Meeting November 18 2010 Agenda 1 Energy

Meeting November 18, 2010

Agenda 1. Energy Management - Bruce Stultz 2. BMWBO – SBR Program – Gayle Nuppnau 3. Legal – Chuck Anderson 4. Materials Updates – Walt Quade 5. Services Updates – Roxana Dietz, Jan Braxton 6. e. Marketplace Updates – Sue Plecker, Roxana Dietz 7. RFP Changes – Jeff Mandel, Roxana Dietz 8. Other Procurement Updates – Cheryl Kleeman 9. CRP – Jen Smith 10. Training Updates – Joan Kraft 2

GESA Guaranteed Energy Savings Act (Performance Contracting) Program 3

GESA Program Overview • Market as a fiscal tool • “Budget Neutral” - Savings pay for projects (utility, operational, capital avoidance) • Third Party Lenders (Maximum 20 year project payback for standard process, 15 years SESCO) • Standard agreements and forms • RFP Procurement Process • Qualified Energy Service Companies (ESCOs & SESCOs) 4

Starting in 1998, DGS worked with the GGGC (Governors Green Government Council), DOC (Department of Corrections), and NAESCO (National Association of Energy Service Companies) to develop the program process and model documents for today's GESA (Guaranteed Energy Savings Agreement) program. 5

An Application for Qualification (AFQ) was released to qualify the DGS Energy Savings Companies (ESCOs) pool which was finalized in 2000. Governor Ed Rendell release Executive Order 2004 -12 DGS designated as the central coordinator for Commonwealth Energy Management and the centralized authority for GESA projects. 6

Management Directive 720. 5 The original MD 720. 5 was released November 22, 2005 Restricted personal appliance use Temperature set-points (68 in heating season, 74 in cooling season) Discontinued use of incandescent lamps Calendar year ‘ 06 showed a reduction in consumption by 9. 5% Avoided utility costs $1. 6 M A new version was released July 25, 2008 Standardized use of Energy Star lamps and appliances Adjusted temperature set-points (67 in heating season, 75 in cooling season) 7

Strategic Plan • Mission: to implement energy and environmental strategies in alignment with government objectives that continuously improves facility use and management. • Goal 1: Long term Supply of Energy • Goal 2: Energy Conservation • Goal 3: Environmental Sustainability • Goal 4: Alignment with Governmental Objectives • Goal 5: Leveraging Technology 8

Current GESA Program Figures As of this date, there have been 69 GESA projects delegated to Commonwealth Agencies. 11 participating agencies which include: Department of Military and Veterans Affairs, DOC, Labor & Industry, State System of Higher Education, Department of Public Welfare, PA Historical & Museum Commission, PA Department of Transportation, Pennsylvania State Police, Department of Agriculture, PA Higher Education Assistance Agency and DGS. 49 projects currently under contract Total Project Costs amount to $426. 6 M Total Guaranteed Savings amount to $627. 1 M Energy Reduction amounts to $606. 5 M 9

DGS GESA Project Initiatives 8 GESA projects since the year 2005 with all projects scheduled to be completed January 2009 through December 2010 28 DGS Buildings Rachel Carson, Governors Residence, North Office, Irvis (South) Office, East Wing, Finance, Forum, Central Plant, Labor and Industry, Health and Welfare, 22 nd and Forster, 18 th and Herr, State Records Center, Scranton, Reading DGS Project Totals Project Costs: $70. 8 M Project Utility/Operation Reduction: $80. 1 M 10

Completed Projects Governors Residence Geo-Thermal System Labor and Industry Solar Panel application (15’ x 50” [4. 6 m x 127 cm] 10 KW) on top of Commonwealth Garage Central Plant Chiller Project Health & Welfare windows Capitol Complex LED lighting 11

Governors Residence Geo-Thermal System 12

Labor & Industry Solar Panels 13

Capitol Complex Chiller Plant 14

Health & Welfare Window Replacement 15

Health & Welfare Window Replacement 16

LED Lighting: Forum Auditorium 17

LED Lighting: Capitol Complex 18

Energy Star • All DGS buildings can now be uploaded into the Energy Star database • A rating of 63 or above on the 1 -100 scale is needed for LEED-EB and a rating of 75 or above qualifies a building for national recognition as an Energy Star facility • Currently Rachel Carson and Scranton SOB have Energy Star Certification • Weather Normalization has also been added to allow DGS to monitor the effect of weather on utility consumption 19

