NCB Justification Process - 1503

NCB Justification Methods

There are two methods for justifying NCB purchases as follows:

• NCB justifications executed on an individual basis.
• Special Category NCB Request (SCR), where a department determines that a significant number of repeat NCB purchases for a particular category of goods and/or services will occur during a specified period of time.

NCB Justification Documents

All NCB Justifications must be submitted and approved electronically through the DGS NCB Portal.

When completing the NCB Justification, departments must respond to all questions clearly and concisely and must fully justify:

• why a particular good or service is restricted/unique
• how the background of events prompted the request
• what the consequences are if the good or service is not purchased
• that no competition exists, based on market research efforts

In addition, departments must document how the price is fair and reasonable. This includes providing a basis of the comparison used such as current market rates, historical pricing, LPA pricing, contracts for similar services, etc.

Finally, departments must describe any cost savings realized or avoided when selecting a particular good or service. Departments must quantify and substantiate their response.

The NCB Justification portal contains a set of consistent questions required for all NCBs, however, DGS reserves the right to ask additional questions that would serve to strengthen and clarify the unique circumstance, which has prompted the NCB. Additional questions may not always be consistent since no NCB is identical.

Example: An NCB for a Non-IT Good will generate different questions from an NCB for IT Goods or Non-IT Services. All three (3) will have very unique characteristics, therefor requiring additional questions depending on the circumstance.

Signature Authority

Buyers must secure the proper signatures for NCB Justifications processed with the departments NCB Justification purchasing authority and necessary approvals on the NCB Justification in the portal. The NCB Justification requires the specified approvals/signatures(s) regardless of whether or not the justification is submitted to the DGS/PD or CDT (if applicable) for approval.

• Approval/Signature Instructions for Agencies with an Agency Secretary

The NCB Justification requires approval by Agency Secretary or Agency Undersecretary and the department director or designee. The Agency Secretary may designate one person, in addition to Agency Undersecretary, to sign on his/her behalf, of cabinet officer level (e.g., Assistant Undersecretary, Deputy Secretary, etc., the actual title is dependent upon the Agency’s organizational structure). The department director may delegate review and approval authority to his/her deputy directors and/or the Procurement and Contracting Officer. The director’s designee shall send ratification notification to their director upon the designee’s approval of the NCB transaction. The typed name and signature must match for both signatures.

• Signature Instructions for Agencies that do not have an Agency Secretary

The NCB Justification requires approval by the highest-ranking executive officer or designee. The highest-ranking officer may designate one person to sign on his/her behalf subject to the DGS approval. The highest-ranking officer may delegate review and approval authority to his/her deputy directors and/or the Procurement and Contracting Officer. The designee shall send ratification notification to their highest-ranking executive officer upon their approval of the NCB. The typed name and signature must match.

The DGS/PD will maintain a file of the names and titles of designees.

File Documentation

Click here for a list of file documentation required for NCB contracts.

NCB Justification Submission Timeline

NCB Justification's require thorough review and analysis and as such, require a minimum of 45 days to process (justification portion only). If an NCB is received by DGS less than the minimum 45 days for review and approval, the submitting agency or department will be notified that goods are not to be purchased prior to determination of NCB approval or non-approval. Any goods or services purchased prior to the approval or non-approval date will require a claim to be submitted to the DGS Government Claims Program.

In addition, to ensure the state’s interests are adequately protected, NCBs are not to be approved when the identified start date of the contract or effective date of the amendment has passed, except under exceptional circumstances as described below (Section 6.2.5). If there is no exceptional circumstance, the agency or department will be advised to notify the business entity to file a claim with the DGS Government Claims Program for compensation for goods or services already received.

Examples of Appropriate and Inappropriate Justifications

Departments should refer to the examples below when submitting an NCB Justification request.

A department has identified during their quarterly review that a specific good or service is needed.

Appropriate

Inappropriate

Needs are clearly identified well in advance. Market survey reveals no competition other than a single vendor. NCB is submitted to DGS no less than 45 days in advance of the contract start date. Consequences are fully explained and impacts identified if unable to contract with proposed supplier. Respond to the questions in the NCB Justification with clarity and detailed responses. Cost breakdown with deliverables are clearly identified and explained on how funds will be expended.

Inadequate contract planning that would prevent competition. For example: A contract expiring in 15 days. Justification responses lack enough detail to substantiate request. NCB submittal to DGS is less than 45 days of the contract start date. Insufficient information to establish cost reasonableness. Unwillingness to provide clarification to substantiate the request.

Departments are reminded that poor procurement planning does not justify an NCB request.

Repetitive submission of NCBs for products and services by a department (particularly within a condensed time period) is highly discouraged. Such a practice could indicate a serious flaw in the department’s ability to properly manage contracts and acquisitions; thus, potentially putting at risk their purchasing authority and triggering an escalation process to alert their leadership.  Repetitive submission of NCBs should not be confused with the Special Category Request, which is an approved acquisition method.

