1 specifications and statement of work (sow): if you want a contractor to provide it, you got to...

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Specifications and Statement of Work (SOW):

If you want a contractor to provide it, you got to tell them what you want and need!

Michael S. Gifford, C.P.M., CPSD 2011 ©

InstructorMichael S. Gifford, C.P.M., CPSD

Housing Agency Procurement Assistance (HAPA)Las Vegas, NV

Office(866)526-7790 Cell(702)236-0275E-mail: [email protected]

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Specifications and Statement of Work (SOW): If you want a contractor to provide it, you got to tell them what you want and need!


What will we accomplish during this seminar? A renewed commitment to conduct all housing agency

(HA) procurement and contract activities in an open, fair, reasonable, justifiable and HUD-compliant manner.

An ability to locate in the Handbooks and regulations what HUD wants and requires; hence, a better understanding of the applicable law(s).

Be more prepared for a HUD/OIG audit. A renewed commitment to advanced planning. Solicitation documents that better meet the needs of

the HA and the contractor community (herein, contractor shall also mean supplier, vendor, consultant, etc.).

Improved relationships with your Board, your ED/CEO, your clients (staff), your contractors, and the public at large.

Learn and implement “Gifford’s Gospels.”

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Specifications and Statement of Work (SOW):

If you want a contractor to provide it, you got to tell them what you want and need!


Gifford’s Gospels

No. 1: “If it ain’t written, it don’t exist.

No. 2: “There are no coincidences in life—everything happens for a reason.”

No. 3: “Whatever we do must be open, fair, reasonable and justified.”

No. 4: “Contractors are not our friends—they are our partners.”

No. 5: “Nothing is free—there is a price to pay for everything.”

No. 6: “Be prepared—if something can go wrong, it will happen at the worst possible moment.”

No. 7: “Luck is where preparation and opportunity meet.”

No. 8: “He/she who writes the contract, the contract is in favor of.”

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Chapter 1: Introduction HUD Handbook 7460.8 REV 2:

7460.8 issued by HUD to explain Part 85.36 in further detail.

Hereinafter “7460.8” or “HPH.” Specific references herein within “[ ].”

24 CFR 85.36: aka the Common Rule. Part 85.36 issued by Congress. Hereinafter “Part 85.36.” Specific references herein within “{ }.”

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Chapter 1: Introduction (con’d) (HAPA) Sample Forms/(HUD) forms:

Identified herein following—and the applicable SF (Sample Form) number within procurementassistance.org.

AEF (Architectural- and Engineering-related Form) AED (Architectural- and Engineering-related Document) CF (Construction-related Form) CD (Construction-related Document) NF (Nonconstruction-related Form) ND (Nonconstruction-related Document) SF (Sample Form) SD (Sample Document)

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Chapter 1: Introduction (con’d)

Important!!!!! Remember, herein: [HPH: 1.2]

“Shall” and “must” mean that an action or item is mandatory and is required by statute or regulation.

“Should” and “may” mean that the action or item serves to provide guidance and/or best practices but is not mandatory.

!!!PLEASE NOTE-BEWARE!!! HUD has used the term “should” a number of times in

the HPH and then in another part of the HPH use the term “shall” or “must” in reference to the same issue—an auditor will most likely go with the stricter reference as the requirement.

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“For administrative purposes, PHA’s are considered local governments” [HPH: 1.3]

“Full and open competition” required [HPH: 1.3]

Many other CFR’s apply to procurement. [HPH: 1.3]

Any issue is not addressed in law/regulations but is good business practice: Might be permissible, if justifiable. [HPH: 1.4]

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PHAs must comply with the stricter of Federal rules and State/local rules. [HPH: 1.5]

States. {Part 85.36(a)}

“When procuring property and services under a grant, a State will follow the same policies and procedures it uses for procurements from its non-Federal funds. The State will ensure that every purchase order or other contract includes any clauses required by Federal statutes and executive orders and their implementing regulations.”

Therefore, one procurement policy only!

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Chapter 2: Procurement Authority Responsibility of the Contracting Officer. [HPH: 2.4]

Sound judgment. Ensure fair, impartial and equitable treatment. Compliance with all laws and Policy. Best value and greatest overall benefit.