LEED-EB Certification 4 buildings are now pursuing LEED-EB certification Gold – Governors Residence and Rachel Carson Silver – Scranton and Reading State Office Buildings DGS LEED-EB Manual DGS Policies Established Credits (27) Points Certification (Operations & Maintenance) Certification (34 -42) Silver (34 -50) Gold (51 -67) Platinum (68 -92) Program to Maintain Certification DGS LEED-EB Expertise Offered with GESA Projects 20

Current Energy Utility Savings DGS GESA Goal Facilities 12 Month Period ending 06/10 Electricity (k. Wh): 88, 715, 186 Natural Gas (MCF): 26, 759 Steam (mm. BTU): 117826 Total Energy (mm. BTU): 455, 431 Fiscal Baseline Year 04/05 Electricity (k. Wh): 121, 926, 126 Natural Gas (MCF): 17, 615 Steam (mm. BTU): 167, 039 Total Energy (mm. BTU): 600, 665 Energy consumption has decreased by 24. 2% 21

Current GESA Cost Savings DGS GESA Goal Facilities 12 Month Period ending 06/10 Electricity: $7, 013, 703 Natural Gas: $336, 710 Steam: $3, 560, 968 Total Energy: $10, 911, 381 Fiscal Baseline Year 04/05 Electricity: $8, 467, 004 Natural Gas: $223, 181 Steam: $3, 948, 719 Total Energy: $12, 638, 904 Energy Utility Usage Costs have decreased by 13. 7% 22

Successes • Energy Leadership Award for Public Service from the US Energy Association • Energy Manager of the Year 2008 Award from the Association of Energy Engineers • Corporate Energy Management Award from Association of Energy Engineers • National Association of Energy Services Companies and Berkeley National Laboratory recognize the Commonwealth’s GESA program as the nation’s best practice and most active for 2007 & 2008 • Green Leadership Award from Penn. Future • NAESCO sponsored delegation from Turkey 23

New Initiatives • Small Energy Service Company Program • County & K 12 – IU Services • Power Purchase Agreements • Lower cost electric procurement strategies • Block & Index / Straight Index 24

Questions? Contact: Bruce Stultz, Director, Energy Management 717 -705 -8519 bstultz@state. pa. us 25

Small Business Reserves (SBR’s) Small Business Reserve (SBR) Overview Purpose: SBR – To allow small businesses to bid without competing with larger more established businesses and to increase economic opportunities for small businesses, including minority and women-owned small businesses. • Authority – Section 2101 of the Commonwealth Procurement Code, 62 Pa. C. S. § 2101 • Promotes the growth of Small Businesses -- Provides participation in a designated procurement to certified small businesses • Provides competition within SBR’s – Among small businesses only 26

Small Business Reserves (SBR’s) Small Business Reserve (SBR) Overview • Program is designed for prime contracting opportunities • No change in the procurement process – Only limit is on what businesses can bid – Everything else about the procurement is done the way it normally would • Before an award is made businesses must be certified as a small business 27

Small Business Reserves (SBR’s) Self-Certification Process for Small Businesses • Small Certification Form – RFP – Appendix D http: //www. portal. state. pa. us/portal/server. pt/community/procurement_forms/19505 – IFB – Attachment A • Self-certification is based on honor system • Must affirm that information provided is accurate and true • Must re-certify each time bid is submitted 28

Small Business Certification 29

Small Business Reserves (SBR’s) Qualification/Definition Small Business • Independently owned and not dominant in its field of operation • Contractor employs no more than 100 persons – Full-time/full time equivalent • Contractor <$20 M in gross annual revenue in each of its last two fiscal years ($25 M for those businesses in IT) • If Contractor is new business (less than 1 year), contractor has an approved business plan by the Small Business Development center or by a PA enterprise Center authorized by the Minority Development Agency of the United States Department of Commerce. 30

Independent Agency Procurement Forms Independent Agency Manual Procurement Forms Survey: – Why? To determine use of Procurement Forms (Procurement Handbook, Part I Chapter 10) - Who? Independent Agencies only § 19 Responses: Many agencies are still utilizing the forms - Now what? BOP will update and maintain forms for use by agencies Use of Manual Procurement Forms: – Utilized under the following circumstances: § Independent Agencies who do not use SRM/SAP system § Emergencies (system down, power failure, etc. ) 31

SRM Attribute Changes Mandatory Attributes in process of being added: • Did Submitter violate any of the contractor integrity provisions in connection with the submission of its offer or any contract negotiations? • In the last 4 years, has Submitter’s officers, directors, associates, partners, or individual owners been charged with, or convicted of any misdemeanor or felony? If yes, provide information in the comment field or as an attachment. 32

