Memo to File



|00711 |Household Appliances |Kathie Collins/Shannon McGuire |

|Contract Type: New Replacement WSCA Enterprise General Use Restricted to:_____________ |

|Contract Duration: Initial Term: 2 years months Maximum life: 6 Years |

|Estimated Term Worth: $1,500,000.00 Estimated Annual Worth: $750,000.00 |

| WEBS was used to notify bidders Number of: Bidders notified: 409 Bids received: 4 Bids Rejected: 2 |

|List the WEBS (not PCMS) commodity Codes were used? 931-07 Appliance and Equipment, Household, 931-30 Cafeteria and Kitchen Equipment |

|% DVA: __0___ MWBE Goal: __0___ % MWBE Award: __0___ WBE% _0___ MBE%___0_ |

|Self Identified WBE% __0___ Self Identified MBE% ___0___ |

| |

|See GE’s statement of Socioeconomic Compliance below: |

| |

|[pic] |

|Executive Summary: |DES has a need for a replacement Master Contract for Appliances/Household. Past spend averages 750,000 annually. Non-profits spend |

| |is 85% of previous contract. The remaining 15% of spend is with state agencies, DSHS being the largest. |

|Bid Development |

|Stakeholder work |Vendor Forum: Contracts Specialist worked with GE, awarded vendor on contract #04405 to obtain a list of most frequently ordered |

| |items occurring on contract #04405 and also included most commonly ordered items that non-profits had been purchasing off contract. |

|Customer Forum? |Specifications were then developed by Contracts Specialist and reviewed by GE, a commodity expert (GE is awarded vendor on #04405). |

|Vendor Forum? |Customer Forum: |

| |Non-profits: Largest non-profit spend was by King County Housing Authority and Seattle Housing Authority. Both were asked to |

| |participate as stakeholders, but only Alan Hoffer/Seattle Housing Authority made the commitment. Draft IFB/specs were provided to |

| |Alan for review/input. Alan approved draft IFB as written. |

| |State Agencies: DSHS & LCB identified contract #04405 as critical. Largest state agency use was by DSHS. LCB spend was extremely |

| |low ($2688 in 2010). Contracts Specialist notified LCB of rebid and that their spend was minimal and stakeholder work would proceed |

| |with DSHS and Non-profits. |

| |Erin Hamilton/DSHS agreed to participate as a stakeholder, however Erin accepted a job elsewhere and Carla Nystrom replaced her. |

| |When draft IFB was provided to Carla for review/input, Carla stated that due to “limited resources” she was unable to participate. |

|Market Research: |When IFB #04405 was released only two responses were received. IFB #04405 was released with a requirement for on-line ordering. |

| |Sears cited the on-line ordering as a reason they could not respond to solicitation 04405. Contracts Specialist removed on-line |

| |ordering as a requirement in IFB 00711 after verifying with current awarded vendor GE (04405) that on-line orders are not occurring. |

| |Removing the on-line ordering requirement in IFB 00711 will increase responses from the bidder community. |

|EPP Strategy: |Strategy is to expand market of environmentally preferable refrigerators, dishwashers and washing machines to solicitation that are |

| |Energy Star certified. Energy Star is a voluntary labeling program designed to identify and promote energy efficient products. The |

| |program is funded by the U.S. Environmental Protection Agency and the U.S. Department of Energy. Energy Star products deliver the |

| |same or better performance as comparable models while using less energy. |

| | |

| |Based on past order history I added appliances that were in demand. The percentage of items identified as Energy Star certified, by |

| |category: Refrigerators 100%, Dishwashers 100% & Washing Machines 40%. Energy Star certification is not offered on Ranges, Washing |

| |Machines, Dryers & Microwaves. |

| | |

| |Appliances are not included in the Comprehensive Procurement Guidelines (CPG). |

|Supplier Diversity Strategy: |Economic and Environmental Goals was provided “Up Front” in the solicitation. |

|(See OSP Supplier Diversity Plan)|Notified OMWBE/C Canorro of opportunity and posting. |

| |OMWBE certified business outreach conducted. I called the following two businesses: |

| |“Quality Discount Supplies” who status was M-SB-V was contacted. They stated they were industrial/medical supplier, not household |

| |appliances. |

| |“The Jones Zylon Co” who status was SB was contacted. They are medical/dinnerware vendor, not household appliances. |

| |Commodities codes selected were 931-07, 045-06, 045-24, 045-52, 045-54, 045-60, 045-66, 045-84, 045-92 & 045-94. WEBS listed 4 |

| |Minority & Woman Owned, 5 Minority Owned, 5 Veteran Owned, 5 Woman Owned, 14 Small Business. A total of 409 vendors were listed. |

| |Removed barriers in the solicitation by unbundling into 6 product categories, making one award by category or in its entirety based |

| |on response received. |

| |Second tier opportunities are not offered on this contract. |

|Best Value Strategy: | |

|Bid Development: |The goal of this solicitation was to create a replacement statewide Contract for the as needed purchase of Appliances/Household. The |

