SEP-14 City of Colorado Springs, Woodman Road Widening Project

City of Colorado Springs

CITY CONTRACTING DIVISION

January 23, 2009

Mr. Tim Harris - Regional Transportation Director
905 Erie Ave.
Pueblo, CO 81001

Dear Mr. Harris:

The City of Colorado Springs (City) is formally requesting approval under FHWA SEP -14 to use an innovative contracting practice to solicit and award the Woodman Road Widening construction project (Est. $50 million) in late 2008, and for similar projects of this nature in the future. The City of Colorado Springs is requesting approval to solicit full and open competitive proposals (Request for Proposal -RFP) and to award a contract based on a "Best Value" evaluation process, in lieu of soliciting bids and awarding a contract using the standard sealed bid (Invitation for Bid-sealed bid) methodology. The City has successfully used this process for several major capital projects in the last 3 years and has found it to be a very effective method for awarding major construction projects when price is not the only consideration. This process has been supported within the contractor community as a fair and equitable process. The City has successfully used the process on the following major road and bridge projects within the last year:

The City has also used this process successfully on other construction projects, such as:

• Construct Parking Garage Expansion - $8 million
• Construct New Rental Car Canopies at Colorado Springs Airport - $6 million
• Drain and Install Lake Liner for Memorial Lake - $5 million
• Construct Major Trail System for Parks and Recreation - $3.5 million
• Construct Airport Business Park - $7.2 million.

If granted permission under SEP -14 to use this procurement process the City expects to award a firm fixed price contract to the contractor that is able to demonstrate through a full and open competitive proposal (competitive negotiations) process, that they are indeed the, "Best Value." The procurement process uses a fair and equitable evaluation process, to take into consideration all of the integral aspects of the project such as; cost, schedule, project approach and understanding, value engineering suggestions, qualifications, experience, and subcontractors to make the award. By using the Request for Proposal to solicit proposals, the City has the ability to negotiate with all firms that are considered to be within the competitive range as determined by the evaluation process.

The following work plan should provide sufficient detail on the "Best Value" procurement process the City is requesting to use, including our scope, schedule, advantages and disadvantages, measures, reporting, regulatory requirements, and a sample $26 million project which includes the contract with provisions, and the evaluation documentation, that were used to award that sample contract. If you have any questions, concerns, or require further information, please contact me at 719-385-5289. I look forward to hearing from you regarding this important procurement process.

Sincerely,

Steven C. Gess, CPPO
City Contracting Manager
City of Colorado Springs

Attachments: Work Plan

WORK PLAN

The Process - Background

The "Best Value" process being requested is not new within the public sector. In fact, the federal government uses this process as the primary process for major procurements, including capital projects, when it is necessary to select a contractor based on factors other than just low price and when negotiations may be advantageous. The process being requested can be found in part 15, "Contracting by Negotiation", of the Federal Acquisition Regulation (FAR). FAR 15.1 entitled "Source Selection Processes and Techniques" which is later described in 15.101 "Best Value Continuum", specifically allows agencies to use competitive negotiations to obtain best value.

FAR 15.002 (b) entitled "Competitive Acquisitions", states as follows: "When contracting in a competitive environment, the procedures of this part are intended to minimize the complexity of the solicitation, the evaluation, and the source selection decision, while maintaining a process designed to foster an impartial and comprehensive evaluation of offerors' proposals, leading to selections of the proposal representing the "best value" to the Government."

The City, as stated earlier, has adopted and uses the same process described and used by the federal government. The City solicits full and open competition using a Request for Proposal (RFP), also known as "Competitive Negotiations", as the procurement method. The RFP includes several components (criteria) in which respondents to the solicitation must include within their proposals such as: price, qualifications, schedule, quality control plan, subcontractors, including respective qualifications', and project approach as examples. The RFP also includes language which informs the respondents as to the order of importance of each of the specified criteria. In essence, all of the critical aspects of the project are evaluated to determine what firm is truly the overall best value to be awarded the project. Price is still a major factor; however, a firm that has the lowest overall price may not be awarded the project if his proposal does not adequately address all of the critical aspects of the project as described in the RFP.

