Federal Transportation Officer Training Program: Intermediate (Level 2)

Transcription

1 Page 1 of 55 Federal Transportation Officer Training Program: Intermediate (Level 2) Session 2: Tenders of Service Page 1 of 55

2 Page 2 of 55 Course Objectives Upon completing this session, given the sample cases and questions in the Knowledge Review section, you will be able to: Indicate whether a tender is the best option for purchasing transportation services. Indicate why a tender is NOT the best option. Identify the types of tenders available. Identify steps to establish a tender program for your agency. Select options for handling older and expiring tenders. Select from existing tender options to award a shipment. Page 2 of 55

3 Page 3 of 55 Session Outline How Are Transportation Services Procured? What Are the Types of Tenders? How Does an Agency Establish a Tender Program? How Do I Manage the Tender Program? How Do I Use Tenders to Award a Shipment? Can I Use Other Agencies Tenders? Wrap Up Glossary of Terms Knowledge Review Continuing the Learning Process Page 3 of 55

4 Page 4 of 55 How Are Transportation Services Procured? This section of Session 2 Tenders of Service will review the question "How Are Transportation Services Procured?" by exploring the following areas: What are the advantages of using a FAR Contract? What are the advantages of using a Rate Tender? Transportation officers (TOs) have multiple options for acquiring transportation services for moving freight and cargo. Contracts and transportation rate tenders provide valuable resources for quickly arranging shipping. Each method has advantages and disadvantages. The procurement method that meets your requirements depends on several factors. Page 4 of 55

5 Page 5 of 55 What are the advantages of using a Federal Acquisition Regulation (FAR) Contract? One method of procuring transportation services is by a FAR contract. You may be able to use a contract that is already obtained by another government agency. Note: Department of Defense services and agencies use the Defense Federal Acquisition Regulations (DFAR). Your agency may find it most advantageous to use a contract when you: Ship the same type and volume of cargo on a frequent basis to the same area. Have a requirement for specialized services. Have enough lead time to follow the FAR contracting procedures and your contract office can handle the requirement. The contract process can take several months from the initiation of the request to award. Have the option of using another agency's contract for transportation services. Page 5 of 55

6 Page 6 of 55 What are the advantages of using a Rate Tender? The other method of procuring transportation services is by a tender of service also known as a rate tender or tender. A tender is a transportation service provider's (TSP's) offer to provide service, as specified by rules or terms, at a given price. The tender may be presented voluntarily by the TSP, exist in the public marketplace to offer services, or be solicited by the government and then negotiated with the TSP. You may be able to use tenders already obtained by another government agency. Your agency may find using a rate tender is more advantageous when: A shipment must be made within too short of a time frame to allow completion of the FAR contracting process. An unknown or low volume of commodity is to be transported. There will be infrequent shipments. There is the option of using another agency's rate tender that offers better or equal value than options otherwise available to you. Contracting and rate tenders provide two separate, legitimate processes for procuring transportation services for your agency. Both provide flexibility for your agency to meet mission and transportation requirements. Note that contracts bind the two parties to follow the terms and conditions more closely than do tenders. The FAR includes provisions for contract enforcement and penalties that may not apply to tenders. Page 6 of 55

7 Page 7 of 55 What Types of Tenders Exist? This section of Session 2 Tenders of Service will review the question "What Types of Tenders Exist?" by exploring the following areas: What is a public tender? What are government rate tenders? What are solicited tenders? What are unsolicited tenders? Page 7 of 55

8 Page 8 of 55 What Types of Tenders Exist? (continued) 41 CFR (2012) definition of a rate tender is " an offer a transportation service provider (TSP) sends to an agency, containing service rates and charges." Rate tenders give transportation officers a flexible means of obtaining transportation services. TOs may be able to choose from several types of tenders for transportation services. Tender types differ based on whether the tender is offered to the general population or is unique and specific to one customer, or a set of customers. Other types of tenders include: Public tenders, also known as market tenders, are tenders and rates that are available to the general public. Solicited tenders are tenders received in response to a request by the agency. The agency and the TSP may negotiate the rules, terms and conditions, and rates, or the TSP may offer rates and services on a nonnegotiable basis. Unsolicited tenders are tenders voluntarily offered by the TSP to attract the agency's business. Page 8 of 55

9 Page 9 of 55 What Types of Tenders Exist? (continued) In any tender, the shipper organization (agency) and the TSP must define and agree to: Terms of service Duration of the agreement Initial rates and how often rates may be adjusted Any traffic guarantees for minimum shipment levels (a promise to ship a certain number of shipments using this tender), and Other terms agreed to by the parties. Page 9 of 55

10 Page 10 of 55 What is a public tender? Public tenders, published by TSPs (either in print or electronically), offer transportation services at specified rates to the general public. Standard terms of service, defined by the TSP, may be published along with rates, or rates may be provided separately from the terms. Any customer, whether government or commercial, may order services using a public tender. Public tenders are very price-flexible, and are often an indicator of changes in market rates and trends in transportation costs. Public tenders often serve as the baseline for determining and negotiating discounted rates and tailored services with a customer. For example, a TSP may agree to provide the government a specified percentage discount off its public tender. This way, the TSP does not need to develop and publish a separate set of traffic lanes and prices for each customer; it merely uses the existing rates, and discounts the charges on the bill of lading. Page 10 of 55

