GovPro - April/May 2012

The official publication of NIGP: The Institute for Public Procurement

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APRIL/MAY 2012

Alternative construction delivery methods help when cost and speed are critical*

THE GROWTH OF

DESIGN-BUILD *Such as when the Minnesota Department of Transportation needed to rebuild the I-35 bridge.

PLUS: The International Green Construction Code Research to Boost Fleet Fuel Efficiency Social Media Impacts Procurement The Benefits of Spend Analysis Keeping the Lights On

A PENTON MEDIA publication

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CONTENTS APRIL/MAY 2012 VOLUME 20, NO. 2

PERSPECTIVES 2 Guest Column: In defense of factory visits.

4 Procurement Ponderable: Dilemma surrounds smugglers and Homeland Security.

IN DEPTH

20

Construction THE GROWTH (AND GROWING PAINS) OF DESIGN-BUILD CONSTRUCTION Design-build is not only more efficient in time, it can also save money.

Choosing the right construction delivery strategy takes acumen and the discerning experience of a professional contracting/procurement officer.

BY EDWARD J. PABOR AND RICHARD PENNINGTON

24

Green Purchasing ASSESSING THE INTERNATIONAL GREEN CONSTRUCTION CODE The code that was just released is designed to complement, not replace, existing green building tools. Will it move green building forward?

BY MARK ROSSOLO

28

Fleet Update BOOSTING FUEL EFFICIENCY Trucks and cars will use less fuel very soon, thanks in part to a government-industry research program.

BY SEAN KILCARR

HOT TOPICS 7 Fair Competition: Guarding against the impact of social media.

10 Emergency Preparedness: Oregon’s disaster toolkit put to the test..

12 Best Practices: NIGP and CIPS release Ten Global Public Procurement Practices.

14 Best Practices: What’s all the buzz about spend analysis?

16 Energy Planning: Keeping the lights on in an emergency.

RESOURCES 30 NIGP: Recognizing milestone agency anniversaries.

31 Calendar of Events: Upcoming courses listed.

BACK PAGES 31 Ad Index 32 Fred Marks: On facts, lies and negotiations.

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Periodicals postage paid at Shawnee Mission, KS, and at additional mailing offices.

SALES OFFICES ARE LISTED ON PAGE 4.

PERSPECTIVES [guest column]

In Defense of Factory Visits iscal budgets are being stretched, and purchasing decisions are being weighed and watched more closely than ever, particularly when municipal, state or federal tax dollars are involved. But there is a common policy that is getting in the way of government officials’ ability to make the most informed decisions: prohibitions on factory visits.

It’s not hard to understand the underlying fear that produces the policy. The playbook of some vendors is filled with expensive dinners, elaborate trips and/or high-end gifts that are solely intended to bring or keep business. But are those bad apples really a prudent justification for preventing all decision-makers from doing their due diligence?

Either we trust our decision-makers, or we don’t, in which case we have the wrong people in those positions. Consider also that if we don’t trust our decision-makers, then we’re inherently placing more trust in the vendors, because we now have to take their word at face value, relying on information from their website, literature or other marketing material.

Although cities can require sample products to be shipped to them for review/testing/comparison, a factory visit can often raise questions about production methods or materials that officials would not be aware of otherwise, and which could ultimately affect a purchasing decision.

To address the concern of any impropriety, rather than issuing a moratorium on visits of this sort, many cities have adopted practices that allow their staff to perform due diligence while reducing temptations.

Common practices include not allowing a vendor to pay for meals or hotel accommodations. Vendors can cover airfare to/from their facilities, but they may not put anybody up in a ritzy hotel or provide expensive dinners. Meals are covered by a reasonable per diem. There are often limits on any gift that an official can accept, usually around $15 to $20.

While it’s difficult to police this policy, the municipal officials are keenly aware that they may be risking their jobs to accept more expensive gifts.

Some cities use the buddy system and send two people rather than one on factory visits. It’s harder to do something questionable when there’s another person from the city on the trip, especially if it’s not a close friend from the same department.

Another benefit derived from factory visits is the continuing education and training that many vendors offer, such as educational seminars at the factor. The seminars are not commercials, but rather an update on the latest technology, materials or production methods relative to the government’s project.

Factory visits are not automatic traps for ethical violations, and they are not a waste of time or money. Either we trust our officials to make good decisions and behave properly, or we don’t. It’s really that simple.

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PAUL MITCHELL is responsible for sales and nationwide education for Sternberg Lighting, Roselle, Ill. He has written several articles related to lighting and municipal RFPs. Email him at pmitchell@satx.rr.com.

PENTON MEDIA INC. 6151 Powers Ferry Road NW, Suite 200 Atlanta, GA 30339 Phone: 770-618-0112 FAX: 913-514-3887 http://www.govpro.com EDITORIAL STAFF Bill Wolpin Editorial Director bill.wolpin@penton.com Larry Anderson Editor landerson1976@aim.com Lindsay Isaacs Managing Editor lindsay.isaacs@penton.com Kim Blaski Production Manager kim.blaski@penton.com Joan Roof Audience Marketing Manager joan.roof@penton.com Wes Clark Art Director wesley.clark@penton.com

THE INSTITUTE for PUBLIC PROCUREMENT

151 Spring St. Herndon,VA 20170-5223 Phone: 703-736-8900 Fax: 703-736-2818 Brent Maas Marketing Director bmaas@nigp.org Cathie Patin Communications Editor cpatin@nigp.org EDITORIAL ADVISORY BOARD Debbie Field, CPPO,VCO Virginia Department of General Services Yolanda C. Jones, C.P.M., APP Clark County, Nev. Jay T. McCleary, CPPB City of Red Wing, Minn.

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PERSPECTIVES [discussion] Reader feedback

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A VIEW FROM THE SALARY FRONT LINE I read “How’s Your Pay?” [February/March 2012] with much interest. I have been the Warehouse Manager for the largest “stores” operation for the City of Philadelphia for 16 years and my base salary is only $43,000 a year.

For the City of Philadelphia, regardless of how large or small a department is, regardless of the value of the inventory, regardless of the amount of work, we all make the same (with the exception of the automotive personnel, which is one pay grade higher because they have been declared a specialty for some reason or another.). I can make the same salary operating this huge operation as I can handing out pencils and paper from a broom closet.

I would have loved to have been part of this survey.

— Bob Deck, Manager, Philadelphia Fire Department Whse.

EDITOR’S NOTE: Additional details on how the survey was conducted, and complete survey results, are available at nigp.org.

Reported salary numbers did not include benefits or pensions.

PROCUREMENT PONDERABLE The goal of Government Procurement is to stimulate thought and discussion on significant issues in the profession, to foster collaboration and community, and to encourage creative solutions to common challenges. In that spirit, this issue of Government Procurement presents a hypothetical scenario describing a challenge that procurement professionals might face in the course of their careers.

The following scenario was created by Stephen B. Gordon, PhD, FNIGP, CPPO, who is the Director of the Graduate Certificate Program in Public Procurement and Contract Management at Old Dominion University in Norfolk, Va. If you feel moved to respond – and we hope that you do – we’ll publish your comments in an upcoming issue of Government Procurement.

You are a senior civilian contracting officer who reports to the chief of information technology (IT) procurement for the U.S. Department of Homeland Security (DHS).The IT procurement chief has asked you to represent him in a meeting of high-level functional specialists within DHS, who have been called together by the Deputy Secretary of DHS to discuss a very serious strategic problem.

Smugglers have demonstrated on more than one occasion that they can stop Coast Guard ships and other watercraft “dead in the water” by taking control of the vessels’ onboard operating systems, including those systems not directly connected to the Internet.

