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
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
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
– Pricing issues– Lack of competition – May affect quality– Influences contract type– Other approaches available? “Alpha Contracting”– And others…..
“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?
“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
• 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
• Risk• Payment mechanism• Maturity of requirement• Clarity of requirement• Urgency
Cost Typ
e
Fixedprice
Hours
Unpriced
Next Steps
• How to conduct the procurement….Competitive.
.Restricted..
Next Steps
• How to Identify and Solicit Potential Sources– Trade Associations
Market Research
Advertisements
Other Customers
www.thomasregister.comEmbassies
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…….Provisions…….InspectionInspection
DataData
QualityQuality
SecuritySecurity
DeliveryDelivery
WarrantyWarranty
ModificationsModifications
TerminationsTerminations
EthicsEthics
InsuranceInsurance
DisputesDisputes
NotificationsNotifications
Record Keeping
Record Keeping
PaymentsPayments
OptionsOptions
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
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)
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!
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