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Ohio Department of Transportation 1
Elements of a Successful Proposal
Office of Transit
Ohio Department of Transportation
June 28, 2007
Ohio Department of Transportation 2
Why Submit a Proposal?
• Maximize Use of Existing Resources
• Expand Revenue Base and Spread Fixed Costs
• Generate Local Match
• Become Viable Player in Local Community
?
Ohio Department of Transportation 3
How Do We Let Agencies Know We Are Interested?
• Networking– Normal interactions with agencies– Speeches to community groups
• Attendance at Pre-Bid Meetings• Participation in Community Groups• Working through Board Members and
Government Officials• Newspaper Articles
Ohio Department of Transportation 4
Self Assessment: Can We Do It?
• Legal Restrictions — Service Area, Type of Service, Funding Program Limitations
• Vehicles — Number, Type, Utilization• Facilities — Size, Capability• Staff — Number, Capability, Flexibility• Type of Service — Is It New or More of the
Same?
?
Ohio Department of Transportation 5
Self Assessment: Do We Want to Do It?
• Agency Mission
• Board Direction
• Management – Interest– Capability
• Local Political Realities
?
Ohio Department of Transportation 6
What are the Keys to Successful Proposing?
• Understanding the Solicitation
• Preparing a Good Response
• Developing a Good Business Plan
• Planning for Start-Up and Operation
Ohio Department of Transportation 7
Understanding the Solicitation
Ohio Department of Transportation 8
Understanding the Solicitation
• Understand the Environment
• Reading the Solicitation
Ohio Department of Transportation 9
Key Transportation Actors
• Transportation Agency– Director– Board
• Local Governments• Ohio Department of Transportation• Federal Transit Administration• Potential Contractors
– Private– Human Service Agencies
Ohio Department of Transportation 10
Labor May Also Be An Important Actor
Be Aware of What You May be “Inheriting”:
– Existing employees– Wages and fringe benefits– Past employees practices
Ohio Department of Transportation 11
Key Laws and Regulations
• Ohio Revised Code
• ODOT Review Schedule
• Federal Transit Administration
Ohio Department of Transportation 12
The Public Process is Slow!
• Everything is a Process
• Publicly-Funded Agencies Cannot Make Snap Decisions– They are not allowed to!
• Conclusion: Follow the Rules!
Ohio Department of Transportation 13
ODOT Review Schedule
Solicitation Task Due DatePrepare RFP/IFB, Solicitation Package, OR Designated Grantee Package
April
Submit Package to ODOT for Review and Concurrence MayAdvertise Solicitation/Designation After ODOT Concurrence May/June*Submit Entire Package, Including Offers Received, Evaluation Methodology, and Award Recommendation to ODOT for Concurrence
June/July
ODOT Notifies Grantee of Concurrence July/AugustGrantee/New Designee Prepares Rural Transit Application July/AugustFor RFPs/IFBs, Grantee Notifies Successful Vendor of Award, Pending Approval of Rural Transit Funding
Aug./Sept.
Ohio Department of Transportation 14
ODOT Review Schedule (Cont’d)
Solicitation Task Due DateGrantee/New Designee Submits Rural Transit Application to ODOT for Review and Approval
September
ODOT Notifies Grantee of Approval Oct./Nov.For RFPs/IFBs, Grantee Makes Final Award to Vendor Nov.*
Ohio Department of Transportation 15
Federal Transit Administration
• Many Required Contract Clauses
• Outlines in FTA Circular 4220.1C
Ohio Department of Transportation 16
Typical Procurement Methods
• Invitation for Bid (IFB)
• Request for Proposals (RFP)
• Multi-Step Strategies
Ohio Department of Transportation 17
Invitation for Bid (IFB)
• Requires Complete and Comprehensive Specifications
• Involves Two or More “Responsive and Responsible” Bidders
• Award Based on Price (Low Bid)
Ohio Department of Transportation 18
IFB Requires High Degree of Agency Certainty
• High Risk for Contractors Since Few Agencies Can Do This Well!
