Ohio Department of Transportation 1

Elements of a Successful Proposal

Office of Transit

Ohio Department of Transportation

June 28, 2007

Ohio Department of Transportation 2

Why Submit a Proposal?

• Maximize Use of Existing Resources

• Expand Revenue Base and Spread Fixed Costs

• Generate Local Match

• Become Viable Player in Local Community

?

Ohio Department of Transportation 3

How Do We Let Agencies Know We Are Interested?

• Networking– Normal interactions with agencies– Speeches to community groups

• Attendance at Pre-Bid Meetings• Participation in Community Groups• Working through Board Members and

Government Officials• Newspaper Articles

Ohio Department of Transportation 4

Self Assessment: Can We Do It?

• Legal Restrictions — Service Area, Type of Service, Funding Program Limitations

• Vehicles — Number, Type, Utilization• Facilities — Size, Capability• Staff — Number, Capability, Flexibility• Type of Service — Is It New or More of the

Same?

?

Ohio Department of Transportation 5

Self Assessment: Do We Want to Do It?

• Agency Mission

• Board Direction

• Management – Interest– Capability

• Local Political Realities

?

Ohio Department of Transportation 6

What are the Keys to Successful Proposing?

• Understanding the Solicitation

• Preparing a Good Response

• Developing a Good Business Plan

• Planning for Start-Up and Operation

Ohio Department of Transportation 7

Understanding the Solicitation

Ohio Department of Transportation 8

Understanding the Solicitation

• Understand the Environment

• Reading the Solicitation

Ohio Department of Transportation 9

Key Transportation Actors

• Transportation Agency– Director– Board

• Local Governments• Ohio Department of Transportation• Federal Transit Administration• Potential Contractors

– Private– Human Service Agencies

Ohio Department of Transportation 10

Labor May Also Be An Important Actor

Be Aware of What You May be “Inheriting”:

– Existing employees– Wages and fringe benefits– Past employees practices

Ohio Department of Transportation 11

Key Laws and Regulations

• Ohio Revised Code

• ODOT Review Schedule

• Federal Transit Administration

Ohio Department of Transportation 12

The Public Process is Slow!

• Everything is a Process

• Publicly-Funded Agencies Cannot Make Snap Decisions– They are not allowed to!

• Conclusion: Follow the Rules!

Ohio Department of Transportation 13

ODOT Review Schedule

Solicitation Task Due DatePrepare RFP/IFB, Solicitation Package, OR Designated Grantee Package

April

Submit Package to ODOT for Review and Concurrence MayAdvertise Solicitation/Designation After ODOT Concurrence May/June*Submit Entire Package, Including Offers Received, Evaluation Methodology, and Award Recommendation to ODOT for Concurrence

June/July

ODOT Notifies Grantee of Concurrence July/AugustGrantee/New Designee Prepares Rural Transit Application July/AugustFor RFPs/IFBs, Grantee Notifies Successful Vendor of Award, Pending Approval of Rural Transit Funding

Aug./Sept.

Ohio Department of Transportation 14

ODOT Review Schedule (Cont’d)

Solicitation Task Due DateGrantee/New Designee Submits Rural Transit Application to ODOT for Review and Approval

September

ODOT Notifies Grantee of Approval Oct./Nov.For RFPs/IFBs, Grantee Makes Final Award to Vendor Nov.*

Ohio Department of Transportation 15

Federal Transit Administration

• Many Required Contract Clauses

• Outlines in FTA Circular 4220.1C

Ohio Department of Transportation 16

Typical Procurement Methods

• Invitation for Bid (IFB)

• Request for Proposals (RFP)

• Multi-Step Strategies

Ohio Department of Transportation 17

Invitation for Bid (IFB)

• Requires Complete and Comprehensive Specifications

• Involves Two or More “Responsive and Responsible” Bidders

• Award Based on Price (Low Bid)

Ohio Department of Transportation 18

IFB Requires High Degree of Agency Certainty

• High Risk for Contractors Since Few Agencies Can Do This Well!

