(reprinted from http://lisacooleyassociates.com/job-order-contract-consulting-rfp-dos-and-donts/)
Dos and Don’ts for your Job Order Contracting Consultant RFP
I’ve had lots of inquiries about my last blog post, and lots of owners have asked specifically what provisions they should avoid to ensure healthy competition on their JOC Consultant RFPs. So, inspired by the Do and Don’t section of a popular fashion magazine, here’s my version for the Job Order Contracting world. All of these contract provisions come from actual RFPs in my files. Names have been changed to protect the innocent.
Unit Price Book: Don’t
“Contractor must prepare a Unit Price Book containing unit prices covering material, equipment and labor costs for various units of construction, and adjusting these costs to current market conditions. The use of generic factors to localize prices is not acceptable. Unit prices for demolition shall be provided for each construction task. “
Unit Price Book: Do
“Bidders may propose their own unit price books, propose to create their own books, or propose the use of unit price books from a third party source, or combination of any of the foregoing. Tasks and prices in unit price book(s) must reflect the local prevailing and other wage requirements of applicable local laws. Books must be updated at least annually. Premiums for restricted area (e.g. prison, airport, courthouse) work and after-hours work will need to be included in the books, or otherwise provided for. The Unit Price Book must contain material, equipment and labor costs for various units of construction, and a mechanism for adjusting these costs to current market conditions.
Describe the research approach of the unit price book, including:
- Number and qualifications of personnel conducting pricing research;
- Anticipated number of material, labor, and equipment line items to be researched and included;
- Price collection methodology;
- Approach to localizing prices;
- Other factors (quantity, conditions, etc.) that are used to modify unit prices;
- Organization of the UPB in both print and electronic form, including demolition tasks; and
- Frequency and methodology for updating unit prices through the life of the contract.”
How to determine JOC consulting and implementation contract provisions
Why: Because there are a limited number of Unit Price Books, this is the place where constrictive language can literally result in NO competition. Price books have in recent years come in two versions—a national pricing book that uses a researched city cost index to adjust costs for a local market, and customized books which assimilate localized research into the deliverable, physical price book. The lines are blurring since current software products automatically apply the city cost index, and line item customization has been introduced to national pricing books to meet specialized client needs. But language barring the use of factors to localize prices can still limit responses to your RFP. A much better approach is to request information in the RFP that helps you understand the methodology and research that goes into creating the UPB, and then evaluating the merits of the deliverable based on that information.
“The JOC Contract Implementation Services agreement will be a performance-based contract with no fees are paid up-front to the consultant, but a percentage fee is paid for successful issuance of construction task orders resulting from the consultant’s preparation of unit price books and contract bid documents.”
“Consultant’s Annual Fee: For the satisfactory performance of all required services hereunder, the Consultant shall be paid an Annual Fee, the amount of which shall be calculated as a percentage of the dollar amount of task orders which are (a) issued to construction contractors utilizing the JOC System, and (b) registered by the Comptroller during the specified year.”
The Contract will be set up on a task order basis, using the prices, licensing fees, and rates established in the Pricing Response Form. Individual tasks will be authorized in advance by [owner] along with an agreed upon scope of work, budget, and schedule. Pricing flexibility to accommodate the possible desire on the part of [owner] to perform some services more economically with agency in-house staff or other Consultants will also be weighed. [Owner] may request clarifying pricing information after the proposals have been submitted in order to make fair comparisons between the proposals.
Why: This is another place where the options tend to be mutually exclusive, so if you want to evaluate multiple options, you need to build some flexibility into your pricing portion of the RFP. Pricing goes to the heart of strategic planning for your JOC, and what level of outsourcing vs. internal management and control you desire. You may not have full clarity on those decisions until you have your consultant on board so a menu of pricing options can be appealing.
One effective approach I have seen recently is to carefully outline all acceptable pricing structures and populate the pricing form with all of them. Then, an offeror can fill out the pricing structure they desire, and zero out the others. Such a flexible pricing form might include a % of volume, burdened hourly rates with estimated hours, or lump sum figures for scope of services. We’ll play with some possible structures in a future posting. While evaluating mutiple RFPs with different pricing structures can be challenging, as owners develop lifecycle costing capabilities these can be applied to JOC programs.
“There shall be no limit on the number of installations of the software. Software must be accompanied by the following: (i) documentation demonstrating that the Consultant either owns or has a perpetual license to use, and to license others to use, the software, and (ii) a written, non-exclusive license granting [owner] and the JOC contractors unlimited use of the software, including all upgrades thereto, throughout the term of the Contract. Such software must be internet based.”
“Detail the pricing structure and options for the electronic support systems, including licensing agreements, volume discounts, and additional services including technical support and recommended training.”
Why: The former provision is not a typical pricing scenario in the software industry. Typically software is paid for as a perpetual license with additional fees for maintenance, support, upgrades, etc., or on an annual subscription basis which includes the above ongoing services. Most software is priced on a per-user or per concurrent-user basis. To have the maximum number of options presented in the RFP process, an owner really needs to allow the most common software pricing structures. Microsoft Excel wouldn’t be a viable competitor if you wrote the first clause into an RFP for spreadsheet software! Regarding internet access, virtually any software can be hosted in the cloud to provide internet-based service, but there may be advantages to having software installed on your own servers and network. The more open-ended language on requirements for a JOC electronic support system will allow you to consider a variety of licensing and pricing approaches.
“The Consultant is not permitted to enter into any subcontract(s) for consulting services for the JOC System.”
“The Proposer shall clearly indicate what portions of the scope of work will be subcontracted. Provide an organizational chart of prime and subcontractors to illustration contractual relationships, and clearly indicate in proposal response which entity is responsible for which portions of work.”
Why: Just as you would not prohibit a general contractor from subcontracting specialty work if it was more effective or efficient, you don’t want to constrain a consultant’s means and methods. You want the most knowledgeable, efficient and professional resources working on your project. Some providers do everything in house, some work with partners to provide domain expertise for the full scope of services. You do want to have a clear idea of how the work will be accomplished, who is doing what, and how quality control will be managed, but don’t prohibit partnering approaches that may meet your needs without having a clear reason for doing so.
Are there any other JOC Consultant or JOC System provisions that have tripped you up or led to lack of competition?
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