After consulting with everyone in the room except you, to elicit their thoughts on what can be done practicably to resolve the problem, the Deputy Secretary turns to you and says: “Well, Mr. Senior Contracting Officer, I haven’t heard one practicable solution yet.

Can I count on you to help preserve the Coast Guard’s ability to execute its mission?”

How do you respond to the Deputy Secretary? Remember: she’s looking for solutions that are practicable – that is, practical and possible – no “boil the ocean” solutions will be entertained. Even if she likes your high-level explanation of your solution(s), you know she is going to press for details.

Government Procurement welcomes your feedback.

Send letters to: publications@nigp.org or Government Procurement, 6151 Powers Ferry Road NW, Suite 200, Atlanta GA 30339, Attn.: Bill Wolpin.

We reserve the right to edit all letters for clarity, brevity, grammar, punctuation, syntax and style.

4 | APRIL/MAY 2012

GROUP OFFICERS Gregg Herring Group Publisher gregg.herring@penton.com Susie Barroso Group Marketing Director susie.barroso@penton.com Joanne Romanek Online Advertising Specialist joanne.romanek@penton.com

ADVERTISING SALES Dave Gibson Northeast Region Sales dave.gibson@penton.com Phone: 216-931-9469 NY, NC, NJ, OH, MA, CT, Washington DC,VA, MD,VT, DE, ME, NH, RI, Canada (Eastern), SC, GA Bill Perry Midwest Region Sales bill.perry@penton.com Phone: 770-618-0453 IL,WI, PA, MN, WV, AK, TN, MS, AL, FL Ron Corey Midwest Region Sales ronald.corey@penton.com Phone: 248-608-0994 MI, MO, IA, KY, IN, ND, SD, AR, LA, TX, OK Julie Fincher Western Region Sales julie.fincher@penton.com Phone: 913-981-6139 CA, KS, CO, AZ, UT, NE, OR, WA, NV, MT, HI, ID, NM, WY, Canada (Western)

CORPORATE OFFICERS David Kieselstein Chief Executive Officer david.kieselstein@penton.com Nicola Allais Chief Financial Officer Executive Vice President nicola.allais@penton.com Bob MacArthur Senior Vice President bob.macarthur@penton.com

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IMPACT OF SOCIAL MEDIA ON PUBLIC PROCUREMENT n some government agencies and municipalities, rules, codes or guidelines restrict the manner and the period for communication between applicants and agency personnel during a public competitive selection process. Miami Dade County, Fla., for example, has implemented what is known as the “Cone of Silence.” The intent of the concept is to channel all communications between applicants competing for goods, services and capital projects through the procurement department.

This is done to avoid communications between competing vendors and members of an evaluating committee, end-users or administration personnel. Doing so diminishes the opportunity for inappropriate communication between applicants and agency personnel. This practice reduces the opportunity of an applicant to influence the outcome of a competitive process, and violating the guideline may result in disqualification of the applicant from the selection process.

The explosion in the use of social media has made its way into the public procurement sector. Inadvertently or purposefully, employees or individuals associated with companies seeking to do business with government agencies may find themselves in a precarious situation related to comments posted in social media during a selection process. Recently, I came across an issue

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HOTTOPICS [fair competition] related to social media and my institution’s practice of the Cone of Silence doctrine during a selection process for a capital project. Searching similar cases that could provide me with solutions or guidelines on how to handle the situation brought to light a lack of standards and common practices to address this issue. I solicited input or feedback from colleagues in the field but received very limited responses.

Those who responded limited their comments to the recognition of potential issues surrounding the matter but had no formal guidelines to address it.

Let’s face it: Some vendors will stop at nothing in trying to influence a selection process. They will call end users, ask for additional information regarding projects, seek inside knowledge of the project from administration personnel, solicit budgets, etc. Some of them will go so far as to discredit competitors by disseminating rumors and horror stories about their performance and personnel. Vendors have the right to solicit additional information but they must do so by following proper communication protocols that guarantee transparency and equality to all competing vendors. Otherwise, the contact is inappropriate. No applicant should try to influence a committee member or administration member regarding the selection of an applicant by direct contact with that individual whether done in person, by phone or by the use of social media tools.

With proliferation of the Internet, many firms have developed web sites and engaged in the use of social media sites such as Twitter, Facebook, My Space and blogs as marketing vehicles. Agencies now have the need to adapt the concept of the Cone of Silence to today’s reality of electronic media. My opinion is that agencies should take steps to monitor or regulate companies, their personnel, consultants and/or retained professionals from posting comments, offering opinions, or engaging in discussions that are directly related to a project during the evaluation or selection process. Agencies may find themselves equally challenged to prevent committee members and administration personnel from reading these postings during the evaluation and selection period; or, worse, to engage and respond to them. An article published recently by Reuters looked into the challenges courts across the nation are facing with jurors communicating, researching and posting opinions about ongoing cases on social media.

Several cases have been dismissed due to this issue.

Agencies face the challenge of creating language that addresses their concern about the use of social media by competing vendors. Equally, agencies must educate committee members and administration personnel to

8 | APRIL/MAY 2012

be alert to emails and invitations to “friend” or to “like” companies or individuals on Facebook, My Space or LinkedIn. They must be instructed to disregard any commentary or postings they come across regarding applicants while using the Internet during ongoing selections. They should be instructed to report to procurement any occurrence of what may be considered inappropriate commentary regarding the selection or the process at hand. You may want to recommend or suggest to them to avoid social media while engaging in the selection process although this request may be seen as extreme. One should consider if such a request hinders the ability of committee members to research and learn about a particular product, similar projects or a company history and its competitors.

At this time, we do not mandate that companies or professionals not engage in social media during selections. However, we do express an expectation from the agency (noted in writing in the solicitation document) that applicants, whether firms or individuals, refrain from doing so during a selection period. Once that concern has been expressed in a solicitation document, applicants are put on notice about any deliberate attempt to make use of social media as an alternate vehicle to breach the Cone of Silence or communication protocols. It will make them aware that you have the option to invoke that rule should you come across evidence of a deliberate attempt by an applicant to influence a selection. Legal counsel should be involved in drafting the language and in the implementation of these new guidelines. This is not an attempt to prevent applicants from posting online but to persuade them to be careful what they say in social media so it doesn’t come back to bite them. So you thought your teenage kid was your only concern regarding social media? Think again.

RAMON S. BRISTOL CASTRILLON, CPPO, FCCM, is assistant purchasing director, facilities/ plant maintenance, at Miami-Dade College.

HOTTOPICS [emergency preparedness]

OREGON’S DISASTER TOOLKIT PUT TO THE TEST or procurement staff working from the Emergency Response Center war room, things happen fast. Half a dozen phones ring off the hook. Supply requests come in from towns that look like swamps of muddy water. The potential for fouled communication abounds: No! I thought you canceled that order for two more backhoes!

Recently, during an emergency caused by heavy

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rains, Oregon’s award-winning disaster response purchasing toolkit was put to use with great results.

The toolkit has user-friendly forms that help organize the rapid flow of requests for supplies and services.

Even a phone script is included to ensure that adequate information is obtained when supply orders are called in from the field. “We didn’t have time to look at thick binders when we were in the Emergency Command Center” said Melissa Canfield, Oregon procurement internal operations manager. “The flow chart and the one-page forms in the toolkit gave us the guidance we needed.”

In case of a full-scale disaster, a mobile office also is on hand that contains paper purchase orders, lists of contracts that have disaster-related supplies, employee phone numbers, locations of Wi-Fi hot spots, and other items necessary to do business from the trunk of a car.