• Contractor Must Be Proactive to Seek Clarification at the Beginning of the Process
Ohio Department of Transportation 19
Request for Proposals (RFP)
• Prefer General Description of Service Specifications
• May Need Oral/Written Discussions With Prospective Contractors
• Award Based on Comparative Evaluation of Price, Quality, Contractual Factors– Primary factor need not be price
Preferable Approach Due to Increased Flexibility and Opportunity for Creative Responses
Ohio Department of Transportation 20
IFB and RFP Steps
Invitation for Bid (IFB)
Invitation for Bids
Bidder Submissions
Bid Evaluation and Award
Request for Proposal (RFP)
Request for
Proposal
Proposer Submissions
Technical Evaluation
Additional Negotiations
Cost Evaluation
Composite Evaluation and Award
Ohio Department of Transportation 21
Multi-Step Strategies
• Pre-Qualify Responsible/Responsive Bidders• Invite/Evaluate Different Technical Approaches• Conduct Discussions to Select Best Technical
Approaches• Award Contract to Lowest and Best Contractor
in Accordance with Sealed Bid Process
Incorporates RFP Flexibility into IFB Process
Ohio Department of Transportation 22
Multi-Step Strategy Steps
Two-Step Invitation for Bid
Bid Evaluation and Award
Request for Qualifications (RFQ)
Request for Qualifications
Biddor Submissions
Qualifications Evaluation and
Selection
Invitation for Technical
Bids
Bidder Submissions
Technical Evaluation
Request for Pricing
Bid
IFB Process or Two-Step IFB
Process
Bid Evaluation and Award
Ohio Department of Transportation 23
Considerations By Procurement Method: IFB, RFP and Multi-Step
Factor IFB RFPMulti-Step
Level of Specification Detail High Medium Low
Evaluation/Award Timeframe Low Medium Med/High
Support of Alternative Approaches N/A Medium Med/High
Evaluation Complexity Low Medium Medium
Ohio Department of Transportation 24
Considerations By Procurement Method: IFB, RFP and Multi-Step
(Cont’d)
Factor IFB RFPMulti-Step
Consideration of Non-Price Factors N/A Med/High Medium
Vendor Discussion Opportunity N/A Med/High Med/High
Potential for Protests Low Medium Medium
Ohio Department of Transportation 25
Typical Solicitation Outline• Cover Page• Overview of Contracting Agency• Statement of Need• Service Specifications• Contractor Qualifications• Contract Mechanics• Agency Protections• Required Clauses• Evaluation Methodology• Format of Submission
Ohio Department of Transportation 26
Service Specifications
• Start-Up Date and Performance Period• Service, Routes, and Operating Hours• Fare Collection and Recordkeeping• Required Vehicle Maintenance• Performance Reporting• Capital Items
Can You Do It and What Will It Cost You?
Ohio Department of Transportation 27
Service, Routes, and Operating Hours Issues
• Make Sure You Know Definitions• Understand the “Service Profile” of
Demand– Time of Day– Day of Week
• Are There Service Guarantees?– Minimums? – Maximums?
Ohio Department of Transportation 28
Vehicle Requirements Should Be Reviewed Carefully!
• Vehicles Provided by Contractor– Do you have the vehicles?– Where and how quickly can you get them?– Can you meet safety and other requirements?
• Vehicles Provided by Public Agency– What are the condition of the vehicles?– When will you take possession?– Will you have to supplement the fleet?
• Contingency Plan– You need one!
Ohio Department of Transportation 29
Contractor Qualifications
• Proposed Personnel• Experience
– The firm as a whole– Proposed personnel
• Total professional experience• Experience with firm
• Financial Capability– Agency wants to make sure you are viable
• Cash Flow — Adequate working capital• Capital — Funding of vehicles and facilities
Ohio Department of Transportation 30
Contract Mechanics
• Contract Length
• Amendment Process
• Reporting Requirements
• Payments
Ohio Department of Transportation 31
Contract Length Options
• Single Year– Does not address high start-up cost factors
• Start-up operations costs• Equipment amortization• Transition costs from prior contractor
– Avoid if equipment acquisition is required or other longer-range opportunities are available
• Multi-Year – Addresses high start-up cost factors– Should address how service changes are handled
Ohio Department of Transportation 32
Multi-Year Contracts Are Most Common
• Often Structured as Minimum Time Frame Plus One-Year Renewals– e.g., Three years plus two one-year renewals
• Maximum Contract Length Limited by Federal, State, and Local Regulations
Ohio Department of Transportation 33
Typical Amendment Issues
• Changes (±) in Required Service – Amount– Vehicles required
• Changes in Commodity Prices– Insurance – Fuel
• New Government Requirements
Ohio Department of Transportation 34
Monthly Contractor Reports: Keep Them Informed!