There are significant advantages with some disadvantages to using the competitive RFP method to award a best value contract.

Advantage:

1. Reduces risk to the City: Since the City is selecting a contractor based on their complete and written understanding of all of the critical aspects of the project (price, quality, schedule, experience, capability, and understanding of project), rather than just price alone, the City has increased its potential for selecting and awarding to the best contractor available. By selecting a contractor through this process the City has significantly increased its chance for success, and reduced overall risk for an unsuccessful project.
2. RFP process is extremely flexible: By using the Request for Proposal (RFP) process it gives the flexibility to negotiate with all firms that are determined to be within the competitive range after proposal evaluations. (The normal approved method of using sealed bids does not allow for negotiations.) This is extremely important when dealing with projects that are on a very tight budget. Secondly, this process allows the City to express to the contractor community in a competitive environment, the most important or critical aspects of the project, and have the contractor community tell the City in the form of proposals how they plan to resolve these issues and the related cost.
3. Best Value: The evaluation process allows the City to evaluate all of the critical aspects of the project rather than just price. Price will still be a major factor, but this process allows the City to consider every critical aspect of the project prior to signing a contract. As an example; Schedule will be very critical. Firms will be required to submit detailed progress schedules for review. A firm that submits a schedule that is lacking sufficient detail, most likely would not score as high as a firm that submits a schedule that contains complete detail proving they are intimately familiar and completely understand the critical elements of the project. The contractor who best demonstrates their complete understanding of project, has a fair price, is qualified and has compiled a good team of subcontractors, through submission of their proposal, most likely will be selected through this highly competitive process as the Best Value. It is a win/win for everyone. Contractors can put their best foot forward and not having to worry about foregoing quality for a low price. The City wins, by awarding the contract to a contractor that has proven capabilities, a fair price, the best team of subcontractors, and has proposed a schedule that allows for early completion.

Disadvantage:

1. Preparation and submission of proposals is costly; While the proposals preparation process by the contractor's is more time consuming and costly, the firms that have the most experience and best qualifications would have experience in preparing and submitting proposals as a normal business process for projects of this magnitude. A $50 million dollar project is worth the investment of a contractor's time and effort to obtain the contract award.
2. Solicitation, Evaluation, and Award Process is longer: The RFP process takes an average of 90 days, as compared to roughly 60 days for sealed bidding. However, the 30 days extra is required to be able to evaluate and select the best value contractor. These days are more than made up in the improved day to day management of the project. Through this process the extra 30 days ensures that there is a complete understanding of the project by both parties and therefore eliminates all of the assumptions normally made by parties under a sealed bid scenario.

SCOPE

The scope of the project the City is requesting permission to pursue the best value methodology is the Woodman Road widening project. Woodman Road is a major east-west corridor in Colorado Springs, which will be expanded to six lanes under a planned $50 million expansion. The project will be divided into 2 phases based on available funding, with the first phase being solicited in late fall 2008 with construction beginning in early 2009. The complexity and most importantly the disruption to the citizens of Colorado Springs during this project, make it extremely critical that a "best value" contractor is selected to perform this work. It is imperative that all factors are considered in the selection and award of a contract such as cost, schedule, project approach and understanding, experience, value engineering, and any other critical factors, are they are all addressed by the competitors in the form of a written proposal for our consideration.