| |Contract will be awarded with an initial term of 2 years with the option to extend another 4 years for a total of 6 years. The |

| |Contract would be awarded to the bidder(s) who were found to be the lowest responsive and responsible for each category. There are |

| |six (6) categories to award. Award language stated one award would be made to the Bidder who is responsive, responsible, and has the|

| |lowest total price for all line items within that category. The right was reserved to award the contract by category, or in its |

| |entirety based on Responses received, whichever was in the best interest of the state. |

| Peer Review |Tim Shay (CS2) and Mark Gaffney (CS3) reviewed and approved the solicitation with suggested changes. Based on their review changes |

| |were made. The Contract’s value is over the CS’s signature authority so Unit Manager signature is required. Cheral Jones, Unit |

| |Manager, reviewed the request and recommended its release with a few minor changes on 10/18/2011. |

| Management Fee? |Contract 00711 will have a management fee of 1.5%, due to the fact that 85% of the spend, historically, has been with non-profits. |

| |Previous contract #04405 did not have a management fee. |

|Bid Process |

| Solicitation |Solicitation posted to WEBS on 10/19/11. |

|[pic] |WEBS ELECTRONICALLY NOTIFED: |

| |A. 409 total vendors. |

| |B. 4 Minority & Woman Owned. |

| |C. 5 Total Minority Owned. |

| |D. 5 Total Veteran Owned. |

| |E. 5 Total Woman Owned. |

| |F. 14 Total Washington Small Business. |

|Pre-Bid Conference: |The optional Pre-bid Conference was held on 10/31/11, at 10:00am. Registration to participate in pre-bid by teleconference was |

|Date: 10/31/11 |offered. Three vendors participated via teleconference (GE/Rusha Miles, Best Buy/Jill Ranft, Best Buy/Brian Quinlan). |

|[pic] | |

|[pic] |Alan Hoffer/Seattle Housing Authority, our Stakeholder/Technical team representative also participated via teleconference. |

| | |

| |Pre-bid conference was conducted by DES Contracts Specialists Shannon McGuire and Kathie Collins. Jennifer Burbage/DES recorded |

| |notes. |

|Amendment(s): |No amendments were issued. |

|Bid Evaluation—Responsiveness |

|Bid Opening: |Four (4) bids were received at bid opening. All four (4) were received on time. |

|Date: 11/8/11 at 2:00pm PST |Business Services |

| |Sears Commercial |

| |Ferguson |

| |General Electric Company |

|Bids Sealed & Signed? |All of the bid responses were sealed and signed. |

|Received all required submittals?|Business Services and Sears Commercial did not supply the required information in Appendix A, Standard Terms & Conditions – Section |

| |1.9, Alternate or Equal Products (If bidding alternate, bidder must provide detailed description, supporting documentation and any |

| |associated exceptions to the specifications with bid submittal. Bidder must identify as alternate on Appendix D - Price Sheets). |

| | |

| |Business Services was rejected without further review. |

| |Sears Commercial was rejected without further review. |

| | |

| |The other two bidders, Ferguson and General Electric Company, supplied the required submittals. |

|Bid Evaluation—Responsibility |

|GE Exceptions- |GE submitted five “Exceptions to Bidding Documents.” After thorough review it was determined that the first 3 were clarifications, |

|OSP Eval & AG Advice |not exceptions. |

|[pic] | |

| |GE Exception 4: “Standard Terms & Conditions, Paragraph 10, Save Harmless” |

| |OSP Note: OSP could not identify “save harmless”. Requested further clarification of GE. Rusha Miles/GE responded that she |

| |“inadvertently included something that should not have been in the document.” |

| | |

| |GE Exception 5: “Standard Terms 7 Conditions, 3.19, Insurance, 4, Additional Insurance Provisions” |

| |OSP Note: GE exceptions states they “will not name the State of Washington or all authorized Contract Users as an Additional Insured|

| |or subrogate its rights.” |

| | |

| |OSP sought AG Advice. The AG/Sullivan-Colglazier was unable to respond in the timeframe needed due to competing priorities. |

| |Contract History/Experience:  General Electric is the current awarded vendor on contract #04405 for Household Appliances which |

| |expires 11/30/11.  General Electric sited this same exception when contract #04405 was awarded six years ago.  No issues arose over |

| |the life of contract #04405 regarding the exception.  |

| |As a result UM/Jones made an executive decision to allow exception and move forward. AG/Sullivan-Colglazier supports the decision. |

| |Contracts Specialist added the following provision to the contract for GE signature. |

| | |

| |REVISED INSURANCE PROVISION: |

| |Appendix A – Standard Terms & Conditions, section 3.19(4) Additional Insurance Provisions: |

| |Revised to reflect GE “Exception to Bidding Documents.” Exception states GE “will not name the State of Washington or all authorized|

| |contract users as an additional insured or subrogate its rights.” |

| |The above referenced revision is the only “Exception to Bidding Documents” agreed to by both parties. See GE Bid Submittal for |

