drafting the request for tender offers: important terms and conditions – charles rumbaugh guest...
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Drafting the Request for Tender Offers: Important Terms and Conditions –
Charles RumbaughGuest Lecturer
Naval Postgraduate School
IDARM
International Defense Acquisition Resource Management Program
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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…
– Maximize competition– Seek (alternative) solutions to a mission requirement– Quick response– Minimize price to be paid– Other?
May be multiple/conflicting purposes
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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?
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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.
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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
– Pricing issues– Lack of competition – May affect quality– Influences contract type– Other approaches available? “Alpha Contracting”– And others…..
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“Must Haves”
• 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?
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“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
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Functions of the Contract
• 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
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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
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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
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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?
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Next Steps
• Selection of the contract type– Consideration of
• Risk• Payment mechanism• Maturity of requirement• Clarity of requirement• Urgency
Cost Typ
e
Fixedprice
Hours
Unpriced
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Next Steps
• How to conduct the procurement….Competitive.
.Restricted..
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Next Steps
• How to Identify and Solicit Potential Sources– Trade Associations
Market Research
Advertisements
Other Customers
www.thomasregister.comEmbassies
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Next Steps
• The Team….who is on the team
Who does not belong on the team?
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Dealing with Interested Parties
What are the ground rules for communication?
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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
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Provisions…….Provisions…….InspectionInspection
DataData
QualityQuality
SecuritySecurity
DeliveryDelivery
WarrantyWarranty
ModificationsModifications
TerminationsTerminations
EthicsEthics
InsuranceInsurance
DisputesDisputes
NotificationsNotifications
Record Keeping
Record Keeping
PaymentsPayments
OptionsOptions
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Provisions…….• Inspection• Acceptance Criteria• Intellectual Property
Rights• Software• Quality Terms/Processes• Payment Provisions• Security• Warranties-Expressed/
ImpliedEvergreen
• Changes/Modifications
• Delivery TermsINCOTERMSBill of Ladings
• Indemnification• Insurance• Limitation of Liability• Terminations—Default/
Convenience Delays/Force MajeureLiquidated Damages
• Dispute ResolutionArbitrationNew York Convention
on Enforcement of Awards
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More Provisions…….
• Recordkeeping and Reports
• Notifications• Countertrade and Offset
agreements• In-Country sources of
supply• Key Personnel• Language• Taxes• Subcontractors
• Import/Export law—LicensesITAR
• Applicable LawForeign Corrupt Practices
ActEthics/BriberyUN Convention on Contracts
for the International Sale
of Goods (CISG)/Treaties
Uniform Commercial Code (UCC)
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And Even More Provisions…….
• Additional Terms
Assignment
Environmental
Nondisclosure/Publicity
Severability
Integration clause
Other…
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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!