SCHEDULE

The estimated procurement process will be broken down in to a similar schedule based on receipt of final construction drawings. The dates are estimated at this time but the time frames for each task are realistic;

MEASURES

By using the "Best Value" method for capital projects of this magnitude, the City of Colorado Springs expects to be able to measure as a minimum the three primary objectives of the project; (1) cost savings, (2) time, and (3) improved quality control as follows:

1. Cost Savings: Since the "Best Value" approach is not a low bid procurement, the cost savings that are consistently realized on best value projects are in the areas of lower number of change orders, improved efficiencies, and value engineering measures associated with the evaluation process. Since the evaluation criteria will also include the evaluation of such items as; qualifications, including subcontractors, project understanding and approach, schedule, quality control and traffic plans, through this process you are hiring a quality contractor that has put together a team of qualified subcontractors and they have proven they completely understand the project. Therefore, as a result the City receives quality work and better understanding of the project which in turn leads to less change orders.
2. Quality: As stated above, using the "Best Value" approach the City is able to evaluate each firm’s past performance, experience, and capabilities and compare subcontractor’s to each other in a competitive process. With all things being equal a firm that is able to put the best team together to build the project, will always result in improved quality at a lower than average cost. The cost savings are seen in less change orders, increased project efficiency (very rare is there a need for repetitive work), and a project that is completed either on time or earlier than expected.
3. Time:This is the easiest of all to measure. In our experience with "Best Value", the City has been able to reduce estimated project completion by 2 or 3 months, by asking and evaluating project schedules as part of the best value process. As an example, most projects that are awarded using sealed bidding give the timeframe the contractors are to complete the work. In the best value process the City provide the proposers an estimated amount of time it should take. The City evaluates and award higher points to the firm that can submit a schedule which would result in shorter completion dates and can demonstrate that their schedule is realistic through experience and complete project understanding.

REPORTING

As part of the reporting process the City plans to provide the following reports:
Initial Report (solicitation)

1. Formal Advertisement of the project
2. Copy of the Request for Proposal with addendums- the request for proposals will include specific detail on proposal preparation and submission along with our evaluation criteria and evaluation process.
3. Sample evaluation scoring sheet

Second Report (evaluation and award process)

1. Detailed evaluation of proposals in the form of evaluation matrix
2. Score sheets from each evaluator
3. Short listed firms ( If applicable)
4. Interview discussions with short listed firms
5. Score sheets from interviews
6. Negotiation memorandums (if applicable)
7. Revised proposals if applicable
8. Revised score sheets for revised proposals ( if applicable)
9. Final award recommendation and decision signed by City Contracting Manager

Periodic reports (after issuance of notice to proceed will provide quarterly)

1. Progress reports showing actual progress as compared to proposed schedule
2. List of change orders with description and dollar amount
3. Quality Issues – list of unacceptable items and quality related issues

PROCESS

This is not new process to the City of Colorado Springs. Section 3-300 of the City Procurement Regulations address the process and contain procedures that must be adhered to in order to comply with the procurement regulations. Section 3-300 in its entirety is attached describing the process in detail that will be followed if this process is approved.

3-300 REQUESTS FOR PROPOSALS (RFP) (FORMAL)

3-301 Definition

Requests For Proposals (RFP) also known as Competitive Sealed Proposals, is an objective method of contracting for goods or services whereby proposals are solicited from qualified contractors, and evaluated in accordance with specified criteria. RFP's are considered negotiated procurements and following submission and review, discussions and changes in proposals and prices are allowed. The offer or proposal deemed by the City to be most advantageous in terms of criteria as designated in the Request for Proposals and is determined by the City Contracting Manager to be in the best interest of the City may then be accepted. An RFP should not be used when the service or equipment to be contracted is standard, routine or common "off the shelf" type items or if there is an industry standard associated with the service or commodity to be contracted. Requests for Proposals (RFP) are a very time consuming and costly method of procurement, which should only be used when sealed bidding is not appropriate.

