procurement and Contract Administration Manual Page 49 of 100 NEGOTIATED PROCUREMENT OVER $100K 5.3.30 5.3.32 The CS will return one copy of the Contract along with Notice to Proceed (NTP), or Limited Notice to Proceed (LNTP) as applicable, to Consultant. The CS will send one copy of the executed Contract to the PM, and to Project Control as requested. 5.3.31 CS issues a purchase order and provides the PO number to the Consultant and PM. 5.3.32 The CS reviews procurement and contract files to ensure all necessary documents are included. 5.3.33 The CM reviews files for compliance with all requirements per the Procurement Activity List. March 2010 Procurement and Contract Administration Manual Page 50 of 100 A&E NEGOTIATED PROCUREMENTS 6.0 A&E NEGOTIATED PROCUREMENTS 6.1 Purpose ST shall use qualifications-based procurement procedures not only when contracting for A&E services, but also for other services as defined in 49 U.S.C. Section 5325(b)(1) that are directly in support of, directly connected to, directly related to, or lead to construction, alteration, or repair of real property. A&E procurements are subject to the "Brooks Act" provisions contained in chapter 11 of 40 U.S.C. All engineering and design, and related services are described in 23 U.S.C. §112 (b)(2)(A) and 23 C.F.R. §172.3 and include program management, construction management, feasibility studies, preliminary engineering, design engineering, surveying, mapping, or other related services. These other services may include professional engineering related services, or incidental services that may be performed by a professional engineer, or individuals working under their direction, who may logically or justifiably perform these services. 6.2 Minimum Procurement Lead Time: 17 to 24 weeks 6.3 Procedure 6.3.1 The PM drafts a Pre-Procurement Strategy Plan, which identifies subcontracting opportunities, budget and schedule implications, and potential conflicts of interest. The PM also begins drafting a Scope of Work, which includes all requisite analysis, deliverables, skills (including the various types of people the A&E Consultant will need to work with or address at public meetings), standards of performance and performance milestones. The PM Drafts Kick-Off Requisition: The PM drafts a requisition with budget estimate for contract and obtains appropriate signatures before forwarding to the Procurement and Contracts Division with the ICE, estimated schedule, and draft scope of work. A Kick-Off Requisition is a paper document, a template of which can be obtained from the Procurement and Contracts Division. 6.3.2 CS receives an ICE from the PM before receiving Proposals. The CS shall not permit Proposals to be evaluated or considered if the independent cost estimate was not submitted before Proposals were received. 6.3.3 The CS and PM discuss needed services so that the CS has the information needed to put together the solicitation document. Discussion topics may include: procurement schedule, inherent risk (for determining insurance requirements); where to advertise; subcontracting opportunities; appropriate evaluation criteria categories (price cannot be a consideration for A&E); weight or points given to the evaluation criteria to determine their relative importance; submittals needed to evaluate based on those criteria; scope and schedule; federal or non-federal monies; selection panel members; legal or other issues that may affect the procurement. 6.3.4 Funding Source: If the procured good or service is in support of capital projects and is paid for completely without FTA funds, then the federal boilerplate language in the procurement documents may not apply; however, the WA State A&E procurement rules will apply. However, because almost every capital project may have federal funding in the future, specific instructions and approval from the CM is required to omit or customize any required Federal clauses. 6.3.5 The CS discusses with the PM to identify any anticipated changes to the contract to ensure that they fall within the original scope. The PM needs to know that March 2010 Procurement and Contract Administration Manual Page 51 of 100 A&E NEGOTIATED PROCUREMENTS he/she will have to carry out a separate procurement for changes that is outside the original scope or work (i.e., a "cardinal change"). 6.3.6 The CS drafts a procurement schedule and delivers it to the PM. The schedule is negotiated between and agreed upon by both the CS and the PM. 6.3.7 The CA starts drafting the Solicitation Document. The PM continues to work on Scope of Work. The CS then forwards a copy of the Solicitation Document to the PM if needed. 6.3.8 The CS discusses project with Legal, Risk, and Diversity and other stakeholders as needed in order to draft and assemble the Solicitation Document. 6.3.9 The PM provides the final Scope of Work and ICE to the CS. 6.3.10 The PM and CS finalize the Pre-Procurement Strategy Plan, including the procurement schedule, subcontracting opportunities, outreach plan, and conflict of interest mitigation plan. The Diversity Analysis Worksheet is completed by the PM, CS and Diversity. The CS incorporates the information provided in the Worksheet into the Solicitation Document. The CS forwards the procurement schedule to all stakeholders (e.g., Project Management, Diversity, Legal, Risk, etc.). The PM provides an internal document distribution list to the CS. 6.3.11 The CS assembles entire Solicitation Document and routes it to the PM for review. 6.3.12 The PM and CS incorporate any changes into their respective portions of the document to arrive at a "final" Solicitation Document. PM and CS conduct a Proposal Readiness Review conference with all stakeholders, if appropriate, to discuss changes to the document. 6.3.13 CS sends out "Advanced Notice", if applicable, to potential proposers and/or interested parties letting them know of the pending solicitation. 6.3.14 The PM enters the "official" purchase requisition into E1. The PM or a Project Control ensures the account codes are approved by Finance Division of Finance and Information Technology Department and that the requisition is approved and forwarded to the Procurement and Contracts Division. At the same time, the PM or the Project Control forwards any changes to the cost estimate to the CS. 6.3.15 The CS completes the Solicitation Document for final review. The PM and ST staff review the Scope of Work for quality assurance. The CM also reviews the entire document for management control. The CM shall ensure that all solicitations include a clear, accurate, and complete scope before soliciting or advertising for Proposals, and evidence such review by receiving a signed form or checklist from the PM, and include the form or checklist in the Procurement file for the contract. Note: The CS includes evaluation factors, such as technical capability of the item offered to meet ST requirements: e.g. past performance; management; key people; and evaluation points or the relative order of importance of the evaluation factors in the solicitation document. 6.3.16 When it is necessary, the CS and PM schedule the Pre-Proposal Meeting Room and administrative support. 6.3.17 The CS prepares Solicitation Document for distribution (prints hard copies, makes CD, makes PDF files, etc.). The CS places advertisement in the appropriate March 2010 Procurement and Contract Administration Manual Page 52 of 100 A&E NEGOTIATED PROCUREMENTS publications (i.e. DJC), places documents on E-Bid system, notifies interested parties of the documents' availability, and distributes copies of solicitation to the PM, Diversity, and those on the internal document distribution list. 6.3.18 The CS will make certain that appropriate advertising (at a minimum once a week for two consecutive weeks with the first publication not less than ten days before the due date established for proposals) occurred before receiving Proposals, evidence such actions with an affidavit of publication or other proof of advertisement, and include the proof of advertisement in the Procurement file. 6.3.19 The CS drafts an Evaluation Procedure Manual for the selection panel to follow when evaluating Proposals and conducting interviews (if held). The Procedure Manual shall be completed prior to receiving proposals. 6.3.20 At the Pre-Proposal Conference, the CS, PM, Diversity and other ST stakeholders present material regarding the solicitation to prospective Proposers. The CS coordinates with Diversity to determine whether or not a Networking Session and/or a Diversity Training Session will be conducted immediately after the Pre- Proposal Conference. The CS ensures that the pre-proposal conference is recorded (i.e., takes notes of the pre-proposal conference) for distribution to all document holders. The CS records all questions including issues that cannot be answered by referencing the solicitation document or with information that is generally known. These questions are answered in clarification document issued after the Conference. 6.3.21 The CS may receive Requests for Information (RFIs) from prospective Proposers and distributes to appropriate parties for answers. The CS then incorporates answers into a written clarification document and/or addendum and issues to document holders. The E-Bid is the preferred method of receiving and sending RFIs. The E-Bid system ensures consistency and accuracy than receiving the RFIs via FAX. All addenda and clarification documents should also be distributed via the E-Bid system. 6.3.22 The CS receives the proposals, reviews them for completeness, and distributes to the selection panel members along with the Evaluation and Selection Procedures Manual to be used in evaluating the proposals. 6.3.23 Selection panel members evaluate the proposals against the stated evaluation criteria using the guidelines provided in the Evaluation and Selection Procedures Manual. The Panel may decide to interview one or more of the proposing firms/teams in person prior to making a decision. The final ranking of firms will be determined based upon the evaluation process described in the Evaluation and Selection Procedures Manual and in the Solicitation Document. The CS notifies firms if they are no longer being considered, and arranges interviews with firms if the Selection Panel requests interviews. Multiple interviews may be held if necessary to make a final selection. 6.3.24 At least one member of the selection panel should be from a department different from the PM's department. 6.3.25 The CS conducts debriefings based upon the guidelines provided in the Solicitation Document. 6.3.26 The CS requests a cost proposal from the top ranked firm. March 2010 Procurement and Contract Administration Manual Page 53 of 100 A&E NEGOTIATED PROCUREMENTS 6.3.27 The CS and PM evaluate the cost proposal to determine whether the proposed level of effort and prices proposed are fair and reasonable. The CS and PM will jointly determine if the cost proposal is acceptable or needs negotiation. Negotiation – Cost Proposal: The CS and PM will jointly develop a written negotiation position. CS will create an initial draft Contract for use as the starting point for negotiations. PM and CS negotiate a Contract with the top ranked firm. PM focuses on scope and budget questions, CS focuses on general terms and conditions, legal issues and cost proposal. Before or during negotiations, PM shall confirm certification of DBE firms (Diversity will assist with this upon request). If a satisfactory Contract cannot be negotiated, terminate negotiations with the firm and go to the next ranked firm. 6.3.28 The CS drafts a Procurement Summary Memorandum, which shall include all applicable items listed in the Procurement Summary template. 6.3.29 The CS routes final Contract to Legal for approval if there are material modifications to important provisions. 6.3.30 Once terms are satisfactorily negotiated, PM prepares materials for ST Agenda Committee meetings and proceeds to obtain appropriate level of approval. The CS obtains a copy of the motion and includes it in the Procurement file. 6.3.31 The CS will obtain signatures on 2 original copies of the contract from the Consultant, and any other required certification (such as federal forms) or documents. Appropriate ST execution of contract will only occur after all required documents are obtained. 6.3.32 The CS reviews Certificates of Insurance and forwards originals to Risk Management. If the procurement is covered by OCIP, the CS also ensures that Consultant is signed on to the OCIP program. 6.3.33 Once Contract and certificates of insurance are approved, the CS will obtain authorized ST signature to execute the Contract. 6.3.34 The CS will return one original of the Contract along with Notice to Proceed (NTP), or Limited Notice to Proceed (LNTP) as applicable, to Consultant. The CS will send one copy of the executed Contract and NTP or LNTP to the PM and other ST stakeholders. 6.3.35 CS issues a purchase order and provides the PO number to the Contractor and PM. The PO number is required for invoice processing and other E1 activities. 6.3.36 The CS reviews procurement and contract files to ensure all necessary documents are included. 6.3.37 CM reviews files for accuracy, completeness, compliance with all requirements per the Procurement Activity Lists contained in the Appendices. March 2010 Procurement and Contract Administration Manual Page 54 of 100 A&E SMALL PURCHASE NEGOTIATED PROCUREMENTS 7.0 A&E SMALL PURCHASE NEGOTIATED PROCUREMENTS 7.1 Applicability This procedure is only applicable to A&E and related services valued less than $100,000, subject to the qualifications-based procurement procedures of 40 U.S.C. Chapter 11 (Brooks Act) and RCW 39.80 and additional related services described in 49 U.S.C. Section 5325(b), which include program management, construction management, feasibility studies, preliminary engineering, design, architectural, architectural engineering, engineering, surveying, mapping, or related A&E services, 7.2 Minimum Procurement Lead Time: 5 to 10 days 7.3 Special Requirements 7.3.1 Guidance for Small Purchase procedure not subject to Brooks Act is provided separately in this Procurement Manual. This procedure provides additional instructions and requirements for A&E and other related services under the Small Purchase threshold. The CS and PM shall ensure that the Brooks Act is adhered to, that price is not an evaluation factor, and that the offeror's qualifications are evaluated to select the most qualified firm when procuring A&E services. 