Sole Source (SS) Procurement Requirements Services: Agencies must create SRM document type Supplier Price Request (SPR) for all SS – >$5, 000 – Agency creates SPR • Set as Restricted Bid Invitation • As part of SPR, must include Doc Builder T & C’s – Supplier submits bid price in response to SPR – Agency completes on-line source justification form – Agency creates follow-on PO/contract from supplier’s bid Materials: DGS creates and processes SPR – If delegated back to the agency follow process noted above Manual SPR Form: – Created for use: • By Independent agencies not using SRM • In case of emergency if SRM system would not be available – Available on DGS Procurement website > Procurement Forms Note: Procurement Handbook updates are forthcoming. 33

SPR Form The SPR form is now available on the DGS web site: 34 http: //www. dgsweb. state. pa. us/comod/Current. Forms/GSPUR_SPR. doc

Electricity Procurement Update • Initiated bidding process for electric generation for all non-PPL utilities. • Deregulation will impact balance of PA 01/11 • Budgets will continue to be impacted with cost increases based on experiences with PPL early this year. • Early large load account bids have shown prices roughly at par to a 5% increase in generation costs over previously capped rates! 35

Laboratory Supplies Supplier: VWR Go-live with Punch-out - November 22, 2010 • XML enabled => auto PO < $10 K 36 VWR punch-out user guide is available on the DGS Training web-site

MRO Contract December 1, 2010 - planned contract “Go-Live” Date – New Contracts are awaiting Attorney General approval. Ø If not released by AG prior to 12/1/10, Agencies may use Supplier Web sites (via P-Card) to obtain supplies. LOT DESCRIPTION SUPPLIERS One a) b) Two a) b) c) Electrical Square D Schaedler/Yesco Distribution Grainger Industrial Supply Three General Hardware, Metal working, Test Equip, & Security Grainger Industrial Supply Four Material Handling Grainger Industrial Supply Lighting (Lamps/Ballasts/Fixtures) Sylvania Lighting General Electric Lighting Phillips Lighting Schaedler/Yesco Distribution Grainger Industrial Supply Wesco Distribution Contract Punch- P-Card out enable d 440000762 X X 3 440000762 2 440000762 1 440000762 2 X X X X 440000762 X X 2 Five Safety Arbill Safety 440000762 X X 4 1. All - System temporarily unavailable A. M. of go-live with new contract to switch punch-outs to new contract #’s. Six Hand & Power Tools X X 2. Schaedler - XML enabled => auto PO <$10 K Grainger Industrial Supply 440000762 2 37 Seven HVAC Grainger Industrial Supply 440000762 X X

Contracts-Last 30 Days Contract Number Value Type of Contract 4400002958 Chemical Detection Equipment $1, 000 Contract Renewal 4600013480 Janitorial Supplies $5, 000 Contract Renewal 4400002988 Lab Equipment $5, 000 Contract Renewal 4400000675 Traffic Control Equip 41, 000 IFB 4600014512 Bulk Propane $250, 000 IFB 4400007494 Light Duty Trucks $6, 000 IFB 4600014517 38 Description Bridge Supplies $400, 000 IFB

New Solicitations next 60 Days Contract Number 4400002037 Mine Water Chemicals $100, 000 IFB 4400006982 Wood Supply $300, 000 IFB 4600014022 Coal Testing $250, 000 IFB Various Fuel Mgt $600, 000 IFB 4400004203 39 Description Value Energy Curtailment $1, 500, 000 Type of Contract ? ? ? Might Renew

New Solicitations next 60 Days Contract Number Description 5630 -01 Concrete Pipes 9905 -06 Value Type of Contract IFB Delineators $500, 000 IFB NA Recreation Equipment $1, 000 IFB NA Brine Production Units $500, 000 IFB NA 40 $2, 000 Compaction Equipment 4500, 000 IFB

New Solicitations next 60 Days Contract Number 4400002037 Mine Water Chemicals $100, 000 IFB 4400006982 Wood Supply $300, 000 IFB 4600014022 Coal Testing $250, 000 IFB Various Fuel Mgt $600, 000 IFB 4400004203 41 Description Value Energy Curtailment $1, 500, 000 Type of Contract ? ? ? Might Renew

Services Team New Solicitations 42

Services Team Current Solicitations 43

Services Team Current Solicitations 44

Services Team New Contracts Project Title Agency Commodity Specialist/ Issuing Officer PADOT Customer Call Center Shingara, Syline Vehicle Decals & Markings ALL Silk Screen Printing 45 DOT ALL PO/Contract Number Supplier Name Original Contract Start Date Original Contract End Date ACS State & Local Solutions Inc 12/3/2010 12/2/2015 Noss, Toniann 4400007607 Bill Korman 10/1/2010 9/30/2012 Williams, Emanuel M&M Displays Inc. 11/1/2010 10/31/2012 4400007265 4400007659