Looking back just a few

10 | APRIL/MAY 2012

years, the level of disaster preparedness and interagency cooperation mostly involved silo efforts and dusty binders filled with business continuity plans.

THE WAKEUP CALL On Aug. 29, 2005, Hurricane Katrina hit landfall. The storm left approximately 1,800 people dead, nearly destroyed New Orleans, and cut a wide swath of destruction across seven states. The frightening chaos that ensued prompted agencies around the nation to examine their disaster response plans.

At that time in Oregon, procurement wasn’t in the picture at the Oregon Office of Emergency Management (OEM). “I didn’t even think about the role of procurement, but during a disaster procurement eventually touches everything” said Ken Murphy, who was then Director of the OEM. A multi-agency effort ensued to develop the first disaster toolkit and to implement many necessary changes in procedures. For example, managers needed purchasing cards with high limits, such as $75,000, to expedite emergency purchasing. The new toolkit was soon put to use in 2007 during the extensive flooding of Vernonia, a town near the coast of Oregon.

During the mop-up stage, the procurement tracking forms for FEMA reimbursement proved their worth.

Stacie Younk, charged with sorting out the disasterrelated expenses, was able to assemble accurate purchasing records from the notes on the forms. “We got 100 percent reimbursement from FEMA because we had all of the documentation they needed,” she said.

REFINING THE TOOLKIT After the 2007 début, Marscy Stone, outreach manager for the Oregon State Procurement Office, led a multi-agency stakeholder team charged with refining the toolkit. Unlike many committees that never seem to gel, this group became a high-performing team.

The group relied on a well-defined charter to keep their efforts on track. “The charter didn’t just sit on a shelf,” she emphasized. “We used it continuously to keep focused.”

Tim Hay, a procurement analyst and a key member of the team, commented on the effectiveness of the group. “The

team didn’t get bogged down in a lot haggling.

Everybody had assignments to work on, and they had to bring these back to the table.� Having the same people on the team for more than three years also created cohesiveness. “We broke down a lot of barriers between agencies through this planning process,� he noted.

The group’s hard work has paid off with a comprehensive set of disaster response resources that support procurement activities. To avoid the trap of good ideas that don’t really work, the checklists and templates were tested through table-top exercises. “We brought in people who hadn’t participated in disaster planning and had them run through the book. We asked them ‘what makes sense, and what doesn’t make sense?’� Tim Hay explained.

Dave Stuckey, deputy director at the Oregon Office of Emergency Management, expressed his appreciation for the effort: “In a major disaster, the procurement people will be like gold. We simply must get things like large cranes from private contractors.

Procurement people will always have a seat at the table.�

The disaster response team now meets quarterly to

review progress and plan next steps. They can be proud of major progress that has been made in cross-agency coordination and procurement support tools shaped and refined in the crucible of a real disaster response.

The toolkit resources are available as free downloads from the state’s website [http://www.oregon.gov/ DAS/SSD/SPO/disaster-preparedness.shtml]. The resources are also bundled on an innovative flash drive in the form of a plastic wrist bracelet that can be ordered for $15. The resources include a list of items to build your own grab-and-go mobile office.

GREG HOPKINS teaches procurement classes for the Oregon State Procurement Office. He has written articles for Government Fleet magazine, Government Procurement, and Training and Development Journal.

Besides writing and teaching, he is also a conference presenter and is an active participant in the green procurement movement.

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HOTTOPICS [best practices]

Procurement Professional Practices Go Global NIGP AND UNITED KINGDOM’S CIPS RELEASE TEN GLOBAL PUBLIC PROCUREMENT PRACTICES TO LAUNCH ONGOING COLLABORATION overnments and procurement departments around the world face real challenges in delivering good quality products and services, including challenges of mounting debt and budget cuts. In some areas of the world, immaturity or corruption in purchasing departments compound the difficulty.

Good practices do exist, however, despite media reports of waste and inefficiency. Excellent results are being achieved around the world using best practice principles.

Capturing these best practices and sharing them more widely with anyone responsible for procurement in the public sector can have a real impact on standards and change.

To that end, NIGP: The Institute for Public Procurement and the United Kingdom’s Chartered Institute of Purchasing and Supply (CIPS) have jointly released Ten Global Public Procurement Practices. Part of a larger shared initiative to define and formalize global professional standards for government procurement officials, these ten standard practices provide high-level guidance across the following procurement activities: Strategic Procurement Planning; Performance Measurement; Performance Metrics; Use of Cooperative Contracts; Transparency; Risk Management; Ethical Procurement; Procurement Policy Manual; Performance Management; and Performance-Based Contracting.

In addition, NIGP and CIPS will continue to jointly develop and release additional practices while maintaining an ongoing review process to ensure that the body of practices remains relevant and supports the evolving needs of government procurement practitioners over time.

G

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Public entities at all levels of government perform many of the same procurement activities, yet their methodologies and outcomes differ because each entity’s practices have been defined based on their unique operating environments. Creating a reference of formalized standard practices, established through the collaboration of public sector professionals around the world, provides agencies an authoritative resource to define professional standards of practice across critical public procurement functions.

As political leaders draw increasing scrutiny and voter pressure to demonstrate fiscal responsibility, procurement professionals must ensure that they maximize the value of every tax dollar.

U.S. governments spend a combined seven trillion dollars, Canadian governments 360 billion dollars, and U.K. governments more than 500 billion pounds. Consistent and professional procurement practices across governments can positively impact the effective expenditure of public funds.

It is a mistake to see procurement policies as a mere set of rules governing practice and not as a crucial strategic approach on which true capability can be built. Smart procurement teams formalize policy and process development and train their teams to have a thorough understanding of process design and to decide what is appropriate for their organization. Smart procurement teams: > have a developed set of procurement policies and procedures. > ensure that the procedures easily accessible, indexed and cross-referenced. > have a high-level procurement policy in place > have clear procedures to inform staff about changes in legislation.

CIPS and NIGP have both been involved in the public sector for decades, each working in their own sphere of influence, until now. Both organizations share a common understanding and view of procurement, so it makes sense to combine their expertise. The partnership’s aim is to work together for the public good, bringing professionalism and best public sector practice to governments all over the world. A lofty ideal maybe, but a simple one and a way of extending the reach of good procurement practice to public sector groups on a global scale. Also, there will be real and tangible deliverables and not just a list of intentions. The results should change how individuals and organizations work, and the activity can be quantified and measured to highlight the progression and improvements.

Since 1944, NIGP has been developing, supporting and promoting public procurement practitioners through premier educational and research programs, technical services and advocacy initiatives. With more than 2,400 member agencies representing more than 15,000 professionals across the United States, Canada and countries outside of North America,

the Institute is international in its reach. NIGP’s goals is recognition and esteem for the government procurement profession and its dedicated practitioners.

The Chartered Institute of Purchasing and Supply (CIPS) is the world’s largest procurement and supply professional organization. It is the worldwide center of excellence on purchasing and supply management issues. CIPS has more than 65,000 members in 150 different countries, including senior business people, high-ranking civil servants and leading academics. The activities of purchasing and supply chain professionals have a major impact on the profitability and efficiency of all types of organization, and CIPS offers corporate solutions packages to improve business profitability.

The joint global initiative is a significant milestone for the public sector and has the potential to contribute significantly to the public good and global economies.

Establishing and leading adoption of a set of principles and practical documents, and a common procurement language around the world, is ambitious. Support of the initiative throughout the public sector can help to achieve worthwhile and sustainable change.

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HOTTOPICS [best practices]

WHAT’S THE BUZZ ABOUT SPEND ANALYSIS? magine you are part of a family of four, and the recession means your monthly budget has been squeezed. Gas and food prices have gone up, and your household income has stayed the same or gone down.