7.3.2 Unless FTA determines otherwise in writing, ST may not use qualifications-based procurement procedures to acquire other types of services if those services are not directly in support of, directly connected to, directly related to, or do not lead to construction, alteration, or repair of real property. Even if a contractor has performed services listed herein in support of a construction, alteration, or repair project involving real property, selection of that contractor to perform similar services not relating to construction may not be made through the use of qualifications-based procurement procedures. 7.3.3 The PM should state evaluation criteria and the relative importance assigned to evaluation factors and sub-factors. 7.3.4 The PM and CS may consider a firm-fixed-price or fixed-price-with-escalation, fixed-price-level-of-effort or time-and-materials (T&M) contract type before or during negotiation when a cost reimbursement type would be inappropriate due to either relatively high administrative costs and/or the lack of an adequate accounting system on the part of a consultant to accumulate costs, but where it is possible to reasonably estimate the level of effort or performance risk is predicted to be minimal. No T&M shall be awarded unless the CS determines and documents that no other contract type is suitable and the Contract specifies a ceiling price that the consultant may not exceed except at its own risk. 7.4 Procedure 7.4.1 The PM submits an approved requisition including a technical Statement of Work (SOW) and an Independent Cost Estimate (ICE) to CS. The requisition should identify pertinent 7-digit NAICS-based code and/or 5 A-E businesses for services requested If an ICE is close to $100,000 and/or the actual negotiated price will likely exceed $100,000, Sound Transit shall not use A&E Small Purchase but a formal A&E Negotiated Process as stipulated in the Procurement Manual, which will require a formal advertisement. March 2010 Procurement and Contract Administration Manual Page 55 of 100 A&E SMALL PURCHASE NEGOTIATED PROCUREMENTS 7.4.2 The CS or PM queries the EBid database and identifies 3 to 5 A-E businesses or the PM may research to identify 3 to 5 A-E firms. One of the firms selected to quote should be a DBE or Small Business. In the event a DBE or Small Business cannot be identified to quote, the PM/CS will document efforts made to locate DBE's and Small Businesses. 7.4.3 The CS and/or PM prepare a Request for Qualification. If federally funded, the CS or the PM shall ensure that appropriate FTA terms, conditions, and certifications are attached to the Request for Qualification. 7.4.4 The CS/PM obtains technical qualifications and CS receives and keeps sealed price quotes. CS will determine if the firms are responsible and check WA State and Federal website to determine eligibility for contract award. Only responsive firms will be considered further. 7.4.5 The PM evaluates and ranks the technical qualifications received. A simple documentation (e.g. rationale for ranking the most qualified firms) is prepared by the PM. The PM may conduct a phone or in-person interview when appropriate to determine the most qualified firm. 7.4.6 An Evaluation Committee may be formed, consisting of a minimum of 2 members to discuss selection criteria, assign evaluation points and to evaluate qualifications or technical proposals. The Committee reviews all qualifications, rank the firm, and document the evaluation result. The Committee may conduct a phone or in-person interview when appropriate to determine the most qualified firm. 7.4.7 The PM informs the CS of the top ranked firm. CS then opens the sealed price quotes or cost proposal of the top ranked proposal. Negotiation of scope and/or cost maybe conducted by the CS or PM. Only after failing to agree on a fair and reasonable price, the CS terminates negotiation and continues price negotiations with the next most qualified offeror. Then, if necessary, negotiations with successive offerors in descending order may be conducted until contract award can be made to the offeror whose price is deemed fair and reasonable. The CS notifies unsuccessful firms if they are no longer under consideration. The CS and PM need not negotiate if the prices quote or cost proposal with the top firm is found fair and reasonable. Unopened price quotes or cost proposals shall be returned to the proposers. 7.4.8 The CS will contact the successful firm to request applicable insurance certificate if applicable. 7.4.9 The CS prepares a Procurement Summary and obtains authorization to award. 7.4.10 The CS issues a Purchase Order or Contract that includes delivery/performance end dates to the selected firm and provides the Purchase Order number to the PM. For FTA funded projects, the CS shall ensure all applicable third party contract clauses are included for all purchase orders or contracts funded by FTA, consistent with the FTA C 4220.1F, Appendix D, "Federally Required and Other Model Clauses" and include all necessary certifications required by FTA. March 2010 Procurement and Contract Administration Manual Page 56 of 100 A&E SMALL PURCHASE NEGOTIATED PROCUREMENTS A Notice to Proceed (NTP) is not issued, but the PO will serve as Sound Transit's legal offer. The PO becomes a binding contract when the consultant returns a signed PO, or begins the work as prescribed in the statement of work. To ensure compliance with the Brook's Act, the CS will prepare a Procurement Summary Memo for the Contract/Procurement Files. The CM shall review files to ensure compliance subject to 49 U.S.C. Section 5325(b)(1). 7.4.11 Upon completion of the consultant services, the PM inspects and accepts the deliverables by approving the invoice for payment and forwards it to Accounts Payable for payment and PO close out. PM shall notify the CS if services are not satisfactory according to the scope of work and/or in the time indicated on the PO. March 2010 Procurement and Contract Administration Manual Page 57 of 100 TWO-STEP PROCUREMENT 8.0 TWO STEP PROCUREMENT 8.1 Purpose This procurement method may be used in both sealed bid and competitively negotiated procurements for complex goods and services, or for a large design-build project if the cost of construction component exceeds that of the design component and the use of qualification-based Brooks Action procurement procedure is prohibited, consistent with RCW and FTA requirements. 8.2 Implementation Two-step procurement involves: o Step 1 consists of the request for, submission, evaluation, and (if necessary) discussion of a technical proposal. No pricing is involved. The step 1 determines the acceptability of the supplies or services offered. As used in this context, the word "technical" has a broad connotation and includes, among other things, the engineering approach, special manufacturing processes, and special testing techniques. It is the proper step for clarification of questions relating to technical requirements. Conformity to the technical requirements is resolved in this step. o Step 2 involves the submission of sealed priced bids by those who submitted acceptable technical proposals in step 1. Bids submitted in Step 2 are evaluated and the awards made. 8.3 Definition Two-step procurement, also called two-step sealed bidding, is a combination of competitive procedures designed to obtain the benefits of sealed bidding when adequate specifications are not available. It permits the development of a sufficiently descriptive and not unduly restrictive statement of ST's requirements, including an adequate technical data package, so that subsequent acquisitions may be made by conventional sealed bidding. This method is especially useful in acquisitions requiring technical proposals, particularly those for complex items. 8.4 Minimum Procurement Lead Time: 9 – 24 weeks 8.5 Procedure 8.5.1 A PM submits an approved requisition, Statement of Work or Scope, and Independent Cost Estimate (ICE) to PROCUREMENT AND CONTRACTS DIVISION. 8.5.2 The CS and PM discuss the needed services. Topics for such discussion may include procurement schedule; inherent risk (for determining insurance requirements); subcontracting opportunities; appropriate evaluation criteria categories for the qualifications submittals and the proposal submittals; scope and schedule; federal or local funds (which will determine if federal requirements must be used); whether a pre-proposal conference is needed. 8.5.3 The CS drafts Request for Qualifications (RFQ), incorporating FTA terms if applicable, and prepares advertisements. The CS shall include evaluation factors, such as technical capability of the item offered to meet ST requirement: e.g. past performance; management; key people; and evaluation points or the relative order of importance of the evaluation factors in the solicitation document. The CS routes Approval to Advertise and draft RFQ to stakeholders for their approval. Evaluation criteria focus on technical qualifications. Advertisements are posted in DJC, ST web and E-Bid. March 2010 Procurement and Contract Administration Manual Page 58 of 100 TWO-STEP PROCUREMENT 8.5.4 The CS issues RFQ via ST's E-Bid system. All requests for information / questions are routed directly to the CS; written clarification and addendum will be issued by the CS when necessary. The CS will route all clarification and addenda for CMs review and approval. 8.5.5 The CS receives Qualifications submittals and distributes to Evaluation Committee to review; qualified firms are determined to be in the competitive range at a subsequent evaluation meeting. 8.5.6 The CS and PM receive and clarify questions relating to technical requirements. Conformity to the technical requirements is resolved in this step. The CS and PM may then narrow the competitive range to those prospective contractors with satisfactory qualifications that demonstrate a technically satisfactory approach 8.5.7 The CS and PM shall establish an evaluation committee to evaluate the responses to the RFQ based on the factors, weighting, and process identified in the solicitation document. Based on the evaluation committee's findings, ST shall select the competitive range of responsive and responsible finalists to submit proposals. ST may, in its sole discretion, reject all proposals and shall provide its reasons for rejection in writing to all proposers. The CS shall notify offerors promptly in writing when their proposals are excluded from the competitive range or otherwise eliminated from the competition. The notice shall state the basis for the determination and that a proposal revision will not be considered. 8.5.8 The CS may proceed directly with Step 2 if there are sufficient acceptable proposals to ensure adequate price competition under Step 2, and if further time, effort, and delay to make additional proposals acceptable and thereby increase competition would not be in ST's interest. If this is not the case, the CS shall request bidders whose proposals may be made acceptable to submit additional clarifying or supplementing information. The CS shall identify the nature of the deficiencies in the proposal or the nature of the additional information required. The CS may also arrange discussions for this purpose. No proposal shall be discussed with any offeror other than the submitter. 8.5.9 The CS notifies qualified firms selected for the competitive range and issues the Request for Proposals (RFP) to those firms via ST's E-Bid system. CS shall include price and price-related evaluation factors and/or the relative order of importance of the evaluation factors. All requests for information / questions are routed directly to the CS. Written clarification and addendum will be issued by the CS with the CMs review and approval. 8.5.10 The CS shall notify offerors promptly in writing when their proposals are excluded from the Step 2. The notice shall state the basis for the determination and that a proposal revision will not be considered. 8.5.11 If applicable, the CS obtains certificate of insurance from Consultant. 8.5.12 The PM or CS must seek appropriate award and financial approvals prior to issuing Agreement to Consultant. Upon approval, the CS sends Agreement to Consultant for signature. 8.5.13 When signed Agreement is returned, the CS routes Approval to Execute to the Director, Legal Counsel, and then to ST staff with appropriate delegated authority to sign. March 2010 Procurement and Contract Administration Manual Page 59 of 100 TWO-STEP PROCUREMENT 8.5.14 Upon contract execution, the CS confirms with PM the date work is to begin. The CS issues the Notice to Proceed and sends it to Consultant along with the Agreement. The CS is also responsible for internal distribution of Contract and related documents. 8.5.15 The CS issues the PO and provides the PO number to the Consultant and PM. March 2010 Procurement and Contract Administration Manual Page 60 of 100 EMERGENCY PROCUREMENT 9.0 EMERGENCY PROCUREMENT 9.1 Policy The Chief Executive Officer is authorized to make a finding of the existence of emergency and execute contracts or purchases necessary to respond to the existing emergency, provided that the Chief Executive Officer shall, at the first Board meeting following the Chief Executive Officer's finding of the existence of an emergency, request Board ratification of the finding of emergency and any purchases or contracts awarded and/or executed pursuant to that finding if the cost thereof exceeds $100,000. The Chief Executive Officer or designee shall keep the Board informed of the development of the emergency situation and the progress of any contracts or purchases executed to remedy the emergency. • Sound Transit shall perform minimal work necessary to remove the emergency. • Although competitive bidding may be waived for declared emergencies or public exigencies, Sound Transit will request quotations for the necessary supplies or services from available, known, reliable sources. • All emergency procurements are considered "sole source procurement" and as such, all sole source justifications shall be reviewed by the Director or CM for concurrence. 