Procurement Planning [HPH: 3.1]

Advance planning. Maximize competition; Competitive pricing; Decrease costs; Supplies and services available when needed; Minimize errors.

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Chapter 3: General Requirements

Procurement Planning (con’d) [HPH: 3.1]

Consider prior purchases. Identify patterns of procurements. Establish master contracts (e.g. annual requirements). Consider storage, security and handling. Economy and Prudence.

Intergovernmental Agreements. Foster economy and efficiency. Reduces effort. Saves money.

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Chapter 3: General Requirements (con’d) Procurement Planning (con’d) [HPH: 3.1]

Individual Procurement Plans (IPPs). Typically for larger procurements. Establishes deadlines and milestones. Checklist. [HPH: Appendix 2]

<See HAPA Sample Forms SF-5a, SF-5b, SF-5c, AEF-6: Competitive Solicitation Checklist/Timeline>

<See HAPA Sample Forms SF-32: Procurement Flow Chart; SF-17: Major Elements of a Compliant Procurement>

Equipment Lease or Purchase. Compare cost and benefits of Purchase vs. Lease.

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Chapter 3: General Requirements (con’d) Independent Cost Estimate (ICE)

[HPH: 3.2] {Part 85.36(f)} HA’s pre-solicitation estimate of cost. “Yardstick” for evaluating reasonableness of cost. Helps the CO to determine the solicitation method. Except in extreme cases, ICE not shared with contractors. Micro Purchases (<$2,000): Not necessary. Small Purchases ($2,000-$100,000, or lower if set by State

law): “Documentation should be kept to a minimum.” Formal Purchases (>$100,000, or lower if set by State law):

More complex.

<See HAPA Sample Forms SF-13a, SF-13b, SF-13c, AEF-12: Independent Cost Estimate (ICE)>

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Chapter 5: Small Purchase Procedures Standard Forms/Mandatory Contract Clauses. [HPH: 5.10]

Small Purchases, Non-construction: Table 5.1. Small Purchases, Non-construction, with Maintenance work:

Table 5.1; form HUD-5370-C, Section II; if applicable, appropriate Maintenance Wage Rate Determination.

Small Purchases, Construction: form HUD-5370-EZ; appropriate wage decision; perhaps bonds.

<See HUD Sample Form NF-10: HUD Table 5.1> <See HUD Sample Form CF-14: form-HUD 5370-EZ> Acceptable Methods of Incorporation. [HPH: 5.10.D]

Attach as printed (I strongly recommend this method); Incorporate text into PHA’s own forms (not recommended due

to potential entry errors or forms changing); and/or Incorporate by reference (least desirable!); the HA must physically

provide the forms if requested by the potential offerors.

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Chapter 6: Sealed Bids

Alternate Bids. [HPH: 6.4] Alternate bids prohibited (e.g. “two different systems or

types of projects”). Deductive alternates are allowed:

Specify most expensive system as base bid; List deductive alternates in inverse priority order; then “Deductive alternates <must> be taken in numerical order

listed until award can be made within available funds.”

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Chapter 6: Sealed Bids (con’d)

Invitation For Bids (IFB). [HPH: 6.5]{Part 85.36(d)(2)} IFB Document, including:

Reservation of Rights; Scope of Work/Technical Specifications; Bid Submittal Format; Bid Evaluation; Contract Award.

Form of Bid. Profile of Firm Form. Section 3 Form. Instructions to Bidders & Contractors. Sample Contract Form. HUD-mandatory forms (see following PPT frames 45-47)

<See many HAPA-created Sample Competitive Solicitations within the “Documents” area of procurementassistance.org.>

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Mandatory (HUD-required) forms. [HPH: 6.5.A]

IFB – Construction: form HUD-5369 (10/2007), Instructions to Bidders for

Contracts, Public and Indian Housing Programs; (CF-11) form HUD-5369-A (11/92), Representations, Certifications,

and Other Statements of Bidders, Public and Indian Housing Programs (NOTE: Must be fully completed and submitted as a part of the bid submittal);