• Operations– Revenue/total hours and miles, missed trips, schedule
performance
• Passengers and Fare Revenue• Financial Results• Accident and Safety Information• Maintenance Activities
– Preventive maintenance inspections, warranty work, major repairs
• Driver/Mechanic Training Activities• Anticipated Issues for Coming Month
Ohio Department of Transportation 35
Basic Payment Options: Fixed Price
• Price set for performance period
• Contractor assumes risk for cost and service increases
Conclusion: Avoid if Possible
Ohio Department of Transportation 36
Basic Payment Options: Fixed Unit Price
• Most Common• Price tied to output measures
– Service provided — revenue/total hours (miles)– Passengers served– Contractor preference: 1) total 2) revenue
3) passengers
• Contractor assumes risk for cost increases– Also ridership if price based on passengers carried
Conclusion: Reasonable, But Do Your Homework If Based on Passengers
Ohio Department of Transportation 37
Basic Payment Options: Cost Plus Fixed Fee
• Accounts for allowable changes in contractor costs
• Agency assumes risk for cost increases
Conclusion: Good Approach, But Few Agencies Willing to Take These Risks
Ohio Department of Transportation 38
Pass-Throughs Can Reduce Contractor Risk and Cost
• Approach– Agency agrees to pay exact cost for specified items
regardless of increases
• Fuel and Insurance Common Pass-Throughs• Risk: Need to Specify How Costs Can Be
Disallowed• Other Option is to Provide Items Directly
– e.g., fuel at agency fueling island
Conclusion: Discuss with Agency Before and During Solicitation
Ohio Department of Transportation 39
Payment Terms
• Key To Cash Flow
• Key Provisions– Required invoicing format– Invoice approval process– Payment timeline
• Guarantee is desired
Ohio Department of Transportation 40
Agency Protections
• Insurance• Bonding• Key Personnel
– Approval of replacements
• Subcontractors– Approval of replacements
• Agency Provided Equipment and Assets– Required maintenance program– Required maintenance records
Ohio Department of Transportation 41
Objectives of Bond Requirements
• Agency Protection– Assures contractor will enter into contract (bid
bond)– Guarantees service performance will meet
terms of contract (performance bond)
• Credit/Financial Screen
Ohio Department of Transportation 42
Performance Alternatives
• Holdbacks (1-5%)
• Penalties and Incentives
• Post Cash
Ohio Department of Transportation 43
Incentives
• Must be:– Important– Measurable– Reasonable– Under contractor control
Conclusion: Do Not Count Your Chickens Before They Hatch! — Generally Do Not Include in Your Budget
Ohio Department of Transportation 44
Penalties
• Must be:– Important– Measurable– Reasonable– Under contractor control
• Should Be Proportional to “Offense”
Conclusion: Count Your Chickens Before They Hatch! —Include in Your Budget (Things Do Happen Even in the Best Systems)
Ohio Department of Transportation 45
Why So Many Contract Clauses?
• Public Safety
• Good Public Fund Stewardship
• Employee Protections
?