11 Page 11 of 55 What is a public tender? (continued) However, for larger requirements, or for recurring traffic over identifiable traffic lanes, you may want to establish tender rates that are below the prevailing public rates. When you need transportation services under these conditions, you may want to pursue a negotiated tender with government-specific rates. These are called government rate tenders. CAUTION: You must review and thoroughly understand if the terms of service of a public tender will meet your requirements. Read the tender carefully. Be sure the public tender is in compliance with 41 CFR and Terms and conditions are important to protect the Government's interest and establish the performance and standards expected of the TSP. Overseas or international tenders may be done differently. Page 11 of 55

12 Page 12 of 55 What are government rate tenders? Government rate tenders are a type of solicited tender. They may be solicited by the agency or unsolicited. Government rate tenders are privately arranged with a TSP, usually at a discount from the TSP's public tender The government has historically held the authority to seek rates that are less than those offered to the general public. The Interstate Commerce Commission Termination Act (P.L ) updated as Subtitle IV "Interstate Transportation" of 49 United States Code (USC) created the U.S. Department of Transportation Surface Transportation Board (STB). Under the provisions of 49 U.S.C and 49 U.S.C carriers (motor carrier, water carrier, rail carriers and freight forwarders) subject to the jurisdiction of the STB are permitted to submit to the government rate tenders that contain rates lower than published rates available to the general public. Based on 49 U.S.C. Federal Acquisition Regulations 48 CFR (2012) Government rate tender procedures specifies requirements for obtaining government rate tenders. You will need to find out who in your agency is authorized to negotiate government rate tenders. Page 12 of 55

13 Page 13 of 55 What are solicited tenders? Solicited tenders are offered by TSPs in response to commercial or government customer requests for rates and services. A government agency may advertise its requirements or directly request offers and rates from the TSPs, and the TSP responds. Solicited tenders may or may not be negotiated. The agency may be firm in its rules and requirements, and accept the TSP's rate offers at face value. In other cases, the agency and the TSP may interact to obtain final agreement on the rules, rates, and standards of service. In some situations, the TSP may also submit an offer, but refuse to negotiate any further details. The tenders then allow the agency to select from potential carriers at the specified rates. An agency is most likely to negotiate tenders when it needs several TSPs to provide: Specific types of service (such as expedited delivery). Types of equipment (such as refrigerated). Service involving varying frequency and traffic lanes. Page 13 of 55

14 Page 14 of 55 What are unsolicited tenders? Unsolicited tenders may be rare in the government. Unsolicited tenders are offers and rates provided voluntarily by a TSP to a commercial customer or government customer in an attempt to gain business. They may take the form of discounts off a public tender, or a negotiated set of rates and terms of service. What is an example of an unsolicited tender? A TSP regularly transports freight for commercial customers, but has limited opportunity for generating revenue from new freight to another destination or "backhaul" to home station. The TSP determines that a government agency has a major facility in this area and may be a potential customer. The TSP may approach the agency in an attempt to fill trucks that will otherwise be leaving the area empty. The rates for that service are often very attractive because any costrecovery revenue over these miles is preferable to empty truck movement. Page 14 of 55

15 Page 15 of 55 What Are the Advantages and Disadvantages of Different Tender Types? Different types of tenders can impact the control you have over the terms of service and rates. The following table identifies the advantages and disadvantages of using the various types of tenders. Type of Tender Public tenders Solicited tenders Unsolicited tenders Advantages Readily available Allow easy comparison of offerings and cost Agency has more control over terms, conditions Agency can exert bargaining influence on rates Rates may be more stable, depending on rules for adjustment timing Offer from a TSP; may improve rates or terms Disadvantages Inflexible, the TSP sets all terms Potentially highest cost (not discounted) Rates may change frequently with little notice Agency needs capability to solicit for, evaluate, and maintain tenders, and the ability to access them when routing and rating shipments May have less leeway to negotiate specifics Page 15 of 55

16 Page 16 of 55 How Does an Agency Establish a Tender Program? This section of Session 2 Tenders of Service will review the question "How Does an Agency Establish a Tender Program?" by exploring the following areas: How do I determine the terms and conditions of service the agency must receive? How do I locate public tenders? How do I "qualify" TSPs? How do I solicit for tender rates? How do TSPs file tender rates? How do I evaluate tenders? How do I accept rate tenders to have on file? Page 16 of 55