Consulting ITQ • Parent Contract: 4400007410 – ITQ posted 10/25/10 – Contracts to be effective: January 2011 § 32 Service Categories (See appendix - C) § Open Enrollment Contract – DGS will review suppliers submissions the 15 th of each month. – Agency instructions will be provided in the ITQ Document Library. – Notify your suppliers 46

Consulting Thresholds 0 to $50 K • Select any qualified service provider from the applicable service category and request a quote. – Limit of $50 K per project, per Agency. 47 $ 50 K to $500 K and over • If delegated by DGS, • Solicitation - RFQ use RFQ template on ITQ website and solicit all service providers in applicable service category. • Threshold processes • Agency must form evaluation committee described in the and follow procedures Consulting Services for RFP. ITQ Threshold Processes document. – Based on best value determination to be provided to DGS for review.

Consulting ITQ • Special Approvals: – For following categories, OB approval must be received prior to agency conducting an RFQ regardless of the threshold: § Actuarial Services § Accounting Services § Financial Services § Auditing Services – Complete the Consulting Services ITQ Review Form, and – Provide a copy of the SOW § Send request to OB resource email account (provided on the form) § In addition, the Auditing Services Category, will require Auditor General approval. • The OB approval must be attached to the resulting PO. 48 DGS Contact Information: Kay Whitsel, Commodity Specialist Phone: 717 -787 -7675 Email: kwhitsel@state. pa. us

e. Marketplace Enhancements • Objective – To provide current and potential suppliers longer term visibility of anticipated/expected forthcoming procurements prior to their actual issuance to assist them in planning and preparation. • New Functionality – Automation of: § Notice of Forthcoming Procurements ( NFP) § Request for Delegation (RFD ) § Award Form § Upcoming Procurements • Benefits – – – 49 Advanced public notice Electronic internal agency approvals via e-mail Electronic DGS approvals via e-mail Archiving of electronic forms and all related documentation for 4 years Internal DGS reporting features and all forms & documentation in one central location Form automation feeds pending procurements.

e. Marketplace Enhancements continued Key Steps Demo provided to the e. Marketplace Agency Focus Group 10/22/10 Testing with agency personnel 11/9/10 Go live 11/19/10 Agency notification 50 Key Dates 11/19/10

RFP / RFQ Changes • RFP vs. IFB • Q & A section • Technical Scoring • Evaluator Scoring Guide • Master Scoring Sheet • Criteria for Selection • Contractor Responsibility • Options for Process • RFQ Selection Memo • RFQ Best Value Selection 51 RFP Playbook and Procurement Handbook updates forthcoming.

RFP vs. IFB • Issuing Officers are required to disclose the justification for use of competitive sealed proposals vs. competitive sealed bidding. – Check the appropriate box as is to why it is not practical or advantageous for COPA to issue an IFB vs. an RFP. • The completed form should be submitted to DGS in conjunction with the Notice of Forthcoming Procurement and DGS will post with the solicitation when issued. – For agency led procurements the form should be posted in conjunction with solicitation issuance. • The form can be located on the DGS website in the agency forms directory. Refer to link below. http: //www. dgsweb. state. pa. us/comod/Current. Forms/BOP 124. doc 52

RFP vs. IFB 53

Q & A on RFP Questions & Answers* (I, 9) 54 If Offeror has questions, they must be submitted via email no later than the date indicated on the Calendar of Events. The Issuing Officer shall post the answers to the questions on the DGS website by the date stated on the Calendar of Events. • An Offeror who submits a question after the deadline date for receipt of questions indicated on the Calendar of Events assumes the risk that its proposal will not be responsive or competitive because the Commonwealth is not be able to respond before the proposal receipt date or in sufficient time for the Offeror to prepare a responsive or competitive proposal. • When submitted after the deadline date for receipt of questions indicated on the Calendar of Events, the Issuing Officer may respond to questions of an administrative nature by directing the questioning Offeror to specific provisions in the RFP. • To the extent that the Issuing Office decides to respond to a nonadministrative question after the deadline date for receipt of *Changes incorporated into RFP questions indicated on the Calendar of Events, the answer must be template

