Navigating the Vast and Diverse Environment of State and Local Contracting
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2 Navigating the Vast and Diverse Environment of State and Local Contracting Breakout Session #: B04 Zelalem Alemayehu, CFCM Virginia Dawson Regina Samuels, CSCM Sheila Wright, JD, CPCM, PMP Date: Monday, July 25 Time: 2:30pm-3:45pm
3 Agenda Procurement strategies and requirements Cooperative purchasing and piggybacking Small and socio-economic business distinctions Provisions/practices by states and localities 2
4 Introduction State and Local or S&L State, Local and Educational or SLED Non-Profit or Not-for Profit State and local (S&L) governments spend billions of dollars each year purchasing commodities and professional services. Most S&L government agencies have policies promoting local small business development. This purchasing activity is on the rise trillion (2013), trillion (2015) trillion (2018) (NCMA Annual Review 2016) 3
5 Procurement Strategies and Requirements Procurement strategies can vary between federal, state and local governments and within state and local governments 4
6 Procurement Strategies and Requirements But there can also be some similarities 5
7 Procurement Strategies and Requirements Federal Centralized vs decentralized procurement Standard vs non-standard contracts Negotiations and exceptions State and Local Centralized vs decentralized procurement Standard vs non-standard Contracts Negotiations and exceptions 6
8 Procurement Strategies and Requirements Centralized Procurement Procurement/ Contracting resides across the organization Decentralized Procurement Procurement/Contracting resides within each individual business areas/units 7
9 Procurement Strategies and Requirements Standard contract form and terms versus contractor's contract or other document 8
10 Procurement Strategies and Requirements Negotiations and Exceptions 9
11 Cooperative Purchasing and Piggybacking Sharing procurement contracts between governments 1 0
12 Cooperative Purchasing and Piggybacking Piggybacking Contracts issued by individual governmental entities that allow other jurisdictions to use the contract 11
13 Cooperative Purchasing and Piggybacking Who Can Participate? States, counties, municipalities, cities, towns, townships, tribal governments, public authorities, school districts, colleges and other institutions of higher education 12
14 Cooperative Purchasing and Piggybacking Procurement Requirements Must have an applicable Cooperative Purchasing contract Must include piggyback language in the contract and the vendor must agree Required documentation (e.g. purchase order, request form or other supporting documentation) 13
15 Cooperative Purchasing and Piggybacking Cooperative Purchasing Advantages Lower prices Higher quality products and services Use and share of procurement professionals Comply with state purchasing requirements Reduction in administration time and expenses Contracts are convenient 14
16 Cooperative Purchasing and Piggybacking Cooperative Purchasing Challenges Legal compliance Local laws Small business participation Source selection Terms and conditions Pricing and fees 15
17 Cooperative Purchasing and Piggybacking Cooperative Purchasing Contracts National Association of State Procurement Officials (NASPO) ValuePoint MN Multi-State Contracting Alliance for Pharmacy (MMCAP) National Cooperative Purchasing Alliance (NCPA) General Services Administration (GSA) Schedule 70 Information Technology Schedule 84 (Additional Security Related Programs) Schedule Disaster Purchasing and 1122 Program 16
18 Cooperative Purchasing and Piggybacking Best Practices Review the contract Analyze the product or services SOW, price and T&Cs Compare contracts Verify whether the contract allows for negotiation Obtain advice from legal counsel to determine if acceptable 17
19 Small and Socioeconomic Business Distinctions The laws, rules and policies applicable to state and local procurements are diverse and complex. Variations Different statues, regulations, and policy requirements standard clauses Mandatory Requirements State Reserved Rights Therefore, it is important to have a thorough understanding of applicable laws and policies, the procurement process and familiarity of the terms and conditions specific to the many jurisdictions. 18
20 Small and Socioeconomic Business Distinctions Small Business Goals S&L Governments have their own goals different from the Federal Government or from other States Current Federal Goals Small Business: 23% Small Disadvantaged Business: 5% Women-Owned Small Business: 5% HUBZone Small Business: 3% Service-Disabled Veteran-Owned Small Business: 3% State Goals: New York: 10 % for MBE and 10% for WBE California: 25% SB goal Virginia: 40% SWaM owned Business Texas HUB goals: %. (23.7% for professional services) 19
21 Small and Socioeconomic Business Distinctions Most state and local government agencies have some policies promoting local small business development direct subsidies to business, funds for management and technical assistance, bonding assistance bid preferences etc. Example - 5% Bid preference for SB Supplier A- Non-SB Lower bid: $20,000 x.0.05 (preference factor) = $1,000, Supplier B- SB Net bid: $20,500 - $1,000 = $19,500 Then, the SB will be awarded 20
22 Small and Socioeconomic Business Distinctions Some States have a well defined statewide programs for disadvantaged businesses New York Minority_ Women Owned Business Enterprise (M/WBE) - administered by the Division of Minority and Women's Business Development (DMWBD). Disadvantaged Business Enterprise (DBE) program is a federally regulated program. California Small business and DVBE program: Administered by The Office of Small Business & Disabled Veteran Business Enterprise Services (OSDS), under The Dept. of General Services (DGS) Procurement Division (PD). 21