9.2 References • 40 U.S.C. Section 502(d) implements the John Warner National Defense Authorization for State and local governments to use any GSA Federal Supply Schedule for emergency declared by the President of the United States. • RCW 39.04.020 – "Plans and specifications -- Estimates -- Publication -- Emergencies" • RCW 39.94.280 – "Competitive bidding requirements – Exceptions" • RCW 39.80.060 - "Procurement of architectural and engineering service – Exceptions for emergency work". • RCW 39.28 – "Emergency public works" • ST Board Resolution 78-1 • Administrative Policies and Procedures No. 5 – Procurement and Disbursement Policy • Administrative Policies and Procedures No. 6 – Delegation of Authority and Execution of Contracts Policy • FTA "Circular 4220.1F (Third Party Contracting Guidelines) and revisions" 9.3 Definition • FTA Circular 4220.1.F: "The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation." • RCW 39.04.280: Emergency" means unforeseen circumstances beyond the control of the municipality that either: (a) present a real, immediate threat to the proper performance of essential functions; or (b) will likely result in material loss or damage to property, bodily injury, or loss of life if immediate action is not taken. • Resolution No. 78-1: "Emergency means the immediate execution of a contract for work or services, or any immediate purchases of materials, equipment supplies, services or construction items. • Responsible Manager is referred to "PM" within this Guide and means the person responsible for initiating, coordinating, and managing the emergency work as defined herein. March 2010 Procurement and Contract Administration Manual Page 61 of 100 EMERGENCY PROCUREMENT • Procurement Activity Lists (PAL): provides systematic instructions including required solicitation provisions and contract terms and conditions to all procurement process. 9.4 Approval Authority Sole Source Justification must be reviewed and concurred by the Director, Procurement and Contracts Division or designee prior to obtaining approval. All Emergency Actions ST Approval Authority Sole Sources up to $25,000 Executive Directors Sole Sources up to $100,000 Chief Executive Officer or Deputy Chief Executive Officer Sole Sources greater than $100,000 Board 9.5 Procedure 9.5.1 When an emergency arises, the PM, in consultation with the CS shall contact contractor(s) and enter into a preliminary emergency contract agreement" by issuing a "Limited Notice to Proceed (LNTP)". In the event of extreme emergency, this may occur at the first practical time and not necessarily before commencement of work. 9.5.2 The CS shall ensure that each LNTP contains the following additional conditions: 126.96.36.199 A short summary of emergency work to be performed including duration, quoted rates, place of performance, delivery requirements, and the name of Responsible Manager. 184.108.40.206 A date for submission of the contractor's price proposal, required cost or pricing data, and, if required, make-or-buy and subcontracting plans 188.8.131.52 A target date for negotiation and finalization of contract, which shall be the earliest practicable date for expenditure limitation and notification; and payment provision (i.e. progress payment) 22.214.171.124 The maximum liability to Sound Transit that is not to exceed 50% of the estimated cost of the definitive contract unless waived by appropriate Approval Authority. 22.214.171.124 If required, customary construction provisions as required by RCW and/or FTA (i.e. Buy America, prevailing wage , bonding requirements, payment schedule, insurance, DBE goal) to protect ST's interests. 126.96.36.199.1 The CS and PM will pay special attention to the contractor's compliance with the contract schedule and document any anticipated delays. 18.104.22.168.2 The CS and PM will monitor the contractor's expenditures and percentage of completion and assure that the limitations established by the letter contract are not exceeded. 9.5.3 Pursuant to RCW 39.04.020, within 7 calendar days after the issuance of a Notice to Proceed or letter contract, or after commencement of public work, the CS shall publish the description and independent cost estimate. 9.5.4 Pursuant to RCW 39.04.280, after award of a letter contract, a written finding of the existence of an emergency (i.e. Sole Source Justification) must be "duly entered of record": meaning, a Board Resolution or ST's Approval Authority must certify no March 2010 Procurement and Contract Administration Manual Page 62 of 100 EMERGENCY PROCUREMENT later than 14 days that the emergency existed following the award of the emergency contract. 188.8.131.52 The Contractor may need to comply with federal regulations and certification requirements including additional, applicable FTA requirements that must be met (i.e. prevailing wage and bond requirements, payment schedule, insurance, the DBE goal) 184.108.40.206 If the work qualifies for public works or construction, the CS shall ensure that the contract/LNTP contains appropriate clauses (i.e. prevailing wages, performance and payment bonds, retainage, diversity, insurance, change order.) 9.5.5 The PM shall provide the specifications or statement of work and Independent Cost Estimate (ICE) for the supply or service being procured to the CS. 9.5.6 The CS shall request cost or pricing data from the Contractor. The CS should allow adequate time for the contractor to prepare its proposal prior to submission. 184.108.40.206 PM and CS will review the proposal with ST staff to prepare for negotiations with the Contractor and negotiate the final terms and conditions of the contract including the final cost. 9.5.7 As required by FTA Circular 4220.1F, a cost analysis shall be performed for emergency works if funded by FTA. March 2010 Procurement and Contract Administration Manual Page 63 of 100 DESIGN-BUILD PROCUREMENT 10.0 DESIGN-BUILD PROCUREMENT 10.1 FTA Requirement The design-build project delivery method provides design and construction under a single contract. In general, it may have an advantage over the traditional two-contract design-bid-build method. For FTA funded projects, the Safe, Accountable, Flexible, Efficient Transportation Equity Act (SAFETEA-LU) expressly authorizes design-build projects after the recipient complies with 49 U.S.C. Section 5325(d)(2). See FTA Circular 4220.1.F. Page VI-14 for more information. The method of procurement is determined by evaluating the following; a. If construction is determined predominant, sealed bids or competitive negotiations procurement methods shall apply. b. If design is found predominant, the Brooks Act and the procedure outlined in the A-E Procurement in this Manual shall be followed. c. The decision to use Design Build project delivery method should be made after documenting facts that support a finding that the construction under the Design-Build method is likely to result in substantial cost savings, higher quality, reduced errors, or other benefits to Sound Transit. 10.2 RCW Requirement According to RCW 39.10.270 or 39.10.280, ST may utilize the design-build procedure for public works projects in which the total project cost is over $10 million and where: a. The design and construction activities, technologies, or schedule to be used are highly specialized and a design-build approach is critical in developing the construction methodology or implementing the proposed technology; or b. The project design is repetitive in nature and is an incidental part of the installation or construction; or c. Regular interaction with and feedback from facilities users and operators during design is not critical to an effective facility design. 10.3 Procedure: ST may use any procurement methods discussed in this Manual (i.e. Sealed Bid, 2 Step Procurement, Contract by Negotiation, A&E Procurement) for Design Build contracts. March 2010 Procurement and Contract Administration Manual Page 64 of 100 SMALL WORKS ROSTER 11.0 SMALL WORKS ROSTER 11.1 Purpose and Scope The Small Works Roster (SWR) is an expedited contracting procedure to procure necessary construction services under $200,000. No solicitation advertisement is required (the Roster is advertised twice yearly in the Seattle Daily Journal of Commerce consistent with the requirements of RCW 39.04.155) and bid bonds are optional at the discretion of the Director. CM monitors the twice-annual advertisement dates. Unlike larger construction projects, electronic, faxed or telephone quotes may be accepted. As the bidders list is used from firms registered as SWR firms on the E-Bid systems website, applications are accepted any time. The SWR is open year round. All Bid notices including the SWR are continuously advertised on the Procurement and Contracts Division Website at Contracts Home Page under Public Notice of Current Solicitations as well as in the E-Bid System at Contracting Opportunities. SWR cannot be used to break-up projects into units/phases to circumvent the standard competitive bidding process or award authority levels. 11.2 Minimum Procurement Lead Time: 3 weeks 11.3 Procedure 11.3.1 Project Manager submits an approved requisition with a Statement/Scope of Work (SOW) and an Independent Cost Estimate (ICE). 11.3.2 The CS and PM review the Statement/Scope of Work and solicitation schedule. 11.3.3 The Project Manager has the option of either conducting a "Pre-Bid" conference or a "walk through". 11.3.4 ST does not rotate through a roster of contractors. CS shall issue the solicitation to all those on the Small Works Roster contained on E-Bid that fit the business classification for the Work as identified by the North American Industry Classification System (NAICS) Code for product or service entered by contractors in the E-bid System. 11.3.5 After bids are submitted, the CS will identify the firm that submitted the lowest priced, responsive offer and meets the responsibility criteria stated in the solicitation. 11.3.6 The CS will check WA State and federal websites to determine if the bidder is eligible for contract award. At the time of bid submittal, Contractor shall have: • A certificate of registration in compliance with RCW 18.27 RCW; • A current state unified business identifier (UBI) number; • If applicable, industrial insurance coverage for the bidder's employees working in Washington as required in Title 51 RCW; • Employment security department number as required in Title 50 RCW; • State excise tax registration number as required in Title 82 RCW. March 2010 Procurement and Contract Administration Manual Page 65 of 100 SMALL WORKS ROSTER 11.3.7 The CS will contact the successful firm and request its Dept. of Labor & Industries (L&I) "Statement of Intent to Pay Prevailing Wages", performance and payment bonds as well as the firm's Insurance Certificate. 11.3.8 Upon receipt of the above documents, a Notice to Proceed (NTP) and a purchase order is issued to the successful firm. 11.3.9 At the conclusion of the work, the Project Manager confirms the acceptance of the work and/or deliverables and sends notice of substantial completion or acceptance of the work to the CS. 11.3.10 The CS checks the L&I website to determine if the Contractor has filed its "Affidavit of Wages Paid". If the contract is greater than $35K (pre-tax), CS checks the Dept. of Revenue (DOR) to determine if all liens and encumbrances have been paid and obtains releases. The CS sends Accounts Payable a request for release of retainage in accordance with RCW 60.28 11.3.11 The PM approves the Contract's final invoice for payment and forwards it to Accounts Payable for final payment and P.O. close out. March 2010 Procurement and Contract Administration Manual Page 66 of 100 SOLE SOURCE 12.0 SOLE SOURCE 12.1 Purpose The purpose of this procedure is to provide direction on sole source procurements, which includes proprietary procurements. As a rule, ST will provide for full and open competition when soliciting bids or proposals. Only under certain limited circumstances, ST may conduct procurements without providing for full and open competition. 12.2 Minimum Procurement Lead Time: 9 to 12 weeks 12.3 Procedure Purchase requisitions for goods and services valued at $3,000 with federal funds or valued at $5,000 without federal funds or more shall be competitively procured. Sole Source procurements may only be used when the award of a competitive contract is unfeasible under Small Purchase, Sealed Bidding or Competitive Negotiation procedures. Circumstances that may lead to a sole source action are: 12.3.1 Unique Capability or Availability. The property or services are available from one source if one of the conditions described below is present: 184.108.40.206 Unique or Innovative Concept. The offeror demonstrates a unique or innovative concept or capability not available from another source. Unique or innovative concept means a new, novel, or changed concept, approach, or method that is the product of original thinking, the details of which are kept confidential or are patented or copyrighted, and is available to ST only from one source and has not in the past been available to ST from another source. 184.108.40.206 Patent or data rights restrictions preclude competition. 184.108.40.206 In the case of a follow-on contract for the continued development or production of highly specialized equipment and major components thereof, when it is likely that award to another contractor would result in substantial duplication of costs that are not expected to be recovered through competition. 184.108.40.206 In the case of a follow-on contract for the continued development or production of a highly specialized equipment and major components thereof, when it is likely that award to another contractor would result in unacceptable delays in fulfilling ST's needs. 12.3.2 Single Bid or Proposal. Upon receiving a single bid or proposal in response to a solicitation, the CS along with the PM should determine if competition was adequate. This should include a review of the specifications for undue restrictiveness and might include a survey of potential sources that chose not to submit a bid or proposal. 