• Contractor Must Be Proactive to Seek Clarification at the Beginning of the Process

Ohio Department of Transportation 19

Request for Proposals (RFP)

• Prefer General Description of Service Specifications

• May Need Oral/Written Discussions With Prospective Contractors

• Award Based on Comparative Evaluation of Price, Quality, Contractual Factors– Primary factor need not be price

Preferable Approach Due to Increased Flexibility and Opportunity for Creative Responses

Ohio Department of Transportation 20

IFB and RFP Steps

Invitation for Bid (IFB)

Invitation for Bids

Bidder Submissions

Bid Evaluation and Award

Request for Proposal (RFP)

Request for

Proposal

Proposer Submissions

Technical Evaluation

Additional Negotiations

Cost Evaluation

Composite Evaluation and Award

Ohio Department of Transportation 21

Multi-Step Strategies

• Pre-Qualify Responsible/Responsive Bidders• Invite/Evaluate Different Technical Approaches• Conduct Discussions to Select Best Technical

Approaches• Award Contract to Lowest and Best Contractor

in Accordance with Sealed Bid Process

Incorporates RFP Flexibility into IFB Process

Ohio Department of Transportation 22

Multi-Step Strategy Steps

Two-Step Invitation for Bid

Bid Evaluation and Award

Request for Qualifications (RFQ)

Request for Qualifications

Biddor Submissions

Qualifications Evaluation and

Selection

Invitation for Technical

Bids

Bidder Submissions

Technical Evaluation

Request for Pricing

Bid

IFB Process or Two-Step IFB

Process

Bid Evaluation and Award

Ohio Department of Transportation 23

Considerations By Procurement Method: IFB, RFP and Multi-Step

Factor IFB RFPMulti-Step

Level of Specification Detail High Medium Low

Evaluation/Award Timeframe Low Medium Med/High

Support of Alternative Approaches N/A Medium Med/High

Evaluation Complexity Low Medium Medium

Ohio Department of Transportation 24

Considerations By Procurement Method: IFB, RFP and Multi-Step

(Cont’d)

Factor IFB RFPMulti-Step

Consideration of Non-Price Factors N/A Med/High Medium

Vendor Discussion Opportunity N/A Med/High Med/High

Potential for Protests Low Medium Medium

Ohio Department of Transportation 25

Typical Solicitation Outline• Cover Page• Overview of Contracting Agency• Statement of Need• Service Specifications• Contractor Qualifications• Contract Mechanics• Agency Protections• Required Clauses• Evaluation Methodology• Format of Submission

Ohio Department of Transportation 26

Service Specifications

• Start-Up Date and Performance Period• Service, Routes, and Operating Hours• Fare Collection and Recordkeeping• Required Vehicle Maintenance• Performance Reporting• Capital Items

Can You Do It and What Will It Cost You?

Ohio Department of Transportation 27

Service, Routes, and Operating Hours Issues

• Make Sure You Know Definitions• Understand the “Service Profile” of

Demand– Time of Day– Day of Week

• Are There Service Guarantees?– Minimums? – Maximums?

Ohio Department of Transportation 28

Vehicle Requirements Should Be Reviewed Carefully!

• Vehicles Provided by Contractor– Do you have the vehicles?– Where and how quickly can you get them?– Can you meet safety and other requirements?

• Vehicles Provided by Public Agency– What are the condition of the vehicles?– When will you take possession?– Will you have to supplement the fleet?

• Contingency Plan– You need one!

Ohio Department of Transportation 29

Contractor Qualifications

• Proposed Personnel• Experience

– The firm as a whole– Proposed personnel

• Total professional experience• Experience with firm

• Financial Capability– Agency wants to make sure you are viable

• Cash Flow — Adequate working capital• Capital — Funding of vehicles and facilities

Ohio Department of Transportation 30

Contract Mechanics

• Contract Length

• Amendment Process

• Reporting Requirements

• Payments

Ohio Department of Transportation 31

Contract Length Options

• Single Year– Does not address high start-up cost factors

• Start-up operations costs• Equipment amortization• Transition costs from prior contractor

– Avoid if equipment acquisition is required or other longer-range opportunities are available

• Multi-Year – Addresses high start-up cost factors– Should address how service changes are handled

Ohio Department of Transportation 32

Multi-Year Contracts Are Most Common

• Often Structured as Minimum Time Frame Plus One-Year Renewals– e.g., Three years plus two one-year renewals

• Maximum Contract Length Limited by Federal, State, and Local Regulations

Ohio Department of Transportation 33

Typical Amendment Issues

• Changes (±) in Required Service – Amount– Vehicles required

• Changes in Commodity Prices– Insurance – Fuel

• New Government Requirements

Ohio Department of Transportation 34

Monthly Contractor Reports: Keep Them Informed!

