ALC-Executive Subcommittee

our report at this time we'll have that ready for delivery in early February, but we are here today to provide an overview of some of our findings and recommendations. And the full report will have 16 findings and 60 recommendations as of this time. Before I go any further, I would like to say thank you to all the state staff, starting with the folks at OSP for all of their help for this project and the cooperation materials they provided as part of our review. So quickly an overview of the process that we followed here, we, uh, had initial meetings with state staff to understand the lay of the land and then identified all the relevant statutes, rules, policies, training materials, as well as 3 examples solicitations is and identified legislators and subject matter experts for interviews. We conducted those interviews, analyzed all the materials that we found and we're in the process of syn synthesizing our findings and developing. In terms of the written materials that we reviewed, uh, we, we read all the statutes, all the policies, all the rules, and then, uh, a total of 85 policy documents and training materials that were provided and we conducted a review of three example solicitations along the way. In terms of interviews, we conducted 9 interviews with 13 individuals, including legislators, OSP staff and agency procurement professionals, and they are listed here on the screen. The report that we'll be providing will contain the 16 findings and 60 recommendations as mentioned. And they are generally organized according to the procurement process. Starting with general findings and observations and then the solicitations process, procurement method selection, procurement development, evaluation, award, protest, negotiations, contract management and committee review. And next, we'll go through, uh, selected, uh, cross section of our findings and recommendations to talk through those in more detail. And again, these will all be included in our final report that we'll be providing in draft form in early February. So in terms of our findings first, uh, rules and policies do not always align with statutory requirements and at times they're in conflict with them. This is something that we knew from the outset, and we have documented these cases and we'll include those in our report. Beyond fidelity to statute, we did review rule and policy for clarity and effectiveness, uh, we did find places where rules and policies suffer from that lack of clarity and guidance that could be at risk of creating negative outcomes. 5 and 6 together, uh, point to an opportunity to provide additional detail within our training and within our procurement manual, uh, to, to support individuals who are not already steeped in the procurement process. Additional additional information will help folks who are not, uh, fully up to speed on this, do a more successful job of conducting public procurement. I mentioned the training materials. They also could benefit from additional depth and detail and also in-person training opportunities are a great method to ensure that the individuals who are conducting the procurements have the comfort level to do so effectively. Moving down to finding 13. We've taken a look at the map and traditional RFP processes and found that both have an application, but the traditional RFP process should remain in place. The map RFP has advantages in certain cases, but it could benefit from some updates, uh, finding 13 is, sorry, 15 is that. RFPs very frequently weigh cost at 30% of the evaluation criteria as almost a de facto standard, um, as opposed to as a minimum. Moving into our recommendation. Uh, starting with recommendation 11. A lot of information is is available and it's very well organized within the procurement manual and the related policies, but more detail would help. So we recommend revisiting the procurement manual and the policies to ensure that it can serve as a sort of a one-stop shop for all procurement needs and questions and ensure that the process is conducted appropriately. Moving down to item 13, there's similarly additional detail on training plus the availability of in-person training sessions that would help support good procurement practices. Moving on to the procurement method selection section, recommendation 32. Guidance should be developed on when to use that map process and when to use traditional RFPs based on the unique characteristics of each method and how they best fit different solicitation. Recommendation 43, uh, we've seen cases where vendors' lack of experience has become an issue in cases where minimum qualifications would have been very reasonable to set. And yet, uh, there, there were not necessarily any minimum uh minimum qualifications set. And so specific guidance should be developed and implemented in relation to expectations for respondent experience and minimum company size for procurements. Recommendations 54, A and B. They relate to determining that a bitter or proposal, uh, sorry, that a bidder proposal price is either unreasonably high or too low to realistically accomplish scope requirements and might lead to a failed contract. There is a rule in place on price reasonableness that exists, but there is not one for unrealistic pricing, uh, and these may benefit from an explicit predicate written into statute. Recommendation 55, uh, following from on from the clear rules and policies on testing price, uh, should be updated. Currently informal practices on unreasonableness exist at OSP but they are not rolled out in any form of formal policy. Looking at recommendation 5 6A. We believe that Rule 8 1911 230 should be updated specifically mention cost as one of the criteria that must be considered as part of establishing a competitive range. The relevant statute, which is 1911 230G is clear, but this is silent in rule. And moving on to 5 6B, there is currently a recommended practice to include cost before removing RFP respondents through the competitive range process. However, the procurement manual and traditional RFP templates suggests that cost evaluation comes after the competitive range is set and so policy should be updated in addition to