126.96.36.199 CS acknowledges competition to be adequate when the reasons for few responses were caused by conditions beyond ST's control. Many unrelated factors beyond ST's control might cause potential sources not to submit a bid or proposal. If the competition can be determined adequate, ST's competition requirements will be fulfilled, and the procurement will qualify as a valid sole source. March 2010 Procurement and Contract Administration Manual Page 67 of 100 SOLE SOURCE 184.108.40.206 CS acknowledges competition to be inadequate when, caused by conditions within ST's control. For example, if the specifications used were within ST's control and those specifications were unduly restrictive, competition will be inadequate. 12.3.3 ST may limit the number of sources from which it solicits bids or proposals when ST has such an unusual and urgent need for the property or services that ST would be seriously injured unless it were permitted to limit the solicitation. ST may also limit the solicitation when the public exigency or emergency will not permit a delay resulting from competitive solicitation for the property or services. 12.3.4 The item is an associated capital maintenance item as defined in 49 U.S.C. § 5307(a)(1) that is procured directly from the original manufacturer or supplier of the item to be replaced. Sound Transit must first certify in writing to FTA: (i) that such manufacturer or supplier is the only source for such item; and (ii) that the price of such item is no higher than the price paid for such item by like customers. ST's Board motion 78-1 permits use of proprietary procurements where only local operating funds are applied. Proprietary procurements may only be used when the award of a competitive contract is infeasible under Micro Purchase, Small Purchase, Sealed Bidding, or Competitive Negotiation procedures. FTA does not permit proprietary procurements unless it meets the sole source justification criteria stipulated in FTA Circular 4220.1.F. If spare parts, replacement parts and maintenance contracts for existing equipment and systems where only proprietary items/ services are compatible with existing equipment and systems and where such items and services can be acquired only from the manufacturer or from a single distributor or licensee and all other alternatives are exhausted, they may be acquired, ordered or paid in the best interests of ST by the CEO within budget appropriations or other Board authorizations. 12.3.5 The Common Grant Rules provide Federal agencies authority to permit a recipient to use noncompetitive proposals. Under this authority, FTA has made the following determinations: 188.8.131.52 With some exceptions, when FTA awards a grant agreement or enters into a cooperative agreement with a consortium, joint venture, team, or partnership, or provides FTA assistance for a research project in which FTA has approved the participation of a particular firm or combination of firms in the project work, the grant agreement or cooperative agreement constitutes approval of those arrangements. In such cases, FTA expects ST to use competition, as feasible, to select other participants in the project. 22.214.171.124 To ensure that ST has flexibility equal to that of Federal contracting officers, FTA authorizes procurement by noncompetitive proposals in all of the circumstances authorized by FAR Part 6.3. In addition to circumstances discussed in the Common Grant Rules, the FAR authorizes less than full and open competitive procurements in one or more of the following circumstances: • To comply with Department of Transportation (DOT) appropriations laws that include specific statutory requirements, with the result that only a single contractor can perform certain project work. March 2010 Procurement and Contract Administration Manual Page 68 of 100 SOLE SOURCE • To maintain a facility, producer, manufacturer, or other supplier available to provide supplies or services in the event of a national emergency or to achieve industrial mobilization. • To establish or maintain an educational or other non-profit institution or a federally funded research and development center that has or will have an essential engineering, research, or development capability. • To acquire the services of an expert or neutral person for any current or anticipated protest, dispute, claim, or litigation. • When precluded by the terms of an international agreement or a treaty between the United States and a foreign government or international organization, or when prohibited by the written directions of a foreign government reimbursing the recipient for the cost of the acquisition of the supplies or services for that government. • When the disclosure of ST's needs would compromise the national security. • When ST determines that full and open competition in connection with a particular acquisition is not in the public interest. 12.3.6 The following actions constitute sole source procurements: 22.214.171.124 If a contract has one or more options and those options were not evaluated as part of the original contract award, exercising those options after contract award will result in a sole source award. 22.214.171.124 Exercising an option after ST has negotiated a lower or higher price will also result in a sole source award unless that price can be reasonably determined from the terms of the original contract, or that price results from Federal actions that can be reliably measured, such as changes in Federal prevailing labor rates, for example. In the circumstances described in this paragraph, FTA assistance may be used to support a sole source award only if that award can be justified under FTA's third party contract standards for sole source awards. 126.96.36.199 Contract time extensions shall be considered in light of whether they are permissible changes or impermissible cardinal changes. Once ST awards a third party contract, an extension of the contract term length that amounts to a cardinal change will require a sole source justification. 18.104.22.168 When ST requires an existing contractor to make a change to its contract that is beyond the scope of that contract, ST has made a sole source award that must be justified. 12.3.7 Less than full and open competition is not justified based on: 184.108.40.206 ST's lack of advance planning, or 220.127.116.11 Limited Availability of Federal Assistance. March 2010 Procurement and Contract Administration Manual Page 69 of 100 SOLE SOURCE 12.3.8 When less than full and open competition is available to ST, the CS shall: 220.127.116.11 Solicit offers from as many potential sources as is practicable under the circumstances. 18.104.22.168 If ST decides to solicit an offer from only one source, CS must justify its decision adequately. 184.108.40.206 Contracts for sole source procurements up to $100,000 may be awarded by the Chief Executive Officer. Contracts for sole source procurements exceeding $100,000 shall be approved by the Board. The resolution approving the contract shall also indicate the reasons for the sole source procurement. 126.96.36.199 The CS shall prepare or obtain a cost analysis verifying the proposed cost data, the projections of the data, and the evaluation of the costs and profits. 188.8.131.52 The CS will submit the proposed procurement to FTA for pre-award review if FTA so requests. March 2010 Procurement and Contract Administration Manual Page 70 of 100 BLANKET AGREEMENTS 13.0 BLANKET AGREEMENTS 13.1 Purpose Blanket agreements may be awarded on the basis of qualifications and prices, if applicable, and for specified periods of time but without specific descriptions, statements, or scopes-of-work. Under blanket agreements and contracts, ST may issue task orders for materials, equipment, supplies, or services. 13.2 Minimum Procurement Lead Time: Initial Blanket Agreement: 9 to 12 weeks Task/Delivery Order Issuance: 3 days 13.3 Procedure A procurement for a blanket agreement shall include technical, price (except for A&E), or both technical and price considerations prior to award of the blanket agreement, which will be for a defined "not to exceed" dollar value. Procurements that result in blanket agreements shall be in accordance with all applicable laws and grant requirements. Issuance of task orders shall be made upon submission of a quote by the vendor based upon rates established in the blanket agreement, and acceptance of the quote by ST. The quote may be a "not to exceed" estimate, where the vendor is compensated only for time and materials expended in producing the task order deliverables, or a firm fixed price. In the event of a roster of blanket agreement awardees for a specific type of work, a documented selection process will be conducted by ST staff to determine which vendor will be assigned the task order. If there is no technical or price competition or the quote is not based upon rates established in the blanket agreement, the task order shall be deemed "Sole Source" procurement and the requirements applicable to sole source procurements shall be complied with before issuing the task order. User departments shall issue a blanket order release in E1 for each work order or purchase made at the time the order is placed. The blanket order release number shall be provided to the vendor and included on their invoice. March 2010 Procurement and Contract Administration Manual Page 71 of 100 PIGGYBACKING 14.0 PIGGYBACKING 14.1 Purpose Establish agreements and contracts by taking advantage of existing contracts awarded by other governmental entities for goods and services that ST currently needs. Piggybacking is defined by the FTA Circular 4220.1.F as: "Piggybacking" is an assignment of existing contract rights to purchase supplies, equipment, or services. 14.2 Minimum Procurement Lead Time: 9 to 12 weeks 14.3 Procedure There are a number of issues that should be addressed before deciding to piggyback on another agency's contract. Following are some of the important steps a CS must follow: 14.3.1 For FTA assisted projects, the CS shall obtain a copy of the entire contract and review it carefully to determine if it contains the provisions required by FTA Circular 4220.1F. This is an important first step, because the requirements of the Circular apply to procurements made through inter-governmental contracts and assignments. If a required Federal clause is not included in the contract, the CS may add them to ST's contract. 14.3.2 Confirm that the original contract contains an express assignability clause that provides for the assignment of all or part of the specified deliverables. FTA's policy is that the original solicitation must contain an express notification to all bidders that an assignment would be possible under the terms of the contract. Such a notification would put the bidders on notice that they would likely be called upon to deliver all of the deliverable items, both the base as well as the option quantities. The assignment clause would thus be an important factor in the original competitive bidding. If the contract does not contain an express assignability clause, piggybacking is not permitted. In addition, ST must have on file an inter-local cooperative agreement permitting the two agencies to piggyback on each other's contracts. 14.3.3 Determine that the contract is still in effect. 14.3.4 Determine that the specifications in the existing contract will meet ST's needs. 14.3.5 Review the contract terms and conditions carefully to determine that they are acceptable to ST; e.g., warranty provisions, insurance requirements, etc. 14.3.6 Determine that the requirements of ST will not be beyond the scope of the existing contract, creating a sole-source (noncompetitive) add-on to the contract, which will have to be justified in accordance with sole source procedures. 14.3.7 Verify that piggybacking quantities were included in the original solicitation. 14.3.8 For federally funded procurements and if the contract is an indefinite quantity contract, verify that the original solicitation and resultant contract contain both a minimum and a maximum quantity, which represent the reasonably foreseeable needs of the parties to the solicitation. March 2010 Procurement and Contract Administration Manual Page 72 of 100 PIGGYBACKING 14.3.9 If the piggybacking action represents the exercise of an option provision in the contract, verify that the option is still valid. Options that have expired may not be exercised. 14.3.10 Determine that the contract was awarded competitively, either through sealed bids or through competitive proposals. If the contract was a sole-source award, the CS will have to justify a sole-source award in accordance with sole-source procedures. 14.3.11 Verify that a cost or price analysis was performed by the original procuring agency documenting the reasonableness of the contract price and include a copy in our files. The CS is not required to do a second price analysis if one was originally performed. However, the CS must determine that the contract prices originally established are still fair and reasonable. Circumstances should dictate the steps to be taken. For example, if the original award was made some time ago, the CS should conduct a market survey and/or perform price analysis to ensure that the prices are still fair and reasonable (even if the original award was competitive and a price analysis was performed initially). Similarly, if deliveries are to be made to a local or centralized delivery point and the original contract calls for statewide deliveries, the CS should seek a price reduction. 14.3.12 If the contract is for federally funded rolling stock, verify that the contract term complies with the five-year term limit established by FTA Circular 4220.1F. 14.3.13 Determine the types of changes ST will require to be made to the deliverables. For an assignment, only "within scope" (non-cardinal) changes are allowed (e.g., seating fabrics and colors, paint schemes, signage, floor coloring, etc.). March 2010 Procurement and Contract Administration Manual Page 73 of 100 PROCUREMENT CARD 15.0 PROCUREMENT CARD 15.1 Purpose The Sound Transit Procurement Card (P-Card) system provides a means for using credit cards for micro purchases. This process can be used for purchase of equipment, materials, supplies and non-professional services (except construction) costing $3,000 or less per transaction. 