(CF-12) form HUD-5370 (11/2006), General Conditions for

Construction Contracts – Public Housing Programs. (CF-

13)

<Please note the CF number for each form above>

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Mandatory (HUD-required) forms. [HPH: 6.5.A] IFB – Non-construction, with Maintenance Work:

form HUD-5369-B (8/93), Instructions to Offerors, Non-Construction; (NF-2)

form HUD-5369-C (8/93), Certifications and Representations of Offerors, Non-Construction Contracts (NOTE: Must be fully completed and submitted as a part of the bid submittal);

(NF-3) form HUD-5370-C (10/2006), General Conditions for Non-

Construction Contracts, Section I – (With or without Maintenance Work); (NF-4)

form HUD-5370-C (10/2006), General Conditions for Non-Construction Contracts, Section II – (With Maintenance Work). (NF-5)

<Please note the NF number for each form above>

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Mandatory (HUD-required) forms. [HPH: 6.5.A]

IFB – Non-construction, without Maintenance Work: form HUD-5369-B (8/93), Instructions to Offerors, Non-

Construction; (NF-2) form HUD-5369-C (8/93), Certifications and

Representations of Offerors, Non-Construction Contracts (NOTE: Must be fully completed and submitted as a part of the bid submittal);

(NF-3) form HUD-5370-C (10/2006), General Conditions for Non-

Construction Contracts, Section I – (With or without Maintenance Work). (NF-4)

<Please note the NF number for each form above>

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Amendments (aka Addendums). [HPH: 6.6] A change/revision to the IFB information already issued. The only formal communication between the HA and the

prospective respondents—informal (spoken) communications have NO standing.

Must be in writing (remember Gifford’s Gospel: “If it ain’t written, it don’t exist”).

Acknowledgement required (ditto the Gospel above). If issued too close to the submittal deadline, strongly

recommend extending deadline an adequate amount of time to allow prospective respondents to consider and implement the issues detailed within the addendum.

<See HAPA Sample Form SF-2: Amendment (aka Addendum)>

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Chapter 6: Sealed Bids (con’d) Pre-Bid Conference. [HPH: 6.7]

Typically held no less than 2 weeks after issuing the IFB and no less than 2 weeks prior to the submittal deadline.

Normally for larger or more complex solicitations only. Sign-in sheet and Agenda. Strongly, strongly recommend that attendance is NOT

mandatory (would be restrictive). Cover ONLY what has already been issued in writing—if an

attendee bring up something new, do NOT speculate, but ask to be submitted in writing, then make a decision and respond to all bid holders by written addendum.

<See HAPA Sample Form SF-26a: Pre-bid Conference Agenda>

<See HAPA Sample Form SF-26c: Pre-bid Conference Sign-in Sheet>

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Bid Protests: [HPH:

6.13] Ensure protest procedures are written in detail

within the bid documents (Instructions to Bidders).

Multi-Step Bids: [HPH: 6.14] Basically, first conduct an Request For Proposals

(RFP), then conduct an IFB with the firms qualified as a result of the RFP.

Is a very time-consuming process—not recommended but is legal.

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Chapter 7: Competitive Proposals Mandatory (HUD-required) forms (con’d) [HPH: 7.2.B]

PLEASE NOTE!: Per HUD [within HPH: 7.2.B], “Only under limited circumstances would construction services be procured by competitive proposals.” Often, HAs use the RFP method for construction instead of

more appropriately using the IFB method so that they can evaluate the proposals and then inappropriately eliminate a bidder who they do not want to get the job due to past poor performance by that proposer.

Instead, most typically do an IFB for construction. RFP’s for construction are appropriate for developer, “turn-

key,” or design-build construction solicitations, NOT regular every-day construction projects.

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Chapter 7: Competitive Proposals (con’d)

Submission Requirements [HPH: 7.2.C] Ensure that the submission requirements are consistent

with the published evaluation factors

Evaluation Factors, Non-Price [HPH: 7.2.D]{Part 85.36(d)(3)

(iii)} HA must ensure that a “clear written statement” of the

evaluation factors is published. Strongly recommend not just brief phrases such as “Past

Experience,” but narrative descriptions such as, “Demonstrated successful past performance (including meeting costs, schedules, and performance requirements) of contract work substantially similar to that required by the solicitation as verified by reference checks or other means.” [HPH: 7.2.D.4.f]

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Chapter 7: Competitive Proposals (con’d) Evaluation Factors, Non-Price (con’d)

Factors are “tailored <by the HA> to fit each” RFP. Non-Price Factors are also called Technical Factors.