Unfortunately, this is easy for many of us to imagine.

So you download a transaction history from your online banking site, and ask the rest of the family to save receipts for things they bought with cash for a couple of weeks. It takes some time to organize the data, useful pieces of information are missing, and it’s not easy to categorize exactly what was bought.

However, it is manageable to record everything on a piece of paper or a spreadsheet. Then you get together as a family to discuss where you can buy things more cheaply, which store gives you the best membership card rewards, and what household items you could probably live without. Since money is one of the top things couples and families fight about, it’s not surprising that when it comes to deciding how to cut spending, the discussion often turns into an argument.

Multiply the number of people who can spend money by 1,000, throw in some complicated rules governing how money can be spent, and remove direct access to the online banking site to download transactions. Now you have the situation many public sector organizations face today. That’s how I explain the difficulties of public sector spend analysis to people who have never worked in or experienced it before.

Like the household example above, spend analysis

I

requires different skill-sets, a balance of priorities, and the right resources, either internal or external, to complete three distinct steps listed below: STEP 1: Collect the data from its various locations, get it into the right shape, clean it up so that you trust it when making your decisions, and add any missing information that you need for your analysis. Doing this in a comprehensive, repeatable, and timely manner is a niche skill. You’re in the minority if you trust the raw data that comes out of your financial management system, if it includes your purchasing card spend, and if it contains all the fields you need in order to get accurate visibility over your organization’s expenditure and contracts. If so, you can skip this step.

STEP 2: It’s only when you have data you can trust, in the right shape, that you can begin analyzing it. Analyzing data really boils down to looking for patterns − and looking for outliers. Sorting, manipulating and pivoting the data in different ways will raise new questions and bring to light new opportunities that you wouldn’t have been able to see without having all of the data in one place.

You probably have preconceived questions such as, “Where have we exceeded our statutory spend limits and need to get a contract in place quickly?” The results of analyzing spend should answer those questions, but also raise questions you had never thought to ask before. It takes a specific skill-set to manipulate data in new ways to look for patterns, and it may be that you need to hire a data analyst, identify the member of your team with the best analytical skills (even if they aren’t the most experienced in procurement), or draft one part-time from another department.

STEP 3: Once data transformation and analytics are accomplished, procurement professionals can really use their dominant skill-sets: assessing all the available information, deciding what to do with the results of the analysis and prioritizing next actions to meet legal requirements, yield savings, and increase procurement’s overall efficiency. The results of the data analysis can be used first to identify the low-hanging fruit, where productive changes can be implemented fast, then

14 | APRIL/MAY 2012

Naperville saves $120,000 using Spikes Cavell Observatory The City of Naperville, Ill., implemented the Spikes Cavell Observatory suite of data-driven online tools to deliver improved spend and contract visibility. “So far we estimate that we’ve delivered around $120,000 and, with the initiatives that the Observatory has helped us to identify, our forecast is that we’ll multiply our initial savings by a factor of four by year end,� said Mike Bevis, Naperville’s Chief Procurement Officer With a total population of 140,000, Naperville is the fifth largest city in the state of Illinois, behind Chicago, neighboring Aurora, Rockford and Joliet. Naperville successfully attracted a number of corporate headquarters to the city and has made Money magazine’s Top 10 Places to Live for the past decade.

Procurement at the City of Naperville is centralized, and the five-person team spends around $140 million a year purchasing everything needed to run the city including construction and professional services.

The number one priority for the procurement team at the City of Naperville is managing spend to deliver savings for the city. As a small team, they have to be careful to ensure they spend their time working on what matters most, and an effective way to rank and prioritize projects high on the needs list The Naperville procurement team has used the Spikes Cavell Observatory, a cloud-based online service, to identify savings opportunities and in particular to establish which of those opportunities delivered the biggest “bang for their buck.� Improved spend and contract visibility have highlighted the opportunity to collaborate with local park and school districts who have also implemented the Spikes Cavell Observatory. The result is that the organizations have been able to identify common suppliers and save money by renegotiating relevant contracts.

to plan for medium-term opportunities and contracting requirements, and lastly, to develop a strategic sourcing strategy that incorporates long-term purchasing decisions as well as the structure and technology required by the organization to achieve those goals. The difficulty for many organizations is that they aren’t able to – or allowed to – spend any money or commit resources to going through steps 1 and 2 before they are expected to jump directly to step 3. It’s like trying to navigate the best possible route with an incomplete map and only a scant few coordinates.

WHY IS NOW A GOOD TIME? In the current climate, public sector procurement teams are in a strong position to argue for the time and resources necessary to carry out a spend analysis exercise.

There is an increased focus on external spend as a means of coping with budget difficulties, and procurement teams are uniquely positioned to play a strategic role in meeting those challenges. The resources, competencies, and experience level of the procurement team will dictate which projects can be undertaken; but if you are going to play a strategic role in your organization’s response to funding cuts, you first need to have a firm handle on where the money is going today.

JONATHAN WHITE is territory cirector for Spikes Cavell, Inc., which equips decision makers in the public sector with the business intelligence, online tools and analytical insight to transform the way they procure goods and services. The Spikes Cavell Observatory is an online platform that facilitates delivery of spend and contract visibility quickly, affordably and with little effort on the agency’s or institution’s part.

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HOTTOPICS [energy planning]

Keeping the Lights On IN AN EMERGENCY, WILL YOUR GOVERNMENT HAVE THE POWER IT NEEDS? magine working late at city hall one night and the lights begin to flicker.

Next, only a few city buildings and key public gathering places remain lit. The rest of the region surrounding your city sits in total darkness.

The power is out for two days, yet the city continues to operate with minimal disruption. It was spared from the worst effects of a power outage because a couple of years ago it became involved in energy assurance or energy security planning.

Today, more local governments are paying attention to energy security issues, which means they are concerned about their ability to maintain essential community services in the face of an energy disruption.

And rightfully so: many essential local governments services fall into jeopardy when the power goes out.

Local governments are apprehensive about the spate of energy outages because basic economic activity can be adversely affected without power, even for a short time.

“We had to change our thought process and build energy into our business continuity plan and figure out how we could make it through a power outage that lasted several days,” says Casper, Wyo., Assistant City Manager Linda Witko.

In planning for Y2K and following 9/11, communities paid heavy attention to crafting and practicing emergency response plans. Now, however, many realize that their emergency response plans do not include actions that specifically address energy disruptions.

Given the increasing importance of energy across most services, this gap is now deemed unacceptable by many.

Although local government energy security planning includes three steps (preparedness and investment, response and restoration), most communities have not completed the first step: preevent energy outage preparedness and investment.

A group of 43 cities — from large communities (Boston, Chicago, Denver and Philadelphia) to medium and small cities (Baton Rouge, La.; Raleigh, N.C.; Hailey, Idaho; and Roswell, Ga.) — have been designing energy assurance plans since 2006 with .the Public Technology Institute (PTI), supported by the U.S. Department of Energy’s Office of Electricity Delivery and Energy Reliability – www.oe.gov.

“It comes down to assuring that local governments are energy self-reliant until normal energy services are restored,” says PTI’s Assistant

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16 | APRIL/MAY 2012

Executive Director Ronda Mosley. “This requires partnerships with utilities and many others.”

Tricia Sears, project director for Portland, Ore.’s energy security plan, says that the program helped the city identify its energy weaknesses and strengths.

“Our energy assurance planning enabled us to pull together sustainability, transportation, energy and emergency issues and integrate them,” she states.

In a separate project, PTI is assisting the California Energy Commission (CEC) reach its goal of having 50 local government energy security plans complete by early 2013. Getting the attention of California local governments may be easier because of the recent numerous energy disruptions and billions of utility-funded local government energy efficiency programs invested over the last decade.

