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We didn’t make the rules, but let’s make We didn’t make the rules, but let’s make the most of them…the most of them…

IPMA Forum 2002IPMA Forum 2002

““IT Services Contracting – IT Services Contracting –

Best Practices”Best Practices”

OrOr

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Presenters:Presenters:

Lourdes Collins, DISLourdes Collins, DIS Susan Johnsen, OFMSusan Johnsen, OFM Steve Demel, GASteve Demel, GA Don Cotey, Milestone TechnologyDon Cotey, Milestone Technology Glenn Briskin, Sierra SystemsGlenn Briskin, Sierra Systems

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PURCHASED SERVICES

•Function is performed under agency direction where typical management authorization and work methods are maintained and are not at the discretion of the contractor.

•Services are more routine or repetitive and meet more general needs of the agency.

•Follows established or standardized procedures.

•Decision-making is made on more routine activities in support of a project or activity.

•Payment is typically based on hourly rates.

PERSONAL SERVICES

•Function is performed independent from control of the agency; consultant maintains control of work methods. Work is more creative or original.

•Services are more specialized.

•Exercises judgment and discretion in accomplishing outcome.

•Decision-making is at a level that determines the strategic direction of the project and/or includes non-routine activities or events.

•Payment is typically deliverables-based.

GA

Non-IT Purchased Services, e.g., temporary office & accounting services, janitorial, bldg. maintenance, conducting predetermined surveys, conference coordination, etc.

DIS

IT Purchased Services e.g., programming, PC maintenance, network back-up services, help desk support, delivering agency-designed IT training etc.

OFM

Personal Services e.g., consulting services, legal services, actuarial services, strategic planning, survey design and results analysis; conference coordination

SERVICES

DIS / OFM

IT Personal Services e.g., IT:software systems design; quality assurance, feasibility studies, etc.

Authorities and ApprovalsAuthorities and Approvals

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Authorities and ApprovalsAuthorities and Approvals

What about projects that have elements of What about projects that have elements of both personal and purchased services?both personal and purchased services?

Agency should determine the primary purpose of the Agency should determine the primary purpose of the contract.contract.

When hardware purchases or programming services are When hardware purchases or programming services are

part of a project that is primarily for personal services,part of a project that is primarily for personal services, then the entire contract is designated as a personal then the entire contract is designated as a personal service.service.

Projects with IT components must comply with ISB IT Projects with IT components must comply with ISB IT policies and standards.policies and standards.

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Authorities and Approvals Authorities and Approvals

ISB/DIS approval, if required, is ISB/DIS approval, if required, is obtained in advance of the solicitation. obtained in advance of the solicitation.

OFM filing and review or approval of the OFM filing and review or approval of the contract is obtained after award, but contract is obtained after award, but prior to start of work.prior to start of work.

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Authorities and Approvals – DIS Authorities and Approvals – DIS

When do you need When do you need DIS/ISB approval?DIS/ISB approval?

Costs greater than delegated authorityCosts greater than delegated authority Level 2 or 3 Severity & RiskLevel 2 or 3 Severity & Risk Under ISB oversightUnder ISB oversight

• 902 Proviso902 Proviso• ISB DiscretionISB Discretion

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Authorities and Approvals – DIS Authorities and Approvals – DIS

Delegated AuthorityDelegated AuthorityThe ISB delegates IT purchasing authority to agency The ISB delegates IT purchasing authority to agency

directors who are in compliance with IT portfolio directors who are in compliance with IT portfolio management policies and standards. management policies and standards.

The three basic levels of delegated authority are:The three basic levels of delegated authority are: $50,000 for agencies with 49 or less total agency FTEs.$50,000 for agencies with 49 or less total agency FTEs. $250,000 for agencies with 50 to 149 total agency FTEs.$250,000 for agencies with 50 to 149 total agency FTEs. $1 million or greater for agencies with 150 or more total $1 million or greater for agencies with 150 or more total

agency FTEs.agency FTEs.