3-302 When Requests for Proposals are Practicable

Factors to be considered in determining whether requests for proposals are practicable include:

1. Estimated contract value is more than $50,000.
2. Requirement is highly technical, unusual, is not a standard "off the shelf" item or there is not any clear standards or specifications available to use in the solicitation.
3. If the contract needs to be other than fixed-price type.
4. If it may be necessary to conduct oral or written discussions with offerors concerning technical and price aspects of their proposals.
5. If it may be necessary to afford offerors the opportunity to revise their proposals.
6. If it may be necessary to base award on a comparative evaluation as stated in the Request for Proposals of differing price, quality, and contractual factors in order to determine the most advantageous offering to the City.
7. If the primary consideration(s) in determining award may be factors other than price(s).
8. When it is necessary to make an award using a Best Value decision, thus requiring evaluation and consideration of other criteria along with price to determine overall Best Value to the City of Colorado Springs.
9. When negotiations would be the preferred method to finalize the contractual arrangement.

3-303 Determinations

The City Contracting Manager may make determinations by category of supply, service, or construction item(s) that it is either not practicable or not advantageous to the City to procure specified types of supplies, services, or construction by competitive sealed bidding. Procurements of the specified types may then be made by competitive sealed proposals based on this determination. The City Contracting Manager may revoke such determination at any time, and all such determinations shall be reviewed from time to time for current applicability.

3-304 Dollar Thresholds for RFP's

Formal Requests for Proposals shall be issued by the City Contracting Division for requirements that are estimated to exceed $50,000. Solicitations in the form of informal RFP's may be issued for requirements estimated to be less than $50,000, if more than one vendor is known to exist that has the capabilities of providing the product or service. The City Contracting Manager may accept written justification from the using agency for a sole source professional service contract, even though it may exceed $50,000. The Department Manager prior to submission to the City Contracting Manager must approve this justification.

3-305 Content of the Request for Proposals

The Request for Proposals shall be prepared using the following sections as a minimum:

1. SECTION I – Proposal Information: This section includes where to submit proposals, how many copies, when they are due, information regarding amendments, basis of award and acceptance time period.
2. SECTION II – Minimum Specifications: This section will include project scope, location, performance period and general information.
3. SECTION III - Proposal Content: This section includes a list of the requirements a potential offeror must address and include in his proposal.
4. SECTION IV – Evaluation Criteria: This section includes the evaluation process, the evaluation criteria and its order of importance, and how the proposals will be evaluated.
5. SECTION V – Terms and Conditions/Attachments/Exhibits: This section includes attachments such as sample evaluation score sheets, drawings, sketches, sample contract, general conditions, special instructions, insurance requirements, etc.

3-305.1 Evaluation of Proposals

RFP's shall be evaluated as per the stated criteria in the Request for Proposal. The Request for Proposals shall clearly define all evaluation factors including price if applicable. Numerical rating or ranking systems may be used for evaluation. Factors not specified in the Request for Proposals shall not be considered.

3-305.2 Best and Final Offers (BAFO's)

1. Upon completion of discussions, the evaluation selection committee may issue to all offerors still within the competitive range a request for best and final offers. Oral requests for Best and Final Offers shall be confirmed in writing.
2. The request shall include:
3. Notice that discussions are concluded.
   • Notice that this is an opportunity to submit a Best and Final Offer.
   • A due date for submission of the Best and Final Offer.
   • Note that this is only an opportunity to revise their proposals. If they chose not to submit a Best and Final Offer then their original proposal as submitted will be considered.
   • After receipt of Best and Final Offers, the evaluation selection committee shall evaluate them accordingly and recommend award be made to the offeror whose best and final offer is most advantageous to the City of Colorado Springs, considering price and the other factors included in the RFP.

3-305.3 Evaluation Committee

The evaluation of proposals shall be an objective process using the specified evaluation criteria in the Request for Proposal to evaluate all proposals. The actual evaluation of proposals shall be conducted by committee, and chaired by a Contracting Specialist from the City's Contracting Office. It is recommended that the committee be made up of a diverse group of individuals from a few different organizations within the City. In most cases the recommended committee should contain at least five members with two of the five members being from organizations that are not the user of the end product or services. There will be cases when it may not be practicable to have five (5) members on the committee and there may be cases when more than five members would be more appropriate.