17 Page 17 of 55 How Does an Agency Establish a Tender Program? (continued) Establishing and maintaining a tender program within an agency can be simple or complex. On the simple end of the scale, you may merely collect and maintain a listing of TSPs that have public tenders on file, then go directly to their websites to find rates to match your shipment requirements. On the complex end, you may have a transportation management system (TMS) that includes all of the rates you have accepted from TSPs after Request for Offer (RFO) or negotiation processes. Details on the TSPs and rates may be entered manually or electronically. A TMS allows the user to perform multiple functions, such as access and compare rates, make total-cost calculations to include application of accessorials, and provide TSP rankings for a given shipment. For example, General Service Administration (GSA) TransPort Integrator, a TMS system, allows users to: Rate shipments for best value TSPs. Rate-shop across less than truckload (LTL), truckload (TL), and small parcel. Offer shipments electronically to a TSP. Page 17 of 55

18 Page 18 of 55 How Does an Agency Establish a Tender Program? (continued) Whether you decide to solicit for tenders or negotiate with the TSPs, you will need to follow several basic steps to build a tender program. You should seek your agency guidance prior to proceeding. Basic elements to establish a tender program include having to: Identify and develop the terms of service the agency must receive. Identify qualified TSPs that can meet the agency needs. Publish agency terms of service and request for offers. Receive and evaluate offers. Notify TSPs of acceptance. Page 18 of 55

19 Page 19 of 55 How do I determine the terms and conditions of service the agency must receive? Terms and conditions are important to protect the Government's interest and establish the performance and standards expected of the TSP. You need to know what you want to accomplish with your program in terms of TSP-provided services. Begin by asking the questions: Who is your shipper customer base and what are their requirements? Do they vary among activities? Do they have special needs? You can address these within the rules you set and release to industry. The TSPs are then free to choose whether they can meet your requirements and wish to compete for your business. Setting and publishing your rules, terms, and conditions gives you more control over the relationship with TSPs than may be found in using public tenders. Some terms and conditions will be based on how you conduct business with the TSPs. Page 19 of 55

20 Page 20 of 55 How do I determine the terms and conditions of service the agency must receive? (continued) 41 CFR (2012) emphasizes that terms and conditions are important to protect the Government's interest and establish the performance and standards expected of the TSP. 41 CFR (2012) provides guidelines on the minimums that should be included when agencies are developing their terms and conditions. What is an example of a set of terms and conditions to conduct business with the TSPs? You may establish a requirement to have all participating TSPs enrolled in an electronic billing and payment system, such as Syncada. Other terms and conditions may be specific to your agency's shippers or the TSP, such as increased liability, specialized packaging requirements, or hazardous material (HAZMAT) requirements. In the GSA program, special conditions are outlined by agency in the sections of the Request for Offers (RFO). Page 20 of 55

21 Page 21 of 55 How do I locate public tenders? For small transportation programs that do not frequently ship freight over defined lanes, public tenders may offer an easy way to determine a potential set of TSPs. Many TSPs have online websites that provide information on their services. Rate information may be available on the website or the TSP may offer interactive rate-seeking software which allows you to enter pertinent shipment information to obtain a rate. Examples include the: Origin and destination zip codes Shipment weight Dimensions Commodity class (if known) Type of service requested, and Dates. Prior to September 4, 2007 carriers under the oversight of the Surface Transportation Board (STB) were allowed to have collective rate bureaus set public tender rates. In May of 2007, the STB ruled in STB Ex Parte No. 656 et al. effective September 4, 2007 its approval of the agreements of motor carrier bureaus to engage in rate-related collective activities was terminated. Rate bureaus were no longer the source for finding public tenders. This ruling set the precedent that TSPs offering common carrier transportation services now must publish tenders showing offered services and prices (rates). These may be published in hardcopy, as electronic files that can be sent to customers or downloaded from the internet, or posted online on the TSP's website. CAUTION: You must review and thoroughly understand if the terms of service of a public tender will meet your requirements. Read the tender carefully. Be sure the public tender is in compliance with 41 CFR and Terms and conditions are important to protect the Government's interest and establish the performance and standards expected of the TSP. Overseas or international tenders may be done differently. Page 21 of 55

22 Page 22 of 55 How do I "qualify" TSPs? The term "qualify" is used to describe the process of determining that the TSPs your agency uses meet all requirements for conducting business with the government at large, and your agency specifically. You should only do business with carriers who are eligible to receive government business. Begin by asking these questions: Is the TSP on a list of ineligible businesses, or excluded from doing business with the government due to non-use status, suspension, or debarment? Is the TSP licensed and certified within the industry and state(s) in which it operates? Can the TSP meet additional qualifications, conditions, or requirements imposed by the agency before entering into a business arrangement such as financial solvency? Page 22 of 55

23 Page 23 of 55 How do I "qualify" TSPs? (continued) In addition to verifying with your agency if the TSP is eligible to conduct business, register and search the System for Award Management (SAM).gov website to determine which companies have been suspended, proposed to be debarred, debarred, or declared ineligible for government business. Under the GSA Freight Management Program (FMP), firms submitting offers must certify that they are not in such status and are not associated with other firms that are in ineligible status. GSA also requires TSPs to submit letters of intent stating that they will follow all rules, terms, and conditions and they "possess the required carrier or STB broker operating authority and maintain cargo and liability insurance as required by Federal, State, and local regulatory authorities." What are examples of other requirements an agency may require of TSPs? An agency may require TSPs to obtain a standard carrier alpha code (SCAC) identifier, posting of performance bonds to protect the government in the event of non-performance or default of the TSP, meeting of operator and equipment safety and maintenance standards, and participation in electronic commerce. How are qualifications provided? Qualification can be made before or in conjunction with solicitation for offers. An agency may ask interested TSPs to submit their evidence of qualification to narrow the field of potential participants, and then selectively ask some to submit rates. Or, it may publish its rules, terms, and conditions and a general request for offers, specifying that interested TSPs should submit evidence of qualification at the same time. Page 23 of 55

