Procurement

Wireless
Sectors	Wireless
Contact	David Witkowski
Topics	Case Studies Case Study Summary Findings & Discussion Considerations for Deploying Municipal IoT Funding Models History of Public WiFi Impacts to Municipal Governments of IoT Networks Internet of Things Introduction to Public WI-FI Use Cases Legal Issues Marketing & Outreach Practical Guide: Deploying an IoT Network Practical Guide: IoT Cybersecurity & Privacy Procurement Project Management Technology Strategy The Current State of Municipal IoT Deployments Wireless Blueprint

Authors

The following sections provide a blueprint for the procurement process for Public Wi-Fi networks.

It is broken into four main areas:

1. Researching the industry
2. Creating an advisory board
3. Procurement approach
4. Contract (pricing, vendor evaluation, and contract execution)

While much of what is covered applies to most standard government agency technology procurements, this can be viewed as a best practices model. It will also specifically address a proposed Public Wi-Fi system from both a “Design-Build” model and a Public Private Partnership (PPP) model. The intention is for readers to apply pieces and/or the entirety of this approach for Public Wi-Fi projects of their own.

Researching the Industry

Researching industry is an important part of any procurement. Although it sounds simplistic, the most effective method is principally done via Google searches. The goals of this research are to:

• Use the internet to obtain accelerated learning of the industry (i.e., become an “expert” in a short amount of time).
• Obtain an understanding of industry terminology.
• Understand the current state of technology and the technology roadmap.
• Understand the principle vendors and their capabilities.
  • Conduct a market survey.
  • Determine the practices of firms engaged in producing, distributing and supporting the required products and services, such as type of contract, terms for warranties, buyer financing, maintenance, packaging and marking.
• Know where recent deployments of the technology have been implemented.
  • Read case studies of recent deployments. Understand what went well, and what were the issues in deployment?
• Know the industry conferences and details, such as:
  • Who are the speakers?
  • Who are the vendors?
  • What topics are discussed – these will provide insight into current industry trends.
• Know and read industry trade journals.
• Note the standards bodies relevant to the technology.
  • • Note the current standards and future standards work.
    • Review available standards material.
  • Review similar procurements issued by other entities
    • Other entities in the U.S. and the world will likely have issued procurements to achieve the same or a similar goal. Review the procurement documentation, noting what questions could be used in your procurement.
    • Understand the procurement model used by other entities, for example, whether Design-Build, PPP, or another model.

Creating an Advisory Board

An advisory board is a group of people that will advise and provide input. Researching the industry (as discussed in the previous area) should reveal at least 1-2 key industry participants. The industry participants should not be from potential vendors, but should be independent and could be from:

• Universities.
• Consulting/Analyst companies.
• Non-profit organizations.
• Trade journals.

Other potential advisory board members include:

• A procurement expert from your entity.
• A person from a similar entity that has implemented a similar procurement.
• A person representing the user base.
• A person with deep knowledge of the technology (if not already covered by a person above).

The role of the advisory board is to advise, provide input based on the person’s experience, and review procurement material produced. It is recommended to meet with the advisory board at least once a month and to meet one-one with people as needed as questions arise. It is important to note that one should not expect the advisory board members to produce material. Their purpose is to provide guidance and assistance. Things to consider include determining if the advisory board members need to sign a confidentiality statement (i.e., the members will be prohibited from discussing any of the work with potential vendors, and the board members must not have a conflicts of interest).

Procurement Approach

The agency should agree early in the process on the method of procurement. This will depend on the goals of the procurement, and what information is needed to execute the contract. An agency should understand what type of contract will result from the project (i.e., the desired outcomes) as this will affect the type of procurement method and process that is used.

There are two common approaches suitable for Public Wi-Fi that will be described below: Design-Build and Public Private Partnership (PPP) models. (Although PPP models can vary in many different ways, this section will look at them generally as one where a private partner provides something of value to the agency beyond basic design and installation services.)

• Design-Build Model. A Design-Build project typically has one or more vendors responsible for designing, building, and commissioning with the public entity responsible for operations and maintenance after acceptance.
• Public, Private Partnership (PPP) Model. A PPP involves a situation where the private partner takes on additional responsibilities, such as operating and maintaining the network over a long period of time or providing assets to the agency. A description of potential PPP models is described in the Finance, Legal, and Marketing chapter.