NCB Submission Exceptions

NCBs for purchases where goods and services have already been procured or for amendments that have already been executed may be accepted on an exceptional basis only if the contracting agency or department certifies in writing that there is good cause for lateness. A late justification letter is required, which provides a statement of detailed facts and demonstrates it is in the state’s best interest to approve the NCB at the time submitted. Examples of good causes are limited to:

• The underlying purchase is necessary to avoid an unexpected and emergent risk to persons or property and the NCB was processed expeditiously upon discovery of the risk;
• The underlying purchase or amendment is the subject of a judicial order.

Note: In no case will an approval be given for goods and/or services that have been procured for a period greater than 30 days.

Urgent risk and good cause late submittals will be evaluated on a case-by case basis upon a review of the facts and the written justification provided by the agency or department. In some cases, an NCB request may be approved prospectively, but not approved for the period that preceded the submittal of the NCB.

The NCB late justification letter must be signed by the Agency Secretary or Agency Undersecretary and the Department Director or Chief Deputy Director.

NCB Fiscal Year Deadline Dates

In order to comply with fiscal year deadlines, NCB, LTB, and SCR requests must be submitted to the Dispute Resolution Unit (DRU) as follows:

Information Technology (IT) Goods and Services Requests
First business day in December	NCBs, LTBs, and SCRs
Non-IT Goods Requests
First business day in February	NCBs, LTBs, and SCRs
Non-IT Service Requests
Requesting agencies and departments should allow 45 days prior to the contract or amendment start date for the review of NCBs or SCRs.	NCBs and SCRs

NCB Process

The department determines a need to acquire a product from a supplier who is the only known source.

The department completes NCB justification, securing appropriate approval, and submits in the NCB portal to DGS/PD/Dispute Resolution Unit (DRU) or CDT (if applicable) for review.

DGS/PD/DRU will:

• Review requests within 45 days.
• Request additional information as required.
• Notify the department when their request has been approved or denied.

If the NCB justification is approved and the NCB contract:

• Is within the department's delegated dollar threshold for NCB contracts, the department may execute the contract. The approved NCB justification shall be maintained in the procurement file.
  • Is above the department's delegated dollar threshold for NCB contracts, the department shall submit a request to DGS/PD/One Time Acquisitions (OTA) to process the contract on behalf of the department.

NCB Denied

If the NCB justification is denied, the DGS/PD will contact the department in the NCB portal.

NCB Corrective Action Plan

A Corrective Action Plan (CAP) is a tool that aims at reducing the use of NCBs when other acquisition methods could have been used. A CAP also allows a department to plan accordingly and seek other competitive acquisition methods to meet their program needs. The CAP will require departments to commit to specific actions within a timeline. Departments are required to fully answer the CAP question in the Justification form if the NCB is being submitted due to the following reasons:

• insufficient time to complete the competitive acquisition process,
• the goods or services could have been competitively bid or are available through an LPA, or
• is being submitted outside the required NCB Submission Timeline.

Departments failings to adhere to the CAP actions required by DGS, run the risk of jeopardizing their purchasing authority. Departments are strongly encouraged to fulfill commitments outlined in their CAP.

Escalation Process

The escalation process serves as a tool to manage NCBs being submitted to DGS. The tool aims at encouraging departments to utilize the NCB acquisition method appropriately. While the NCB acquisition method is a valid method for acquiring goods and services, it is not intended to circumvent the competitive process.

Step 1- If a Department submits 20% or more non-compliant NCBs within a quarter.

Step 2- If a Department submits 35% or more non-compliant NCBs within a quarter.

Step 3- If a Department submits 50% or more non-compliant NCBs within a quarter.

Non-compliance	Consequence
Step 1 (20%)	Letter sent to Manager & PCO**
Step 2 (35%)	Letter sent to Deputy Director & cc Manager, PCO*
Step 3 (50%)	Letter sent to Agency Secretary & cc Manager, PCO, Deputy Director, PAU*

 

*DGS will require departments to complete our Basic Acquisition Certification class provided by CalPCA.

**DGS will require or suggest completion of NCB, Contract Management, and Statement of Work workshops provided by CalPCA.

NCB CAP tracking analysis will be done on a quarterly basis. Quarters will begin on the first day of the fiscal year (July 1). DGS will use the intake date to determine which quarter an NCB is recorded. For percentages to be utilized as a metric, a department must have submitted a minimum of 5 NCBs within a quarter. Departments submitting less than 5 NCBs in a quarter will be handled on a case-by-case basis.

LPA Transactions and NCB

Department buyers must carefully review individual LPA User Instructions to determine if the LPA is exempt from competitive bidding.

State agencies must use the NCB Acquisition Method, when only one supplier is known to sell the goods or services needed and offers cannot be obtained through available LPA contracts.

The NCB Acquisition Method must be used for amendments to previously approved LPA transactions when the amendment requires an NCB Justification.  These amendments must be executed using the NCB Acquisition Method and adhere to the NCB Justification and NCB contract approval process.

The NCB Justification and NCB contract approval process is not required if the individual LPA User Instructions state that the contract is exempt from obtaining offers. This exemption typically applies when DGS/PD has competitively bid an LPA, obtained a statewide NCB Justification and NCB contract when creating an LPA, or where the DGS has approved a categorical exemption to competition.

Known Suppliers Outside LPAs

Departments must conduct a competitive solicitation if suppliers are known outside of CMAS contractors or Master Agreement (MA) contracts that can meet the department’s requirements.