Negotiation Under PCC Section 6611(a) - New Acquisitions - 901

DGS and CDT may initiate negotiations if one or more of the following conditions exist:

The business need or purpose of a procurement or contract can be further defined as a result of a negotiation process (Public Contract Code § 6611(a)(1)); In general, this may occur when a business solution common in the commercial marketplace needs to be tailored to fit the unique needs of the state.

Example: Use of temporary and contract labor to meet volatile staffing demands is commonplace in the private sector. However, due to restrictions on use of personal services contracts for civil service functions, the state often is unable to use these services “as is.” The state could negotiate with temporary labor contractors to purchase only the services that conform with California law under Government Code, Section 19130.

The business need or purpose of a procurement or contract is known, but a negotiation process may identify different types of solutions to fulfill the business need or purpose (Public Contract Code § 6611(a)(2)); In general, this condition can exist with emerging technology where fully developed solutions do not yet exist and require negotiations to ensure the solution meets the state’s needs.

Example: The state identifies a need to block unauthorized mobile phone communications at correctional facilities. While emergent frequency management technology exists, no complete solutions have been delivered to the market. Through a negotiation process, the state would be able to identify potential solutions prospective contractors may be willing to offer.

The complexity of the purpose or need suggests a bidder’s costs to prepare and develop a solicitation response are extremely high (Public Contract Code §6611(a)(3)); This condition can exist when the state is acquiring solutions of an extremely large scale and/or scope which requires bidders to perform significant analysis, design, and/or development in order to bid. It can also occur when past attempts to secure bids have resulted in no compliant bids.

Example: Acquisition of any complex system of significant scale and scope. A negotiations process that provided for regular discussion of the state’s needs, refinement of requirements, the creation and evaluation of pilot systems, and bargaining to trade-off costs and benefits could reduce the costs for bidders to submit acceptable bids.

The business need or purpose of a procurement or contract is known, but negotiation is necessary to ensure the department is receiving the best value or the most cost-effective goods, services, information technology, and telecommunications (Public Contract Code § 6611(a)(4)); This condition most commonly exists when bid prices exceed the state’s target price compared to historical costs or established through market research.

Example: The state has conducted a bid for computer equipment, however bidder prices were higher than expected compared to the state’s prior contract. A negotiation process is used to obtain pricing more in line with the estimate.