15.2 Procedure ST shall contract with a merchant bank to obtain commercial credit card services. The contract will provide P-Cards to ST employees for the purpose of paying for official purchases. 15.3 Definitions Approving Official - The person who reviews and approves the cardholder's monthly statement of purchases. This will be the cardholder's Division Manager or department Executive Director. Cardholder - The ST employee to whom a card is issued. The card bears this cardholder's name and may only be used by this individual to pay for authorized ST purchases. Statement of Account - A monthly listing of all payments authorized for purchase made by the cardholder and billed by the merchant. P-Card Administrator – A PCD employee assigned by the Director, Procurement and Contracts and who is responsible for the day-to-day administration and operation of the ST P-Card program. 15.4 Responsibilities The P-Card Administrator is the focal point for applications for cards, issuance, and destruction of cards, and training for this Program. Upon approval by the P-Card Administrator, the bank will issue cards to designated cardholders and provide monthly statements to cardholders on-line. The bank will pay merchants in a timely manner and will receive reimbursement from ST. The P-Card Administrator will serve as the liaison between ST and the bank and will be subject to the direction of the Director, who shall oversee the program and establish guidelines. The Director shall approve changes to dollar thresholds or authorized merchant codes. Each cardholder shall reconcile his/her monthly statement and forward the reconciled statement to his/her approving official for signature. Reconciling includes, but is not limited to, verifying that all charges are correct, that account coding is correct, and that receipts or supporting documentation for each purchase accompany the statement. Reconciliations are due by 4 calendar days from the statement closing date, and must be completed no later than the last day of the reconciliation grace period (7 calendar days from the statement closing date). After the last day of the grace period, the reconciler will not be able to make changes online. The approving official will sign the cardholder's monthly statements as evidence they agree payments are for purchases that are authorized and made in accordance with these procedures, and original supporting documents accompany the statement. The approving official will also assist the cardholder in resolving disputed payments. The approving official or the Director, Procurement and Contracts have authority to direct the P-Card Administrator to instruct the bank to cancel a card at any time. March 2010 Procurement and Contract Administration Manual Page 74 of 100 PROCUREMENT CARD Accounts Payable shall answer the bank's questions about payment of monthly statements as well as make payments under this program. 15.5 Use of Purchase Card The P-Card may be used to pay for micro- purchases. Without exception, the P-Card may only be used to pay for authorized ST purchases. Under no circumstances, will the P-Card be used for cash advances or personal purchases. 15.6 Setting up the Purchase Card Account 15.6.1 The sponsoring department will request PCD to issue P-Cards to named employee. 15.6.2 The P-Card Administrator will distribute Signature Authorization, Account Maintenance, and Cardholder Agreement forms to selected cardholder and approving official for completion. 15.6.3 The cardholder and approving official will complete the forms. The Cardholder Agreement indicates the cardholder understands the terms of use and will agree to abide by these procedures. The card will be subject to review by the Director. 15.6.4 The P-Card Administrator shall order the card from the bank, and issue the card to the cardholder when received. 15.7 Dollar Limits Associated with the Purchase Card The P-Card is subject to a single purchase limit and a monthly cardholder limit. The purpose of these dollar limits is as follows: 15.7.1 "Single Purchase Limit" is a limitation on the procurement authority ("micro purchase authority") delegated to the cardholder by the cardholder's Department Executive Director consistent with the requirements of Sound Transit's Policy 6 Delegation of Authority and Execution of Contracts Policy. This limit cannot be exceeded. 15.7.2 "Monthly Cardholder Limit" is a budgetary limit assigned by the approving official and may be modified if necessary, by the Director. 15.8 Authorized Use of the Card The unique P-Card that the cardholder receives may be used only by that cardholder. No other person is authorized to use the card and the card may only be issued to ST employees. Use of the card must meet the following conditions: 1. The total of a single purchase to be paid for using the card may be comprised of multiple items and cannot exceed the authorized single purchase limit. 2. Payment for purchases may not be split in order to stay within the single purchase limit. 3. All items purchased over the counter to be paid for using the card must be immediately available. No back ordering is allowed, nor are deposits for special orders. March 2010 Procurement and Contract Administration Manual Page 75 of 100 PROCUREMENT CARD 15.9 Unauthorized Use of the Card The P-Card must not be used for the following purchases, unless approved by Director: 1. Cash advances; 2. Rental or lease of motor vehicles; 3. Rental or lease of land or buildings; 4. Purchase of airline, bus, train, or other travel related tickets; 5. Purchase of meals, drinks, lodging, or other travel or subsistence costs, except as authorized by Sound Transit's Policy 1 Travel and Expense Reimbursement; 6. Telephone calls. 7. Personal purchases. 15.10 Procedures for Use when Paying with the P-Card When making purchases that will be paid for using the P-Card, all the applicable procurement regulations apply. Purchases not in excess of $3,000 may be accomplished without competition if the cardholder considers the prices to be reasonable. The monthly statement when reconciled contains an explanation of how price reasonableness was determined. 15.11 DOCUMENTATION, RECONCILIATION AND PAYMENT PROCEDURES Any time a purchase is made that will be paid using the card, whether it is done over the counter or by telephone, an original supporting document must be retained as proof of purchase (i.e., receipt, invoice, or confirmation screen print). These documents will later be used to verify the purchases shown on the cardholder's monthly statement. At the end of each monthly billing cycle, the cardholder must reconcile the information on his/her on-line statement. The cardholder must fill in a description for each purchase, general ledger code, and price comparison and sales tax information. The cardholder must then print the statement, obtain their approving official's signature on the statement, and forward it to Accounts Payable with receipts attached. It is important that the cardholder check each purchase on the statement to verify the accuracy. If for some reason the cardholder does not have documentation of the transaction to send with the statement, he/she must attach an explanation that includes a description of the item, date of purchase, merchant's name and why there is no supporting documentation. The cardholder must forward the statement to Accounts Payable by the end of the monthly reconciliation period. 15.12 BILLING ERRORS AND DISPUTES If a cardholder receives a statement that lists a transaction for merchandise that has not been received, the cardholder must attempt to resolve the issue with the Merchant. If items purchased with the card are found to be defective, the cardholder has the responsibility to obtain replacement or correction of the item as soon as possible. March 2010 Procurement and Contract Administration Manual Page 76 of 100 PROCUREMENT CARD 15.13 LOST OR STOLEN CARDS If the P-card is lost or stolen, it is important that the cardholder immediately notify the bank. The cardholder must also notify the P-Card Administrator of the lost or stolen card within one workday after knowledge of the card missing. 15.14 CARD SECURITY It is the cardholder's responsibility to safeguard the P-Card and account number at all times. The cardholder must not allow anyone to use his/her card or account number. A violation of this trust will require that the card be withdrawn from the cardholder with the possibility of subsequent disciplinary action. 15.15 SEPARATION OF CARDHOLDER Upon separation of a cardholder, the cardholder must surrender the card to his/her approving official. 15.16 TRANSFER OF CARDHOLDER TO ANOTHER DEPARTMENT OR DIVISION If a cardholder is transferred to another Department or Division with a different approving official, the new approving official must determine whether the employee will be a cardholder within his/her Department or Division. If it is determined that the card should be kept by the cardholder, an Account Maintenance Form should be sent to the P-Card Administrator requesting that the P-Card Administrator update the cardholder's Department or Division. 15.17 UNAUTHORIZED PURCHASES OR CARELESS USE OF THE P-CARD A cardholder who makes unauthorized purchases or carelessly uses the card may be liable to ST for the total dollar amount of unauthorized purchases made in connection with the misuse or negligence. In addition, the cardholder may be subjected to disciplinary action for unauthorized or careless use. 15.18 CONTROLS 15.18.1 Audit The cardholder's Division Manager or Department Executive Director reviews and approves the cardholder's monthly statement reconciliation. A Finance Division Accountant reviews every bank statement and reviews every cardholder's monthly statement reconciliation. 15.18.2 Management Reports. The P-Card Administrator submits an incident report for each case of fraud or misuse of a P Card whenever one occurs, to his/her supervisor, Contracts Manager and the Internal Auditor. The P-Card Administrator conducts periodic review of spending patterns to identify repetitive purchases and submits a report to the CM. The P-Card Administrator provides a monthly spend report including amount spent, number of transactions, and average transaction size. March 2010 Procurement and Contract Administration Manual Page 77 of 100 CONTRACTING OPPORTUNITIES WEBSITE E-BID 16.0 CONTRACTING OPPORTUNITIES WEBSITE E-BID 16.1 Purpose To describe Sound Transit's Business and Contracting Opportunities Website, located at www.SoundTransit.EBidSystems.com. The Procurement and Contracts Division utilizes an internet website managed by E-Bid Systems for posting of solicitation information, including documents available for downloading by vendors. The website also permits self-registering by vendors whereby they receive e-mail or fax notification of various procurement activities. 16.2 Procedure The E-Bid system is used by Procurement and Contracts Division to: • Generate a new Contract/Procurement Number. • Document essential procurement information, such as: o Status (Active, Canceled, Future). o Type (Bid, Emergency, Proposal, Qualifications, Quote, Small Works, Sole Source). o Issue and Closing Dates. o Events, such as pre-bid conferences. o Business Classifications, using the NAICS Codes (see www.census.gov/eos/www/naics/ to search the codes). o Yes/No buttons to choose to make certain information visible to vendors or choose Invitation Only. o Bid Amounts and awarded vendor. • Post documents for viewing, downloading and printing. • Provide vendors an electronic mechanism for requesting document or asking questions. • List firms that have downloaded the document, i.e., the Bidders List. • Generate notifications to vendors. • Search or make reports from the E-Bid database for information on procurement activity or vendors. • Track information on awarded contracts, such as PO Number, Contact for the Prime, and dates for receipt of insurance, bonding, and prevailing wage paperwork, Subcontractors, and Closeout. Prospective vendors should register on the E-Bid system to receive e-mail or fax notifications of the availability of solicitations and any resulting changes. The E-Bid is used by the vendor community to: • Register as a vendor, with contact information, business classifications that pertain to their business, and Diversity data such as Small Business or MWDBE certification. Respond to solicitations, such as downloading solicitation documents, requesting document orders for pick-up or delivery, and asking questions. • View the Bidders List on a solicitation to identify partnering or subcontracting opportunities. • View Award information on past procurements. March 2010 Procurement and Contract Administration Manual Page 78 of 100 VENDOR DATABASE MAINTENANCE 17.0 VENDOR DATABASE MAINTENANCE 17.1 Purpose The computer system utilized by ST is Enterprise One or E1. Controlled and correct creation and maintenance of vendor database is a risk sensitive and security matter. The vendor database contains the vendor's address, tax information and other related items of incorporation. Only authorized divisional staff of the Procurement and Contracts Division maintains the database. 17.2 Procedure Prior to creating a new vendor within the database, care must be taken to avoid duplication. Additional checkpoints are: 1. Is the vendor as reported on IRS Form W-9* stating (DBA) Doing Business As business name on IRS Form W-9 line 2? 