Transcript Drafting the Request for Tender Offers

Drafting the Request for
Tender Offers: Important
Terms and Conditions –
Charles Rumbaugh
Guest Lecturer
Naval Postgraduate School
IDARM
International Defense Acquisition Resource
Management Program
Goal(s) of the Request for Offers
• Meet end user requirements
• Specifies proposed conditions of the sale
• Requests that prospective contractors submit an
offer
• Other goals could include…
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Maximize competition
Seek (alternative) solutions to a mission requirement
Quick response
Minimize price to be paid
May be multiple/
Other?
conflicting purposes
Long Term Goal(s)
• May be negatively impacted in achieving
the immediate goal. For example:
– Limiting competition can have a serious
consequence related to life cycle/ownership
costs
– Using commercial/“off-the-shelf” items
– Others?
Maximize Competition
• Clearly, accurately, and completely describe
requirement(s)
– Exclude unnecessary restrictive specifications
– SOW
• Provisions that are generally acceptable to the
industry
– Role of Market Research
– Benchmarking
• Reasonable time for submission of tender offers
• Clear evaluation methodology that will result in
fair evaluation and selection of the best offer.
Quick Response
• Adequate Market Knowledge of Potential
Sources
• Existing Contractual “vehicle?”
– Past Performance a factor?
• Predefined Bidding Limitations
– Specification/SOW issues
• Legal Right to Exclude Sources
• Problems with this Goal
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Pricing issues
Lack of competition
May affect quality
Influences contract type
Other approaches available? “Alpha Contracting”
And others…..
“Must Haves”
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Price
Period for Validity of Offer
Responsive Offer from Responsible Offeror
Compliant with Request except for…
Certifications
Representations/Warranties—What are they?
Identification of Authorized Negotiators
Others?
“Nice to Haves”
• Alternative Offers
• Negotiable Items
– You may be willing to eliminate these items
– Relationship to Price
• Options
• “Nice to have” and “must have” provisions
can impact price
Functions of the Contract
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Record of “the” agreement
Document which frames and facilitates
contract administration activities
Risk allocation among the parties
Defines Payment Terms
Performance Incentive to Contractor
Request for Tender Forms the
Foundation For the contract
First Steps—RFT
• Identify the approved
requirement
• Ensure specification
and SOW is clear
• What is the estimate?
• Ensure that funds
are/will be available
– The contract will
create a legal
obligation to pay
Funding over the near and long term
Next…Organization of Information
• Uniform assembly of information that
permit interested suppliers ease of access
to information necessary to submit an
acceptable tender offer.
– Web/electronic posting
• Systemic approach is preferred
Pricing Information
• What information is necessary to
determine a fair price?
• What information may be available to
determine a fair price?
– Market Research
– Reverse Engineering
• To what extent does the request for tender
provide you the flexibility to obtain the
necessary pricing information?
Next Steps
• Selection of the
contract type
– Consideration of
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Risk
Payment mechanism
Maturity of requirement
Clarity of requirement
Urgency
Cost
Typ
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Hour
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Fixed
price
Unprice
d
Next Steps
• How to conduct the procurement….
Competitive.
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Restricted..
Next Steps
• How to Identify and Solicit Potential
Sources
– Trade Associations
Market Research
Advertisements
www.thomasregister.com
Embassies
Other Customers
Next Steps
• The Team….who is on the team
Who does not
belong on
the team?
Dealing with Interested Parties
What are the ground rules for communication?
Terms & Conditions
• Tender/proposal submission requirements
• Provisions that must be included in the
subsequent contract
• How capabilities will be evaluated
Changes that are required
after release impact schedule/price
Provisions…….
Ethics
Inspection
Insurance
Data
Disputes
Quality
Options
Security
Delivery
Notifications
Record
Keeping
Payments
Warranty
Modifications
Terminations
Provisions…….
• Inspection
• Acceptance Criteria
• Intellectual Property
Rights
• Software
• Quality Terms/Processes
• Payment Provisions
• Security
• WarrantiesExpressed/Implied
Evergreen
• Changes/Modifications
• Delivery Terms
INCOTERMS
Bill of Ladings
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Indemnification
Insurance
Limitation of Liability
Terminations—
Default/Convenience
Delays/Force Majeure
Liquidated Damages
• Dispute Resolution
Arbitration
New York Convention on
Enforcement of
Awards
More Provisions…….
• Recordkeeping and
• Import/Export law—
Reports
Licenses
• Notifications
ITAR
• Countertrade and Offset • Applicable Law
agreements
Foreign Corrupt Practices
Act
• In-Country sources of
Ethics/Bribery
supply
UN Convention on Contracts for
• Key Personnel
the International Sale of
• Language
Goods (CISG)/Treaties
• Taxes
Uniform Commercial Code
(UCC)
• Subcontractors
And Even More Provisions…….
• Additional Terms
Assignment
Environmental
Nondisclosure/Publicity
Severability
Integration clause
Other…
RFT Summary/Best Practices
• Conduct Market Research/Benchmark
• State with clarity, accuracy, & completeness the
desired goods/services
• Identify Risks & Select Right Contract/Pricing
Approach
• Develop Quality Request for Tenders
• Plan Selection and Negotiation Strategy
• Use (appropriate) consultants
• Create Contract Provisions “Favorable” to Buyer!