Technical Scoring (III, 4) • In order for a Contractor to be considered responsible for this RFQ/RFP and therefore eligible for selection for best and final offers or selection for negotiations the total score for the technical submittal of the Contractor’s proposal must be greater than or equal to 70% of the available technical points. • Using adjusted scores was difficult – Hard to understand – Don’t know final scores until all suppliers are scored and adjusted • Raises the bar in terms of supplier qualifications – Previously, suppliers with raw scores under 50% of available technical points were receiving an adjusted score > 70% – Creates necessary differentiation among suppliers – The 70% threshold was established several years ago at a very conservative point and it was intended to reevaluate. Simplifies and expedites process 55 •

Technical Scoring Sample 56

Evaluator Scoring Guide 57

Master Scoring Sheet Project Name Project Number Technical Points Allotted Statement of the Problem Management Summary Prior Experience Work Plan Cost Points Allotted Disadvantaged Business Points Allotted Enterprise Zone Points (Bonus) Domestic Workforce Points (Bonus) Contractor Participation Program Points (Bonus) Total Points Allotted 0 0 Technical Scoring Supplier Name 58 Supplier #1 Supplier #2 Supplier #3 Supplier #4 Supplier #5 Supplier #6 Supplier #7 Supplier #8 Supplier #9 Supplier #10 Supplier #11 Supplier #12 Supplier #13 Supplier #14 Supplier #15 Supplier #16 Supplier #17 Supplier #18 Supplier #19 Supplier #20 Cost Scoring DB Scoring Initial Score 70% Met Initial Score #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! 0. 00 0. 00 Bonus Scoring Domestic Contractor Enterprise Zone Workforce Participation Score Program Score 0. 00 0. 00 0. 00 0. 00 0. 00 Grand Total Initial Score #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Master Scoring Sheet TECHNICAL SCORING WORKSHEET Total Technical Points Allotted For This Project : Percentage Of Technical Points Needed To Qualify: 0 70% Technical Team Members Supplier Name Total Points Reviewer #1 Reviewer #2 Reviewer #3 Reviewer #4 Reviewer #5 Reviewer #6 Average Initial Score Points Rank % of Technical 70% Met Points Supplier #1 0. 00 #DIV/0! #DIV/0! Supplier #2 0. 00 #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! Supplier #3 Supplier #4 Supplier #5 0. 00 Supplier #6 0. 00 #DIV/0! #DIV/0! Supplier #7 0. 00 #DIV/0! #DIV/0! Supplier #8 0. 00 #DIV/0! #DIV/0! #DIV/0! #DIV/0! Initial Supplier #9 Score Supplier #10 0. 00 Supplier #11 0. 00 #DIV/0! #DIV/0! Supplier #12 0. 00 #DIV/0! #DIV/0! Supplier #13 0. 00 #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! Supplier #14 Supplier #15 Supplier #16 0. 00 Supplier #17 0. 00 #DIV/0! #DIV/0! Supplier #18 0. 00 #DIV/0! #DIV/0! #DIV/0! 0. 00 #DIV/0! #DIV/0! Supplier #19 Supplier #20 59

Master Scoring Sheet PROPOSERS NAME: ___________________ Enter 0 -100 for each question Enter 0 -100 for each question Evaluation Team Member Name: _________________ Evaluation Criteria Evaluation Component Understanding the Problem and Proposed Technical Solution IV&V RFQ Max Pts Initial Score Pts Adjusted Score Pts 0. 0 50 Primary Objectives (I-4) Objectives (IV-1) Nature and Scope of Project (IV-2) 10 Management Summary (II-3) Work plan (II-4) Primary Objectives (I-4) Objectives (IV-1) Nature and Scope of Project (IV-2) Statement of Problem (II-2) Primary Objectives (I-4) Objectives (IV-1) Nature and Scope of Project (IV-2) 0. 0 0. 0 0. 0 Requirements (IV-3) Statement of Problem (II-2) 10 10 50 10 Are the problems of providing the service clearly delineated or are they merely “parroted” from the RFQ? How consistent are the scope of effort and resources proposed by the Contractor with the size and nature of the service to be provided? Does the Contractor demonstrate a thorough understanding of the overall project (IV&V RFQ, ITS RFP and DOR’s needs) and its requirements? 10 Has the Contractor made an accurate assessment of the service to be provided based on its interpretation of the requirements as defined in the work statement? Statement of Problem (II-2) Does the Contractor state in succinct terms an accurate understanding of the problem presented and services required for this IV&V RFQ? 60 RFQ SOW Section 150 ITS RFP RFQ Response Section