Ohio Department of Transportation 46
Required Contract Clauses(Standing in the Agency’s Shoes)
• FTA Circular 4220.1C
• ODOT Rural Transit Program Manual
The Key Clauses Are Covered Next
Ohio Department of Transportation 47
1. Remedies for Breach of Contract
• Available Remedies to the Grantee if Contractor Violates or Breeches Contract Terms– Administrative– Contractual– Legal Remedies
• Provision for Appropriate Sanctions and Penalties
Ideally, We Should Never Get This Far
Ohio Department of Transportation 48
2. Contract Termination (>$10,000)
• Conditions Under Which the Grantee May Terminate the Contract for:– Default: Contractor fails to comply with terms
of the contract– Convenience: Contractor cannot comply due
to circumstances beyond contractor’s control
Ohio Department of Transportation 49
3. Equal Employment Opportunity (>$10,000)
• Contractor Agrees to Take Positive Action to Insure that Persons Employed or Seeking Employment Are Treated Without Bias Regarding:– Race– Religion– Color – Sex– National origin
• Contractor Required to Conspicuously Post Notices
Ohio Department of Transportation 50
4. Contract Work Hours and Safety Standards Act
• Contractor Must Pay Overtime (1.5 x wage rate) to Laborers and Mechanics for Work Exceeding 8 Hours per Day
• Prohibits Requiring Workers to Work in Unsanitary, Hazardous, or Dangerous Conditions as Defined by Secretary of Labor
• Applies to:– Construction contracts > $2,000– Other contracts > $2,500
Ohio Department of Transportation 51
5. Access to Contractor’s Records
• Provisions Cover Access to the Contractor’s:– Books – Papers– Documents – Records
• Access Granted to:– Grantee– ODOT– FTA– Comptroller General– Authorized agents
• Materials Must Be Maintained for 3 Years
Ohio Department of Transportation 52
6. Disadvantaged Business Enterprise
• Contractor Will Take Affirmative Steps Whenever Possible to Use DBEs as Sources of Supplies, Equipment, Construction, and Services
• Selected Affirmative Steps– Place qualified DBEs on solicitation lists– Assure that DBEs are solicited when they are potential
sources– Divide projects into small tasks suitable for DBEs– Establish procurement schedules that encourage DBE
participation
Make Sure You Know Agency Requirements
Ohio Department of Transportation 53
7. Buy America
• Steel, Cement, and Manufactured Products Used in FTA-Supported Projects Must Be Produced in US.
• FTA Can Make Special Exceptions
Ohio Department of Transportation 54
8. Title VI Civil Rights Act of 1964
• Non-Discrimination– Selection and Retention of Contractors– Procurement of Materials and Leases of Equipment– Employment Practices
• Provide Access to Records• Compliance with Regulations• Requirements Pass Through to
Subcontractors
Ohio Department of Transportation 55
9. Americans with Disabilities Act
• Service Provided by Contractor Must Meet All Requirements for Grantee — (Standing in the Agency’s Shoes)– Complimentary service – Vehicle accessibility– Public information– Telecommunications
Ohio Department of Transportation 56
10. Drug and Alcohol Testing
• Comply with Federal Requirements– 49 CFR Parts 655 and 40– Drug Free Workforce Act 49 CFR Part 29,
Subpart F
Ohio Department of Transportation 57
11. Selected Other Contract Clauses
• Lobbying• No Government Obligation to Third Parties• Program Fraud and False or Fraudulent
Statements and Related Acts• Government-wide Debarment and
Suspension Non-Procurement
Ohio Department of Transportation 58
Evaluation Methodology
• Depends on Procurement Method– IFB — Assessment of “Responsive” and
“Responsible”– RFP — Assessment of Cost and Non-Cost Factors
• Evaluation Objectives– Objective– Quantifiable
Conclusions– Need to write your proposal to cover criteria– Need to state “obvious” facts about yourself
Ohio Department of Transportation 59
Common RFP Evaluation Factors
• Cost• Proposed Technical Approach
– Service Delivery Approach– Maintenance Plan– Transition/Start-Up Plan
• Proposed Personnel• Experience
Ohio Department of Transportation 60
RFP Factors Often Weighted to Aid Contractor Selection
FactorRating (1to 10;
10=best) Points ScoreService Delivery 7 10 7Maintenance 8 10 8Personnel 6 10 6Experience 8 20 16Cost 9 50 45Total 100 82
Scoring of Bob’s Contracting, Inc. by Barry Bonds, Reviewer
Conclusion: Write Proposal in View of Point Emphasis
Ohio Department of Transportation 61
Preparing a Good Response
Ohio Department of Transportation 62
Keys for Writing a Good Proposal
• Demonstrate that You Know:– The services to be provided– The local operating environment
• Know Your Competitive Strengths and Weaknesses– Who are your likely competitors– What sets you apart from them
• Demonstrate that You Will Provide Value
Ohio Department of Transportation 63
Pre-Bid Meetings Can Help You Develop a Responsive Proposal
• Typical Agenda– Agency overview– Project objectives– Key project information– Agency contact for questions– Contractor questions
Ohio Department of Transportation 64
Suggestions for Pre-Bid Meetings
• DO Ask Clarification Questions• DO NOT Ask Questions that Reveal Your
Approach• USE the Meeting to Size Up Your
Competition• DO NOT USE the Meeting to Reveal Your
Proposed Team• USE the Meeting to Establish a Good
Relationship with the Agency
Ohio Department of Transportation 65
Write for Someone Who Does Not Know You
• Describe the Services Provided by Your Company
• Describe Your Experience and Knowledge of the Local Community
• Highlight Your Accomplishments– Toot Your Own Horn!