24 Page 24 of 55 How do I solicit for tender rates? After you are ready to contact TSPs to obtain rates, you have a variety of options. For engaging a few TSPs, you may contact them directly and give them your requirements. When going to a wider target audience, you may advertise your needs using the Federal Business Opportunity website ( GSA publishes its Request for Offer (RFO) and specific filing instructions annually ( RFO). The instructions provide specific guidance to TSPs wishing to participate such as: Types of service needed (such as truckload; less-thantruckload, or LTL; specialized, such as refrigerated and flatbed). Routes/lanes and traffic volumes anticipated (but with no guaranteed traffic minimums offered or implied to TSPs). Filing dates for initial, late, and supplemental filings, and the period for which the accepted rates will be effective (for example May 1 through April 30 of the following year). How the tenders will be evaluated and accepted. Rules for terminating rate offers based on unsatisfactory service from the TSP or for the convenience of the government. Special requirements of specific agencies covered under the program. Specific rules for electronic submission of rate information into GSA's TransPort Integrator (TPI) TMS. Page 24 of 55

25 Page 25 of 55 How do TSPs file tender rates? The goal is to have accepted tenders officially filed with the agency and then made available for transportation personnel to use in planning shipments. 41 CFR (2012) provides guidance on how TSPs must file their tenders with agencies. Because agencies must conduct audits on their expenditures for transportation services, it is imperative that the correct tender applied for the shipment is used for costing analysis. The requirement for submission to GSA is to ensure that pre-payment audits and post-payment audits can be accomplished using the correct tender information. TSPs must follow agency guidelines on how tender data should be submitted. Some TSPs may submit electronic files containing the structured information to the agency, or the agency may grant TSPs limited permissions to the TMS to enter their rate data online. Page 25 of 55

26 Page 26 of 55 How do I evaluate tenders? Check your agency to determine if there are established guidelines for evaluating tender submissions. Tender submissions must pass various tests. The first-level test is to determine if the offers submitted by TSPs are acceptable did the TSP follow the rules for submission? Failure to comply may result in requests for additional information, or automatic disqualification of the response. Under GSA FMP, those submissions that do not meet the test are determined unacceptable and discarded without further scrutiny. Page 26 of 55

27 Page 27 of 55 How do I evaluate tenders? (continued) For the remaining acceptable offers, the evaluation process can be simple or complex, depending on your selection criteria. You should determine the criteria in advance and publish them in your rules, terms, and conditions or request for offers. Research and apply any agency-specific selection criteria accordingly. If price is your predominant criterion for evaluation, and you use the "low price, technically acceptable" method for evaluation, then arraying the responses should be fairly straightforward. GSA's Freight Management Program (FMP) evaluates and sorts rate offers by total cost for the service needed, including any extra charges, known as accessorials. When rates are called up within TPI, a list of all TSPs is shown in a costascending order. If two or more TSPs have the same rate information, they will be shown alphabetically based on the TSP company name. GSA shows all acceptable rates, with no range limitations. Page 27 of 55

28 Page 28 of 55 How do I evaluate tenders? (continued) As referenced in the GSA FMP RFO, "individual agencies may use other methods of evaluation such as prior performance " in addition to price. If you use other rating categories besides price, you should determine how each will be weighted and scored. For example, if the TSP does not have sufficient equipment, or has low Federal Motor Carrier Safety Administration Compliance, Safety, and Accountability (CSA) scores, you may choose to disregard the tender response. You may also consider setting out-of-range boundaries for each rating category, enabling you to discard submissions that do not seem reasonable. After discarding out-of-range rates or TSPs with unsatisfactory performance history, rank the remaining tenders, and decide how many tenders to accept on file. Page 28 of 55

29 Page 29 of 55 How do I accept rate tenders to have on file? Your next steps depend on whether you intend to negotiate with the TSPs or just accept the rates and place them "on file." If you are negotiating, you will want to contact each TSP and follow up to clarify information or set up discussions. When you are in agreement, you technically accept the negotiated rates and terms. If, like GSA, you merely capture the rates you accept in your system, you may want to notify those TSPs whose rates you have accepted. While this is a business courtesy, in some cases, the TSP can merely look to see if its rates are now included in the transportation system. In some cases, you may also want to notify those TSPs with tenders not accepted, providing the reasons so that they can submit better responses the next time. Page 29 of 55