23 Small and Socioeconomic Business Distinctions Virginia The Department of Small Business and Supplier Diversity (SBSD) administers SWaM: The Small, Women-owned, and Minority-owned Business DBE: The Disadvantaged Business Enterprise Maryland Small Business Set-Asides Small Business Reserve Program: 10% of the State s procurements as SBR Small Business Preference agencies may designate The Minority Business Enterprise (MBE) Program. State agencies need to make every effort to award a minimum of 29% of the total dollar value of their procurement contracts. 22
24 Small and Socioeconomic Business Distinctions State programs don t always accept federal business classifications and have their own certification programs. Therefore a small business partner you use on federal contracts may not be eligible as a small business on a state contract Federal System for Award Management (SAM) registration. Example: Texas - Historically underutilized business (HUB) definition different from Federal (Social group Vs Location) 51 % owned by one or more economically disadvantaged persons (Black Americans; Hispanic Americans; women; Asian Pacific Americans; Native Americans; and veterans (20 % service-connected disability)) Contracts valued at $100,000 or greater - If there is subcontracting, are required to include a HUB subcontracting plan. 23
25 Small and Socioeconomic Business Distinctions Some localities have their own programs which are different from the states Example The City of Houston has a program that s different from the state of Texas. City of Huston Minority and Women Business Enterprise (MWBE) programs Vs Texas - Historically underutilized business (HUB) program. A company that is a HUB as certified by the Texas Comptroller s office would not necessarily qualify unless they have also received the City of Houston certification. Therefore, even though a business may qualify, the state will only accept the HUB certification and the city will only accept the city certifications. 24
26 Small and Socioeconomic Business Distinctions Networks Small Business Development Center (SBDC) Network A partnership between the U.S. Small Business Administration (SBA), leading universities and state economic development agencies. Provide a variety of free business consulting and low-cost training services to SB. Examples The Virginia Small Business Development Center (SBDC) Network Most extensive business development program in the Commonwealth. Partners include universities, community colleges, chambers of commerce, municipalities, economic development organizations, and private companies. The Maryland Small Business Development Center (SBDC) Network A partnership between the SBA, the State of Maryland and the University of Maryland. Links private enterprise, government, higher education 25
27 Small and Socioeconomic Business Distinctions State and Local programs often come along with required monthly/quarterly reporting Federal: Individual Subcontract Report (ISR) - due by April 30 and Oct. 30 Summary Subcontract Report (SSR) - due by Oct. 30 California Annual report August 1 st to the Department of General Services (DGS), Office of Small Business & Disabled Veteran Business Enterprise Services (OSDS). New York: Contractor shall submit to the state Quarterly M/WBE Compliance reports by the 5 th day of each State fiscal quarter (January, April, July & October). Florida Quarterly Report coinciding with the State Fiscal Year: Q1- (July Sept.), Q2 - (Oct. Dec.) Q3 (January March), Quarter 4 - (April June) If unable to meet goal - waiver may be offered based on company s good faith effort. Non-compliance can lead to sanctions within the state (including being debarred). 26
28 Provisions/Practices by States/Locales 27
29 Provisions/Practices by States/Locales vs Federal Common Provisions Dispute resolutions Right to audit Open records Insurance 28
30 Provisions/Practices by States/Locales vs Federal Common Provisions Termination Convenience Default Indemnification Limitation of Liability Payment Terms 29
31 Provisions/Practices by States/Locales Other Common Practices Representations/certifications Other forms 30
32 CONCLUSION 31
33 Who We Are Grant Thornton LLP is the U.S. member firm of Grant Thornton International Ltd (GTIL), one of the world s leading organizations of independent audit, tax and advisory firms. Through member firms in 113 countries, including over 50 offices in the United States, Grant Thornton partners and employees provide personalized attention and the highest quality service to clients around the globe. Our Global Public Sector (GPS), based in Alexandria, Virginia, is a global management consulting practice providing responsive and innovative solutions to government and international organizations. GPS consists of over 600 professionals with certified subject matter experts in strategic planning, financial management, acquisition management, business and process transformation, performance measurement, and project management. Financial Management & Assurance Performance Transformation Information Technology Decision Analytics Governance, Risk and Compliance Financial Management Operations Transaction Valuation Services Audit and Attest Services Information Assurance Audit Readiness/Remediation Strategy and Organizational Transformation Budget and Planning Performance Measurement and Management Business Process Improvement Acquisition Management Human Capital Management IT Program and Project Management Office IT Strategy and Governance Data Management and Analysis Cybersecurity and Information Assurance Systems Development and Sustainment Applied Analytics Spend Analysis Vendor Management Post-Contract Accountability Cost and Performance Analytics Financial Business Analytics 32
34 Contact Information Grant Thornton LLP 33
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