Evaluation Factors, Price. [HPH: 7.2.E]{Part 85.36(d)(3)(iii) & Part 85.36(f)}

“Price MUST be factor in making awards.” Two options:

Where Price is Assigned an Explicit Point(s); and Where Price and Other Technical Factors are Considered. I recommend the former ONLY—I do NOT recommend the

latter and will not advise on it (the latter is NOT easy to apply).

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Chapter 7: Competitive Proposals (con’d) Evaluation of the Price Factor and the Non-Price Factors

The Price Factor is OBJECTIVE in nature, meaning the evaluation

is based on mathematical fact, not opinion. Accordingly, it is most appropriate for the evaluation of the

objective factors to be conducted by a skilled person other than the appointed evaluation committee.

Factors pertaining to Section 3 and disadvantages businesses is also objective in nature.

The Non-Price Factors (Technical Factors) are typically

SUBJECTIVE in nature, meaning the evaluation is based on opinion, not fact. Accordingly, technical factors are most appropriately evaluated

by the appointed evaluation committee.

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HUD Procurement Handbook 7460.8 REV 2

Chapter 9Specifications and Statements of Work

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Chapter 9: Specifications and Statement of Work

General. [HPH: 9.1] Good specifications will:

“Enhance competition;” and “Clarify the relationship between the contractor and the

<HA>, resulting in improved contract administration.”

Regulatory Requirement. [HPH: 9.2]

Per 24 CFR 85.36(c)1, “all procurement transactions shall be conducted in a manner providing for full and open competition.” Accordingly, the HA must ensure that “competition is NOT restricted to one supplier” by utilizing restrictive specifications.

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Chapter 9: Specifications and Statement of Work (con’d)

Specifications. [HPH: 9.3]{Part 86.36(c)(1)

(i)} Definition: [HPH: 9.3.A]

“Specification is a detailed description of materials, supplies, equipment, pre-cuts, or construction work that is used in the procurement to tell prospective contracts precisely what the PHA desires to purchase.”

A statement or scope of work is a “unique type of specification generally used for the procurement of professional or management services.”

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Specifications (con’d) Specification Types: [HPH: 9.3.B]

Performance (aka Functional) Specification: [HPH: 9.3.B.1]o Addresses “what does the item/service do” or how it functions.

Addresses performance standards.o Detailed design specifications or exact measurements are NOT

stated.o Can be “inherently risky” for the HA in that overall requirements

are stated, then the bidder/proposer proposes to the HA how he/she will fulfill those needs—the HA then must evaluate and justify the offer and ensure that the bidder/proposer is offering what the HA needs.

o Typically used to procure services.

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Specifications (con’d) Specification Types: (con’d)

Design Specifications: [HPH: 9.3.B.2]

o Addresses “what does the item/service look like.o Detailed design specifications or exact measurements ARE

issued as opposed to performance standards.o Is inherently less risky for the HA in that the bidder/proposer

must respond to provide the specific specifications issued by the HA.

o Typically used to procure construction; materials and supplies; equipment; some non-professional services.

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Specifications (con’d) Specification Types: (con’d)

Brand Name or Equal Specifications: [HPH: 9.3.B.3]o The brand name and model number is listed within the

specification.o The words, “Or Equal” MUST follow each brand name

specification.o The HA must also list the essential characteristics or “salient

requirements” (“salient” meaning conspicuous or prominent requirements or features, or what is most important to the HA).

o Bidders must be made aware that when used, such brand name references “establish only design or quality standard” and that the HA WILL consider “any other products that clearly and demonstrably meet the set standard.”

