how do i run a good competitive bidding process?
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www.usac.org
How Do I Run a Good Competitive Bidding Process?
Back to the New Basics
Schools and Libraries Division
Washington, DC • Orlando • Boston • New Orleans • Cleveland • San Francisco • Phoenix
September/October 2007
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Overview
Why are we talking about this again? Rules of the Road What we see
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Are there problems?
Yes! Highly public instances of waste, fraud and
abuse reported in the media, US DOJ More instances of competitive bidding
violations, which may not be intentional, but still result in funding reductions/denials.
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% FRNs Denied Due to Competitive BiddingFunding Year 2006
Competitive bidding denials32%
All other denials68%
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Competitive Bidding Violations BreakdownFunding Year 2006
Contract violation42%
28 day w aiting period violation
21%
Insuff icient documentation14%
Bidding violations15%
Cost effectiveness review5%
Insuff icient support resources
3%
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Bidding Violations
Price was not primary factor in selecting service provider Service Provider involved with preparing 470 Service Provider involved with competitive bidding
process Applicant’s consultant associated with Service Provider Contract signed before RFP due date Failure to provide competitive bidding support
documentation (e.g. bids, vendor bid score sheet, RFP) Consulting services provided before Letter of Agency Failure to advise bidders that RFP was available
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Know Your Role
Applicants– Write tech plan, file Form 470 and write RFP,
evaluate bids, select provider, document the process, file Form 471, select invoice method
Service Providers– Respond to 470/RFPs, assist with preparing Item 21,
provide answers on specific goods and services requested, but NOT on competitive bidding
Consultants– Make sure that you have a Letter of Agency
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Technology Plan
Creation date– Month and year that the plan is “written”
Sufficient detail to support and validate the services requested
Five elements– Goals/strategy for using technology– Professional development strategy– Needs assessment– Sufficient budget– Evaluation process
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Selective Review
Further review of – Budget– Necessary Resources– Competitive Bidding and Contracts– Technology Plan
Sample Selective Review Information Request (SRIR) available on SLD website
Retain your documentation!
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Budget
Purpose is for you to show us you can fund your share
Operating budget (or draft) has dates that cover the funding year (July – June)
Budget documentation should clearly identify applicant’s share (e.g., expense line item)
Can provide letter for reasonable expectation
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Budget
More about “reasonable expectation”
– You don’t have the money in your hands now but expect to have it after July 1
– We understand that your budget cycle may not coincide with our review cycle
– Will have to “show the money” during Form 486 review for the entire BEN for the year
– If a shortfall, we will work with you to cancel FRNs
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Payment Plans
Applicants are required to pay their share at the same time that USAC pays the discount amount.– Service Provider certifies that the invoices they
submit are for services that “have been billed to service provider’s customers.”
– Therefore, deferred payment plans that allow the applicant to pay after USAC has paid will jeopardize a funding request.
– FCC Rules include a presumption that the non-discount share will be paid within 90 days.
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Necessary Resources
Do you have the other necessary resources?– Are there end user computers?
• Must have reasonable plans to fully utilize all internal connections for which you are requesting discounts (e.g., 2-year plan to get computers for all network drops)
– Do you have software to run on the computers?– Staff trained on how to use the technology?– Electrical capacity?– Can you maintain your eligible and ineligible
equipment?
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Form 470/RFP
Form 470 indicates types of products and services ordered on the Form 471
Form 470/RFP is based on tech plan Form 470 and RFP must be available for
28 days Define and document your evaluation
process Indicates who will be receiving the
services
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Form 470/RFP
Be able to explain what you were asking for (avoid generic descriptions or statements that are overly broad)
Post for what you want (multi-year contract, type of service, voluntary contract extensions)
Indicate on your Form 470 if you are issuing an RFP
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Form 470/RFP
Applicants must be prepared to explain if and how they disqualified bids.
Applicants must inform all bidders of any requirements that could lead to disqualification.
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Competitive Bidding
Fair and open competitive bidding process Avoid conflicts of interest
– Independent consultant Service Provider– Applicant Service Provider
Open competition and bid evaluation Follow the rules – FCC and state/local Read the contract fine print Document the process!
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Competitive Bidding Selecting the winning bidder
– Price must be the primary factor, considering only ELIGIBLE goods and services.
– Solution must be cost-effective (not just the most cost-effective)
• Ysleta Order, para. 54: Routers priced at twice the market price would not be cost effective
May not use E-rate to subsidize the procurement of ineligible or unrequested products or services because that constitutes a rebate of the non-discount portion of the costs, which is a violation of FCC rules.
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Vendor Selection
Keep documentation of your selection process
Create your selection matrix and follow it If using a multi-round selection process,
price of the eligible goods and services must be the primary factor in every round.
USAC template available!
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Keep dates in order
Remember the correct order for dates:– Allowable Contract Date (28 days after 470)
THEN
– Contract Award DateTHEN
– Form 471 filingTHEN
– Form 471 Certification dateALL BEFORE
– Window close
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State Master Contracts
Applicant files Form 470
– Can use State Master Contract as a bid response
– Contract Award date is date the applicant selected the State Master Contract as its winning bid
State files Form 470
– Applicants may cite that Form 470
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State Master Contracts
Single winner
–Applicants do not need to justify the selection of the winning bidder
Multiple winners
–Applicants must be able to document why they selected the specific provider off the master contract
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State Master Contracts
Multiple Award Schedules–Applicants must be able to document
why they selected the specific provider off the multiple award schedule.
Only Terms and Conditions, not prices–These contracts do not meet FCC
contract requirements.
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Pattern Analysis
USAC reviews a group of applications, usually looking at competitive bidding information.
Are there any elements that are the same across applications?
Applicants are given an opportunity to explain the similarities.
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A tale of three districts
District A District B District C
Identical RFP format, font, table of contents
Identical RFP format, font, table of contents
Identical RFP format, table of contents but font changed
Identical description of services sought and quantities
Identical description of services sought and quantities
Identical description of services sought and quantities
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A tale of three districts
District A District B District C
Description of how they selected the vendor identical
Description of how they selected the vendor identical
Description of how they selected the vendor identical
Same typos and grammatical errors
Same typos and grammatical errors
Same typos and grammatical errors
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A tale of three districtsDistrict A District B District C
Forgot to change school name to own
My service provider listened to my needs and then wrote the RFP and the SR responses
Cancel my application
I don’t know why others are similar. We often share with other districts.
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Documentation
Retain documents to show your compliance:– Letters of Agency and any agreements
with all consultants– Technology Plan and CTPA Plan Approval
letter– RFP, including evidence of publication date
and any solicitation you did– Any and all bids (winning and losing)– Email to yourself if you get no or one bid
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Documentation
Retain documents to show your compliance: – Documents describing bid evaluation criteria
and weighting
– Any correspondence with potential bidders
– Documents related to the selection of the service provider(s)
– Signed and dated copies of contracts
– Also, see further list on USAC website
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Lack of Documentation
Leads to difficulties answering PIA Delays your FCDL Reduces/denies funding Leads to further questions from Site
Visitors and Auditors Could result in you having to return cash
to USAC
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Questions?