INITIAL SCORE SUPPLIER NAME Scoring 0 -100 each question Evaluation Component Understanding the Problem and Proposed Technical Solution IV&V RFQ Evaluation Criteria Max Pts 150 RFQ Response Section Are the problems of providing the service clearly delineated or are they merely “parroted” from the RFQ? How consistent are the scope of effort and resources proposed by the Contractor with the size and nature of the service to be provided? Does the Contractor demonstrate a thorough understanding of the overall project (IV&V RFQ, ITS RFP and DOR’s needs) and its requirements? ITS RFP 61 RFQ SOW Section Evalua tion Team Score s: Initial Adjusted Average Score Ave Pts 130. 1 43. 9 85 Primary Objectives (I-4) Objectives (IV-1) Nature and Scope of Project (IV-2) 88 89. 0 90. 0 9. 2 85 82 86. 3 85. 3 8. 7 85 Primary Objectives (I-4) Objectives (IV-1) Nature and Scope of Project (IV-2) 93 Primary Objectives (I-4) Objectives (IV-1) Nature and Scope of Project (IV-2) 82 84. 8 84. 3 8. 4 85 85. 0 84. 5 8. 5 93 89. 0 10 10 Management Summary (II-3) Work plan (II-4) 10 Statement of Problem (II-2) 50 Does the Contractor state in succinct terms an accurate understanding of the problem presented and services required for this IV&V RFQ? Has the Contractor made an accurate assessment of the service to be provided based on its interpretation of the requirements as defined in the work statement? ADJUSTED SCORE Master Scoring Sheet Requirements (IV-3) 42. 6

Criteria for Selection Supplier Financial Capacity (III, 4) Financial Performance* • The Issuing Office will assess each offeror’s financial capacity based on industry standard analysis of the offeror’s financial information submitted with the Technical Submittal. This may include: – ratio, horizontal or vertical analysis; – industry comparison using Dun & Bradstreet’s Key Business Ratios to measure offerors’ solvency, efficiency and profitability; – the ratio of the offeror’s annual sales revenue to the expected annual spend for this contract; – the percentage of the offeror’s annual sales revenue attributed to the Commonwealth; and – the offeror’s sustainable growth rate (SGR). 62 *Changes incorporated into RFP template

Contractor Responsibility (III, 4) Size/ Capability • The Issuing Office reserves the right, in its sole discretion, not to consider for best and final offers or selection for contract negotiation, any offeror which fails to achieve acceptable scores on the Dun & Bradstreet’s Key Business Ratios; – has annual sales revenue less than three (3) times the expected annual spend for this contract; – with the award of this contract would receive more than half of its annual sales revenue from the Commonwealth; – or which has a SGR that does not support the addition of the expected annual spend for this contract. 63 – See Appendix –A & B for information on the Key Business Ratios

Options for Process BAFO (I, 20) While not required, the Issuing Office reserves the right to conduct discussions with Offerors for the purpose of obtaining “best and final offers. ” To obtain best and final offers from Offerors, the Issuing Office may do one or more of the following, in any combination and order: i) Schedule oral presentations; ii) Request revised proposals; iii) Enter into pre-selection negotiations; and iv) Conduct a reverse online auction. The Issuing Office will limit any best and final offer opportunities to responsible Offerors (defined in Part III, Section III-4 of this RFP) whose proposals the Issuing Office has determined to be reasonably susceptible of being selected for award as being within the top competitive range of responsive proposals. 64

RFQ Selection Memo To date, utilizing RFP Recommendation Letter template. * Unlike an RFP, the ITQ is a multiple award contract wherein a best value decision is being made (follow-on PO)vs. contract award. Key modifications: II B Notice Closed bid via e. Alerts vs. public posting. III B. 1 Opening Added if proposals submitted late and disqualified as untimely. III B. 2 Added proposals will be reviewed for responsiveness. III E. 2 Added technical thresholds to match RFP process III E. 3 and 5 Added EZ and DW provisions III. E. 8 Pre-selection Added provisions if engage in with multiple suppliers, if negotiations not, delete III. E. 9 III. E. 11 65 Added EZ and DW in overall scoring totals Revised to read that if pre-selection negotiations conducted, they were done so after final scores were derived III. E. 15 *Required for all solicitations greater than $250 K EZ points can be obtained with sub-contractor participation