2. Is the vendor as reported on IRS Form W-9* stating they are an individual reporting income under a Partnership or Corporate name? 3. Does the vendor want payments remitted to a different address than their correspondence address? IRS Form W-9 contains the same information as the ST 'New Vendor Registration Form'. If any of the above applies; then two separate vendor addresses must be created, one for the corporate name and the other for the payment remittance address. The rest of the identifying Information is entered as below: 17.2.1 Name - Use all capital letters Enter the name from the IRS Form W-9 line 1. a) Corporations, partnerships, and others, enter as given on IRS Form W-9. b) Individuals, enter surname (last name) first, followed by a comma and space, then first name. 17.2.2 Address Book Naming Conventions – The vendor name is limited to 40 alphanumeric characters and must be entered to the following guidelines: (a) If a vendor name begins with "a", "an" or "the", eliminate these words. Hence, "The University of Washington" is entered as "Univ of Washington". An exception is if the article is an official part of the vendor's name (on their invoice, phone book listing, etc.) (b) If "a", "an" or "the" are within the name that exceeds 40 characters, eliminate these words. (c) Do not use periods, commas, apostrophes, hyphens and slashes in the name field, except when entering names of individuals, which is, entered last name first, then first name, separated by a comma. Hyphenated last names are separated by a space. Examples: US not U.S. (d) Surname prefixes are included as part of the name with no space separation. Examples: MCDONALD, VANSANT. (e) Acronyms and initials are used if directed by the vendor. Examples: AT&T, D&D, IBM, YMCA etc. (f) Names of individuals are entered last name first, comma, then first name. (g) Address Field – Commas should not be used unless separating City from State, apostrophes and periods should not be used; standard two letter State abbreviations should be used. March 2010 Procurement and Contract Administration Manual Page 79 of 100 PROCUREMENT CARD (h) Common Name Abbreviations - The following abbreviations are used when the first word in the name needs to be abbreviated. Spell out Department and Washington if it is the first word in your vendor name. If Washington is followed by State use "WA"; American – AMER; Associates, Association – ASSOC; United States – US; University – UNIV, etc. (i) Common Address Abbreviations – Building – BLDG Division – DIV Limited - LTD Center(s) – CTR Incorporated – INC Manufacturing - MFG Committee – COMM Institute – INST Marketing - MKG Company – CO Institution – INSTN National - NATL Corporation – CORP International – INTL North - N Council – COUN Journal -JRNL Service(s) - SRVC Department – DEPT Laboratory(ies) - LAB Society(ies) - SOC For complete instructions on Enterprise One Vendor Address entry, follow the attached link: http://stportal/sites/opcs/contracts/E1%20Vendor%20Address%20Book%20Setup/For ms/WebFldr.aspx March 2010 Procurement and Contract Administration Manual Page 80 of 100 CONTRACT ADMINISTRATION E. CONTRACT ADMINISTRATION Contract administration is the art and science of managing the performance of the contractor in all aspects of the contract to ensure successful contract fulfillment. Contract administration begins with the award of a contract or issuance of Notice to Proceed and ends with contract closeout, and includes all technical and administrative tasks that ensure proper performance of responsibilities by the Contractor and ST itself. Factors determining the level, scope and intensity of contract administration activities will depend on the type and nature of contracts, the experience of Sound Transit project and contract staff, and compliance requirements. Simple to moderate contracts will require relatively little contract administration efforts while most construction contracts or professional contracts, or cost reimbursement-based or specialized contracts such as incentives or design-build will require extensive contract administration involvement. Sound Transit is subject to review and audit by FTA and State Governments or its agents during and after contract performance and is required to comply with the standards mandated by the FTA when using Federal assistance to finance its procurements. Sound Transit is also subject to several Revised Code of Washington (RCW) and Washington Administrative code (WAC) provisions governing Sound Transit's authorizing legislation, procurement of public works and architectural and engineering services, Disadvantaged Business Enterprise and Small Business requirements, identification of subcontractors, and tax statues regarding sales and use taxes, business and occupation taxes, and real property taxes. This Manual primarily implements the requirements of FTA Circular 4220.1.F and state laws in the interpretation of a contract. The contract administration principles, concepts and approaches discussed in the Manual shall be utilized for all contracts at Sound Transit if such procedures will achieve savings in cost, or accelerate schedule, or meet ST goals, or meet public needs, consistent with applicable WA State laws and regulations and the FTA Master Agreement. 1.0 Scope This Manual provides a general procedural framework for contract administration to comply with the terms, conditions, and specifications of contracts and applicable Federal, State and local requirements. Departments and Divisions may issue their own procedures and forms to supplement this Manual in collaboration with the Procurement and Contracts Division. Together, these form the agency-wide Contract Administration System at Sound Transit. For construction contracts, ST has developed detailed manuals, policies, and procedures to enable strong and full contract administration. 2.0 Roles and Responsibilities The goal of contract administration is to receive ordered contract deliverables in an economic, efficient, effective, timely, and compliant manner. Successful contract completion requires skilled professionals, cross-functional team support, collaboration, transparency, and timely decision making. As such, the contract administration functions are shared responsibility of all project owners/project managers and supporting organizations. Project Owner/Project Manager (PM) – A PM is the technical, subject matter expert with daily contract performance oversight. The project management or technical oversight (e.g., daily field inspection, monthly or quarterly assessment and monitoring of project status used to determine and validate project performance) is the responsibility of the Project Owner or PM. Project Control (PC) – PC plays a critical role in supporting the project operation during procurement and contract administration. The post-award tasks include all project control functions (i.e. budgeting, estimating, forecasting, and scheduling, change order management and approval coordination, configuration management, and documentation control). The PC assists PM in coordinating or fulfilling contract administration functions, reporting of work progress, performing review and acceptance of schedule updates and preparing, reviewing, or directing the development of ICE, reviewing and processing invoices, reviewing or performing cost/price analysis, and reviewing and processing change orders and progress payments for all professional, consultants, and construction contracts. Contract Specialist (CS) - The Procurement and Contracts Division leads procurement and supports all requesting organizations, project owners, or project managers with post-award contract administration activities as necessary. A CS provides broad range of procurement planning, solicitation, source selection, March 2010 Procurement and Contract Administration Manual Page 81 of 100 CONTRACT ADMINISTRATION negotiation, contract administration services. Collaborating with the Project Owners, Project Controls, consultants, and functional organizations, the CS ensures timely and compliant resolution of contract administration issues and implements solutions for efficient, effective contract administration. To ensure successful completion of a contract, the CS is available to properly interpret and appropriately apply the contract clauses as well as concurrently review change orders, recognize and analyze project and contract related problems, conduct contract or legal research, analyze claim proposals, summarize results, and make appropriate recommendations cradle to grave. Immediately after full execution and award of the contract, the technical administration of the contract becomes the responsibility of the PM with the CS responsible for all contractual matters. The CS and the PM shall establish the methods and procedures to be utilized in the performance of the contract. Prior to the contract completion date; the CS shall contact the PM to confirm that no contractor effort will be required after the specified contract completion date and that the contract may be closed out. This action shall be initiated depending on complexity of work, at least sixty to one hundred days prior to the contract completion date. This is necessary to determine whether there will be an overrun; to negotiate and extend the period of performance, if necessary; and, to allow sufficient procurement lead-time if there is a follow-on effort. If the contract is to be completed on schedule, the CS shall proceed with contract closure; otherwise, appropriate action shall be taken to extend the contract. Construction Management Consultant or Resident Engineer (RE) - Construction projects require on-site engineering supervision by a resident engineer/program manager. At the same time, it is not feasible to have a CS at each construction site. An RE Team typically consists of a RE, office engineer, administrative assistant, document control specialist, inspectors, and a contract change specialist or project control specialist. The RE team performs nearly all of the construction management responsibilities and is the ST authorized on-site field representative for all assigned work. The team monitors and maintains control of the progress of the work and all aspects of the contract through Monthly Progress Payment Meetings, Monthly Progress Reports, Contract Progress meetings, Quality Meetings, Schedule Meetings, claims, and disputes. The ST Construction Manual and Resident Engineer Manual provide detailed instructions for administering and managing construction contracts. The REs role includes responsibilities to liaison with Contractor and PM to ensure effective contract administration. The following are other organizational functions involved in contract administration with a short description of typical contract administration responsibilities: Diversity – is responsible for establishing, reviewing, approving and monitoring Small Business and DBE Programs and administering the application of Title VI. Legal – is responsible for creation or review and approval of standard contract terms and conditions for solicitation and award documents, representing ST in dispute and litigation cases. Environmental Compliance – is responsible for ensuring that ST's environmental commitments are addressed in solicitation documents and that the contractor complies with applicable environmental permitting requirements. Risk Management – is responsible for review and approval of contract terms and conditions relating to insurance and liability protection. Budget – is responsible for assuring that all procurements are coded to the appropriate accounts and that adequate budget authorization is allocated and available for the procurement. Accounting – is responsible for reviewing invoices and making payments. Accounting also reviews solicitation documents and provides guidance to Procurement Owners and Contract Specialists on any financial issues related to accounting treatment of transactions and on how specific contract terms will affect a contract's ultimate treatment, and sets up appropriate approval routes in Enterprise One, based on current organization charts and authority levels. March 2010 Procurement and Contract Administration Manual Page 82 of 100 CONTRACT ADMINISTRATION Real Estate – provides input on real estate procurement issues and their potential impact on other related procurements to procurement owners and Contract Specialists Permits Team – provides guidance on permit requirements and their impact on other related procurements. Change Control Board (CCB) – Some departments form a CCB. The CCBs ensure proper cross-functional review of change orders. Board Administration – provides guidance to Procurement Owners related to procurement presentation to the Board of Directors. A contract change order that exceeds the sum of the "original contract amount" and the "original contract contingency" may require Board approval depending on change order amounts. 3.0 Contract Administration System The following documents and resources form the basis of Sound Transit's Procurement and Contract Administration System. 