• Operations– Revenue/total hours and miles, missed trips, schedule

performance

• Passengers and Fare Revenue• Financial Results• Accident and Safety Information• Maintenance Activities

– Preventive maintenance inspections, warranty work, major repairs

• Driver/Mechanic Training Activities• Anticipated Issues for Coming Month

Ohio Department of Transportation 35

Basic Payment Options: Fixed Price

• Price set for performance period

• Contractor assumes risk for cost and service increases

Conclusion: Avoid if Possible

Ohio Department of Transportation 36

Basic Payment Options: Fixed Unit Price

• Most Common• Price tied to output measures

– Service provided — revenue/total hours (miles)– Passengers served– Contractor preference: 1) total 2) revenue

3) passengers

• Contractor assumes risk for cost increases– Also ridership if price based on passengers carried

Conclusion: Reasonable, But Do Your Homework If Based on Passengers

Ohio Department of Transportation 37

Basic Payment Options: Cost Plus Fixed Fee

• Accounts for allowable changes in contractor costs

• Agency assumes risk for cost increases

Conclusion: Good Approach, But Few Agencies Willing to Take These Risks

Ohio Department of Transportation 38

Pass-Throughs Can Reduce Contractor Risk and Cost

• Approach– Agency agrees to pay exact cost for specified items

regardless of increases

• Fuel and Insurance Common Pass-Throughs• Risk: Need to Specify How Costs Can Be

Disallowed• Other Option is to Provide Items Directly

– e.g., fuel at agency fueling island

Conclusion: Discuss with Agency Before and During Solicitation

Ohio Department of Transportation 39

Payment Terms

• Key To Cash Flow

• Key Provisions– Required invoicing format– Invoice approval process– Payment timeline

• Guarantee is desired

Ohio Department of Transportation 40

Agency Protections

• Insurance• Bonding• Key Personnel

– Approval of replacements

• Subcontractors– Approval of replacements

• Agency Provided Equipment and Assets– Required maintenance program– Required maintenance records

Ohio Department of Transportation 41

Objectives of Bond Requirements

• Agency Protection– Assures contractor will enter into contract (bid

bond)– Guarantees service performance will meet

terms of contract (performance bond)

• Credit/Financial Screen

Ohio Department of Transportation 42

Performance Alternatives

• Holdbacks (1-5%)

• Penalties and Incentives

• Post Cash

Ohio Department of Transportation 43

Incentives

• Must be:– Important– Measurable– Reasonable– Under contractor control

Conclusion: Do Not Count Your Chickens Before They Hatch! — Generally Do Not Include in Your Budget

Ohio Department of Transportation 44

Penalties

• Must be:– Important– Measurable– Reasonable– Under contractor control

• Should Be Proportional to “Offense”

Conclusion: Count Your Chickens Before They Hatch! —Include in Your Budget (Things Do Happen Even in the Best Systems)

Ohio Department of Transportation 45

Why So Many Contract Clauses?

• Public Safety

• Good Public Fund Stewardship

• Employee Protections

?

Ohio Department of Transportation 46

Required Contract Clauses(Standing in the Agency’s Shoes)

• FTA Circular 4220.1C

• ODOT Rural Transit Program Manual

The Key Clauses Are Covered Next

Ohio Department of Transportation 47

1. Remedies for Breach of Contract

• Available Remedies to the Grantee if Contractor Violates or Breeches Contract Terms– Administrative– Contractual– Legal Remedies

• Provision for Appropriate Sanctions and Penalties

Ideally, We Should Never Get This Far

Ohio Department of Transportation 48

2. Contract Termination (>$10,000)

• Conditions Under Which the Grantee May Terminate the Contract for:– Default: Contractor fails to comply with terms

of the contract– Convenience: Contractor cannot comply due

to circumstances beyond contractor’s control

Ohio Department of Transportation 49

3. Equal Employment Opportunity (>$10,000)

• Contractor Agrees to Take Positive Action to Insure that Persons Employed or Seeking Employment Are Treated Without Bias Regarding:– Race– Religion– Color – Sex– National origin

