The following guidelines and suggestions may be helpful to potential contractors, especially small and minority businesses that have no prior experience with public procurement.
Carefully review the solicitation, including attachments and specifications
Charleston Water System solicitations and contracts require careful review. Requests for Proposal (RFP's) and Invitations to Bid (IFB's) include standard forms and special provisions, with many contract clauses incorporated by reference. Inexperienced contractors are often unaware of the importance of the clauses, and failure to understand often leads to problems. The newcomer should determine all that is expected before bidding.
Ensure your business is capable of performing the requested work
Businesses, especially small and minority business, in their endeavor to increase sales volume and anticipated profit may at times be overly optimistic in assessing the task, the risk and in-house capabilities when bidding on a contract, either as a prime or subcontractor. In assessing the risk, the bidder must take a realistic approach in determining whether they have the overall capability, both technical and financial, to perform on a selected procurement.
Delay in receipt of goods and supplies from vendors or subcontractors could cause the contract to be in delinquent status, which in turn could be cause for termination of the contract. These factors must be taken into consideration if a small or minority business entrepreneur is to succeed in establishing a profitable business entity.
There must be sufficient cash available either on hand or through granting of credit by suppliers and/or financial institutions.
Given sufficient capital, a small or minority business can always expand its in-house capabilities; however, management must decide whether increased staff, and the additional equipment and space can be used productively beyond the completion of the immediate contract. A solicitation may be a one-time procurement.
Overall, businesses involving themselves in Commission procurement must approach each solicitation critically and assess the following:
1. Are your people competent, and are they available for this job?
2. Are your facilities adequate, and are they available?
3. What has been your experience on similar jobs?
4. Are the Commission's drawings complete?
5. Can you meet the delivery schedule?
6. Can you handle the job financially?
Specifications and Standards
Specifications seek a level of quality. They are clear and accurate descriptions of the technical requirements for materials, products, or services. They specify the minimum requirements for quality and construction of material and equipment necessary for an acceptable product. Generally, specifications are in the form of written standards, and other descriptive references. They are an integral part of the purchase contract and not meant to favor one product over another.
Standards are descriptive criteria to assure material uniformity and interchange-ability of parts and may be used in specifications, invitations for bids, proposals, and contracts.
Avoid bidding by "guestimation"
Experience has shown that some small business concerns prepare a cost estimate based on previous award prices. The presumption is that prior contractors had profitable contracts. A firm that underbids the last award price by a small percentage instead of computing its own real cost is taking a major risk.
Sometimes the bid price is arrived at by historical prices on comparable items, and the market is not checked for current costs for materials and components.
There are instances in which a business will bid low to obtain a contract in the hope of follow-on business.
Skill in estimating costs realistically is perhaps the most important capability of a contractor, because it is usually price that gets him the contract when competing with others equally qualified. Some typical cost estimating factors are:
Allow yourself time to complete the required bid documents
When a contractor bids under the pressure of time the results can be disastrous. The contractor finds himself committed to contractual requirements that cannot be met profitably or in a timely manner. Preparing a profitable, responsive bid requires close and careful study of the bid package that includes all specifications and standards. Invitations have deadlines, and there seems to be no time to get needed specifications, obtain supply quotations, and resolve conflicts. In brief, the quotation is made with little or no visibility. The solution lies in setting up a system for a quick bid/no bid decision, and if the word is "bid", a rapid system for retrieving specifications. Referenced specifications should be read carefully.
Waiting until the preparation of a bid is a poor time to start assembling vendor support. A business should take the time to assemble cost accounting records so that costs in terms of time and material are readily available. If a short lead-time solicitation arrives, a firm should not resort to a hasty estimate based on a best guess; rather, it should bid on factual performance records. A relatively insignificant error in addition can be multiplied into the difference between profit and loss when extended by production quantities.
The contractor should realize that no matter how attractive the solicitation appears on the surface, it should not be bid unless time permits the bidder to adequately study all of the task specifications and evaluate completely all costs essential to the production of the bid item or service.
Review the project schedule before you bid
If you can't do it - don't bid. Because of eagerness to receive a contract award, a contractor may inadvertently or intentionally accept an impossible time frame or delivery schedule for contract performance. The net result could be serious financial losses or even bankruptcy.
Prior to the acceptance of a contract you must ascertain that you can make delivery of the supplies or perform the services within the time specified in the contract, and also be assured that continued progress can be made so that performance will not be endangered.
All fixed price supply contracts contain a default clause which, in part, provides the Commission with the right to terminate all or any part of the contract for default if the contractor (1) fails to make delivery of the supplies or perform the services within the time specified in the contract, and (2) fails to make progress so as to endanger performance of the contract.
In the event the Commission terminates the contract in whole or in part, the Commission may procure the supplies of services similar to those so terminated, and the contractor is liable to the Commission for any excess costs for such similar supplies or services.
How to prepare bids and proposals
There are two types of offerings: bids and proposals. Bids involve advertised proposed purchases, while proposals involve purchases to be made by negotiations.
Bids and proposals always should be prepared with utmost care. Contracts awarded on erroneous bids may result in serious financial loss or other difficulty for the bidder. Errors in bids or proposals, if revealed during negotiations or through subsequent request for amendments, may cause the Commission to doubt the firm's reliability to perform successfully.
Before preparing a bid, close study should be made of the specifications for the item to be sure that all requirements can be met. Particular attention should be given to the instruction to bidders and to conditions of purchase, delivery and payment.
When determining the amount of the bid, the small firm should be especially careful to include all costs of material, labor, overhead, packaging, and transportation. Also, it should be sure to comply with such important provisions of the bid such as submitting the required number of copies, mailing the bid in sufficient time to reach the Purchasing Department before the bid opening date, and properly tagging, marking and mailing any required samples well in advance of the opening date.
When preparing a proposal on a purchase to be made by negotiation, the same care should be taken as when preparing a formal bid. However, because the negotiated purchase procedure is more flexible than the bid procedure, there is greater opportunity to seek modification of specifications or conditions of purchase, delivery, and payment, if modifications seem necessary or desirable.
If the Director of Operations Support decides to negotiate on a firm's proposal, he or she may require a complete cost analysis. Therefore, the firm should be prepared to support the quotation with facts and figures.
If a business person wants to change or withdraw a bid, he or she must do so in writing to the Purchasing Manager. The notification must reach the office prior to the time set for the bid opening.
After award of the contract, it is imperative that the contractor maintains close contact with the Commission through the user department. This close relationship is important in order to avoid costly contractor errors and misconceptions about the project. It would serve no purpose if an end item is delivered that is not what the procuring activity intended.
Contractors should approach their projects with caution and be sure that they understand all provisions of Charleston Water System's procurement policies to minimize expenditure of company resources.