1. The Common Grant Rules 2. FTA Master Agreement 3. FTA Circular 4220.1F 4. Applicable Revised Code of Washington (RCW) 5. Regional Transit Authority Resolution No. 78-1 6. Regional Transit Authority Resolution No. 81 – Ethics 7. ST Administrative Policies and Procedures a. No. 5 Procurement and Disbursement Policy b. No. 6 Delegation Authority and Execution of Contracts Policy c. No. 23 Agency Records Management d. No. 24 Capital Project Execution and Delivery e. No. 27 Development and Administration of Agreement f. No. 28 Project Closeout - Administrative and Financial References for Best Practices: 1. FTA's Best Practices Procurement Manual (BPPM) 2. FTA Project and Construction Management guidelines 2003 Update 3. Federal Acquisition Regulation Part 31- Federal Cost Principles and Procedures 4. Federal Acquisition Regulation Part 42 – Contract Administration 5. Federal Acquisition Regulation Part 43 – Contract Modifications 6. The National Transit Institute Course, "Cost or Price Analysis and Risk Assessment" 7. FTA's Price and Cost Analysis guide located at Pricing Guide for FTA Grantees 8. Defense Contract Audit Agency - Audit Manual. Contract Administration Steps Detailed Contract Administration processes are available on the ST Live link pages. It consists of: 1. POST AWARD CONTRACT ADMINISTRATION ACTIVITY LIST 2. POST AWARD CONTRACT ADMINISTRATION ACTIVITY LIST - CONSTRUCTION March 2010 Procurement and Contract Administration Manual Page 83 of 100 CONTRACT ADMINISTRATION 4.0 Contract Administration terms The following terms apply during performance of contract administration activities: Allocable Cost: A cost is allocable if it is assignable or chargeable to one or more elements of work or final cost objectives (accounts, contracts, etc.) according to the relative benefits received from those objectives. Allowable Cost: Cost which is reasonable, allocable, and in consonance with 48 CFR Chapter 1 Part 31 or otherwise conforms to accepted accounting principles, specific limitations, or exclusions set forth or agreed to between contracting parties. Acceptance - A written Notice of Acceptance issued by Sound Transit constitutes acceptance of a designated portion of the Work. Administrative Change - A unilateral contract change, in writing, that does not affect the substantive rights of the parties (e.g., changes of address for submittals of documents, reports). Affidavit - A written declaration that is a formally and legally binding pledge made before an authorized individual. Bilateral Change - A bilateral modification, also known as a "supplemental agreement", is a Contract modification that is signed by both the Contractor and Sound Transit indicating acceptance of the modifications stated therein. Bilateral modifications are used to: (a) provide equitable adjustments resulting from the issuance of a change order and (b) reflect other agreements of the contracting parties modifying the terms of the Contract. Change Notice (CN) - A document transmitted by Sound Transit (e.g., a Resident Engineer) to the Contractor initiating the change process. A CN may be either a Change Notice - Request for Proposal (CN- RFP) or Change Notice - Work Directive (CN-WD). Change Notice - Request for Proposal (CN-RFP) - A CN-RFP describes the scope of work and directs the Contractor to submit a cost and schedule proposal to perform the scope of work. A CN-RFP does not authorize a Contractor to perform the changed work or payment to the Contractor for performance of any portion of the scope of work. Change Notice - Work Directive (CN-WD) - A CN-WD is used in force account or field order situations to direct the Contractor to start work on a Not-to-Exceed (NTE) cost basis with a request for a proposal to follow when the scope of the change is fully defined. Changes Clause - A contract clause, which permits Sound Transit to make unilateral changes, within the general scope of the contract along with such equitable adjustments in price and delivery schedule as necessary. Construction Schedule - The schedule prepared by the Contractor and accepted by Sound Transit. Claims – The schedule prepared by the Contractor and submitted to Sound Transit. Contract Modification - A written change order issued to contractors. Contract Price - The amount payable to the Contractor under the terms and conditions of the Contract and identified in the Contract, as adjusted by a Change Order. Construction Contract Consultant (CMC) – A consultant contracted to manage construction contracts. Construction Phase - Once the grantee enters into a Full Funding Grant Agreement (FFGA) with FTA (a multiyear funding commitment between FTA and the grantee), the Construction phase begins. At this time, the grantee will typically select a general contractor, specialty construction, and related subcontractors, and begin vehicle and system procurement. The scope and duration of these contracts will be based on the size of the project and on whether the grantee selects a more innovative approach to project construction, such as design. Once the construction and related acquisition activities are complete, the project moves beyond the New Starts process into Operations and Maintenance. It is at this point that the project begins service and, assuming all FFGA funding is complete, the project graduates from the New Starts program. Constructive Change – A change resulting from the written or oral conduct of the grantee's officials or a change in the scope of work required by circumstances that lacks the formality of a directed change order, which has the effect of requiring the Contractor to perform additional work. When this action occur, the PM/RE shall have it reviewed by CS before an official determination can be made by the appropriate approval authority and proper directions given in writing under the Change clause. Deductive Change - A change resulting in a reduction in the Contract Price because of a net reduction in the Contractor's Work. Department – The highest organizational unit of Sound Transit. Division – An organizational subunit within departments. March 2010 Procurement and Contract Administration Manual Page 84 of 100 CONTRACT ADMINISTRATION Document Control System (DCS) - Agency wide electronic filing system. Escrow - A retained percentage of money held by a third party and only released after contract or procurement conditions have been met. Final Design – Following Preliminary Design, this phase requires the grantee to address any remaining uncertainties in the construction cost estimate that were specified at the end of preliminary engineering. During this phase, grantees and their contractors prepare detailed specifications and bid documents, and address all remaining financial, technical, and regulatory issues necessary to begin construction. It is during Final Design that the most detailed designs, and resulting cost estimates, are established. Force Account – means Sound Transit's own labor forces and equipment in performing project work. FTA third party contracting guidance does not apply to a recipient's use of its own forces to perform project work. Liens - A claim created by law for the purposes of securing payment for work performed or materials furnished. Preliminary Engineering - During this phase, project development work shifts to creating design that is more detailed and engineering work. During this period, it is possible that the environmental work required to complete the Environmental Impact Statement and related activities, if not performed by the grantee, will continue under the same contract as established during Alternatives Analysis. Punch List - A list or list of items to be furnished and/or Work to be performed. Release of Claim - Contractor affidavit that all claims have been resolved and settled. Request for Change (RFC) - A formal request by a Contractor that may or may not result in a Change Order. Schedule of Values - Contractors' submittal of Values representing the value of each activity performed by Contractor for payment. STPM – Sound Transit Project Manager responsible for administering and managing Small Works construction contract Time Extensions - Consistent with the general tone of the FTA Circular 4220 in effect, contract time extensions will be considered in light of whether they are permissible changes or impermissible cardinal changes. Unilateral Change - A contract modification signed by an authorized representative of Sound Transit. Written acceptance is not required by the Contractor/Vendor; however, the changes clauses in the contract must allow unilateral direction. 5.0 Contract Administration Qualification Sound Transit employees or consultants performing any aspect of procurement or contract administration duties, must demonstrate requisite skills, knowledge, and ability of having satisfactorily performed procurement and contract administration duties. In addition, staff assuming complex contract administration functions is expected to properly interpret and apply the contract clauses as well as recognize and analyze project and contract related problems, conduct research, summarize results, and make appropriate recommendations. If the consultants or outside contractors are performing the contract administration work, Project Owners shall take appropriate steps to prevent or mitigate organizational conflicts of interest that would result in conflicting roles that might bias a contractor's judgment or would result in unfair competitive advantage. 6.0 Contract Administration Tasks Post-award contract administration is a significant part of the procurement process, as shown in the sample contract administration activities below. As such, only the disciplined, compliant, and integrated team approach will ensure that Sound Transit makes the best use of the public funds entrusted to it. Each contract will likely require different contract administration actions, collaboration and documentation activities. Simple to moderate goods and services contracts will have different specific administrative actions than construction contracts do just as lump sum contracts are managed differently than incentive or time and material or cost-reimbursement contracts. March 2010 Procurement and Contract Administration Manual Page 85 of 100 CONTRACT ADMINISTRATION 7.0 Standards of Conduct The Common Grant Rules require Sound Transit to maintain written standards of conduct governing the performance of its employees engaged in the award and administration of contracts. As provided in the Common Grant Rules and the Federal Transit Administration Master Agreement, no Sound Transit employee, officer, agent, or board member, or his or her immediate family member, partner, or organization that employs or is about to employ any of the foregoing may participate in the selection, award, or administration of a contract supported with FTA assistance if a conflict of interest, real or apparent, would be involved. Such a conflict would arise when any of those previously listed have a financial or other interest in the firm selected for award. The Sound Transit Board established a code of ethics for board members, officers, and employees; Sound Transit's officers, employees, agents or board members shall neither solicit nor accept gifts, entertainments, gratuities, favors, or anything of monetary value from contractors, consultants, potential contractors or consultants, or parties to sub-agreements. Information about conflict of interest, giving or accepting entertainment, gifts, favors or gratuities, political activity and other matters relating to ethical conduct are contained in the Code of Ethics on the Sound Transit Intranet. To the extent permitted by the State of Washington regulations, this standard of conduct will consider appropriate penalties, sanctions, or other disciplinary action for violation of such standards by Sound Transit's officers, employees, agents, board members, or by contractors, consultants, or sub-recipients or their agents. 8.0 Change Order Administration ST may execute bilateral or unilateral change orders to its contracts. Change Order administration requires that the CS make an in-scope determination for the desired change work. Later a cost or price analysis must be performed to ensure that the price for the changed work is equitable, fair and reasonable. The methodology and depth of analysis is influenced by the facts surrounding the particular procurement situation. The following procedures will be applicable to administering and managing change management and activities related to change orders, change notice, progress payment, and approval: 8.1 Independent Cost Estimate The Independent Cost Estimate (ICE) is a price or cost estimate developed by the PM, based on the project requirements (i.e., statement of work or other specifications or change order condition), without the influence of potential contractors' efforts (e.g., marketing), prior to receiving contractor proposals. Why is an ICE so important? An ICE is a very important tool in the development of change orders. PMs can also use the ICE to justify, defend, make tradeoff decisions, and manage the procurement life cycle. Required: FTA Circular 4220 requires a cost or price analysis for every procurement action, including change orders. The starting point for the analysis is an independent cost estimate. Prior to receiving a change proposal, Sound Transit shall independently estimate the cost of performing the work. The ICE can be used as a basis of comparison for evaluating the proposed price received. A "change order" means any contract action that calls for the negotiation of a cost or price proposal arising out of a change in the contract requirements. 8.2 Change Order Don'ts Sound Transit shall ensure that none of the following conditions is present when preparing, processing, reviewing, or approving change orders: 1. Change order work is outside the original work scope; this requirement is met through sole source justification that results in a new contract. 2. An ICE is prepared after receipt of a change proposal or based on recommendation of the affected contractor. March 2010 Procurement and Contract Administration Manual Page 86 of 100 CONTRACT ADMINISTRATION 3. A cost analysis is performed without detailed or sufficient cost elements. 4. A profit or fee is not analyzed commensurate with work complexity, performance/contractual risk, contractor's investment, amount of subcontracting, past performance data, or market place rates. 5. Fully loaded rates or NTE contract prices are not broken down into requisite cost elements (i.e., labor, overhead, G&A, material, equipment, profit or fee) when cost analysis is required. 6. Negotiations with contractors are not documented (*if negotiation is not necessary, the file should be documented to the analysis that led to that conclusion.) 7. If a lump sum price is compared, a price analysis is based on contract prices that were obsolete or established non-competitively without appropriate cost analysis. 8. A change order is approved for an option that cannot be exercised unilaterally. 9. A proper option evaluation (e.g. price/cost analysis) was not performed and documented during the pre-award stage. *The need to perform a pre-award cost/price analysis should not be circumvented through the use of post-award sole source justification. 10. No documentation is available to determine that the option price is better than prices available in the market, or that when Sound Transit intends to exercise the option, the option is not advantageous. 