• Contractor Required to Conspicuously Post Notices

Ohio Department of Transportation 50

4. Contract Work Hours and Safety Standards Act

• Contractor Must Pay Overtime (1.5 x wage rate) to Laborers and Mechanics for Work Exceeding 8 Hours per Day

• Prohibits Requiring Workers to Work in Unsanitary, Hazardous, or Dangerous Conditions as Defined by Secretary of Labor

• Applies to:– Construction contracts > $2,000– Other contracts > $2,500

Ohio Department of Transportation 51

5. Access to Contractor’s Records

• Provisions Cover Access to the Contractor’s:– Books – Papers– Documents – Records

• Access Granted to:– Grantee– ODOT– FTA– Comptroller General– Authorized agents

• Materials Must Be Maintained for 3 Years

Ohio Department of Transportation 52

6. Disadvantaged Business Enterprise

• Contractor Will Take Affirmative Steps Whenever Possible to Use DBEs as Sources of Supplies, Equipment, Construction, and Services

• Selected Affirmative Steps– Place qualified DBEs on solicitation lists– Assure that DBEs are solicited when they are potential

sources– Divide projects into small tasks suitable for DBEs– Establish procurement schedules that encourage DBE

participation

Make Sure You Know Agency Requirements

Ohio Department of Transportation 53

7. Buy America

• Steel, Cement, and Manufactured Products Used in FTA-Supported Projects Must Be Produced in US.

• FTA Can Make Special Exceptions

Ohio Department of Transportation 54

8. Title VI Civil Rights Act of 1964

• Non-Discrimination– Selection and Retention of Contractors– Procurement of Materials and Leases of Equipment– Employment Practices

• Provide Access to Records• Compliance with Regulations• Requirements Pass Through to

Subcontractors

Ohio Department of Transportation 55

9. Americans with Disabilities Act

• Service Provided by Contractor Must Meet All Requirements for Grantee — (Standing in the Agency’s Shoes)– Complimentary service – Vehicle accessibility– Public information– Telecommunications

Ohio Department of Transportation 56

10. Drug and Alcohol Testing

• Comply with Federal Requirements– 49 CFR Parts 655 and 40– Drug Free Workforce Act 49 CFR Part 29,

Subpart F

Ohio Department of Transportation 57

11. Selected Other Contract Clauses

• Lobbying• No Government Obligation to Third Parties• Program Fraud and False or Fraudulent

Statements and Related Acts• Government-wide Debarment and

Suspension Non-Procurement

Ohio Department of Transportation 58

Evaluation Methodology

• Depends on Procurement Method– IFB — Assessment of “Responsive” and

“Responsible”– RFP — Assessment of Cost and Non-Cost Factors

• Evaluation Objectives– Objective– Quantifiable

Conclusions– Need to write your proposal to cover criteria– Need to state “obvious” facts about yourself

Ohio Department of Transportation 59

Common RFP Evaluation Factors

• Cost• Proposed Technical Approach

– Service Delivery Approach– Maintenance Plan– Transition/Start-Up Plan

• Proposed Personnel• Experience

Ohio Department of Transportation 60

RFP Factors Often Weighted to Aid Contractor Selection

FactorRating (1to 10;

10=best) Points ScoreService Delivery 7 10 7Maintenance 8 10 8Personnel 6 10 6Experience 8 20 16Cost 9 50 45Total 100 82

Scoring of Bob’s Contracting, Inc. by Barry Bonds, Reviewer

Conclusion: Write Proposal in View of Point Emphasis

Ohio Department of Transportation 61

Preparing a Good Response

Ohio Department of Transportation 62

Keys for Writing a Good Proposal

• Demonstrate that You Know:– The services to be provided– The local operating environment

• Know Your Competitive Strengths and Weaknesses– Who are your likely competitors– What sets you apart from them

• Demonstrate that You Will Provide Value

Ohio Department of Transportation 63

Pre-Bid Meetings Can Help You Develop a Responsive Proposal

• Typical Agenda– Agency overview– Project objectives– Key project information– Agency contact for questions– Contractor questions

Ohio Department of Transportation 64

Suggestions for Pre-Bid Meetings

• DO Ask Clarification Questions• DO NOT Ask Questions that Reveal Your

Approach• USE the Meeting to Size Up Your

Competition• DO NOT USE the Meeting to Reveal Your

Proposed Team• USE the Meeting to Establish a Good

Relationship with the Agency

Ohio Department of Transportation 65

Write for Someone Who Does Not Know You

• Describe the Services Provided by Your Company

• Describe Your Experience and Knowledge of the Local Community

• Highlight Your Accomplishments– Toot Your Own Horn!