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Authorities and Approvals – DIS Authorities and Approvals – DIS

Level 2 & 3 Severity & Risk Criteria - Level 2 & 3 Severity & Risk Criteria - Defined in the IT Portfolio Management Defined in the IT Portfolio Management StandardsStandards

Impact on citizensImpact on citizens Visibility to the public and LegislatureVisibility to the public and Legislature Impact on state operationsImpact on state operations Consequences of not doing the projectConsequences of not doing the project Impact of the project on the organizationImpact of the project on the organization Effort needed to complete the projectEffort needed to complete the project Stability of the proposed technologyStability of the proposed technology Agency preparednessAgency preparedness

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Authorities and ApprovalsAuthorities and Approvals - DIS - DIS

IT Purchased Services IT Purchased Services CompetitiveCompetitive Thresholds:Thresholds:

0 - $9,999 – Direct Buy0 - $9,999 – Direct Buy $10,000 – 99,999 – at least 3 vendors, verbal or $10,000 – 99,999 – at least 3 vendors, verbal or

written rqmts, ads discretionary written rqmts, ads discretionary $100,000 – 249,999 – at least 5 vendors, written $100,000 – 249,999 – at least 5 vendors, written

rqmts, ads discretionaryrqmts, ads discretionary $250,000 and up – ads required, include all vendors $250,000 and up – ads required, include all vendors

responding, written rqmtsresponding, written rqmts Contact DIS for further detailsContact DIS for further details

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Authorities and Approvals – DISAuthorities and Approvals – DIS

For IT personal and purchased For IT personal and purchased services, use DIS model contracts.services, use DIS model contracts.

For more information see:For more information see: http://www.wa.gov/dis/portfoliohttp://www.wa.gov/dis/portfolio

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Authorities and Approvals - OFMAuthorities and Approvals - OFM

Personal Service Competitive ThresholdsPersonal Service Competitive Thresholds• $5,000 - $19,999 – informal competition – at $5,000 - $19,999 – informal competition – at

least 3 vendors, written rqmts, ads least 3 vendors, written rqmts, ads discretionarydiscretionary

• $20,000 or more – formal competition, ad $20,000 or more – formal competition, ad required, all vendors responding, written rqmtsrequired, all vendors responding, written rqmts

• RCW 39.29RCW 39.29• OFM Web SiteOFM Web Site

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Acquisition – Most Important Acquisition – Most Important StepStep

Clear Statement of Work/Scope of WorkClear Statement of Work/Scope of Work• Identify project requirementsIdentify project requirements• Determine your desired business Determine your desired business

outcomesoutcomes• Establish key deliverables and associated Establish key deliverables and associated

milestonesmilestones

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Acquisition – Hourly Rate vs. Acquisition – Hourly Rate vs. Fixed BidFixed Bid

Time and materials (hourly rates), fixed bid, Time and materials (hourly rates), fixed bid, or a combination or a combination • Well defined deliverables and cost drivers - FBWell defined deliverables and cost drivers - FB• Deliverable and cost driver definition needed – TMDeliverable and cost driver definition needed – TM• Need to transfer risk, OK to transfer control - FBNeed to transfer risk, OK to transfer control - FB• Have strong mgt , just need productive cost Have strong mgt , just need productive cost

effective staff – TMeffective staff – TM• Combination approachCombination approach• ISB or agency policy/guidelines may dictateISB or agency policy/guidelines may dictate

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Acquisition – RFP/RFQ – Acquisition – RFP/RFQ – Evaluation CriteriaEvaluation Criteria

Determine your evaluation approach Determine your evaluation approach • Focus on evaluation criteria important to Focus on evaluation criteria important to

youyou• Weight the criteria to reflect their Weight the criteria to reflect their

importance importance – Cost and non-cost factorsCost and non-cost factors

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Acquisition – RFP/RFQ Acquisition – RFP/RFQ Evaluation CriteriaEvaluation Criteria

• Appropriately express your needs and Appropriately express your needs and constraints to get consistent responses constraints to get consistent responses and encourage competitionand encourage competition

• Use references effectivelyUse references effectively• Don’t over complicateDon’t over complicate

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Contract ApprovalsContract Approvals - OFM- OFM

Contract Filing Thresholds for Contract Filing Thresholds for Personal ServicesPersonal Services• Sole source contracts of $5,000 or Sole source contracts of $5,000 or

more more

• Competitive contracts of $20,000 or Competitive contracts of $20,000 or more more

