ACHIEVING BEST VALUE USING LPAs - 1603

Seeking Multiple Offers

Multiple offers must be sought whenever multiple suppliers are known to exist unless otherwise directed by individual contract user instructions, policies and/or statutes or identified as an “exempt” contract. “Multiple offers” is defined to be a minimum of three (3) offers, including one CA certified SB and/or DVBE (if available).

See individual LPA topics within this section for additional instructions.

Choose your Words Carefully

Avoid using words:

• That imply competitive bids when using LPA categories such as MA and CMAS
• “Bid”, “quote”, “solicitation” and/or “evaluation” when conducting a supplier comparison or requesting offers.  Clarify that there will be a comparison of offers to determine best value.

Do not include language regarding SB preference, DVBE incentive, protest language, intents to award, evaluation criteria or advertising requirements when procuring through the LPA program.  When obtaining offers using a written document, the document is referred to as a Request for Offer (RFO).

Since RFOs are not considered competitive solicitations, departments must not use the two-envelope evaluation process.

Best Value

Most LPAs require a supplier be selected based upon a “value effective” is high score and not the same as best value concept or as commonly referred to within the LPA processes as “best value”, when there are multiple providers of products and services.  “Best value” relates to requirements and supplier selection criterion or other factors for a particular transaction that are established to ensure that business needs and goals are effectively met and that the State obtains the best value.  For the purposes of this section, best value will refer to consideration of factors deemed a priority to the department.

Buyers must know what is important to the program for which the procurement is being made, document those needs and requirements, and then canvas suppliers, either using a pre-qualified supplier group in an MA or searching CMAS contractors who possess the products or skills.  Canvassing may take the form of a written RFO outlining the requirements.  The best value criteria must be included in the procurement file.

LPAs that have been identified as “exempt” from obtaining multiple offers are not required to document best value, unless otherwise directed by the individual user instructions.

Possible Criteria

Best value can be determined using any one or all of the following criteria as applicable to the effort:

• The price of the product or service
• The operational cost that the State would incur if the offer is accepted
• The quality of the product or service, or its technical competency
• The reliability of delivery and implementation schedules
• SB/DVBE participation as prime or subcontractor (advertising and DVBE forms not required for LPAs) to meet department goals
• Environmentally Preferable Purchasing (EPP) criteria
• The maximum facilitation of data exchange and system integration
• The warranties, guarantees, return policy and take-back for reuse or recycling 
• The supplier financial stability
• The consistency of the proposed solution with the State’s planning documents and announced strategic program direction
• The quality and effectiveness of business solution and approach
• The industry and program experience
• The prior record of supplier performance
• The supplier expertise with engagements of similar scope and complexity
• The extent and quality of the proposed participation and acceptance by all user groups
• The proven development and methodologies and tools
• The innovative use of current technologies and quality results

Regardless of other criteria being used to accept an offer, price must always be used as best value criteria.

Supplier Contract Award using Best Value

To determine supplier selection using best value, the following minimum steps are required.  Departments shall:

• Define business requirements (for example, in a Statement of Work for services) for inclusion in the RFO
• Obtain a copy of the LPA contract from each contractor contacted
• Review the contracts in context with the department’s requirements and contractor offers
• Compare contracts and offers with those from other contractors
• Select the offer with documented “best value” meeting requirements

Include the supplier selection rationale and the related documentation that supports the selection in the procurement file.

Conduct a Supplier Comparison

Unless otherwise directed by the individual LPA user instructions or when using an exempt contract, multiple offers are required.  Contact a minimum of three (3) suppliers who can provide the requested goods and/or services.

This supplier comparison can be in the form of a verbal or written RFO, identifying the department’s needs and requesting contractors to offer their best price and/or offer to meet requirements.  An RFO process may be conducted by phone, fax, email, or by other means such as a supplier picking up the RFO in person.  Buyers shall refer to applicable user instructions to confirm any special requirements regarding the supplier comparison format.

Departments must document in the procurement file all LPA contractors that were contacted, provide a recap of their offers, and record how the selection was made, including criteria for determining “best value”.

Click here for RFO Templates.

Contacting more than 3 Suppliers

Departments that contact more than 3 suppliers and obtain more than 3 offers shall document their files with all responses, determine best value, and then proceed with the purchase document execution.

Fewer than 3 Offers

Unless otherwise directed by either the LPA user instructions or it has been determined that the LPA being used is exempt from obtaining 3 offers, the procurement file must be documented in sufficient detail to support the supplier selection.

If a Department Contacts 3 Sources and Receives	Then the Department shall Document the Procurement File with the Reasons Why
1-offer	The other two (2) suppliers did not respond.
2-offers	The third supplier did not respond.

Only One Source Known

The LPA user instructions will determine the number of offers that have to be obtained.  If only one source is known within an LPA type and category (CMAS, MA, SLP, etc.), and thus multiple offers cannot be obtained:

• Conduct a competitive solicitation, if suppliers are known to exist outside of the LPA programs or
• Execute the response as an NCB contract if no other sources are known outside of the LPA program being used.  See the section for NCB processing requirements or
• Execute the response as a transaction that is exempt from obtaining multiple offers by either statute or policy and document the procurement file in sufficient detail to support the basis of the exemption. (Examples: authorized dealer letter, proof of copyrighted material, officially licensed good or patented product)