rule in order to make sure that cost is considered before any sort of reduction in the number of respondents is made. Recommendation 72 is that there's uh the rule for protest, rule 4 for protest should be updated to explicitly allow negotiations to proceed during a protest to ensure time is not lost and the state is not fully stymied by the simple existence of a protest. The idea being that during a protest process, um, we may need, we may have, uh, a drawn out process where the contract with the existing vendors expired, and they may in fact be inclined to protest simply to, um, to carry out the process, but if we are allowed to proceed with negotiations and be ready to sign a contract at the end of the protest period immediately with all the details worked out, it will ensure we do not lose time. Um, and this could also be strengthened by making this explicit in statute as well to reinforce that opportunity. Moving on into negotiations and recommendation 85. This is back on the subject of establishing a competitive range. We're recommending removing guidance from rule and policy that would potentially result in negative outcomes and or protests. So, starting with recommendation 85, um, in Rule 8 of 1911 231D, we should remove the clause, for example, and not by limitation, a request for proposals may provide that only the 3 highest ranked vendors are eligible for negotiation. And that is to avoid the potential for arbitrary elimination of proposals that are very close in score to proposals included within a competitive range. It's pretty easy to imagine a scenario where the the policy is written that we're gonna cut off at 3, but there's another vendor who's in 4th place just a, a fraction behind and it would be arbitrary to remove them. So that should be removed from rule and from policy. And then similarly, um, the, the next part of the rule should have the numbered list of criteria for selecting the competitive range removed in favor of simply citing the final criterion, which is the evaluation scores. There are 4 other items in the list that are not practicable to be used as criteria for setting a competitive range, uh, so they, they include things like price, which is not a definable way to establish a competitive range at that point in the process and other things that, uh, simply couldn't be. executed without receiving a protest for an arbitrary process. Then finally, uh, in contract management, the rule for debarment and suspension processes in 1911245 should be simplified to be less onerous and sure that worthwhile debarments are not avoided due to procedural hurdles. It's a quasi-legal process at this point in time with subpoenas, witnesses, and cross-examinations. And the net result of that complexity is that we may find a situation in which debarments and suspensions which are worthwhile or avoided just because of the procedural complexity to do them. And then finally, um. The rules should be updated to require that any agency suspension or debarment action be done in consultation with OSP. The rule allows a procuring agency to suspend and debar, but this should be effective statewide and therefore it should, should not be conducted without OSP's awareness and involvement. So that's the conclusion of the, of the recommendations and findings that we wish to highlight for you all today. Um, there are a number of other recommendations throughout our report that will be taken together to help to help to bring additional clarity to the procurement process. Uh, at this point, I'd be open to any questions that you may have. All right, thank you for that, sir. Members, are there any questions? Senator Hickey, you want to push your button. All right. OK. Thank you for that. So I, I hear what you're saying about the report and then you've pointed this stuff out to us. Now at this point right here, is that gonna be the end of it? Are you actually gonna make suggestions on how we correct that, and I could use a, use examples, you know, of course one of the uh bunch of these I may have issue with. Of course, whenever we put the 30%, the 30% rule in there as far as cost, uh, you know, as you just mentioned, it was always our intention that was supposed to be minimal. Uh, it's become the default where basically everybody's using it. Do you all have any ideas or have you seen other states, how they've uh kept that from happening that, you know, way May would help us and will that be included in the report. Yes sir, there, so, um, it will be included in the report. We will have uh across all of these recommendations for red lines to rules. I think what we're talking about here though is more a matter of something that should be written into policy to make sure that procurements are conducted in a way that people understand how to set that, that threshold, uh, and that it's not reflected in the materials as a, as a quasi default. There are a number of places where it does appear to be a quasi default, and I think people proceed with it as if it. were as if it were the standard, uh, and it needs to be made clear that it is, it is strictly a floor and not anything that is to be, um, to be treated as a standard and held at that level. OK, well, we'll just have to work with our staff and may and this, this question may be for our, our staff along with you. So it, it appears like to me within our, uh. Statutes that some of those are, of course, are probably written the way that this body, you know, had deemed it wanted to be. And then, of course, they brought rules before us and promulgated those rules. Uh, so they're now in place. So I guess the thing is, is if there's, which it did sound like that you had some of these that. If a rule just needs to be changed. To, uh, so that it fully complies with the statute. Is that Is that how, how would we do that? Would we just need to make legislation saying you'll re-promulgate the rules or do we need to actually change the statute, uh, in a small way so that rules would be re-promulgated. How, what would be that process, I guess. Senator Hickey, there would be no need to re-promulgate to the law. Um, it would just be a direction to the, and it could be part of the packet of