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Q. We recently sent out an RFP for towing services with an estimated annual expense of about $150,000. However, the engines in our fixed route buses have a defect, and now we project that towing expenses will be at least $300,000. Does this constitute a cardinal change for which we should cancel the RFP and re-bid? We believe we could get a better deal based upon our higher usage. How should we proceed?
A. We would certainly advise you to amend the RFP and give prospective vendors your more accurate estimate of the volume of services required. This could well give you better pricing. You would not be using a "change order," per se, since they would be issued only against existing contracts. You would reissue the RFP or "amend" the existing one. But if you awarded a contract based on a requirement for one level of towing services, say $150,000, you could not issue a change order against that contract to require twice the volume of services. That would indeed be a cardinal change since it
goes beyond anything the parties originally had in mind when the RFP was issued and the contract was awarded. The subject of cardinal changes is discussed in the Best Practices Procurement Manual, section 9.2.1 - "Contract Scope and Cardinal Changes." The BPPM is available online at:
http://www.fta.dot.gov/funding/thirdpartyprocurement/grants_financing_6037.html.
Q. Here in the City of Tucson we are in the process of planning for a Modern Streetcar. We have a consultant on board for work through Preliminary Engineering. We have recently discovered that we will need someone to do Project Management Oversight for the Design, Construction, Maintenance and Operation of the Streetcar. We also discussed starting that process now (to speed up design and construction as we have an 2009/2010 deadline) and having the new contract include Preliminary Engineering, which has yet to be done under Phase 3 of the existing contract. Obviously the firm already on board for several years has quite a leg up on another firm coming in and replacing them. To me, it seems almost pointless and a waste of other firms resources to formally solicit for this when the existing firm has to be considered almost a shoo-in. The scope of the original contract did not contemplate Project Management, so change ordering it in could be considered a cardinal change, and issuing a new contract to them would be a sole source situation. Is there is a way to do this as a cardinal change to the existing contract or as a sole source and issue a new contract?
A. The circumstances do not warrant a change order for several reasons. First, the project management (PM) oversight phase was not within the contemplation of the original competition, and the new work is simply beyond the scope of the original contract, adding years to performance and substantially more funds and effort. If your agency's decision is to award the oversight work to the incumbent, your choices are a sole source add-on to the existing contract or the award of a new sole source contract. The sole source justification would need to be processed through appropriate agency management levels for approval. From an FTA perspective, however, a competitive RFP would be much preferred, even if the incumbent has a competitive advantage by virtue of its present contract work. Doing a new competition would preclude any questions later from FTA or the professional engineering community.
Q. Can a fuel contract be amended to increase quantities and include additional locations for delivery without being considered a cardinal change to the contract? We are a city department, and our current contract is attractive to the other departments. Some of the departments have approached me to see if the contract can be expanded to include them. This would mean additional locations and volume (50,000 gallons on a 1,200,000 gallon contract) to add to the contract that was not originally considered at the time of the bid. Can the other departments use this contract?
A. The Best Practices Procurement Manual (BPPM) discusses the topics of
joint procurements, "piggybacking" and "tag-ons" in Section 6.3.3, which may
be found online at:
http://www.fta.dot.gov/funding/thirdpartyprocurement/bppm/grants_financing_6189.html#BM6_3_3
The scenario you describe would be considered a "tag-on" and thus a cardinal change. Your agency may want to consider a future joint procurement with other local agencies for fuel if you believe this would produce better pricing. The solicitation would inform the bidders of the total estimated quantities to be purchased by the participating agencies and the contract could then be structured as an indefinite quantity contract with minimum and maximum quantities. FTA requires indefinite quantity contracts to have minimum and maximum quantities, which when reached would require a new procurement action. This is to protect the suppliers as well as avoiding open-ended contracts where unlimited purchases can be made at the originally quoted prices (a situation never intended by the parties).
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