Conducting Negotiations from the Outset of a Procurement - 904

Departments shall follow this procedure when conducting negotiations from the outset of a procurement:

1. With the exception of CDT, obtain approval from DGS to utilize negotiations.
2. Craft a solicitation under the authority of Public Contract Code, Section 6611. The solicitation should include initial administrative and technical requirements, a cost proposal, evaluation criteria, and reference the state’s general provisions. It should also explain the general purpose and scope of the negotiations, the anticipated schedule for the negotiations; and the procedures to be followed for those negotiations.
3. Identify in the solicitation document the requirements for bidders to be included in negotiations. This may include, but is not limited to, establishment of objective pre-requisites based on capabilities, experience, expertise, or capacity.
4. Determine the negotiation sequence which may include the order of steps such as negotiations, bid submission, evaluation, confidential discussions, supplemental bid submission, and contract award.
5. Evaluate bids.
   1. The solicitation may allow for evaluation of all bids, even bids that would not be responsive under the rules of Public Contract Code, Section 12100 et seq. (for IT goods and services) or Public Contract Code Sections 10308, 10309, 10331, 10332, 10333, and 10290.1* (for non-IT goods).  Alternatively, the solicitation may require that bids meet certain minimum criteria in order to be evaluated.
   2. Buyers may choose to establish an evaluation team to evaluate bids according to the methodology specified in the solicitation.
   3. Establish initial scores either via ranking, as a percentage of total possible points, or other method that clearly differentiates between each bid.

   *Includes non-IT services for LPA transactions.

6. Negotiate. 
   1. Follow the rules of the solicitation in negotiating with bidders.
   2. Negotiations may be completed after a single round or may be done in several rounds.
   3. Negotiations may be conducted orally and/or in writing. Oral negotiations may be held in person, by conference call, or by use of video or web conferencing.
   4. The negotiation process may include persuasion, alteration of assumptions and positions, give and take, and may apply to price, schedule, requirements, or other terms of the proposed contract. The state may discuss other aspects of the Bidder’s proposal that could, in the opinion of the state, be altered or explained to enhance materially the proposal’s potential for award. However, the state is not required to discuss every area where the Bidder’s proposal could be improved. The scope and extent of negotiation exchanges are the matter of the state’s judgment. All Bidders currently in negotiations will be notified of changes in requirements.
   5. The state may establish a negotiation team to consist of representatives from DGS, and the requesting department, and other state representatives. The section Participants and Roles identifies the general roles and responsibilities of a negotiation team although the composition of any team may vary based upon the procurement.
7. Supplemental bids may be received after initial bids are opened. At the conclusion of negotiations, Bidders may be given an opportunity to submit a Best and Final Offer (BAFO) to the state. The state will establish a date and time for receipt of each Bidder’s BAFO.
8. Final evaluation and award. Use one of the following options to make a final award:
   1. Using the original criteria in the solicitation, score all proposals based on either the results of negotiations or, if applicable, the BAFO. Award to the highest ranked bidder.
   2. Revise the evaluation criteria based on the results of the negotiations. Prior to final evaluation, all bidders participating in negotiations shall be informed of the revised evaluation criteria and shall have the opportunity to submit a BAFO based on those criteria. Award to the highest-ranked bidder.
9. Issue a final evaluation and selection report documenting any decisions relating to selection of bidders to participate in negotiations, final scoring of proposals, and award decisions.
10. DGS or CDT, as applicable, may terminate negotiations and/or the solicitation at any time.