Furthermore, all committee members shall read and sign the “Procurement Integrity Non-Disclosure Statement” prior to reviewing any of the received proposals, or if a previously signed integrity statement is on file then the committee member should be reminded of their responsibilities in the form of a briefing by the Contracting Specialist. This statement serves as a briefing to each evaluator of the confidentiality that must be maintained while evaluating the proposals and shall remain in effect and on file in the City Contracting Office for all future evaluation committees the evaluator participates in.

3-306 Proposal Preparation Time

Proposal preparation time should be set to provide offerors thirty (30) calendar days under normal circumstances to prepare and submit their proposals. The City Contracting Manager may modify this requirement to require less time on less complicated requirements, but in no event will the period be less than fourteen (14) calendar days, unless there is written justification which warrants an emergency procurement approved by the City Contracting Manager.

3-307 Form of Proposal

The manner in which proposals are to be submitted, including any forms for that purpose, may be designated as a part of the Request for Proposals in Section III.

3-308 Public Notice - Advertisement

Public Notice shall be given by advertising the Request for Proposals in the same manner provided for the Invitation for Bids. See 3-108 Public Notice – Advertisement

3-309 Pre-Proposal Conference

Pre-proposal conferences may be held. Any such conference should be held a minimum of ten (10) calendar days prior to the submission of initial proposals.

3-310 Amendments to RFP

Amendments to Requests for Proposals may be made in accordance with Amendments to Invitation for Bids prior to submission of proposals. After submission of proposals, any amendments shall be distributed to all offerors who submitted proposals.

3-311 Modification or Withdrawal of Proposal

Proposals may be modified or withdrawn by any offeror prior to the established due date and time.

3-312 Receipt of Proposals

The time and date for receipt of Proposals will be included in the RFP and may read a specific time or "close of business" on a certain date. If a specific time is cited then proposals must be received by the time or they are considered late and will not be accepted. If "close of business" is cited then proposals may be accepted at any time during business hours on the date specified. Proposals shall be safeguarded in a way as to protect and to avoid any disclosure of information that could harm the City's negotiation position. This includes as a minimum, non disclosure of the number and names of offerors until such time that an award is made. A list containing the names of the offerors shall be released and their proposals subject to any proprietary or confidentiality requirements shall be made available for public inspection after contract award.

3-312.1 Late Proposals

Late proposals shall be handled in the same manner as Section 3-107 Late Bids.

3-313 Only One Proposal Received

If only one proposal is received in response to a Request for Proposal (RFP), the City Contracting Manager has the following options:

1. Determine if there was sufficient time allotted for offerors to submit a proposal (if not, the solicitation may be amended to extend the receipt of proposal date and the only proposal received shall be returned unopened to the only offeror)
2. Proceed with the evaluation of the proposal from the single offeror; if the offer meets the requirements of the City as stated in the RFP, and the cost is determined to be fair and reasonable through negotiations, an award may be made.
3. If the evaluation determines that the only offeror does not meet our needs, or negotiations of the cost do not result in a fair and reasonable price, then the solicitation may be canceled and re-solicited at a later date. Note: If the solicitation is canceled the proposal shall be returned to the offeror upon request and the canceled solicitation file shall be documented as to why it was canceled.

3-314 Evaluation of Proposals

The Request for Proposals shall clearly define all evaluation criteria in order of importance, including price. Numerical rating systems and/or weights may be used but are not mandatory to be listed in the RFP. However, the criteria listed in the RFP must be listed in order of importance and the weights or points assigned by the evaluation committee prior to evaluating proposals, must follow the listed importance accordingly. The evaluators shall not consider criteria that are not specified in the Request for Proposals when evaluating proposals. Selection for the award shall be conclusive based on scoring criteria as specified in the RFP. The City reserves the right to enter into contractual negotiations with the highest ranked firm selected by the evaluation committee. If a mutual contractual relationship cannot be established that will meet the City's needs, then the City reserves the right to enter into negotiations with the second highest ranked firm and so on.