“The term energy assurance is new to many people and yes, it is competing with other issues for attention,” says Witco. “But once you understand that it can help you manage your city more effectively, you have to pursue it.”

Because of the many threats from hazards such as natural events and terrorism, power outages, and the possible supply disruption from foreign sources of petroleum, local governments must work with utilities, regional councils of governments, neighboring communities and other stakeholders to build strong energy assurance plans. For example, local governments in the California San Joaquin Valley are considering energy security issues regionally, and in the interest of self-reliance, discussing options for shoring-up their local energy supplies. Not only are cities like Visalia, Calif., designing their own energy security plans, the region is parlaying its experience with climate action and sustainability plans into partnerships with Fresno and other regional cities.

They also are thinking regionally to keep energy dollars and jobs in their area.

“We see increased interest from our members in energy planning,” says Fred Abousleman, executive director of the National Association of Regional Councils. “Lots of jobs are at stake with new shale gas finds and renewables. When you combine energy assurance efforts with general planning efforts, the community wins.”

Local governments also are finding themselves engaged in what typically has been a utility-only

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HOTTOPICS [energy planning] world. City leaders are perhaps for the first time building real partnerships with their energy suppliers, and learning about smart grid opportunities, cyber security threats and exploring various types of alternative energy generation. They are writing new energy security plans to minimize the impact of future service disruptions and to reduce economic risk.

Some local governments are considering their energy security planning as an investment similar to an insurance policy. “You pay a small premium up-front to protect against something you hope never happens,” Mosley says.

However, energy security planning does not have to be resource intensive, she says. She suggests several lowand no-cost options used by some local governments: > Identify and document all generator locations, the fuel used in each, their fuel capacity and make sure these generators are exercised. > Locate and map fuel storage facilities. > Require that all government fleet vehicles have at least a 1/2 tank of fuel at the end of a shift. > Traditional telecommuting and 4-day work

weeks help control the load growth and energy used by your local government > Review all existing fuel contracts, ensuring that your government is “first in line” in an energy emergency. > Review all available materials related to any past energy emergency, and put together a short document that outlines the lessons learned If an emergency occurs that affects energy, local governments must be prepared to “go it alone” for at least 72 hours because state and federal governments may not be able to provide assistance for at least that long, Mosley says. “If that happens, a local government is better prepared if it has an energy assurance plan,” she says.

GEORGE BURMEISTER is a strategic advisor to the Public Technology Institute and president of the Boulder, Colo.-based Colorado Energy Group, Inc. STEVE FOUTE, PH.D. also is a strategic advisor to Public Technology Institute and a former environmental manager for the City and County of Denver.

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IN DEPTH [construction]

By Edward J. Pabor and Richard Pennington

THE GROWTH OF DESIGN-BUILD CONSTRUCTION

After the I-35W Bridge over the Mississippi River collapsed in 2007, the rebuilding project was completed three months early using design-build construction.

ver the last decade, the public procurement profession has seen greater use of alternative delivery methods of construction projects, including design-build, construction manager at risk (GC/CM or CM/GC), public private partnerships (P3), and job order contracting.

The traditional method of soliciting and contracting, design-bid-build, is still the most widely used method of construction contacting. It has been the mainstay of government construction contracting for well over 60 years.

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GROWTH OF DESIGN-BUILD Many states and local governments were slow to adopt the new construction contract delivery methods. For a long time, statutes continued to require that public improvements be competitively bid in the traditional way. In fact, the American Bar Association

20 | APRIL/MAY 2012

(ABA) Model Procurement Code was not revised until 2000 to add coverage for procurement of infrastructure services using integrated project delivery methods like design-build.

The alternative construction delivery methods are solicited as a request for proposal, and all are intended to save time and hopefully money. As of the writing of this article, all 50 states and Washington D.C. allow some form of alternative contracting methods, among them design-build. Moreover, in 2011-2012, at least 20 states expanded their design-build authority.

Design-build procurements award a single contract for both architectural/engineering design and construction.

Design-build is well suited for highway and bridge construction. But this contracting method is particularly valuable as well for construction after disasters, such as tornadoes, floods and hurricanes. In 2012, for example, the Louisiana state senate unanimously voted to approve a senate bill that expanded design-build contracting capacity

into July 2013. The Times Picayune reports that designbuild had been in place since 2007 and has been used to repair damaged libraries, hospitals and other construction projects after the state suffered devastating hurricanes.

On Aug. 1, 2007, the I-35W Bridge over the Mississippi River collapsed. Thirteen months later, on September 18, 2008, the first cars rolled across the newly constructed bridge. The Minnesota Department of Transportation (MnDOT) used design-build to complete the construction. The biggest benefits were described as “speed of delivery and innovation.” The state was able to save time by overlapping design and construction activities. The state avoided an estimated $400,000 a day from lost revenue and the costs of detouring traffic caused by the downed bridge.

The MnDOT process is illustrative of design-build project delivery. The process started with a statement of qualifications. Mayor and city council approval of the designbuild contracting method was expedited. The speed of contract approval was unprecedented, and the bridge was completed in one year – three months ahead of schedule.

The State of New York passed legislation to use design-build in October 2011, after the destruction caused by Hurricane Irene. Likewise, the State of Missouri and the Federal Emergency Management Agency (FEMA) used design-build to help rebuild Joplin, Mo., after the devastating tornado of May 2011. Many of these jobs need to be done rapidly because there is a 180day window for federal reimbursement for some projects.

Johnson County, Kan., used the design-build method for an emergency communication center. The center operates 24/7 and includes a 911 call center. The structural design was based on FEMA requirements, making mission-critical areas within the building capable of withstanding an F4 tornado (or 260 mile-per-hour winds) and having redundant electrical and mechanical systems that can maintain operations for four days.

The project was finished seven months earlier than scheduled.

PROS AND CONS OF DESIGN-BUILD Alternative methods of contracting for construction projects are not the best methods for every project. It takes acumen and the discerning experience of a professional contracting/ procurement officer to know the right type of construction delivery strategy because there are some fundamental differences. In traditional design-bid-build, for example, the risk of adequacy of design is on the owner. The specifications and drawings provided by the owner to the contractor are “design specifications.” Under construction law, the owner warrants their adequacy, meaning the contractor is responsible only for building to the design and does not guarantee that any particular outcome will be achieved. This legal concept, the Spearin doctrine, is named after the 1919 United State Supreme Court case that spawned it. The Spearin doctrine protects the contractor from incomplete or impractical specifications issued by the owner or the owner’s architect/engineer (“A/E”).

In design-build, on the other hand, the statement of work typically uses more performance-based language (even though practically the specifications are often mixed between performance and design-type specifications). Because the

design-build entity delivers not only construction, but also the design, that company is responsible for achieving the objectives in the statement of work. While at first blush a designbuild approach seems preferable by centralizing design and construction responsibility in a single company, there are both advantages and disadvantages to use of the delivery method.

With regard to advantages, the contractor is selected based on qualifications, capabilities, experience and price, thus avoiding some of the pitfalls from contract awards solely based on low price. The design and construction are performed by a single team, under one contract. This reduces the owner’s risk from diffused responsibility for design and construction. Time can be saved because ordering of materials and site work begin before the total design is complete. There is a close, contractual relationship between the design and construction teams, resulting in fewer change orders by the owner that arise from occasional revisions in design by an owner’s A/E. Overall, design-build contracting has greater potential to save time and reduce cost.

But there are disadvantages as well. The owner may not have the security (and comfort) of having an A/E act as their agent during the project. Even if the owner has an independent A/E involved in oversight of the project, the A/E does not have as much insight into the design details. As such, with designbuild, the owner will lose some control of the design process.