Ohio Department of Transportation 66

Identify and Write to Members of the Agency Evaluation Team

• Sometimes the Members are Identified in the Solicitation

• If not, Ask Who They Are

Ohio Department of Transportation 67

Follow All of the Rules!

• Order of Presentation• Due Dates• Number of Copies• Size — Pages, Fonts, Tabs, Margins• Signatures/Legal Forms• Attachments

Ohio Department of Transportation 68

Remember the Agency’s Procurement Requirements

• Treat All Prospective Sources Equally

• Maintain An “Arms-Length” Procurement Relationship

Do Not Accidentally Put Your Agency Friends in a Bad Position

Ohio Department of Transportation 69

Recourse: “Partnering” Meet and Discuss

• Objectives– Keep agency informed about

operations– Address issues before they

escalate into big problems– Focus on solutions and

lessons learned

• Recommend Weekly Meetings

Ohio Department of Transportation 70

Award and Start-Up

• Agency Responsibilities

• Contractor Responsibilities

Ohio Department of Transportation 71

Agency Responsibilities

• Agency Should Designate Points of Contact– Contract Manager

• Changes/amendments, recordkeeping, respond to inquiries

– Service Manager• Operations issues, monitor performance, initial invoice review,

initiate contract changes, assist contractor

Ohio Department of Transportation 72

Contractor Responsibilities

• Start-up Plan• Hiring and Training of Personnel• Procurement of Equipment• Communication with Former Contractor(s)• Vehicle Repair

Ohio Department of Transportation 73

Understanding of Your Costs

• Fixed Costs Do Not Vary with the Amount of Service Provided (e.g., Administrative Salaries)

• Variable Costs Change Relative to the Amount of Service Provided (e.g., Drivers’ Wages)

Fixed

Variable

Total

Output (Hours/Miles)

Co

st

Ohio Department of Transportation 74

Example of Expense AssignmentExpense Class Vehicle Hours Vehicle Miles Fixed CostsLaborVehicle Operations $241,237 $28,047 Vehicle Maintenance $31,344 General Administration $67,986 Fringe BenefitsVehicle Operations $35,800 $4,661 Vehicle Maintenance $6,080 General Administration $11,867 ServicesContract Maintenance $46,847 Professional Technical $2,115 Materials and SuppliesVehicle Operations $45,002 Vehicle Maintenance $14,761 General Administration $9,825 Utilities $3,336 Casualty And Liability Premiums: Vehicle PD $10,044 Premiums: Public Liability $34,734 TaxesVehicle Operations $175 Miscellaneous Expenses $921 Depreciation: Local Share $7,260 Depreciation: Federal/ State $65,342 Leases and Rentals $18,045 Totals $277,037 $188,812 $219,580

Ohio Department of Transportation 75

Example of Unit Cost Calculation

Basic of AssignmentExpenses Assigned

Annual Operating Statistics

Unit Cost

Hours $277,037 28,811 $9.62

Miles $188,812 473,512 $0.40

Subtotal ( H + M ) $465,849

Fixed Cost (w /o Fed/State Dep.) $154,238 $465,849 33%

Fixed Cost (Fed/State Dep.) $65,342 $465,849 14%

Fixed Cost (Total) $219,580 $465,849 47%

Annual Cost = 1.47 * [($9.62 * Hours) + ($0.40 * Miles)]

Ohio Department of Transportation 76

Three Estimates of Contract Costs

• Fully Allocated (Highest)– All costs (variable + fixed)

• Reallocated Fixed Costs – Variable costs– Fixed costs (spread over more service)

• Incremental Costs (Lowest)– Variable costs only

Ohio Department of Transportation 77

Sample Problem

• The transit system wishes to start a new service between a small town and the county government center.