30 Page 30 of 55 How do I accept rate tenders to have on file? (continued) You will often want to keep multiple tenders on file for a particular traffic lane (origin and destination pair). Awarding and maintaining multiple tenders on file gives you the option to select from several TSPs. While you may have TSPs that you favor based on performance or price, you may need to go to alternates when the primary TSP cannot support your immediate requirement. Maintaining multiple tenders on file gives you greater flexibility. Again, be sure to report all accepted tenders to GSA for use in the auditing process. After you have accepted tenders from TSPs, your agency will need to manage them for use in shipment planning and keep them current. Page 30 of 55

31 Page 31 of 55 How Do I Manage the Tender Program? This section of Session 2 Tenders of Service will review the question "How Do I Manage the Tender Program?" by exploring the following areas: How do I maintain a current TSP listing and their rates? How do I determine when and how TSPs may adjust their rates? How do I maintain the agency's rules, terms, and conditions? When should I renegotiate tenders? Page 31 of 55

32 Page 32 of 55 How Do I Manage the Tender Program? (continued) Basic functions included in a tender management program are: Maintain current TSPs and their rates in the rate database or file Determine when and how TSPs may adjust their rates Maintain and update the agency's rules, terms, and conditions Renegotiate or re-initiate tenders, and Be proactive and contact vendors yourself to get their updated rates. Page 32 of 55

33 Page 33 of 55 How do I maintain a current TSP listing and their rates? Internal changes to your requirements or rules of business may require you to periodically update your tenders. Similarly, changes in transportation market capacity and pricing may also require you to periodically update your tenders. Be proactive and contact vendors yourself to get an updated copy of their rates. As identified earlier in this session, rate information should be accessible to your shipment planners. Rates are normally maintained in a TMS, such as GSA's TransPort Integrator or your own agency's TMS. Page 33 of 55

34 Page 34 of 55 How do I determine when and how TSPs may adjust their rates? The shipper-provider relationship is fairly simple. Shippers try to minimize their shipping costs relative to service, and TSPs seek to maximize their profitability. Changes in economic conditions and the transportation market will affect the capacity available and the price charged for transportation services, so rates do not normally remain static. You desire rate stability maintaining rates for a set duration to determine transportation spend rates and budgets. However, when preparing bids for longer terms, TSPs must factor any potential risks that will affect profitability into their rates. This may result in your agency paying artificially high rates. Provisions for frequent rate adjustment allow TSPs to deal with risk and quickly adjust to market conditions which may lead to rate reductions or increases. It is important to realize that if the TSP isn't allowed to adjust rates to reflect changing market conditions, it may stop accepting your shipments. How well you can hold TSPs to their negotiated rates without their refusing shipments depends on your terms of service and rules. Page 34 of 55

35 Page 35 of 55 How do I determine when and how TSPs may adjust their rates? (continued) When considering rate adjustment policy, your options include: Allowing TSPs to adjust their rates. Renegotiating rates with TSPs. Allowing rates to expire and starting fresh with new requests for offers. If you allow TSPs to update their rates on an as-needed or periodic basis, you will need a way to post the changes in your rate database. This can either be done interactively, with the TSP accessing the TMS database and updating, or rates may be passed to the agency for importing into the database or manual posting after review. A consideration in how often you allow TSPs to "refresh" their rates may be your ability to handle the administrative workload. Page 35 of 55

36 Page 36 of 55 How do I maintain the agency's rules, terms, and conditions? GSA republishes its Standard Terms of Service (STOS) and Request for Offers (RFOs) on a periodic basis, as conditions or requirements change. If you publish your rules and terms of service for soliciting and managing rate tenders, you should consider doing the same. Check with your shipping customers to see if their requirements are addressed adequately in terms of what you require of your TSP providers. If regulatory guidance, such as safety and certification has changed, ensure your documents are periodically monitored and update as necessary. If industry changes have an effect that you need to address, you can alter your terms and conditions and rules accordingly. As with most administrative actions, coordination with all stakeholders is advised. Page 36 of 55

37 Page 37 of 55 When should I renegotiate tenders? If you plan to have a long-term, in-house program using negotiated tenders, you will need to consider whether to renegotiate your tenders with current TSPs, or re-solicit completely. You may find that your requirements have changed significantly and your program is outdated. Changes in the prevailing market rates or TSP capacity on your traffic lanes may necessitate a major change. Either way, your agency should periodically review and update its required terms of service and rules. Renegotiating may be more attractive if you have: A TSP base that serves you well at reasonable rates. Limited lanes and lower shipment volumes. Established relationships with the TSPs that allow both parties to fine-tune and adjust to changes. Page 37 of 55

38 Page 38 of 55 When should I renegotiate tenders? (continued) However, you may reach a point where it is simply better to start over. To follow this course of action, you may simply allow all rate offers to expire and begin anew. Or, following GSA's lead in the RFO, if your rules allow, you may terminate the rate offers at any time for the convenience of the Government when it is in the Government's best interest. Re-solicitation may be a better option for agencies with large shipping requirements, capturing input from many TSPs over a wider variety of modes and geographic areas. However, be careful to allow sufficient lead time to put a new program in place prior to the expiration or termination of current capability, or you may not be able to acquire sufficient services to meet your agency's needs. Page 38 of 55