Design often is managed through owner approval of design documents during performance. While some design elements may be specified, typically the contractor is given flexibility in design. Recent federal court decisions have illuminated the boundaries of design and construction independence as one of the sources of tension in the relationship.

Another disadvantage can be less competition. Not every company can put together an effective design-build team, and it may be more difficult to secure performance and payment bonds on this type of project. Even from the public procurement professional’s perspective, the process involves best value approaches to solicitation development, evaluation and award not always familiar to construction management personnel.

Contract management is more challenging as well.

Contract administration overall requires more collaboration.

The absence of effective collaboration may be where the growing pains of design-build are revealed.

LEGAL DECISIONS HIGHLIGHT GROWING PAINS As the Louisiana state senate learned when considering a bill to extend design-build authority, there is opposition to its use by some architects and engineers. In the State of California, in fact, groups representing the A/E community filed a lawsuit (unsuccessfully it turned out) against the San Francisco Presidio parkway project, alleging that the design-build approach did not comply with state law. [Professional Eng’rs in California Gov’t v. Dep’t of Transp., 198 Cal.App.4th 17 (2011)] Recent court decisions illustrate some of the other friction points that can occur when any procurement system is changed in fundamental ways. The cases discussed here are published appellate court decisions, meaning significant resources

www.govpro.com • GOVERNMENT PROCUREMENT | 21

IN DEPTH [construction] were invested to resolve the issues at the heart of these cases.

Public procurement professionals can learn from these cases where they can reduce risk in solicitations and contracts.

Design-Build is reframing historical procurement processes. Advanced construction delivery methods like design-build reframe the way traditional procurement concepts like responsiveness are applied. There is a resource and training implication, of course. Personnel perhaps very experienced in construction bidding have to learn new processes. The Minneapolis I-35W bridge reconstruction illustrates the growing pain very well.

A 2010 Minnesota Supreme Court decision dealt specifically with the application of responsiveness concepts to the I-35W design-build project. [Sayer v. MN Dep’t. of Transp., 790 N.W.2d 151 (Minn. 2010)] After the award of a design-build contract for reconstruction of the bridge, disappointed offerors protested. They alleged that, although the winning contractor had the highest evaluation ratings, the winner’s proposal was nonresponsive and should have been eliminated from consideration. They claimed that the winner’s proposal had deviated from the request for proposal (RFP) requirements by planning to work outside of the right-of-way reserved for construction and by using noncompliant concrete box designs.

The court ultimately sustained the award, but the reasoning is particularly instructive. The court of appeals (the appellate court below the Minnesota supreme court) had held that the common law definition of “responsiveness” does not apply to design-build. Yet, the majority on the Supreme Court proceeded to analyze the issue as one of responsiveness, undertaking detailed analysis of the RFP specifications and concluding that the winning contractor’s technical proposal did not deviate from the requirements. The chief justice of the court voted to sustain the procurement decisions, but in a concurring opinion he used different reasoning. He thought the case was squarely focused on the application of responsiveness law to design-build procurement. In the chief justice’s view, the determination of responsiveness had been committed by statute to the technical review committee and was a function of the committee’s aggregated technical score, not a microscopic examination of technical compliance with individual RFP requirements.

Thus, in these kinds of procurements the construction industry is facing the same kinds of questions arising out of other complex service procurements. [See “Responsive or not?” Government Procurement (Feb./March 2011)] The use of competitive range determinations or “short listing” also highlights growing pains. Last year, two state courts looked at their statutes governing construction and concluded that short listing was not permitted as part of the competitive negotiation process in design-build procurements. [Brayman Constr. Corp. v. Commonwealth, 30 A.3d 560 (Pa. Cmwlth.

2011); O’Shea v. New Jersey Schools Dev. Auth., A-3943-08T1 (N.J. Sup. Court, April 7, 2010)] These results discourage use of a time-tested procurement process that permits exchange of communications before award. A government has neither the

22 | APRIL/MAY 2012

time nor resources to engage in communication exchanges with every responding offeror not reasonably in line for an award.

Subcontractors may see a different relationship with the government. Historically in fixed price construction, the government owner had little formal relationship with subcontractors and suppliers. While states’ statutes commonly require payment bonds, or retainage statutes may grant a right to subcontractors or suppliers to file administrative claims against final payment to the prime contractor (and delay final settlement with the prime construction contractor until the dispute is settled), governments otherwise stay out of the prime-subcontractor relationship. In some advanced delivery contracts, however, the relationship with and expectations of the subcontractor may be different. A San Diego subcontractor was permitted to file a protest against the general contractor and city on a design-build contract.

The subcontractor alleged that it should have been awarded a subcontract by the general contractor. The court permitted the law suit, characterizing the general contractor as a “consultant to the city.” [J.T. Wimsatt Contracting Co., Inc. v.

City of San Diego, D059276 (Cal. App, March 20, 2012). In traditional construction contracts, subcontractors generally do not have standing to bring this kind of action against the owner challenging actions of the general contractor. The owner and subcontractor are not in “privity” of contract.

These cases highlight the importance of using sound selection processes to clarify the expectations among the parties.

A DIFFERENT KIND OF COLLABORATION It takes an experienced public procurement professional to be able to help draft the statement of work, develop the solicitation and then negotiate an equitable contract that achieves overall good for the taxpaying public. For many leading edge projects — communication facilities, modern wastewater facilities, hospitals, schools and universities, public event facilities, and even information technology projects — choosing the most qualified contractors, with the best capabilities, makes logical sense.

Before selecting any alternative contract delivery method for public construction, consider your state or agency laws, expected outcomes of the project, competition, budgets, and timelines.

For emergencies and disasters, in particular, these kinds of alternative delivery methods may provide more efficiently the infrastructure improvements the public desperately needs.

EDWARD J. PABOR, CPPO, CDT, C.P.M. is currently the stores supervisor/buyer for City of Eugene, Ore., Public Works Department, and NIGP Master Instructor.

RICHARD PENNINGTON, CPPO, C.P.M., J.D., LL.M. is an NIGP Individual Member and NIGP Instructor. He served as an assistant attorney general (procurement and contract law and litigation) and State Purchasing Director for the State of Colorado.

He retired from the practice of public procurement law in 2010.

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IN DEPTH [green purchasing]

Just released, the new code is designed to complement, not replace, existing green building tools. Will it move green building forward?

Assessing t h e e r n Co e I G ns n tr u

l a n o i t e d a o n nC r te tio c

24 | APRIL/MAY 2012

n March 28, 2012, the International Green Construction Code (IgCC) was officially released, ending a development process that lasted more than two years and encompassed thousands of volunteer hours by dedicated professionals committed to furthering the green building movement. However, the release of the IgCC comes with almost as many questions as answers. How will state and local jurisdictions adopt the code? Will it serve to ultimately move the green building forward, or simply provide yet another tool in an increasingly full toolbox?

Before answering these questions, it is helpful to review what the IgCC is and how it differs from the myriad other well-known green building tools, such as Leadership in Energy and Environmental Design (LEED) from the U.S. Green Building Council (USGBC) and Green Globes from the Green Building Initiative (GBI).

Fundamentally speaking, the IgCC looks at very

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similar criteria as more traditional tools such as LEED. They both look at the environmental impact of numerous categories, including site, energy, water, indoor environmental quality and material usage. The difference is primarily in how they are applied.

The most popular green building tools in the world (including LEED) are points-based, allowing users the flexibility to choose which credits to pursue based on their specific environmental goals and budget. Green codes, conversely, tend to have a lower overall bar, and the majority of credits are mandatory.

