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Testimony on the Timeliness of Contract Transmittals for Review by the Council - June 13, 2013

Thursday, June 13, 2013

Testimony of Testimony of James D. Station

Chairman Phil Mendelson
Councilmember Kenyan McDuffie
Committee of the Whole
Committee on Government Operations

June 13, 2013
John A. Wilson Building
Room 500
1350 Pennsylvania Avenue, NW
Washington, DC 20004

Good morning, Chairman Mendelson, Councilmember McDuffie and members of the Committee of the Whole and the Committee on Government Operations. I am James D. Staton, Jr., Director of the Office of Contracting and Procurement and Chief Procurement Officer for the District of Columbia. Today, I will provide testimony about the procurement process and seeking retroactive approval from Council. I am pleased to be joined by my General Counsel, Nancy Hapeman , Sheila Mobley, Assistant Director for Procurement, and Sanya Cade, Chief of Staff. 

Procurement Process: RFP, IFB, Human Care Agreement

The procurement process begins when the Contracting Officer consults with the agency program staff to determine the procurement method for acquiring goods or services, which best meets the needs of the District.  An Invitation for Bids (IFB) is used when the District conducts a procurement by competitive sealed bidding in accordance with DC Code Sec. 2-354.02 and 27 DCMR Chapter 15.  OCP uses an IFB when detailed specifications can be prepared and an award can be made based solely on lowest price.  A Request for Proposals (RFP) is used when the District conducts a procurement by competitive sealed proposals in accordance with DC Code Sec. 2-354.03 and 27 DCMR Chapter 16.  OCP uses an RFP when specifications cannot be prepared to permit an award solely on the basis of lowest price, and when evaluation factors such as the technical proposal, experience of the offeror, staff qualifications, and price are to be taken into account.  An RFP is used generally for the more complex acquisitions over $100,000.

It is important to note that the RFP method of procurement is totally different from an IFB. When the IFB method of procurement is used, the bidder cannot change the bid once submitted and the District cannot conduct negotiations with a bidder. That means that if the bid fails to comply with the terms of the IFB, the District must reject the bid as nonresponsive. There are no negotiations with bidders and the public has a right to review the contents of all bids. 

Another procurement method is the use of a human care agreement. A human care agreement is a written agreement for the procurement of education, special education, health, human or social services to be provided directly to individuals who have disabilities or are disadvantaged, displaced, elderly, indigent, mentally ill, physically ill, unemployed, or minors in the custody of the District. Human Care Agreements are usually used for services that the agency purchases as the need arises, but the quantity, rate of utilization, delivery areas, or specific beneficiaries of the service cannot be accurately estimated at the outset of the procurement process. To initiate a human care agreement, a contracting officer issues a request for qualifications to potential providers of the needed service. In response, providers submit a statement of qualifications which provides information about the provider’s firm and staff experience and qualifications.  For those providers who are found qualified, the contracting officer issues a human care agreement which sets forth the rates and the type of services to be provided. However, the human care agreement does not become a binding contract between the District and the vendor until the District issues to the vendor task orders for the services set forth. 

If the contract is valued over one million dollars or the base term is more than one year, the Contracting Officer obtains approval from the Chief Procurement Officer, submits the contract package for legal sufficiency review, and then submits the proposed award to the Council for approval. The contract is not officially awarded until the contract is approved by Council and the Contracting Officer signs the contract.

Retroactive vs. Unauthorized Commitment (Ratification)

It is standard procedure for the Contracting Officer to seek Council approval prior to the award of any contract or exercise of an option year over one million dollars. The contracting staff at OCP make every effort to avoid seeking retroactive approval for contracts whenever possible; however, in certain situations it is necessary for the contracting officer to award the contract and seek retroactive Council approval due to an unforeseen emergency or to avoid an interruption of services critical to District residents or government operations. Retroactive contracts are the result of D.C. Official Code 2-352.02, requiring a multiyear contract or a contract in excess of one million dollars to receive Council approval prior to award. The circumstances that have triggered the need for retroactive approval include: 

  • When a partial exercise of an option year exceeds one million dollars;
  • Changes or modifications that when added to the base value of the contract take the total value of the contract over $1 million during a 12-month period;
  • Changes or modifications that cumulatively total more than $1 million during a 12-month period;
  • Cumulative task orders that exceed $1 million during a 12-month period for a human care agreement;
  • Failure to obtain Council approval before awarding a contract or exercising an option that exceeds $1 million during a 12-month period.

It is important to note the difference between retroactive approval and an unauthorized commitment, commonly referred to as a ratification. Section 901 of the Procurement Practices Reform Act of 2010, prohibits District government employees from entering into oral agreements with vendors to provide goods or services received without a valid written contract.  The OCP contracts that are the subject of today’s roundtable are all contracts requiring retroactive approval and do not represent ratifications.

Action Plan

In examining the circumstances that have triggered our most recent group of contracts requiring retroactive approval, we have identified several consistent issues that we are working to address: staff turnover, increased workloads, and lack of proper planning.   With the additional staff and resources allocated to OCP in the fiscal year 2014 budget for procurement reform, we expect a visible difference in the way we do business. Even before the procurement reform effort officially begins, I am working with my team to adjust our approach to our work to meet the needs of our clients and improve our outcomes by:

  • Contract Monitoring – In our new Contract Administration training rolled out last year, we emphasize the need for Contract Administrators to not only monitor the performance of the vendor, but also the expenditures associated with the contract.  The contract administrator must notify the contracting officer in a timely manner, when it is anticipated that the expenditures will exceed the current contract amount.
  • Acquisition Planning – In accordance with the PPRA, we are required to work with our customer agencies to develop acquisition plans for the coming fiscal year. These plans alert us to the agency’s planned procurements and help us to plan our workload accordingly.
  • Lessons Learned – The management team is working with the staff to learn from past experience. We are able to develop better milestone plans and revise contract provisions based on past experience with our customer agencies.

I believe that these changes to our approach will only further the anticipated success of the procurement reform initiative. The team at OCP is determined to improve accountability, collaboration and efficiency in our work with our customer agencies. 

Conclusion

The role of OCP is bigger than to just negotiate contracts and procure goods and services on behalf of the District agencies we serve. The staff at OCP is entrusted with the task of being stewards of tax payer dollars and ensuring that we get the best value for the District’s dollars. Our ultimate responsibility is to ensure that the District’s residents – particularly those in need -- receive the high quality, goods and services they need and deserve without interruption. Further, we have a responsibility to pay vendors in a timely manner for goods and services provided. It is this standard of business that encourages vendors to compete for new business opportunities and continue to do business with the District year after year. In conclusion, thank you for the opportunity to testify and I am happy to answer any questions you may have.