3-314.1 Disclosure of Information after Receipt of Proposals

Evaluation committee members shall not discuss the names of proposers; numbers of proposals received, or answer any questions outside of the realm of the evaluation committee from any of the offerors, or outside agencies such as the media during the evaluation process. The primary responsibility lies with the City Contracting Office for answering questions regarding status of the evaluation process or clarifications of proposals from interested offerors both prior to receiving proposals and during the evaluation of proposals.

3-314.2 Clarifications

Clarifications may be requested from offeror's on their proposals during initial evaluations to determine the acceptability of their proposal. Clarifications shall be limited to items contained in an offerors proposal that the evaluation committee has determined requires further explanation by the offeror in order to properly evaluate their proposal. Clarifications shall not be used to allow offerors to revise or modify their initial proposal.

3-314.3 Discussions with Individual Offerors

Discussions are held to promote complete understanding of the City's requirements and the offeror's proposal, to facilitate arriving at a contract that will be most advantageous to the City taking into consideration price and the other evaluation factors set forth in the Request for Proposals. Furthermore, offerors determined to be within the competitive range shall be accorded fair and equal treatment with respect to any opportunity for discussion and revisions of proposals, (if discussions are conducted with one offeror within the competitive range then discussions shall be conducted with all and prior to award, for the purpose of obtaining best and final offers. Auction techniques or disclosure of any information derived from competing proposals are prohibited. Any substantial oral clarification of a proposal shall be reduced to writing by the offeror.

3-315 Mistakes in Proposals

Since proposals are considered to be competitive negotiations there is more leeway allowed for correction of mistakes by an offeror. When it appears from a review of the proposal during evaluation and before award that a mistake has been made, the offeror may be asked to clarify their proposal in lieu of withdrawal.

3-316 Award of Contract

Award shall be made to the responsible offeror whose proposal is determined to be most advantageous to the City, and in the best interest of the City, based on the evaluation factors set forth in the Request for Proposals. No other factors or criteria shall be used in the evaluation. If an evaluation committee is established, that committee may make that determination, or may make recommendation to other levels of the City organization and the City Contracting Manager. The contract file shall contain the basis on which the award is made.

3-317 Debriefing Unsuccessful Offerors

If requested within thirty (30) days after notice of selection and award of the contract an unsuccessful offeror shall be debriefed and furnished the basis for the selection and award of the contract. Debriefings shall include the following information:

1. Copies of the offeror's evaluation score sheets showing the strengths and weaknesses of their proposal as evaluated by the committee.
2. The overall evaluated cost and technical rating of the winning contractor.
3. The overall ranking of all offerors.
4. A summary of the rationale for award.
5. Answer any relevant questions about the process the offeror may have.
6. DO NOT: Provide point by point comparisons of the debriefed offeror's proposal with those of other offerors, or any items listed in other offerors proposals that may be marked confidential or proprietary.

Debriefings are held for the purpose of providing lessons learned and as a type of feedback tool to improve competition and provide an objective process.

SAMPLE PROJECT/PROCESS

Attached is the Austin Bluffs – Union Overpass project file containing the Request for Proposal, copy of final awarded contract, evaluation score sheet and evaluation matrix showing how the 4 proposals received were evaluated and scored, plus the costs proposals that were received and how they were scored by the evaluation committee.

One of the key elements for a fair and equitable procurement process is the ability to be able to defend the process. The scoring matrix gives the City this ability to analyze the overall best value through the strengths and weaknesses of each offer received. Per the City Procurement Regulations the City is required to provide a formal debriefing to the firms that were not selected. This required debriefing support the best value decision. If the process is not fair it would be very difficult to brief a non selected firm as to why they were not selected.