Ohio Department of Transportation 66
Identify and Write to Members of the Agency Evaluation Team
• Sometimes the Members are Identified in the Solicitation
• If not, Ask Who They Are
Ohio Department of Transportation 67
Follow All of the Rules!
• Order of Presentation• Due Dates• Number of Copies• Size — Pages, Fonts, Tabs, Margins• Signatures/Legal Forms• Attachments
Ohio Department of Transportation 68
Remember the Agency’s Procurement Requirements
• Treat All Prospective Sources Equally
• Maintain An “Arms-Length” Procurement Relationship
Do Not Accidentally Put Your Agency Friends in a Bad Position
Ohio Department of Transportation 69
Recourse: “Partnering” Meet and Discuss
• Objectives– Keep agency informed about
operations– Address issues before they
escalate into big problems– Focus on solutions and
lessons learned
• Recommend Weekly Meetings
Ohio Department of Transportation 70
Award and Start-Up
• Agency Responsibilities
• Contractor Responsibilities
Ohio Department of Transportation 71
Agency Responsibilities
• Agency Should Designate Points of Contact– Contract Manager
• Changes/amendments, recordkeeping, respond to inquiries
– Service Manager• Operations issues, monitor performance, initial invoice review,
initiate contract changes, assist contractor
Ohio Department of Transportation 72
Contractor Responsibilities
• Start-up Plan• Hiring and Training of Personnel• Procurement of Equipment• Communication with Former Contractor(s)• Vehicle Repair
Ohio Department of Transportation 73
Understanding of Your Costs
• Fixed Costs Do Not Vary with the Amount of Service Provided (e.g., Administrative Salaries)
• Variable Costs Change Relative to the Amount of Service Provided (e.g., Drivers’ Wages)
Fixed
Variable
Total
Output (Hours/Miles)
Co
st
Ohio Department of Transportation 74
Example of Expense AssignmentExpense Class Vehicle Hours Vehicle Miles Fixed CostsLaborVehicle Operations $241,237 $28,047 Vehicle Maintenance $31,344 General Administration $67,986 Fringe BenefitsVehicle Operations $35,800 $4,661 Vehicle Maintenance $6,080 General Administration $11,867 ServicesContract Maintenance $46,847 Professional Technical $2,115 Materials and SuppliesVehicle Operations $45,002 Vehicle Maintenance $14,761 General Administration $9,825 Utilities $3,336 Casualty And Liability Premiums: Vehicle PD $10,044 Premiums: Public Liability $34,734 TaxesVehicle Operations $175 Miscellaneous Expenses $921 Depreciation: Local Share $7,260 Depreciation: Federal/ State $65,342 Leases and Rentals $18,045 Totals $277,037 $188,812 $219,580
Ohio Department of Transportation 75
Example of Unit Cost Calculation
Basic of AssignmentExpenses Assigned
Annual Operating Statistics
Unit Cost
Hours $277,037 28,811 $9.62
Miles $188,812 473,512 $0.40
Subtotal ( H + M ) $465,849
Fixed Cost (w /o Fed/State Dep.) $154,238 $465,849 33%
Fixed Cost (Fed/State Dep.) $65,342 $465,849 14%
Fixed Cost (Total) $219,580 $465,849 47%
Annual Cost = 1.47 * [($9.62 * Hours) + ($0.40 * Miles)]
Ohio Department of Transportation 76
Three Estimates of Contract Costs
• Fully Allocated (Highest)– All costs (variable + fixed)
• Reallocated Fixed Costs – Variable costs– Fixed costs (spread over more service)
• Incremental Costs (Lowest)– Variable costs only
Ohio Department of Transportation 77
Sample Problem
• The transit system wishes to start a new service between a small town and the county government center.