• What should you charge for this service?

• Estimated Annual Operating Data for the New Service.

Hours = 6,120 Miles = 153,000

Ohio Department of Transportation 78

Sample Problem: Fully Allocated Cost

Unit Cost

Annual Operating Statistics Total Cost

Hours $9.62 6,120 $58,874

Miles $0.40 153,000 $61,200

Subtotal $120,074

Fixed Cost (w /o Fed/State Dep.) 33% $120,074 $39,624

Fixed Cost (Fed/State Dep.) 14% $120,074 $16,810

Total $176,508

• All Costs Increase with New Service

Ohio Department of Transportation 79

Sample Problem: Incremental Cost

Unit Cost

Annual Operating Statistics Total Cost

Hours $9.62 6,120 $58,874

Miles $0.40 153,000 $61,200

Total $120,074

• Only Variable Costs Increase with New Service

Ohio Department of Transportation 80

Sample Problem: Reallocated Fixed Costs

Basic of AssignmentExisting

Expenses New

Expenses

Total (Existing

+ New) Expenses

Annual Operating Statistics

Unit Cost

Hours $277,037 $58,874 $335,911 34,931 $9.62

Miles $188,812 $61,200 $250,012 626,512 $0.40

Subtotal ( H + M ) $465,849 $120,074 $585,923

Fixed Cost (w /o Fed/State Dep.) $154,238 $585,923 26%

Fixed Cost (Fed/State Dep.) $65,342 $585,923 11%

Fixed Cost (Total) $219,580 $585,923 37%

Annual Cost = 1.37 * [($9.62 * Hours) + ($0.40 * Miles)]

• Only Variable Costs Increase with New Service• Reallocate Fixed Costs Across Existing and

New Service

Ohio Department of Transportation 81

Sample Problem: Reallocated Fixed Cost

• All Costs Increase with New Service

Unit Cost

Annual Operating Statistics Total Cost

Hours $9.62 6,120 $58,874

Miles $0.40 153,000 $61,200

Subtotal $120,074

Fixed Cost (w /o Fed/State Dep.) 26% $120,074 $31,219

Fixed Cost (Fed/State Dep.) 11% $120,074 $13,208

Total $164,501

Ohio Department of Transportation 82

Sample Problem: Summary of Three Approaches

Incremental $120,074

Reallocated Fixed Cost $164,501

Fully Allocated $176,508

Incremental $120,074

Reallocated Fixed Cost $151,293

Fully Allocated $159,698

All Depreciation Included

Only Local Depreciation Included

Total Cost

Ohio Department of Transportation 83

Business Plan – Non-cost Components

• Staffing – Drivers– Part-time– Full-time– Overtime

• Dispatchers• Supervisor Coverage

– Scheduled– On-call

• Management Team

• Support– Local– Corporate

• Financial Manager– Budget– Cash Handling– Fare/Revenue

Collection Procedures– Expenses

• Recordkeeping/Reporting

Ohio Department of Transportation 84

Startup / Transition Plan

• Timeline – Work Backwards From Startup Date• Understand Interrelationships Between Tasks• Be Thorough• Incorporate Contingencies• Commit Necessary Resources

– Staff Hours– Revenue Outlays– Vehicles– Facilities

• Be Prepared to Mobilize Quickly

Ohio Department of Transportation 85

Startup Plan Components

• Staffing– Recruiting– Hiring– Drug Testing– Training

• Vehicles– Purchase/Lease– Inspections– Preventative Maintenance– Repairs to Minimum Standard

Ohio Department of Transportation 86

Startup Plan Components (Cont’d)

• Administration– Recordkeeping– Accounting/Bookkeeping Procedures– Personnel Policies/Procedures– Telephone Lines / Internet

• Procurement– Inventory– Maintenance Consumables– Equipment– Supplies– Brochures/Ride Guides

Ohio Department of Transportation 87

Startup Plan Components (Cont’d)

• Operations– Service Design and Characteristics– Driver Manifests/Schedules– Scheduling/Dispatching Procedures In Place– Obtain Necessary Information From Former Contractor –

Check for Accuracy/Efficiency