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Specifications (con’d) Standardizing Inventory. [HPH: 9.3.C]

Buying the same item (e.g. faucets) can mean stocking less

parts. All procurement regulations must be followed, especially as

applies to using Brand Name specifications. Then how can you standardize? A potential solution, using

contracts already awarded by other agencies, is detailed within Chapter 15 herein.

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Specifications (con’d) Avoiding Manufacturers Specifications. [HPH: 9.3.D]

HUD strongly recommends avoiding using such as a

solicitation specification. Gives the appearance of restricting competition by putting

other’s specifications at a disadvantage or that they will not be accepted as an equal.

If you have to get potential specifications from a potential respondent, get them from several and then make sure that you incorporate all of the essential or salient qualities.

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Specifications (con’d) Contractor-Developed Specifications.

[HPH: 9.3.E]{Part 85.36(c)(1)(iv)} Basically, a HA cannot retain a contractor to develop

specifications for a HA to use for a competitive solicitation, then allow that same contractor to also respond to the competitive solicitation. NOT FAIR!

EXCEPTION: “Prior to the solicitation, all respondents . . . are provided with materials and information made available to the contractor involved in matter pertinent to the solicitation.” NOT recommended—creates an appearance of impropriety!

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Statement of Work (con’d) Purpose and Functions of the SOW. [HPH: 9.4.A]

Primary Purpose: “Provide a basis for mutual understanding

between the PHA’s Contracting Officer and the offeror and subsequent contractor.”

SOW needs to be specific, clear and inclusive of requirements. More complex work—more complex SOW. For RFP’s the SOW must be reflected in the evaluation factors. SOW will become the standard for measuring contractor

performance. Remember Gifford’s Gospel, “if it ain’t written, it don’t exist.”

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Statement of Work (con’d) Elements of the SOW. [HPH: 9.4.B]

Minimum requirements include the six elements detailed within

Section 9.4.B, including:o Requirementso Deliverableso Scheduleso Reportingo Objectiveso HA Contacto Other (e.g. warranties; personnel classifications; etc.)

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Chapter 10: Miscellaneous Requirements (con’d) HUD Requirements (*)/Recommended Elements for

Contracts (con’d) As an attachment to the contract (appendix), Mandatory

HUD forms, each used as appropriate: *HUD Table 5.1, Mandatory Contract Clauses for Small

Purchases other than Construction (QSP, <$100,000) (NF-10) *form HUD-5370-EZ (10/2006), General Contract Conditions for

Small Construction/Development Contracts (QSP, <$100,000)

(CF-14) *form HUD-5370 (11/2006), General Conditions for Construction

Contracts – Public and Indian Housing Programs (IFB, RFP, >$100,000) (CF-13)

*form HUD-5370-C (10/2006), General Conditions for Non-Construction Contracts, Section I – (With or without Maintenance Work) (IFB, RFP, >$100,000) (NF-4)

*form HUD-5370-C (10/2006), General Conditions for Non-Construction Contracts, Section II – (With Maintenance Work) (IFB, RFP, >$100,000) (NF-5)

*form HUD-51915 (9/98), Model Form of Agreement Between Owner & Design Professional (RFQ/QBS, </>$100,000) (AED-1)

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Chapter 10: Miscellaneous Requirements (con’d) Mandatory Contract Clauses (For purchases above

the Federal Small Purchase Threshold). [HPH: 10.5]

form HUD-5370 (11/2006), General Conditions for Construction Contracts – Public and Indian Housing Programs (IFB, RFP, >$100,000). (CF-13)

form HUD-5370-C (10/2006), General Conditions for Non-Construction Contracts, Section I – (With or without Maintenance Work) (IFB, RFP, >$100,000). (NF-4)

form HUD-5370-C (10/2006), General Conditions for Non-Construction Contracts, Section II – (With Maintenance Work) (IFB, RFP, >$100,000). (NF-5)

form HUD-51915 (9/98), Model Form of Agreement Between Owner & Design Professional (RFQ/QBS, </>$100,000).

(AED-1)

<Please note the CF, NF or AED number for each form above>

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I hope this information is of a help!

Thank you!

1 specifications and statement of work (sow): if you want a contractor to provide it, you got to...

Documents

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contractor community

introduction hud handbook

renewed commitment

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introduction condimportant

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