39 Page 39 of 55 Can I Use Other Agencies Tenders? This section of Session 2 Tenders of Service will review the question "Can I use Other Agencies Tenders?" by exploring the following areas: What factors should I consider when using another agency's tender? How do I arrange to use another agency's tenders? 41 CFR (2012) allows agencies to use another agency's contract or rate tender with a TSP only if allowed by the terms of that agreement or if the Administrator of General Services delegates authority to another agency to enter an agreement available to other Executive agencies. You will need to verify with your agency that it allows the use of another agency tender. Page 39 of 55

40 Page 40 of 55 Can I Use Other Agencies Tenders? (continued) Using tenders arranged by other agencies can be beneficial for several reasons: You avoid having to seek or negotiate them yourself. The sponsoring agency, like the GSA Freight Management Program (FMP), may be able to build a solicitation that is tailored to your needs, with special levels of service or specific routes. The sponsoring agency may be able to obtain more favorable rates and terms due to its larger volume and carrier base. On December 5, 2012 Office of Management and Budget issued Memorandum M Improving Acquisition through Strategic Sourcing - requiring agencies to identify and implement purchasing opportunities through strategic sourcing. Using the Federal Strategic Sourcing Initiative (SSI) can leverage your agency's purchasing power. Led by GSA, the Federal Strategic Sourcing Initiative was created to provide leveraged purchasing power, create opportunities to increase cost savings, and collaborate with industry to develop optimal solutions. The sponsoring agency may offer a variety of services that you do not have to duplicate within your agency, such as use of the transportation management system (TMS) for cost comparison, production of bills of lading, analysis, and reports. Page 40 of 55

41 Page 41 of 55 What factors should I consider when using another agency's tender? Although another agency may have a program or individual tenders on file that are available for use, you should not automatically assume that this is your best course of action. It may be convenient to use these services, but the result may not be a best-value solution for your transportation needs. For example, while the rates for a specific shipment may be lower than a solution that you had previously obtained, a service fee charged by the agency to use its system may result in a higher total transportation cost. 41 CFR (2012) answers the question "What other factors must I consider when using another agency's contract or rate tender?" that you must: a. Assure that the contract or rate tender meets any special requirements unique to your agency b. Pay any charges imposed by the other agency for external use of their contract or rate tender c. Ensure the terms of the other agency's contract or rate tender allow you to use it, and d. Ensure that the agency offering this service has the authority or a delegation of authority from GSA to offer such services to your agency. Page 41 of 55

42 Page 42 of 55 How do I arrange to use another agency's tenders? Gaining access to other agencies' programs and tenders may require formal or informal agreements, such as memorandums of understanding or agreement (MOU or MOA), or a similar document as prescribed within the agencies. You should first determine if your agency authorizes you to use another agency's program. You may need to collaborate with your agency's: Chief Financial Officer, and Legal Office. Contact the agency for their specific requirements. It may require enrolling in the program with certain conditions, such as: Agreement to use electronic billing and payment systems Subscribing to the sponsor agency's transportation management system, or Providing financial lines of accounting or funds set-asides in an escrow-like arrangement to ensure that adequate funds are available. Page 42 of 55

43 Page 43 of 55 How Do I Use Tenders to Award a Shipment? After you know the shipment details and characteristics, you must determine the type and source of tenders to use. If you are authorized to use another agency's tender, such as GSA's FMP, this may be your best immediate solution. If the movement falls into a category where you have already solicited and/or negotiated to have government tenders on file, you may want to refer to those tenders. As a last resort for an unusual or infrequent requirement, you may consider public tenders. Carefully review all public tenders because the terms may not be acceptable to the Government. Page 43 of 55

44 Page 44 of 55 How Do I Use Tenders to Award a Shipment? (continued) After pricing all possible solutions for the shipment requirement using tenders being considered, compile and rank them using your agency's best-value selection criteria. For example, if price is the sole determining factor, all available tender rates applying to the shipment should be ranked from lowest to highest cost. The shipment would then be offered to TSPs, going from lowest to highest cost until the shipment is accepted. If there are other best-value determinants, such as preferred carriers (based on quality of service, responsiveness, or other factors) the shipment planner will follow agency guidelines for selecting the TSP from the tender choices. You should also consider any minimum shipment levels the agency has agreed to provide each TSP over time. This is referred to as "traffic distribution" and can affect a best-value decision because you may need to offer traffic to an underused TSP at a higher price or pay a penalty for not meeting your guaranteed minimums. Page 44 of 55

45 Page 45 of 55 How Do I Use Tenders to Award a Shipment? (continued) What is an example of awarding a tender for a shipment? An agency has tenders on file for six LTL TSPs. After the rates are ranked, TSPs "A" and "B" are lowest cost. However, the agency has decided to award traffic equally to the three lowest-cost TSPs. TSPs "A" and "B" have already each received more than one third of the traffic for the month. The agency rule would, therefore, award the shipment to TSP "C" as the next-lowest carrier. Once you have selected your TSP, the next major step is to order the transportation and produce the appropriate bill of lading (BOL). The U.S. Government Freight Transportation Handbook (2012) provides specific information on use of BOLs. 47 CFR requires that the applicable rate tender number and carrier identification be shown on all transportation documents; for example, "ABC Transportation Company, Tender Number 999." Page 45 of 55