| |additional information. |

|Pricing Comparison ( 04405 to |Pricing analysis completed for costs on previous contract #04405 to pricing received from GE on IFB 00711 by GE. |

|00711) | |

|[pic] |Analysis revealed: |

| | |

| |25% overall increase in costs received on 00711 over 04405. |

| |36% overall decrease offered on 00711 than MSRP. |

| |Mng Fee of 1.5% has been added to this contract which would increase the pricing quoted from bidders by 1.5%. Awarded bidders are |

| |required to pay the 1.5% of sales back to DES every quarter. The previous contract #04405 did not have a management fee. |

| | |

| | |

|Negotiation/Pricing |Contracts Specialist/McGuire proceeded to negotiate with GE, the lowest responsive, responsible bidder for better pricing. |

|[pic] | |

| |GE stated they reviewed the pricing offered on the RFP and were unable to change/lower the pricing.  GE states they have seen a rise |

| |in the raw material costs of manufacturing their products.  |

| | |

| |GE states during the 5-year contract (#04405 due to expire 11/30/2011), they requested only one price increase in 2008 (September 9, |

| |2008), despite raw material cost increases.  The requested price increase was capped at 4% by the State of Washington.  Therefore, |

| |the State received 2005 pricing with only a 4% increase over a 5 year period while GE saw raw material costs increasing (supplied |

| |with documentation in 2008) by 22-26% during that timeframe. |

| | |

| |As an additional note GE remarked they are making changes that will bring over 1300 jobs back to the U.S. |

| | |

| |ADD PPI/ANALYSIS FROM SARAH_______________________________________ |

|Past Performance? |GE is awarded vendor on contract #04405 for Appliances/Household which expires 11/30/11. GE is in good standing with the State and |

| |no deficiencies were noted in PCMS. |

|UBI |General Electric has an active UBI# (409000047) with the State of Washington. |

|[pic] | |

|Qualifications? |No additional qualifications checks were done, but the lowest responsive, responsible bidder meets the required qualifications. |

|Bid Evaluation |

|Evaluation: |The Contract would be awarded to the bidder(s) who were found to be the lowest responsive and responsible for each category. There |

| |are six (6) categories to award. Bidders did not have to bid on every category. Award language also included the right to award by |

|[pic] |line item, or aggregate total based on Responses received. |

| | |

| |General Electric Company had the lowest total cost for all Categories. Award will be made to General Electric Company for Category |

| |1, 2, 3, 4, 5 & 6. |

|Results & Recommendation |

|Savings: |As compared to the previous Contract 04405, which started on 12/1/05 there were no savings. Price analysis completed on replacement |

|[pic] |Contract 00711 shows a 25% overall average increase on all items. |

|[pic] | |

| |The previous Contractor (GE) on Contract 04405 received only one price increase over the life of the contract, which was granted on |

| |10/08. At the time they requested a 10% increase, however only a 4% increase was granted. |

| | |

| |Since the inception of contract #04405 on 12/1/05, appliances have increased 9% and raw materials (iron & steel) have increased 47% |

| |according to the Producer Price Index. |

|Recommendation: |It is in the States interest to move forward and make an award on Contract 00711 based on the above information. |

| |General Electric Company is the lowest responsive responsible bidder for all Categories, so they should be awarded Contract 00711 in |

| |its entirety. |

|Award Activities |

|Implementation Plan | |

|WEBS | Notify bidders of the award via WEBS done on 11/30/11 |

|Communication | Send rejection letter to those bidders to disqualified bidders |

| |Send apparent successful bidder announcement letter |

| |Email Kerry Bustetter a brief award announcement for Bi-Weekly Broadcast |

|Contract | Model Contract updated with insurance exception cited by GE (Appendix A Standard Terms & Conditions, section 3.19 (4) Additional |

| |Insurance Provisions). |

| |GE states they “will not name the State of Washington or all authorized Contract Users as an Additional Insured or subrogate its |

| |rights.” This exception was reviewed and authorized by UM/Jones and supported by AG/Sullivan-Colglazier (11/23/11) |

|PCMS | Populate PCMS Info Tab |

| |Complete PCMS Expanded Description Tab |

| |Add Web remark in the PCMS Remarks Tab announcing the award of the contract |

| |Add at least 5-FAQ remarks in the PCMS Remarks Tab |

| |Complete PCMS Internet Tab to include relevant search terms |

| |Include relevant search terms in the PCMS Internet Tab |

| |Complete PCMS Commodities Tab |

| |Complete PCMS Vendors Tab |

| |Complete PCMS Customer Tab |

| |Complete PCMS Fees Tab |

|Post Contract to GA Website |Copy the following files into the G:\Shared Info\INTERNET folder: |

| |Copy Contract file (00711c.doc) |

| |Copy the price sheet (00711p.doc or xls) |

| |Copy the specification (00711s.pdf) if applicable |

| |Copy the bid tab (00711t.doc or xls) |

| |Copy the bid document (00711b.doc) |

| |Copy the Award Memo to File document (00711m.doc) |

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