April 20, 2017 by John W. Carpita, PE
Purchasing and Contracting
How many times have you read (or even written) a memo in which acronyms are bandied about with no clue or explanation as to which words are represented by the acronym and, worse yet, the term referenced by the acronym doesn’t match the term that you would generally use. Purchasing and contracting terms and their acronyms are no exception:
“Since this is an ITB for a PW project, we need to make sure we get a P/P bond, hold retainage, and have an approved I&A set. When we close out the project we need to send the NOC to DOR. ESD, and LNI CR. We can use the SPWR, just not the LPWR provisions.”
“Let’s use an RFP process for this telephone system purchase and installation rather than a RFB.”
If you completely understood these two sentences, read no further: you are an astute acronym assessor. If you didn’t, read on.
||What It Stands for
||Invitation to Bid
||ITB, RFB, AFB, and BC all refer to a request for a lowest-price bid for a public works project or a lowest-price bid purchase of goods, equipment, materials, or supplies, most often via a formal, competitive process
||Request for Bid
||Advertisement for Bid
||Request for Quotes
||Most often used for purchases of goods, equipment, materials, or supplies via an informal, competitive process
||As defined in RCW 39.04.010(4)
||Performance and/or Payment Bonds
||Required for public works projects per RCW 39.08.010
||Request for Proposals–Services
||A request for proposals asks a firm to submit qualifications (if not already on file) and a proposed scope of services in response to specific agency needs
||Request for Proposals–Telecommunications
||RCW39.04.270 allows a municipality to acquire electronic data processing or telecommunication equipment, software, or services through competitive negotiation rather than through competitive bidding
||Request for Qualifications
||A request for qualifications asks only for a firm’s general capabilities, list of principals, previous projects, number of employees, licenses, etc. for either a services roster or, perhaps, an individual project
||Intents and Affidavits
||Intents to Pay prevailing wages and Affidavits of Wages Paid are required for public works projects and some purchased services contracts
||Notice of Completion
||Required for public works projects over $35,000. An NOC must be reviewed and approved by the Department of Revenue (DOR) the Employment Security Department (ESD) and the Department of Labor and Industries Contract Release Office (L&I CR)
||Small Public Works Roster
||Authorized by RCW 39.04.155
||Limited Public Works Roster
||Authorized by RCW 39.04.155(3)
||Certificate of Insurance
||Must be provided to the agency before work can begin
||Plans, Specifications, and Estimate
||Required by RCW 39.04.020-.080
||Job Order Contracting
||JOC, GC-CM, and D-B are all alternative forms of contracting authorized by Chapter 39.10 RCW
||General Contractor - Construction Manager
Let’s look at how these terms work in contracting for public works, purchasing goods and supplies, and procuring services.
Contracting for Public Works
For notification on public works projects, where a contract is to be awarded by a local government agency to a responsible firm that submits the lowest bid, I prefer the term Request for Bid (RFB), but any of the other terms (ITB, AFB, or BC) will work too. RFBs can be used for projects of all dollar amounts.
Note the bid summary table below. A formal, competitive bid process is required for all contracts over $300K, regardless of the jurisdiction. Below that dollar amount, authorized agencies may use the Small Public Works Roster (SPWR) process to ask for bids (RFBs) on a project. Below additional bid limits (say $40K/$65k for code cities), a jurisdiction may simply ask a few, selected contractors for informal bids.
|Public Works Bid Summary
||Formal (Legal) Bid Advertisement Required
||Formal Public Bid Opening Required
||Bidding Open to:
|Bids: $300,000 and Over
||All Registered Contractors
|Informal Bids: Bid Limits to $300,000 (if SPWR is Used)
||Registered Contractors on an SPWR
|Informal Bids: Below Bid Limits
||Selected Registered Contractors
Purchasing Goods, Equipment, Materials, and Supplies
When purchasing goods, equipment, materials, or supplies, each jurisdiction has dollar limits above which formal, advertised bids (RFB, ITB, AFB, or BC) are required. Below those limits, however, agencies are allowed to use the less formal Requests for Quotes (RFQs). Local jurisdictions should follow these four steps before any purchase of goods, equipment, materials, or supplies is proposed:
Step 1: Define the need
What kind of purchase is this and why does the agency need it?
Step 2: Determine the cost
How much will this item cost? Estimates should include appropriate sales/use taxes plus freight, handling, and set-up costs.
Step 3: Determine the procurement process
Staff should ask themselves the following questions: How do I procure it? Should I just buy it or do I need 3 quotes? Formal sealed bid? How will I advertise for it? A web posting? DES contract? GSA? Purchasing Co-op?
Step 4: Identify approval authority
Staff should determine: Who has to approve the purchase? No one? Foreman? Department head? Purchasing Manager? Chief Executive? Council/Board/Commission?
Services are classified in our Contracting for Services publication as:
- A/E Professional Services
- Personal Services
- Purchased Services
In almost all cases, services are procured using a Request for Proposals (RFP) process or – possibly – a Request for Qualifications (RFQ) process followed by an RFP. Once the category of service has been identified, the next step is to decide which process will be used to select a service provider. The Contracting for Services publication has more detail on levels of competitive solicitation and delineates those levels of competition as formal, informal, and minimal. Recommended levels of competitive solicitation by service type are available in table form for the following services
Local governments have great latitude in setting their own policies and procedures, all except for Port Districts, which must follow Chapter 53.19 RCW for personal service contracts. Threshold dollar amounts in the three tables listed above can be modified by a jurisdiction to fit its comfort level. Agencies should recognize federal procurement limits as well as conditions of a grant or funding agency policies that may require advertising for a project.
Now that you know all the important purchasing and contracting acronyms, impress (and really annoy) your colleagues by using some at your next staff meeting!
Do you have a question or comment about purchasing and contracting? Contact me at email@example.com or 206-444-3639.