There are positives and negatives to both. The more flexible rating systems incentivize users to achieve as many points as possible, thereby encouraging the incorporation and use of more cutting-edge sustainability technologies. However, because rating tools are points-based, there is the possibility for “gaming� the system. This involves installing a feature or technology into a building simply to get the points, even if it does not have any real environmental benefit to that particular building or surrounding area. Additionally, because of the flexibility allowed by points-based tools, two green buildings in the same region could be substantially different from one another, even though the buildings achieved a similar number of points using the same rating system.

As the IgCC is an actual building code, it is written in mandatory language, so a minimum baseline must be reached in each section. This mandatory language is good for helping raise the bar, but typically does not encourage the use of cutting-edge technology or new practices. Therefore, it is important that IgCC be adopted and used in a way that is complementary to rating systems, as opposed to being used as an alternative or replacement.

HOW WILL IGCC BE ADOPTED? The IgCC brings the promise of raising the bar and making green building more accessible. What is still unknown, and one of the primary hurdles, is how and when the code will be adopted by local jurisdictions. Code approvals and changes vary by city and state depending on what the current laws and regulations require. An authority having jurisdiction (AHJ) is the entity that has responsibility for establishing minimum building and fire code standards as designated by current statutory requirements. Ultimately, the success of the IgCC will come down to how it is received and implemented by AHJs across the country.

As written, the new code is not intended to be adopted in its entirety by a given jurisdiction.

www.govpro.com • GOVERNMENT PROCUREMENT | 25

IN DEPTH [green purchasing] Instead, it is designed with the intention of allowing AHJs to adopt the aspects of the IgCC that are most relevant for their specific region. Ideally, this flexibility will ensure that the baseline is moved up while preventing the building code from becoming burdensome and complicated for a typical building.

Even though the IgCC was just recently released, there has already been significant interest around the country by jurisdictions who wish to adopt it. In fact, even prior to its completion, Rhode Island, Maryland, Oregon and Florida passed some type of state legislation recognizing the IgCC and encouraging its use. Additionally, numerous cities have also gotten into the act by recognizing the green code in some type of city ordinance or other policy, including Portland, Ore., Phoenix, and Richland, Wash.

Interestingly, with the exception of Phoenix (and neighboring Scottsdale), none of these state or municipal jurisdictions has actually adopted the IgCC as it was intended. For example, the state of Florida added the IgCC as an option that can be used when new publicly-funded buildings in the state are built or retrofitted. Previously, Florida had required that new construction and major renovations must be certified to LEED, Green Globes or any equivalent green building rating system.

Now, builders will have the option to use IgCC instead of the rating systems to show compliance with the law. However, it remains to be seen how this will actually be accomplished, given that rating systems such as LEED have a third party verification process in place to show compliance, whereas the IgCC does not.

WILL IGCC ACTUALLY MOVE GREEN BUILDING FORWARD? The obvious and primary goal of the IgCC is to move green building forward by setting a minimum sustainability baseline and building off of it. However, if the code is not adopted and used as it was intended, there is a possibility it could actually hurt, or slow, the green building movement.

And, if the early-adopters are any indication, that is a very real possibility. It appears as though the marketplace currently views the IgCC as more of a competitor (or at least alternative) to traditional green building tools such as LEED. As the code was developed to complement, not replace, existing green building practices, this confusion could be detrimental to the overall green building movement.

As we have seen, the IgCC is written to provide each AHJ the ability to adopt the specific sections of the code that are most relevant to their region. A number of factors determine which criteria each AHJ adopts within a building code and which criteria they leave out, including what is economically feasible. Therefore, showing consistency among buildings in various jurisdictions will be difficult, if not impossible.

A building in Portland that uses the IgCC could have very different environmental attributes than a building in New York. They both may be technically built to the IgCC, but that will not necessarily mean they have a similar environmental

26 | APRIL/MAY 2012

footprint. Ensuring that the marketplace understands this distinction will be critical to ensuring the success of the IgCC. Similarly, it is extremely important that the marketplace understand that just because a building is built to the IgCC does not mean that is has the same environmental impacts as a building certified to a green building rating system (and vice versa). In the Florida example above, publicly funded buildings must meet LEED, Green Globes, IgCC or another equivalent green building rating system. However, while LEED and Green Globes are similar points-based rating systems, with similar tiers of achievement, the IgCC is essentially a pass/fail with no third party assessment process unless it is formally adopted into the jurisdictional building code. If a builder in Florida claims the building complies with IgCC as a means to avoid getting a LEED certification, how will the state verify compliance? And since the code was not meant to be adopted as is by any AHJ, what specific criteria will be used?

These are important questions that need to be answered before widespread adoption of the IgCC is achieved. If the marketplace continues to believe that the IgCC is simply another competitor in the increasingly muddled green building field, then the goal of moving the baseline up while still incentivizing builders to push even higher will likely not be realized. Instead, the IgCC could actually hurt the green building movement.

Given the economy and the fact that new construction has been slow to recover, a green code that still complies with existing requirements, but is easier (and likely cheaper) to achieve is an attractive option. This will not help move the green building marketplace forward. Instead, it may produce a race to the middle (or even bottom) where builders are incentivized to do just enough to comply with the baseline green building code, but have no reason to go above and beyond.

As the green building marketplace continues to evolve and mature, we face the dilemma of how to move the minimum baseline up without removing the incentives that have pushed many builders to incorporate as many green building technologies as possible. The good news is that there is already a lot of interest, and the solution, while complicated, is not out of reach. Using the IgCC as the new baseline and ensuring that all new construction projects have a least a minimum amount of green features, while still encouraging the marketplace to go even further, is the ultimate goal. The tools are all in place and available, from green codes to green rating systems. Now we just have to make sure the right policies are put in place so that these complementary pieces can all fit together.

MARK ROSSOLO is the director of public affairs for UL Environment (ULE). He works on policy-related sustainability issues for ULE and has extensive experience and expertise working with green building codes, standards and programs.

This article is for general information purposes and is not intended to convey legal or other professional advice.

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IN DEPTH [fleet update]

By Sean Kilcarr

Boosting fuel

efficiency

Trucks and cars will use less fuel very soon, thanks in part to a government-industry research program uel efficiency has always been a watchword among government fleets, but thanks to a massive research program launched by the U.S. Department of Energy (DOE) nearly two years ago, fuel economy for light, medium and heavy-duty trucks should increase significantly in the very near future.

And it better, because light trucks face new federal fuel economy improvement mandates starting in 2016 that roll on through 2025, while commercial vehicles must comply with similar regulations beginning in 2014 on into 2018 (see sidebar).

Energy Secretary Steven Chu says manufacturers are on the cusp of big breakthroughs in vehicle technologies. That is why the DOE is stepping up research and development partnership efforts such as SuperTruck, a program that is helping fund nine projects with $187 million in federal grants to improve fuel efficiency for heavy-duty trucks and passenger vehicles.

FUNDING AIMS AT HEAVY DUTY Chu unveiled the “SuperTruck” program two years ago, and three of the nine SuperTruck projects — accounting for $115 million of the $187 million in grants — will focus on increasing Class 8 long-haul tractor fuel efficiency by at least 50 percent by 2015.

The four main manufacturers joining with DOE — Navistar, Peterbilt Motors, Cummins Inc. and Daimler Trucks North

28 | APRIL/MAY 2012

America (DTNA) — are experimenting with advanced aerodynamics, engine idling reduction technologies, a waste heat recovery system to increase engine efficiency, advanced combustion techniques and powertrain hybridization.