8.3 Change Order Cost/Price Analysis The Common Grant Rules require a cost/price analysis in connection with all change orders. The method and degree of cost/price analysis depends on the facts and circumstances surrounding each contract action. If the original contract contains only a lump sum price, additional cost and pricing data must be requested to perform a cost/price analysis. CS or PM shall perform a cost analysis when a contractor is requested to submit detailed cost elements (that is, labor hours, overhead, materials, and so forth) of the change order cost. Changes in scope do not always result in increased costs. Elimination or reduction of contract work may result in a decrease in the contract price. Regardless of the direction of the price change, these modifications require cost analysis using the cost principles to determine that the price change is fair and reasonable. A CS is responsible for performing cost/price analysis for all change orders. A PM/RE/RE Team is responsible for performing cost/price analysis for post-award construction contract change orders only. 1. The following references provide guidance in preparing cost or price analysis: 2. FTA's "Best Practices Procurement Manual," Chapter 5 3. Pricing Guide for FTA Grantees www.fta.dot.gov/documents/Helpline_Price_Guide.doc 4. FAR Part 31, Contract Cost Principles and Procedures 5. Defense Contract Audit Agency's Audit Manual. 8.4 Termination Cost Analysis If a contract of any type (fixed-price or cost-reimbursement) is contemplated for termination of convenience or for cause, a complete cost analysis must be performed to negotiate the final amount of the termination settlement. Terminating a contract means unilaterally ending it before its stated end. Contracts can be terminated for the convenience of ST or for cause (also called default). Contracts are usually terminated for convenience when ST no longer has a need for the service or products as they are specified in the contract, or when it is not possible to substantiate that the contractor's performance is poor enough to terminate for cause. Contracts should be terminated for cause when the contractor fails to perform the contract as written. 9.0 Exercising Option If a contract has one or more options and those options were not evaluated as part of the original contract award, exercising those options after contract award will result in a sole source award. Exercising an option March 2010 Procurement and Contract Administration Manual Page 87 of 100 CONTRACT ADMINISTRATION after Sound Transit has negotiated a lower or higher price will also result in a sole source award unless that price can be reasonably determined from the terms of the original contract, or that price results from Federal actions that can be reliably measured, such as changes in Federal prevailing labor rates. FTA expects Sound Transit to ensure that the terms and conditions of the option it seeks to exercise are substantially similar to the terms and conditions of the option as stated in the original contract at the time it was awarded. Sound may not exercise an option unless it has determined that the option price is better than prices available in the market, or that when it intends to exercise the option, the option is more advantageous. Sound Transit need not evaluate bids or offers for any option quantities when it determines that offer evaluation or exercise of option would not be in its best interests. 10.0 Invoice and Payment The Contract specifies the payment terms. The contractor must submit and Sound Transit must process applications for progress payment in accordance with the requirements and General and Special Conditions of the contract. The Finance Division of FIT Department has several stages of involvement in third party contracts and at various stages of post contract award action. A major responsibility in third party contracts is to ensure timely payments. While CS and Project personnel are responsible for recommending and approving payments, Finance Division is responsible for receiving invoices, issuing checks, and validating funds availability. For contracts not serviced by Construction Management Consultants, invoices are first received in Finance Division. Finance Division routes these invoices to the CS or PM for review. In construction and other areas, Finance Division may not be receiving the invoices initially, in which case it must rely on Project Control or RE Team to log such invoices into a data system to ensure proper controls. Once an approved invoice is received by Finance Division, it will release payment if all documentation is in order. CS is responsible for identifying any retentions and withholdings. Finance Division provides oversight to such retentions and withholding to ensure payment accuracy. At contract closeout, Finance Division is responsible for the final check processing. Invoice Review for CPFF or T&M Contracts: When reviewing invoices under a cost-plus-fixed-fee contract (CPFF), a time-and-materials (T&M) contract or any hybrid contract containing incentive or award fee, CS shall examine and validate all allocable and allowable costs incurred by the prime contractor, including amounts spent for supplies and services on purchase orders or subcontracts pursuant to the contract terms and conditions and the cost principles stipulated in FAR Part 31 and accordingly reject or disallow un- allocable or unallowable cost elements. This requirement equally applies to the invoices directly reviewed or approved by a RE or RE team or PM. 11.0 Advanced Payment Advance payments are payments made to a contractor before the contractor incurs contract costs. The following principles and restrictions apply to all advanced payment situations at Sound Transit: Use of State or FTA Assistance Prohibited: Sound Transit shall not use State or FTA assistance to make payments to a contractor before the contractor has incurred the costs for which the payments would be attributable. Adequate Security for Advance Payments: FTA recognizes that advance payments may be needed for certain costs supported by sound business judgment. Adequate security for the advance payment is an essential pre-condition to FTA's concurrence in the use of FTA or local share funds. Customary Advance Payments: The FTA recognizes that advance payments are typically required for, but are not limited to, public utility connections and services, rent, tuition, insurance premiums, subscriptions to publications, software licenses, construction mobilization costs, transportation, hotel reservations, and conference and convention registrations. Accordingly, Sound Transit may use FTA assistance to support or reimburse the costs of such acquisitions. The FTA concurrence is required only when such advance March 2010 Procurement and Contract Administration Manual Page 88 of 100 CONTRACT ADMINISTRATION payment or payments customarily required in the marketplace exceed $100,000. In summary, if there are sound business reasons justifying the advance payment and adequate security for the payment, FTA will generally concur in a written request for an exception. 12.0 Progress Payment Progress payments are payments for contract work that has not been completed. Sound Transit may use FTA assistance to support progress payments provided that Sound Transit obtains adequate security for those payments and has sufficient written documentation to substantiate the work for which payment is requested. Adequate Security for Progress Payments: Adequate security for progress payments may include taking title or obtaining a letter of credit or taking equivalent measures to protect Sound Transit's financial interest in the progress payment. Adequate security should reflect the practical realities of different procurement scenarios and factual circumstances. The FTA acknowledges the practical reality that taking title to work in progress may not be desirable in some circumstances. Sound Transit will consider the costs associated with providing security and the impact of those costs on the contract price, as well as the consequences of incomplete performance. Adequate Documentation: Sufficient documentation is required to demonstrate completion of the amount of work for which progress payments are made. Percentage of Completion Method: The Common Grant Rules require that any progress payments for construction contracts be made on a percentage of completion method described therein. Sound Transit, however, may not make progress payments for other than construction contracts based on this percentage method. 13.0 Record Retention The record retention requirement of three years shall commence only after the final audit and final payment is made and all other issues are resolved. It does not necessarily start with completion of the contract work or contract closeout. This requirement does not distinguish between fixed-price contracts and cost-type contracts. There would not be a final audit for fixed-price contracts and thus the three-year retention period will generally start upon contract closeout. A cost-type contract will be audited before being closed. 14.0 Contract Documentation The Procurement and Contracts Division, in collaboration with all responsible parties, shall ensure that the history of all pre-award, post-award actions, and related project, operation, legal, and financial information are documented, collected, reviewed for compliance, maintained, distributed, archived and readily accessible to internal and external audits including the State of Washington and the FTA. Sound Transit personnel and consultants involved in and performing contract administration tasks shall prepare, maintain, and keep adequate and readily accessible project performance and financial records, covering procurement transactions as well as other aspects of project implementation and contract administration including • Procurement documentation will include rationale for the method of procurement for each contract, including a sole source justification for any acquisition that does not qualify as competitive, as well as any change order deemed cardinal by the Procurement and Contracts Division. • Contract type documentation will state the reasons for selecting the contract type used (i.e., fixed price, cost reimbursement, time and material); • Contractor selection will include reasons for contractor selection or rejection, as well as a written responsibility determination for the successful contractor; • Cost or Price Analysis: All procurement and change orders will evaluate and state its justification for the contract cost or price by including an ICE and cost or price analysis. March 2010 Procurement and Contract Administration Manual Page 89 of 100 CONTRACT ADMINISTRATION • Change Order: All change order information including essential documents, will be collected from the program/project organization, functional departments, and construction management contractors, and maintained in Live-link, and other project related information will be kept in the internal databases, readily available to internal audit and FTA. Change Orders documentation will include in-scope determination as well as a cost or price analysis to establish that the price is fair and reasonable. • All Post-award Activities: partnering, inspection report, claims, disputes, invoice processing, and reports and forms. • As determined by the Procurement and Contracts Division, the level of documentation will be commensurate with the size and complexity of the procurement. • Access to Records. Apart from the more limited record access provisions of the Common Grant Rules, 49 U.S.C. Section 5325(g) provides FTA and DOT officials, the Comptroller General, or any of their representatives, access to and the right to examine and inspect all records, documents, and papers, including contracts, related to any FTA project financed with Federal assistance authorized by 49 U.S.C. Chapter 53. 15.0 Disputes, Claims, Litigation, and Settlement Sound Transit will resolve all contractual and administrative issues including protests, disputes, and claims using good administrative practices and sound business judgment. FTA may be involved in Sound Transit's administrative decisions when Sound Transit uses federal funds to support the costs of settlements or other resolutions of protests, disputes, claims, or litigation. For detailed FTA guidance, see FTA C 4220.1F, Page VII-1 through V-10. March 2010 Procurement and Contract Administration Manual Page 90 of 100 APPENDIX APPENDIX A. PROCUREMENT ACTIVITY LISTS There are five primary procurement activity lists within Procurement and Contracts Division. These lists provide detailed steps in the procurement action. The lists are: 1. PROCUREMENT ACTIVITY LIST FOR IFB 2. PROCUREMENT ACTIVITY LIST FOR RFP & RFQ 3. POST AWARD CONTRACT ADMINISTRATION ACTIVITY LIST 4. POST AWARD CONTRACT ADMINISTRATION ACTIVITY LIST - CONSTRUCTION 5. SOLE SOURCE & PROPRIETARY ACTIVITY LIST The following pages provide the cover pages of each list. Additional drilled down pages are available on the Procurement and Contracts Division Live-link intranet web pages. March 2010 Procurement and Contract Administration Manual Page 91 of 100 PROCUREMENT ACTIVITY LIST FOR IFB 1. PROCUREMENT ACTIVITY LIST FOR IFB – A SNAPSHOT March 2010 Procurement and Contract Administration Manual Page 92 of 100 PROCUREMENT ACTIVITY LIST FOR IFB March 2010 Procurement and Contract Administration Manual Page 93 of 100 PROCUREMENT ACTIVITY LIST FOR RFP AND RFQ 2. PROCUREMENT ACTIVITY LIST FOR RFP & RFQ – A SNAPSHOT March 2010 Procurement and Contract Administration Manual Page 94 of 100 PROCUREMENT ACTIVITY LIST FOR RFP AND RFQ March 2010 Procurement and Contract Administration Manual Page 95 of 100 POST AWARD CONTRACT ADMINISTRATION ACTIVITY LIST 3. POST AWARD CONTRACT ADMINISTRATION ACTIVITY LIST – A SNAPSHOT March 2010 Procurement and Contract Administration Manual Page 96 of 100 POST AWARD CONTRACT ADMINISTRATION ACTIVITY LIST March 2010 Procurement and Contract Administration Manual Page 97 of 100 POST AWARD ACTIVITY LIST FOR CONSTRUCTION CONTRACTS 4. POST AWARD CONTRACT ADMINISTRATION ACTIVITY LIST FOR CONSTRUCTION CONTRACTS – A SNAPSHOT March 2010 Procurement and Contract Administration Manual Page 98 of 100 SOLE SOURCE & PROPRIETARY PROCUREMENTS 5. SOLE SOURCE & PROPRIETARY ACTIVITY LIST – A SNAPSHOT March 2010 Procurement and Contract Administration Manual Page 99 of 100 THE END
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posted: | 7/11/2011 |
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