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Contract ApprovalsContract Approvals - OFM- OFM

There are two types of contract filing – There are two types of contract filing – “Review” or “Approval”“Review” or “Approval”

OFM Review = Review contract and make OFM Review = Review contract and make recommendations as needed – Agency can recommendations as needed – Agency can sign and start work immediatelysign and start work immediately

OFM Approval = 10 day waiting period OFM Approval = 10 day waiting period requiredrequired before work begins – review contract before work begins – review contract and may and may requirerequire changes – may disapprove changes – may disapprove

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Contract ApprovalsContract Approvals - OFM- OFM

““Review” vs. “Approval” depends on Review” vs. “Approval” depends on acquisition method, size, and type of acquisition method, size, and type of work - Examples Subject to OFM work - Examples Subject to OFM Review Review • Enhancements to existing systemsEnhancements to existing systems• IT systems analysis servicesIT systems analysis services• IT network implementation servicesIT network implementation services• On-call IT technical servicesOn-call IT technical services

(If sole source of 20K or over, subject to OFM approval.)(If sole source of 20K or over, subject to OFM approval.)

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Contract ApprovalsContract Approvals - OFM- OFM

Examples of IT Personal Service Contracts Subject Examples of IT Personal Service Contracts Subject to OFM Approvalto OFM Approval• Design, development and implementation of a Design, development and implementation of a

major information processing systemmajor information processing system• Re-engineering of major information technology Re-engineering of major information technology

systemssystems• Quality assurance on IT systemsQuality assurance on IT systems• Development of IT strategic plansDevelopment of IT strategic plans• Conduct of IT feasibility studiesConduct of IT feasibility studies• Project management servicesProject management services

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Contract ApprovalsContract Approvals - OFM- OFM

Sole Source Filing Requirements:Sole Source Filing Requirements:• All sole source 5K or more must be filedAll sole source 5K or more must be filed

• All sole source filings require 10 day All sole source filings require 10 day waiting period waiting period

• All sole source 20K or more require All sole source 20K or more require approvalapproval

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Contract Management - Good Contract Management - Good Working RelationshipWorking Relationship

Require a project charter defining high level Require a project charter defining high level expectation, roles, responsibilities, decision expectation, roles, responsibilities, decision making needsmaking needs• Get assumptions on the tableGet assumptions on the table

Emphasize good project management Emphasize good project management disciplinediscipline• Issue and change managementIssue and change management• Clear acceptance criteriaClear acceptance criteria

Open and complete communicationsOpen and complete communications Work as a teamWork as a team

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Contract Management - Contract Management - Technology TransferTechnology Transfer

Depends on type of contract – FB vs. TMDepends on type of contract – FB vs. TM Depends on your commitment to having qualified Depends on your commitment to having qualified

resources availableresources available Look for ways to create a team and work togetherLook for ways to create a team and work together Build team involvement and technology transfer Build team involvement and technology transfer

into the work planinto the work plan• Include staff in project and phase kickoffsInclude staff in project and phase kickoffs• Involve staff in producing deliverablesInvolve staff in producing deliverables• Include staff in reviews of deliverablesInclude staff in reviews of deliverables• Train staff at turnover timeTrain staff at turnover time

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More InformationMore Information

OFM – http:/www.ofm.wa.govOFM – http:/www.ofm.wa.gov DIS – http:/www.wa.gov/dis/portfolioDIS – http:/www.wa.gov/dis/portfolio GA – http:/www.ga.wa.gov/pca/ps2GA – http:/www.ga.wa.gov/pca/ps2 Lourdes Collins, Lourdes Collins, lourdesc@dis.wa.govlourdesc@dis.wa.gov Susan Johnsen, Susan Johnsen, susan.johnsen@ofm.wa.govsusan.johnsen@ofm.wa.gov Steve Demel, Steve Demel, sdemel@ga.wa.govsdemel@ga.wa.gov Don Cotey, Don Cotey, donc@milestone-tech.comdonc@milestone-tech.com Glenn Briskin, Glenn Briskin, glennbriskin@sierrasystems.comglennbriskin@sierrasystems.com