• What should you charge for this service?
• Estimated Annual Operating Data for the New Service.
Hours = 6,120 Miles = 153,000
Ohio Department of Transportation 78
Sample Problem: Fully Allocated Cost
Unit Cost
Annual Operating Statistics Total Cost
Hours $9.62 6,120 $58,874
Miles $0.40 153,000 $61,200
Subtotal $120,074
Fixed Cost (w /o Fed/State Dep.) 33% $120,074 $39,624
Fixed Cost (Fed/State Dep.) 14% $120,074 $16,810
Total $176,508
• All Costs Increase with New Service
Ohio Department of Transportation 79
Sample Problem: Incremental Cost
Unit Cost
Annual Operating Statistics Total Cost
Hours $9.62 6,120 $58,874
Miles $0.40 153,000 $61,200
Total $120,074
• Only Variable Costs Increase with New Service
Ohio Department of Transportation 80
Sample Problem: Reallocated Fixed Costs
Basic of AssignmentExisting
Expenses New
Expenses
Total (Existing
+ New) Expenses
Annual Operating Statistics
Unit Cost
Hours $277,037 $58,874 $335,911 34,931 $9.62
Miles $188,812 $61,200 $250,012 626,512 $0.40
Subtotal ( H + M ) $465,849 $120,074 $585,923
Fixed Cost (w /o Fed/State Dep.) $154,238 $585,923 26%
Fixed Cost (Fed/State Dep.) $65,342 $585,923 11%
Fixed Cost (Total) $219,580 $585,923 37%
Annual Cost = 1.37 * [($9.62 * Hours) + ($0.40 * Miles)]
• Only Variable Costs Increase with New Service• Reallocate Fixed Costs Across Existing and
New Service
Ohio Department of Transportation 81
Sample Problem: Reallocated Fixed Cost
• All Costs Increase with New Service
Unit Cost
Annual Operating Statistics Total Cost
Hours $9.62 6,120 $58,874
Miles $0.40 153,000 $61,200
Subtotal $120,074
Fixed Cost (w /o Fed/State Dep.) 26% $120,074 $31,219
Fixed Cost (Fed/State Dep.) 11% $120,074 $13,208
Total $164,501
Ohio Department of Transportation 82
Sample Problem: Summary of Three Approaches
Incremental $120,074
Reallocated Fixed Cost $164,501
Fully Allocated $176,508
Incremental $120,074
Reallocated Fixed Cost $151,293
Fully Allocated $159,698
All Depreciation Included
Only Local Depreciation Included
Total Cost
Ohio Department of Transportation 83
Business Plan – Non-cost Components
• Staffing – Drivers– Part-time– Full-time– Overtime
• Dispatchers• Supervisor Coverage
– Scheduled– On-call
• Management Team
• Support– Local– Corporate
• Financial Manager– Budget– Cash Handling– Fare/Revenue
Collection Procedures– Expenses
• Recordkeeping/Reporting
Ohio Department of Transportation 84
Startup / Transition Plan
• Timeline – Work Backwards From Startup Date• Understand Interrelationships Between Tasks• Be Thorough• Incorporate Contingencies• Commit Necessary Resources
– Staff Hours– Revenue Outlays– Vehicles– Facilities
• Be Prepared to Mobilize Quickly
Ohio Department of Transportation 85
Startup Plan Components
• Staffing– Recruiting– Hiring– Drug Testing– Training
• Vehicles– Purchase/Lease– Inspections– Preventative Maintenance– Repairs to Minimum Standard
Ohio Department of Transportation 86
Startup Plan Components (Cont’d)
• Administration– Recordkeeping– Accounting/Bookkeeping Procedures– Personnel Policies/Procedures– Telephone Lines / Internet
• Procurement– Inventory– Maintenance Consumables– Equipment– Supplies– Brochures/Ride Guides
Ohio Department of Transportation 87
Startup Plan Components (Cont’d)
• Operations– Service Design and Characteristics– Driver Manifests/Schedules– Scheduling/Dispatching Procedures In Place– Obtain Necessary Information From Former Contractor –
Check for Accuracy/Efficiency