There are many standard options available for procurement. These vehicles may vary from agency to agency, but the overall purpose and details are largely similar and easily portable. These options for the procurement include:

• Request for Information (RFI)
  • A request for information from industry participants. Does not request pricing, and may or may not result in a follow-on procurement
  • Provides an opportunity for the agency to have industry response to specific questions
  • An RFI is especially relevant when considering a PPP project, and there is uncertainty as to the type of PPP project to move forward with. The RFI allows an entity to receive vendor and industry input regarding PPP models and recommendations from vendors/industry regarding their preferred PPP model. An RFI can validate if the preferred PPP model is acceptable to vendors.
• Request for Qualification (RFQ)
  • A request to qualify vendors, for a subsequent price phase.
  • In the subsequent price phase, only the vendors qualified in this phase are permitted to respond.
• Request for Proposal (RFP)
  • Request for Proposal typically includes a request for both technical information and pricing information
  • Technical information divided into mandatory and desirable requirements
    • Mandatory requirements are ‘must have’ requirements and if the Vendor cannot meet a mandatory requirement they are disqualified
      • All mandatory requirements must be met by the Vendor to not be disqualified
    • Desirable requirements are ‘desired’ and points are allocated to each desirable requirement
      • A Vendor is required to have a specified minimum number of points to not be disqualified
    • A vendor meeting all mandatory requirements and having the minimum number of points for desirable requirements can have their pricing evaluated
  • A possible approach to determine Vendor price points is as follows: Vendor price points determined with the lowest priced vendor receiving all available price points. The other vendors will receive a proportionate share of the price points.
    • Request that vendors not include any pricing information in response to any desirable requirements
    • The vendor pricing response should be separate from the desirable requirement response
  • The winning vendor is the vendor that has met all mandatory requirements and has the maximum number of points (technical + price)
• Request for Pricing/Invitation for Bid (IFB)
  • With this procurement approach, there is no technical evaluation. The awarded vendor is selected based on price only. The vendor with the lowest price is awarded.

These approaches represent standard procurement vehicles. The next section will go into greater detail on PPP and Design-Build project projects and discuss considerations for each type.

PPP Projects

• Can be long term, for example 20 years.
• Negotiations and implementation can be complex.
• Often allows the public entity to avoid or minimize up-front investment and/or maintenance costs.
• Are subject to key performance indicators.
• Thus payments to the private partner from the public entity are dependent on the private partner meeting defined performance thresholds.
• If vendor is to operate and/or maintain the network, requirements in the procurement documentation will need to confirm Vendor ability.
• Procurement documents should specify the financing required. The procurement vehicle should help solicit from vendors financing options available. Private financing should be compared with the tax-exempt financing available directly to the public entity.
• Private partner in the PPP may share in the revenue generated. The procurement vehicle can be used to describe public entity assumptions and expectations regarding generated revenue.
• PPP agreement should include dissolution clauses:
  • Include How and When to Initiate a dissolution
  • What will be the disposition of equipment (i.e., who owns it after dissolution?)
  • What, if any, penalties would apply (early withdrawal)?
  • What is the defined buyout for the public entity if the public entity were to terminate the agreement early?
• The procurement documents should also clarify ownership during the term and at conclusion of term.
• One key to understand is that the private partner should always share in the risk. The level of risk is determined by the PPP model.

Design-Build Projects

Helpful Tip
A procurement template likely already exists, produced by your entity. Many procurement clauses will be identical between procurements of the same type (RFI, RFQ, and RFP). Find one and use it!

• In this model, the public entity has the principal responsibility once a solution is accepted. Most vendor obligations are just until acceptance.
• Vendor is typically paid in full following acceptance.
• Design-build is typically much shorter than in a PPP project.
• Design-build models are more prevalent than PPP models.
• Understand if the resulting contract will allow joint purchasing. This is where other entities can utilize the same resulting contract. If so, are there state or local procurement rules to follow?
  These can sometimes be referred to as “cooperative buying” agreements. For example, the City of San Jose CA included “co-op” language in its contract with SmartWAVE Technologies for Public Wi-Fi, which has since been utilized by other cities in the San Francisco Bay Area.
• Understand if the procurement is for specific material and/or services today or is to establish a master contract
• Requirements and specifications to include in the procurement could be sourced from:
  • Subject matter experts within the issuing entity; perhaps in a different department.
  • Published federal and/or state specification templates.
  • Similar procurements from other entities.
  • Input from the Advisory Board.
  • Review of case studies of past implementations, showing what worked and what didn’t work.
  • External subject matter experts.
• Communication should not occur with potential vendors to obtain requirements and specifications. This would be a conflict of interest and likely disqualify the vendor.
• Agree on timeframe between publishing the procurement and deadline for response. Typically, this is between 6 and 8 weeks for RFI, RFQ and RFP procurements. May be longer for very complex procurements. Request for Pricing/Invitation for Bid procurements may be shorter.
• Within the procurement period allow vendors to ask questions.
  • State this in the RFP, and include a deadline for when no more questions are accepted, or if questions are accepted after the deadline a response is not guaranteed.
• A vendor call will be helpful to guide vendors on how to respond, and to emphasize dos and don’ts for the vendor. Goal is to minimize the vendors disqualified due to vendor errors in their procurement response.
  • For a new initiative, the vendor call can be helpful to provide background to the project, and to provide context for what is being asked.
• Once the RFP has been published, inform vendors of the existence of the procurement by:
  • Email.
    • Email as many vendors as possible that could provide a response.
    • Blind copy the vendors and only alert them to the existence of the procurement and provide a link to the procurement.
    • Do not enter into a dialogue with any vendors or provide any further information. All requests for information and any questions should be directed to the single point of contact listed in the procurement.
    • The procurement primary point of contact may need copies of all emails sent to vendors.
  • Social media.
  • Press release.
    • If the procurement is part of a larger initiative of the entity, a press release shows progress in the initiative.
  • Announcement at conferences.
  • Inform your leadership and colleagues of the existence of the procurement, and ask that they also socialize the procurement.
• Following procurement award, if the Vendor is required to sign a contract, include the contract terms in the procurement and ask the Vendor to highlight their exceptions. This will minimize/eliminate any further negotiation to get to contract signature.
• Include statement regarding Vendor exceptions to contract terms. For example, an excessive number of exceptions or certain exceptions may result in Vendor disqualification.