46 Page 46 of 55 Wrap Up In this session on tenders of service, you have been introduced to the following: Contracts and tenders are methods of acquiring transportation services for the federal government on a recurring basis. Tenders generally offer more flexibility for the agency and the TSP. Tenders are a better solution when requirements are less-defined, you have greater variability in traffic lanes and demand, or your lead times are limited. Contracts are a better solution when requirements are well known, sufficient volume exists over defined traffic lanes, and you have time to negotiate and execute a contract. Agencies can enter into tender arrangements with TSPs with both parties agreeing to the terms and conditions and rates. Whether the agency then chooses to move shipments under the arrangement is up to the agreement between parties. Tenders are offers to provide services, but generally the government does not guarantee minimum traffic with tenders. Tenders can be allowed to expire or terminated at the convenience of the government. You must review and thoroughly understand if the terms of service of a public tender will meet your requirements. Read the tender carefully. Be sure the public tender is in compliance with 41 CFR and Terms and conditions are important to protect the Government's interest and establish the performance and standards expected of the TSP. Overseas or international tenders may be done differently. There are many steps involved in establishing and maintaining an internal tender program. The agency must establish its rules, terms, and conditions; solicit for rates; ensure the TSPs are qualified; and evaluate and accept the rates. The agency needs a capability to manage the rates on file, and may need a TMS to support the tender program. Finally, the agency must maintain its rules, terms, and conditions, and determine when or if to renegotiate tenders. Page 46 of 55

47 Page 47 of 55 Wrap Up (continued) The ability to use tenders of other agencies, such as under GSA's Freight Management Program, can be of great benefit to many agencies. In the case of GSA, the TSPs rebate a portion of the transportation bill back to GSA to pay for the administration of the program, and this rebate is factored into the TSP's rates. This means that the tender rate may be higher than could otherwise be obtained on the open market or through negotiation; however, this may be a reasonable cost to the shipper for accessing an established transportation capability. Using tenders to route shipments is not complicated. The shipment planner merely selects from the available tenders that provide required services over the route, and computes the total shipment cost using each tender. Agency best-value criteria are then applied to make the selection. Tenders are a legitimate, authorized means to acquire transportation services. However, you should always research your agency's policies regarding the use of other agency's tenders or contracts, and the ability to initiate your own internal tender program. Page 47 of 55

48 Page 48 of 55 Glossary of Terms Government rate tender: An offer by a common carrier to the United States at a rate below the regulated rate offered to the general public. Public tender: A list of services and prices offered by the TSP to the general public as a common carrier. Rate schedule: A list of freight rates, taxes, and charges assessed against non-household goods. Rate tender: An offer a TSP sends to an agency, containing service rates and charge. Solicited tender: A tender offered by a TSP in response to an agency's request for offers. Selection criteria: The factors an agency uses to evaluate and rank the responses or offers from TSPs prior to selection. Terms of service: A set of rules established by the agency for qualifying TSPs; managing the solicitation, evaluation and maintenance of tender rates; setting service and performance standards for TSPs; and specifying rules for non-use. Unsolicited tender: A tender offered to an agency on a voluntary basis; the offer may include rates or discounts and terms of service intended to attract the agency's business. Page 48 of 55

49 Page 49 of 55 Knowledge Review Based upon the following scenario select the correct response(s): An agency is considering whether to negotiate tenders or initiate a transportation services contract to support its shipping requirements. Which of the following attributes most apply to selecting a tender solution? A. Consistent volume B. Short lead time C. Multiple city-pairs D. Limited acquisition staff resources E. Cargo volume varies considerably F. Requirement for specialized services G. Infrequent shipments Answer: B, D, E, G Feedback: Initiating contracts requires sufficient lead time to put the contract in place. If your cargo volume varies significantly, and you have infrequent shipments, tenders are the better solution. Your agency may find using a rate tender is more advantageous when: A shipment must be made within too short of a time frame to allow completion of the FAR contracting process. An unknown or low volume of commodity to be transported. There will be infrequent shipments. There is the option of using another agency's rate tender that offers better or equal value than options otherwise available to you. Contracting and rate tenders provide two separate, legitimate processes for procuring transportation services for your agency. Both provide flexibility for your agency to meet mission and transportation requirements. Note that contracts bind the two parties to follow the terms and conditions more closely than do tenders. The FAR includes provisions for contract enforcement and penalties that may not apply to tenders. Page 49 of 55