legislation to the, um, Office of State procurement to promulgate rules in compliance with the law, and then you could set out. the specific provisions in, um, like intent language of which ones need to be, um, amended. So if we've already got a statute in place they've already promulgated rules, but they don't fully comply with it. We do, we would have the ability to ability, and I'm gonna use this word to force that to happen. Yes, there are various ways that that can happen. Um, we can discuss that, you know, the different options of doing that. Super. OK. Thank you, ma'am. Thank you, Senator. Members, any other questions? Representative Wardlaw, you recognize. Senator Hickey dancers, yes, but the. The only way you could truly force them to do that is a, is a bill. Put it in statute, um. I mean we've already rescinded one rule and we saw what they did with that. They didn't, they didn't move forward with it. And I, there's no way to actually force it if you don't put it in statutes. And that's my question for staff I guess and, and, and I think maybe we need to look at, look at all of our, all of our different avenues because from my standpoint, you know, I don't want it to be a suggestion whenever we get down to this. And if, uh, you know, if this, From my standpoint, it always looks like to me that the, uh, uh, the statute. Should trump the rule, but, uh, I don't know that that's what, if that's happened. So, if, if we've got to add amen to the bottom of a of a current statute to could get some type of repropagation process, and that's what I want to happen, or, you know, as a Representative Wardlaw suggested. I mean, even, even if we have to do a statute that just says that you will, will repromulgate these rules, then I'm, I'm willing to look at whatever we need to do because I mean, actually, we, we spent a whole whole A whole year on trying to get these uh these correct, and I think we expected them to be followed. We, you know, I'm not saying we didn't make some missteps along the way, but, uh, I think our intent was pretty clear. So whatever when when did you all say that your report's gonna be back? We'll have that available the first week of February. OK, so we'll have, we'll have more than ample time, I guess, to look at all that and see what we need to do as far as legislation, correct? Yeah, we're gonna set another meeting that would happen the week of February 10th for their final report. Thank you, Mr. Chair. You bet Representative Wardlight. So Senator, when we did this the first time, And Tom, you were there, but we left a lot of things open and broad for rulemaking process so they so they left lead way for them to be able to put processes in place for all the procurement that could happen. And we were asked to do that. I don't know if you remember some of those conversations, Tom, and Reading these findings, it seems like because we left it so open and broad, it, it allowed some of these things to take place. Uh, you look at finding number 4. It says rules do not always include the needing and helpful guidance to how to implement and or apply the statute. It's because they didn't get very descriptive in the rules and we didn't get very descriptive in in the in the statute. So, in my opinion, Going forward, we probably should get more descriptive. Which is gonna actually limit some things that we probably didn't want to limit. That's what happens when you get very descriptive in statute, but we can see now that it's needed, it's been problems, it's time to fix it and close those loopholes. Thank you. Thank you, Representative Representative Speaker Evans, you're recognized. Amish chair, uh, Tom, on, uh, under the findings roster, the overview, line 15, RFPs very frequently weigh costs at 30% of evaluation criteria. So by stating very frequently that means there's obviously sometimes that it doesn't. Is that because There's no guidelines, there's no statute that says that 30% is the rate that we want to look at and if not, do you see that consistently amongst other states that there's just variations of what. Where cost comes to play. Yeah, so, uh, we said very frequently because we only looked at 3 example solicitation that we were exposed to a couple of others and you know all of those cases it was weighted at 30%. We don't want to say definitively that they're not weighted at more than 30% in some cases, but we had a perfect hit rate of the ones we looked at that were at 30%, um, in other states we see it varies very significantly, uh, the use of a minimum threshold is not, um, It is not universal, but it is common. So what we're doing here is very common, um, but in our experience, it does, it does tend to vary based on the specifics of a procurement where, um, the more it's a commoditized element to the, to the solicitation, you're gonna have a higher weighting of costs, the more that it's highly specialized or or potentially a critical system or piece of infrastructure, it might be a lower weight, but we, we are seeing here that in the examples that we looked at, it's Consistently set at the minimum. Then over on, on page 4, it's Roman numeral 2-2. Says the printing delegation order manual should be updated to reflect 3 bids must be obtained only when a commodity is less than or equal to 75,000. Can you expand on what is the, what is the printing delegation order manual, yeah, so this is a a specific element in statute that's, that's focused on, on printing and the statute simply is very clear that, um, that 3 bids are required only when it is less than or equal to $75,000 and what we found was that the actual policies that underlie that were not actually consistent with, with the statutory requirement. OK. Thank you. Thank you, Mr. Chair. Thank you, Speaker Evans. Members, any other questions? No. No. Chairman Gilmore, are you good? All right, seeing, seeing no further questions, that's all we have on the agenda today. We will set a follow-up meeting for the week of February 10th, specific date will be sent out to you at that time. And Marty, anything else? Thank you. Seeing Northerns, thank you, gentlemen, for, for coming down. We appreciate it. With that, we are adjourned. Thank you very much.