The Contract

Contract Pricing

In your procurement, it is important to understand how you expect to have services and materials priced. For example, services could be priced per hour, based on the service provided. Materials could be priced with a percentage off MSRP or list price or as a set markup on the Vendor’s cost to purchase. One should be prepared to ask, “If there are multiple phases of the project, how will pricing be affected?” If the master contract term is for multiple years, negotiate if a cost increase will be allowed. For example, after two years an increase in labor rates based on the Consumer Price Index (CPI) could be negotiated. Finally, PPP projects typically result in defined periodic payments to the private partner, subject to performance indicators being met. The private partner may also share in generated revenue. It is critical to define these terms up front.

Procurement Rules – Entity specific and State

These are some general guidelines for procurement rules. Understand the procurement rules for the issuing entity and any others that may be purchasing from the contract, if a joint procurement. Check if any entity rules or state laws conflict with what is being asked in the procurement. Review similar procurements issued by the entity.

• Check with local procurement staff if a procurement template already exists
• There may be a minority, veteran or small business requirement of the issuing entity, whereby a certain percentage of the contract has to be allocated to a disadvantaged group, veteran, and/or small business. This should be stated in the procurement.

Vendor Evaluation

For certain procurements, e.g. RFQ, RFP an evaluation team will be required. Recruit a team of evaluators in advance of this phase. Potential evaluators can (and should) include people from the advisory board. Here are some general guidelines to help with this aspect:

• Aim to have 1 – 2 external evaluators in addition to evaluators from the entity
• Evaluators will be responsible for assigning points to the Vendor technical responses (for RFQ and RFP procurements)
• Check if the evaluators are required to sign confidentiality agreements
• Produce ahead of time an evaluation spreadsheet for the evaluators, where evaluators will enter their scores
• The vendor with the highest score should be awarded. The next phase is contract signature.
• Consider a multi-phase evaluation for the procurement. The below outlines a 4-phased evaluation but phases can be combined, based on size on complexity. When using a multi-phased approach, each proposal will be reviewed and evaluated in accordance with its contents.

Phases

1. For Phase I of the multi-phased approach, interested parties should demonstrate they are capable of performing the work by providing a capability statement.
   1. Capability statements will be evaluated based on defined criteria in the solicitation.
2. During Phase II, the public entity will conduct an initial review of the proposals received in order to verify conformance and completeness with the RFP.
3. In Phase III the public entity will review and evaluate each proposal to ensure it meets the pass/fail factors identified in the RFP.
4. Phase IV is the Detailed Evaluation. Those bidders whose proposed solutions have been determined to conform to the RFP in Phase II and successfully pass Phase III will move into Phase IV. During this phase, the public entity will commence the detailed evaluation of all information and documentation received from the Offerors based on the evaluation factors.

Contract Execution (Signature)

You’ve made it to the end of the procurement process and are ready to sign a contact. Congratulations! There are a few more things to look for: 1) vendors that stated exceptions in their response should minimize or eliminate these in the contract negotiation; 2) for activity after contract signature, define success and then work to achieve this success.

See? Procurement isn’t that hard.

Key Takeaways

• Use the internet to obtain accelerated learning of the industry (i.e., become an “expert” in a short amount of time).
• Create an advisory board to assist with your procurement. However, do not expect the advisory board members to produce material for you; they are simply to provide advice and guidance.
• There are two common approaches suitable for Public Wi-Fi: Design-Build and Public Private Partnership (PPP) models. Each will require its own procurement vehicle and negotiations.
• PPP projects can be long and complex. They are often attractive because they require little to no funding from the agency involved. However, the private partner should always share in the risk.
• In a typical design-build project, follow all your agency, state, and federal rules to ensure a smooth project.
• The vendor evaluation can be broken into multiple phases and include multiple stakeholders and evaluators to come to a strong, consensus-based result.
• Always consult with your procurement teams in the project from the very beginning to avoid any unforeseen problems throughout the process.