50 Page 50 of 55 Knowledge Review Select the correct response(s): A tender solution may NOT be the best option for acquiring transportation services when: A. There is consistent volume B. There is a short lead time to make transportation arrangements C. Shipment is to multiple city-pairs D. Cargo volume varies considerably E. There is a requirement for specialized services Answer: A and E Feedback: Contracts are the better solution when you can accurately predict your shipping volumes and lanes, and have sufficient volume to make a contract attractive to potential TSPs. If you need special services or types of equipment, these can be negotiated into contracts. Your agency may find it most advantageous to use a contract when you: Ship the same type and volume of cargo on a frequent basis to the same area. Have a requirement for specialized services. Have enough lead time to follow the FAR contracting procedures and your contract office can handle the requirement. The contract process can take several months from the initiation of the request to award. Have the option of using another agency's contract for transportation services. Contracting and rate tenders provide two separate, legitimate processes for procuring transportation services for your agency. Both provide flexibility for your agency to meet mission and transportation requirements. Note that contracts bind the two parties to follow the terms and conditions more closely than do tenders. The FAR includes provisions for contract enforcement and penalties that may not apply to tenders. Page 50 of 55

51 Page 51 of 55 Knowledge Review Based on the following scenario select the correct response(s): An agency transportation officer is considering whether to solicit for tenders or use another agency's tender program. Market research for the agency's five prevalent lanes of traffic for LTL and TL freight indicate that the sponsor agency's rates are higher on some lanes and lower on others. When choosing the acquisition approach, what other factor(s) must the transportation officer consider? A. The number of vehicles that each TSP possesses. B. Any charges that the sponsor agency will impose for use of its tender program. C. The frequency that tender rates change. D. The ability of either option to support the agency's special requirements. Answer: B and D Feedback: 41 CFR (2012) states that you must consider all of these before choosing to use another agency's contract or tender: Assure that the contract or rate tender meets any special requirements unique to your agency. Pay any other charges imposed by the other agency for external use of their contract or rate tender. Ensure the terms of the other agency's contract or rate tender allow you to use it. Ensure that the agency offering this service has the authority or a delegation of authority from GSA to offer such services to your agency. Page 51 of 55

52 Page 52 of 55 Knowledge Review Select the correct response(s): What are the basic elements for establishing a tender program? A. Identify terms, conditions, and rules B. Accept offers C. Publish terms, conditions, rules, and requests for offers D. Maintain rates and TSP qualifications E. Receive and evaluate offers Answer: A, B, C, and E Feedback: The five basic elements of establishing a Tender Program are to: 1. Identify and develop the terms of service the agency must receive. 2. Identify qualified TSPs that can meet the agency needs. 3. Publish agency terms of service and request for offers. 4. Receive and evaluate offers. 5. Notify TSPs of acceptance. Maintain rates and TSP qualifications is an element in maintaining a Tender Management Program. Page 52 of 55

53 Page 53 of 55 Knowledge Review Based on the following scenario select the correct response(s): An agency has negotiated tenders on file with four established TSPs. The tenders have been in effect for four years and will expire in the next year. Two new start-up TSPs have entered the market in the last year and are well regarded for service and price competitiveness. Although the agency has good relationships with the current TSPs, it is wondering whether to renegotiate. Select the factors that apply in a decision to let the current tenders expire and re-solicit new tenders. A. Current TSP's service levels are only adequate but they meet performance standards. B. A start-up TSP has a newer facility and equipment. C. Discount rates have remained consistent with the current TSPs. D. A start-up TSP is aggressively seeking new accounts. Answer: A, C, and D Feedback: Newer equipment and facility may not affect the levels of transportation services provided. However, because the new TSP is aggressively seeking new accounts, it may provide the agency better service and lower rates than it receives from the incumbents. The agency could attempt to renegotiate with the incumbents to improve service and lower rates, but if it wants to add the new TSP to its carrier base, allowing the current tenders to expire and then initiating a new solicitation open to all could produce better results. Page 53 of 55

54 Page 54 of 55 Knowledge Review Select the correct response(s): What are the basic functions of a tender management program? A. Maintain current TSPs and their rates in the rate database or file. B. Renegotiate or re-initiate tenders. C. Maintain and update the agency's rules, terms, and conditions. D. Determine when and how TSPs may adjust their rates. Answer: A, B, C, and D Feedback: The four steps for a Tender Management Program are: 1. Maintain current TSPs and their rates in the rate database or file. 2. Renegotiate or re-initiate tenders. 3. Maintain and update the agency's rules, terms, and conditions. 4. Determine when and how TSPs may adjust their rates. Page 54 of 55

55 Page 55 of 55 Continuing the Learning Process In addition to the sites identified in this session, you can find more information on the topic of Tenders of Service from the following: 41 CFR, Part (2012), Transportation Management, Subpart B, Acquiring Transportation or Related Service. 49 U.S.C or 49 U.S.C for information on negotiating a rate tender under a federal transportation procurement statute. Federal Acquisition Regulation, 48 CFR (2012), for government rate tender procedures. GSA Freight Management Program, for information regarding GSA's services offered to other government agencies for the movement of freight. Freight TSP Approval Requirements, for information on GSA's qualification requirements for TSPs under the FMP. It is critical agencies ensure compliance to Prepayment and Postpayment Transportation Audit requirements identified in 31 U.S.C and 41 CFR Transportation Payment and Audit. Contact GSA Transportation Audits Division at AskAudits@gsa.gov or by phone (703) for further information. Page 55 of 55