RFQ Best Value Selection 66

Award Letter continued 67

Award Letter continued 68

Procurement Handbook Progress Report: Completed Chapter Description Location Change Contract Compliance Data Form, STD-21 references Various Standardized name and updated link for Initial Contract Compliance Data Form, STD-21. Nondiscrimination Pt I Ch 20 Changes made throughout as a result of Management Directive 215. 16 being revisions Competitive Sealed Proposals RFP Process Pt II Ch 07 Revisions due to Management Directive 215. 9 (Contractor Responsibility) revisions. Monthly Contract Compliance Report for Construction Contractors, STD-28 references Pt IV Ch’s: 04, 05*, 06, 07*, 08, 09, 11, 12 69 STD-28 (Monthly Contract Compliance Report for Construction Contractors) form link & language added: "Requires the contractor to complete, sign and submit Form STD-28, Monthly Contract Compliance Report for Construction Contractors, each month no later than the 15 th of the month following the reporting period * STD-28 form beginning with the initial job conference and continuing replaced STD-21 through the completion of the project. " form

Procurement Handbook Progress Report: In Progress Change Description Location Status Definition and use of RFEI Pt I Ch 02 Pt I Ch 06 In Development (Legal) RFP process distinction between BAFO and Pre-selection Negotiation Pt I Ch 06 In Development (BOP) Update to section on Debriefings (B. 13 & B. 12) This change will be published as soon as complete Pt I Ch 06 Draft Language Under Review Adding language on Established Catalog Price Contract Types Pt I Ch 08 In Development (BOP) Chapter being revised to remove obsolete forms and add new forms Pt I Ch 10 In Development (BOP) Use and approval of Funds Commitments Pt I Ch 30 In Development (BOP) Chapter being revised to remove obsolete forms, unused terminology and to reflect current processes Pt I Ch 32 In Development (BOP) 70

Procurement Handbook Progress Report: In Progress Change Description Location Status Revisions to language indicating that contractor must sign SPR for sole sources These changes will be published as soon as complete (within a few weeks) Draft Language Under Review Revisions to reflect the proper use of the Delegation Request and Notice of Forthcoming Procurements and requirement to complete the automated Source Justification Form Pt II & III Ch 04 Draft Language Under Review Revisions to processes associated with the procurement of vehicles Pt II Ch 18 & In Development (DGS 19 BVM) New chapter on the Acquisition of Federal Surplus Property 71 Pt I Ch 06 Pt II Ch 05 Pt II Ch 27 To Be Drafted (BOP & BSSO)

Contract Alert Notifications for Agencies • Notifications sent via outlook and the alerts tab in the universal work list (UWL) Alert: “Contract Alert for 440000 XXXX is at least 180 days to expiration or has reached 75% target value/qty. ” • Went live for DGS October 12, 2010 – Monitoring for issues • Planned roll-out for agencies – After completion of Support Pack implementation – Initiate process (mid-December) 72

Ship To Address Change Form COMING SOON • New web form to change SRM Ship-To Addresses • Available for agency use • Located on DGS Procurement website – Under Agency Dashboard Note : When you save this form it will automatically be sent to the QA Resource account for review. 73

Changes to Auto-POs Issue: When making a change to a PO that is generated via auto-PO the changed document will auto-fax to the supplier. Resolution: For auto-fax orders, the Purchaser should change the Output method from “Fax” to “Print” for those changes that do not require notification to the supplier (i. e. liquidations). System Reminder: When a PO is output to a supplier, regardless of the method of output, the System will generate a message to the Purchaser when initiating a change: 74

P-Card Expansion DGS and OB Partnering on Project to Expand Use of Pcard While Maintaining Proper Controls Goals Actions Under Review • Increase COPA revenue thru higher rebates • Increasing number of P-card Enabled contracts • Decrease administrative costs • Increasing number of suppliers who accept P-card • Make shopping experience easier for agencies • Increase reporting/tracking ability via Business Intelligence • Provide prompt payments to suppliers 75 • Exploring opportunities to expand P-card threshold • Expanding SW contract opportunities • Examining off contract P-card spend • Reconciling P-card designation in e. Marketplace

P-Card Accepted & Enabled P-Card Accepted: Supplier accepts P-card for payment on SW contracts. • Orders are not processed through SRM and are not auto-PO generated. P-Card Enabled: Suppliers are enabled through SRM • Supplier must have auto-PO functionality and have a Punch-Out Catalog or Material/Service Contract Catalog (MSCC). • P-card Requisitioner can create POs through SRM and use P-card to pay for purchases <$5 K from P-card enabled supplier. • P-card orders are auto-faxed to supplier with appropriate P-card data on PO. P-Card Payment Requirements: • Supplier must be registered in SRM PA Supplier Portal. • Contracts must include standard terms & conditions containing P-card payment language. • When using non-standard terms and conditions, supplier must agree to accept P-card payments. 76

