November 5, Breakout Session 2: Procurements and Contract Negotiations...a Stakeholder Perspective
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1 November 5, 2018 Breakout Session 2: Procurements and Contract Negotiations...a Stakeholder Perspective
2 Session Description Join us for a lively discussion on the government procurement process from inception of the Request for Proposal (RFP), the creation, review and approvals of the RFP, negotiations of the contract and the reviews and approvals of the contract. Our panel, consisting of Government and Industry members, will discuss how best to prepare for and address topics ranging from, but not limited to, the creation, review and approval process, timing for release of the procurement, the requirements of the Terms and Conditions, and exceptions. The panel will seek to share real-life experiences and lessons learned with the objective of streamlining the procurement process, and overcoming challenges and obstacles when implementing new contracts.
3 Panelists Penny Burke, Management Analyst, USDA FNS Kathy Vaughan, TNWIC Project Manager, Tennessee Department of Health Andre Gamrasni, Contracts, Conduent State & Local Solutions
4 Agenda FNS Perspective - Penny Burke State Perspective Kathy Vaughan Processor Perspective Andre Gamrasni
5 FNS Perspective - Penny Burke
6 A FABLE: EBT PROCUREMENT Are you an ant or a grasshopper?
7 The Tale of the Ant and the Grasshopper 7
8 Starting the Process The Ant 3 years in Advance SNAP EBT Tools Kick-Off Meetings
9 The Request for Proposal The Ant Uniformity Standard Areas Keep Unique Items Separate Realistic Service Level Agreements Is 100% realistic? Conversion/Implementation Range Add Options to the RFP i.e.: Mobile Applications If applicable, language to add other card programs
10 The Request for Proposal (cont d) Required Federal Clauses Do not have restrictive minimum requirements Evaluate experience, company attributes, etc. in the scoring Evaluation weighting Cost, technical, past performance/experience, etc. Have a good balance of weighting for factors FNS recommends 20-40% for cost
11 Pro Ant Tips: Request for Proposal Do not use or dust off your old RFP and call it good Do not re-make the wheel - update accordingly Include Online Shopping Include Disaster Systems Ensure time for vendor questions
12 FNS Timing is Everything 60 Days to Review Perfect Ants still receive comments build in adequate time for FNS review Recommend 90 days for solicitation for the RFP
13 Contract The Ant Shorter Contract Documents Terms and Conditions and Mandatory Requirements Service Level Agreement Liabilities Hold backs versus Penalties
14 Pro Ant Tips: Contract In the Contract Contract Amendments Liquidated Damages Outage Communication Plan With the Vendor Communicate clearly Escalation process Involve technical folks Timely follow-ups on actions
15 FNS Timing is Everything 60 Days to Review Perfect Ants still receive comments build in adequate time for FNS review
16 The Grasshopper Doesn t heed the warning of getting started early Timelines are crunched Federal funds topic of concern Contract end date and conversion are not aligned
17 State Perspective Kathy Vaughan
18 Joint SNAP and WIC Solicitations Advantages & Disadvantages & Lessons Learned From the WIC vantage point
19 L = Lead P = Participate M = Monitor E = Evaluate T&I MIS Transfer and Implementation Contractor QA Quality Assurance Contractor PMSC Project Management Services Contractor EBT Electronic Benefits Transfer Processor Phase T & I QA PMSC EBT STATE Project Initiation, Planning & Management P E L P P (Risk Mgmt Plan) System Design L E M -- P System Transfer, Modification & Testing L E M -- P UAT P E & L (Scripts) L P P Pilot Test L E M L P Data Conversion Rollout L E M L P Operations and Maintenance & Initial Warranty L -- P L P Project Closure & Transition P E L P P Ext. Warranty & Operations Period options L P
20 General comments on RFPs/Solicitation Timeframes and cautions Q and A - allow time to answer and compare answers
21 Bring in Partners Early Procurement Staff responsible for the whole of the solicitation FNS approvers of the solicitation Program staff Business Unit rules IT staff critical for interfacing Treasury staff Hold the cards for paying the ewic Processor PMSC for new projects
22 Communications Method Frequent
23 Processor Perspective Andre Gamrasni
24 Focus Areas for Today s Presentation 1. Structuring Effective Service Level Agreements (SLAs) 2. A Balanced Approach to: Intellectual Property Rights Liability Issues A Vendor s perspective of what constitutes an appropriate allocation of risk
25 Developing Effective Service Level Agreements (SLAs) Whenever possible, the SLAs should align with FNS standards and guidelines and Quest Operating Rules Establish clear performance metrics othe service level requirements should be properly defined and measurable oif possible, specify the calculation methodology used to determine compliance with the SLA odefine key terms (such as Availability or Uptime ) Each performance metric should specify a Measurement Interval (preferably monthly)
26 Developing Effective Service Level Agreements (SLAs) Financial offsets should be reasonable and proportionate with the service deterioration caused (not punitive) Define a monthly at risk amount for financial offsets Consider an earn-back mechanism to motivate good behavior and performance Clarify any excused event circumstances, where penalties are not applicable (e.g. State or third party failures)
27 A Balanced Approach to Intellectual Property Rights - Overview 1. Mandatory Federal Software Ownership Clause - For specified human services programs, the provisions of the CFR govern software ownership rights for automated data processing systems that states procure using Federal Financial Participation (FFP). 45 CFR State Ownership Requirement - Under the CFR, the state s contract with the vendor must grant the state ownership of all original software developed under the scope of the EBT contract (i.e. paid for with FFP). 3. Broad Federal License - In addition, the Federal funding agency, in this case FNS, must be granted a broad license to use, and more importantly authorize others to use, the developed software on a royalty-free basis. (This license allows the Federal funding agency to leverage its investment of FFP by promoting the transfer of the technology to other states.)
28 A Balanced Approach to Intellectual Property Rights Key Issues 1. Vendor s Pre-Existing IP - In the EBT arena, the vendor s core technology platform has often been developed outside of any individual state contract, and represents the vendor s pre-existing intellectual property. As such, this software would be beyond the scope of the CFR software ownership provisions. 2. Licensed vs. Internal Use Software - State EBT contracts often specify the outputs required from the vendor platform, but do not require the state s actual use of the system (except in some cases for ongoing project monitoring). Here, the system largely serves as the vendor s own internal use software for delivering the contracted services. Thus the state would not require extensive license rights.
29 A Balanced Approach to Intellectual Property Rights Recommended Practices 1. The language of the EBT service agreement should clearly outline the distinction between 1) works created specifically for the benefit of the state client and 2) preexisting vendor IP. 2. The state customer should acquire title to all original or created works developed under the contract (typically includes custom reports, system interfaces, etc. developed for the specific project). 3. Any license rights the state may require for use of the vendor s pre-existing software should expire upon the termination or expiration of the EBT service agreement.
30 A Balanced Approach to Liability Issues Indemnification: o Specify the types of liability where the duty to indemnify may arises (e.g., bodily injury, death, damage to real or personal property, infringement) o Require the vendor s indemnification liability to be fault-based i.e., the injury must have been cause by vendor s negligence or willful misconduct o If Contractor s negligence combines with the Customer s negligence or willful misconduct to cause the injury, the indemnity provision should allow for equitable apportionment of liability between the parties (determined by a court). Limitation of Liability: o Contractor s total aggregate liability for direct damages (including indemnification liability) should be capped (unless prohibited by State law) o Indirect, consequential, incidental, punitive or special damages should be excluded o Any claim brought against either party should be timely (preferably within one or two years after the claim or cause of action arises) o Each party should have a duty to mitigate damages for which the other party is responsible
31 Questions and Answers
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