P-Card Designation in e. Marketplace 77

CRP Updates • Begin using new system again. • After performing check in new system, also do check in SAP or Oracle in order to verify results of the check. • If you receive conflicting results, please ask consider Question #1 below: 1. Is the conflict with obligation records? If yes, reply to this resource account immediately at RA-Finance_Transform@state. pa. us. Provide as much information as possible about the check you performed. If no, see question #2. Is the conflict with performance issue records? If yes, likely a result of clean-up effort that took place in August 2010. Agencies reviewed all performance issues and made quite a few changes. Updated data was loaded into CRPS, but SAP and Oracle were not updated. Info in CRPS is accurate for performance issues, therefore you do NOT need to report these discrepancies to us. If no, see question #3. Is the conflict with suspensions or debarments? If yes, likely due to: 1) CRPS is checking the Federal suspension/debarment listing, whereas SAP and Oracle do not so may get result in new system not displayed in SAP or Oracle. 2) Clean-up effort for performance issues as well as suspensions/debarments that took place in August 2010. If concerns about these conflicts, contact resource account RA-Finance_Transform@state. pa. us. If no, see #4. 4. 78 Report issue immediately to RA-Finance_Transform@state. pa. us. Provide as much info as possible about the check performed.

Training Updates Contractor Responsibility Program (CRP) System Upgrade Roles Total # of Users Trained Enrolled DOT to Date Traine d CRP User (to search & check) 1896 1228 743 485 Performance Issue (PI) Creator 556 327 315 12 Performance Issue (PI) Approver 75 31 27 4 – Training Courses – DGS BOP WBT - Contractor Responsibility Program System – DGS BOP WBT - Executing a CRP Check/Search 79 Note: The CRPS web-based training courses remain available in ELMS. Ensure that you have enrolled and completed the appropriate course for your role as the system is functional again.

Training Updates • 142 PA’s attended Certified PA Purchasing Agent training. – 109 Receiving their CPPA certification • Latest Certification recipients: Ø Ø Ø Susan Barket – Office of Administration Lisa Burchfield – Office of Administration Maggie Boyer – Dept of Conservation & Natural Resources Michelle Flynn – Dept of Conservation & Natural Resources Gary Forman – Dept of Health Patricia Perkins – Civil Service Commission Suzanne Schmitt – PA Historical Museum Commission Gloria Strawser – Dept of Conservation & Natural Resources Veronica Ulrich – Office of Inspector General Nancy Weibley – Dept of Conservation & Natural Resources Danni Werntz – Dept of Public Welfare Next class tentatively scheduled for 2/28/11 through 3/3/11 Enrollment is through ELMS 80

Contact Information Chuck Anderson, DGS Attorney, Strategic Source chanderson@state. pa. us Jan Braxton, Associate Commodity Manager, Services 717 -703 -2943 jabraxton@state. pa. us Roxana Dietz, Director, Services Procurement 717 -783 -8062 roxdietz@state. pa. us Dennis Fellin, Commodity Manager, Services 717 -346 -2675 defellin@state. pa. us Cheryl Kleeman, Strategic Development Manager, BOP 717 -346 -4326 ckleeman@state. pa. us Joan Kraft, Director, Business Process Improvement 717 -705 -0564 jokraft@state. pa. us Gayle Nuppnau, BMWBO Procurement Liaison 717 -346 -3819 gnuppnau@state. pa. us Jeff Mandel, Chief Procurement Officer 717 -787 -5862 jmandel@state. pa. us Susan Plecker, Systems Manager, BOP 717 -346 -2678 splecker@state. pa. us Walter Quade, Director, Materials Procurement 717 -787 -4775 wquade@state. pa. us Bruce Stultz, Director, Energy Management 81 717 -214 -7739 717 -705 -8519 bstultz@state. pa. us

Appendix • Appendix – A – Key Business Ratios • Appendix – B – Sustainable Growth Rate • Appendix – C – ITQ, Consulting Services 82

Appendix – A, Key Metrics 83

Appendix – A, Key Metrics continued 84

Appendix – B, Sustainable Growth Rate • Sustainable Growth Rate (SGR) of a firm is the maximum rate of growth, in sales, that can be achieved, given the firm's profitability, asset utilization, and desired dividend payout and debt (financial leverage) ratios. – The SGR for sales is limited by the growth a company can obtain using the information on the Balance Sheet and Income Statement. Thus, sustainability is a function of equity growth rates, not sales growth rates. • The formula for calculating Sustainable Growth Rate (SGR) is: G = Margin x Turnover x Leverage x Retention Margin = Net Income / Sales Turnover = Sales / Assets Leverage = Assets / Equity Retention = % of Earnings Retained 85