For example: Cummins will receive more than $38.8 million to work with Peterbilt to combine a more efficient diesel engine, advanced waste heat recovery system, and fuel cell auxiliary power unit to reduce engine idling with an aerodynamic tractor and trailer combination.

DTNA will get $39.5 million to focus on engine downsizing, electrification of auxiliary systems such as oil and water pumps, waste heat recovery, and improved vehicle aerodynamics and hybridization.

Navistar will receive $37.3 million to improve truck and trailer aerodynamics, combustion efficiency, waste heat recovery, hybridization, idle reduction and reduced rolling resistance tires.

DOE officials noted that the total contract value for the SuperTruck effort is approximately $270 million, which includes DOE grants alongside what its industry partners are spending.

DOE expects 40 percent of the freight fuel efficiency improvements from the SuperTruck research to come from

New light vehicle fuel economy standards set Last November, the Environmental Protection Agency (EPA) and the Department of Transportation (DOT) rolled out the second stage of a joint rulemaking effort to set higher miles-per-gallon (mpg) fuel economy and greenhouse gas (GHG) pollution standards for passenger cars and light trucks.

This latest regulatory proposal builds on the first phase (2012-2016) of the Obama administration’s MPG/GHG program, which it said will raise fuel efficiency equivalent to 35.5 mpg by 2016 and result in an average light-vehicle tailpipe carbon dioxide (CO2) level of 250 grams per mile.

Combined with 2011 fuel economy standards and the standards in effect for 2012-2016, the latest proposal represents the most significant federal action ever taken to reduce greenhouse gas emissions and improve fuel economy, the agencies said. Taken together, the agencies said those actions would reduce greenhouse gas emissions by half and result in model year 2025 light-duty vehicles with nearly double the fuel economy of model year 2010 light-duty vehicles.

The two agencies also are imposing the first of its kind fuel efficiency standards for commercial vehicles to go into effect in stages between 2014 and 2018.

The rules, however, impose different fuel efficiency targets based on the size and weight of the vehicle involved: Vocational vehicles — including delivery trucks, buses, and garbage trucks — will be required to reduce fuel consumption and greenhouse gas emissions by approximately 10 percent by model year 2018. The trucks could save an average of 1 gallon of fuel for every 100 miles.

For heavy-duty pickup trucks and vans, separate standards are required for gasoline-powered and diesel trucks. The vehicles will be required to achieve up to about a 15 percent reduction in fuel consumption and GHG emissions by model year 2018. Under the final standards, a typical gasoline or diesel-powered heavy-duty pickup truck or van could save 1 gallon of fuel for every 100 miles.

DOT and EPA noted that different measurements will apply to each vehicle category. For example, heavyduty pickup trucks and vans must meet targets for gallons of fuel consumed per mile as well as grams of carbon dioxide (CO2) emissions per mile. However, vocational vehicles must meet targets for gallons of fuel consumed and GHG emissions per ton-mile. engine efficiency improvements, with the remaining 60 percent to come from other vehicle system design changes, such as aerodynamics, use of more light weight components and materials, drivetrain friction reduction, and wider use of hybrid powertrain systems, where smaller diesel engines are combined with electric motors and batteries.

The department expects that some of the new technologies will begin to enter the market in about four years.

LIGHTER VEHICLE RESEARCH Significant change also is expected for light vehicles through the SuperTruck program, as six projects — totaling more than $71 million in grants — are focused on developing engine technologies that will improve the fuel economy of passenger vehicles by 25 percent to 40 percent by 2015 using an engine-only approach. The projects and funding being underwritten by DOE include: Chrysler Group received more than $14.4 million to devise a flexible combustion system for its minivan platform based on a downsized, turbocharged engine that uses direct gasoline injection, recirculation of exhaust gases, and flexible intake air control to reduce emissions.

Cummins received $15 million to develop a fuel-efficient, low emissions diesel engine that achieves a 40 percent fuel economy improvement over conventional gasoline technology and significantly exceeds 2010 EPA emissions requirements.

Delphi Automotive Systems obtained more than $7.4 million to design a new low-temperature combustion system, coupled with technologies such as continuously variable valve control and engine “down-speeding,” to improve fuel economy by at least 25 percent.

Ford Motor got $15 million to achieve a 25 percent fuel economy improvement with a gasoline engine in a 2010 mid- to large-size sedan, using technologies including engine downsizing, turbo-charging, direct injection, and a novel exhaust after-treatment system.

If breakthroughs developed by the entire program — for heavy-duty trucks and light vehicles alike — are adopted broadly across the country, they could save more than 100 million gallons of gasoline and diesel per day, and reduce carbon emissions from on-road vehicles by 20 percent by 2030, says Ramin Younessi, Navistar group vice president for product development and strategy.

Near term, however, he believes ongoing work with composite materials and new aluminum components will be more rapidly applied to current truck designs, as well as aerodynamic advances, to help vehicle makers improve fuel economy ahead of the federal mandates.

“The improvements we strive to achieve will not come in leaps for the most part, but will be the sum of many smaller but important measures,” says Elmar Boeckenhoff, DTNA’s senior vice president for engineering and technology.

In the end, the cost of the new technology could be biggest challenge the participants in the SuperTruck project must surmount, says Wayne Eckerle, vice president for research and development at Cummins.

“Our biggest technical challenge is really getting the costs for any and all of the technologies and systems we’re working on down to where the fleets will want to buy them,” he says. “They need to be durable and reliable, of course, but in the end they must offer a way to reduce total cost of ownership in order for the customer to use them.”

SEAN KILCARR is senior editor for Fleet Owner, a Government Procurement sister publication.

www.govpro.com • GOVERNMENT PROCUREMENT | 29

RESOURCES [anniversaries]

NIGP RECOGNIZES MILESTONE AGENCY ANNIVERSARIES Your efforts and membership have contributed to our legacy ... building a world in which public procurement practitioners are highly regarded members of a respected professional order.

Celebrating 60 Years > City of Owensboro, Ky. Celebrating 55 Years > Virginia Department of General Services > Virginia Department of Transportation – Central Office Celebrating 50 Years > Old Dominion University, Va. > City of Rockford, Ill. > Baltimore County, Md. > City of Salisbury, Md. > Tulsa Public Schools ISD #1, Okla. > City of West Palm Beach, Fla. Celebrating 45 Years > Hillsborough County Department of Procurement Services, Fla. > City of Aurora, Ill. Celebrating 40 Years > Kauai County, Hawaii > City of Allentown, Pa. > Village of Glenview, Ill. > City of Wilmington, Del. Celebrating 35 Years > City of Cheyenne, Wyo. > Manatee County, Fla. > St. Lucie County, Fla. > City of Lake Charles, La. > State of Mississippi, Miss. > Shelby County Government, Tenn.

30 | APRIL/MAY 2012

> District School Board of Pasco County, Fla. > Albermarle County, Va. > Arlington County Public Schools, Va. > State of Idaho, Idaho > City of Charlottesville, Va. > Maricopa County Community College District, Ariz. > City of Oneonta, N.Y. > Pulaski County, Ark. > City of Bowling Green, Ky. > City of Naples, Fla. > Coconino County, Ariz. > City of Kansas City, Mo. > Alachua County Board of Commissioners, Fla. > Pennsylvania Turnpike Commission, Pa. > City of Wheaton, Ill. > City of Greenville, Texas > Village of Elk Grove, Ill. > City and Borough of Juneau, Alaska > Beaufort County, S.C. > City of Hollywood, Fla. > City of Yuma, Ariz. > Hanover County, Va. > City of Scottsdale, Ariz.

Celebrating 30 Years > Jefferson County Public Schools, Colo. > Detroit Water & Sewerage Department > City of Hurst, Texas > City of Kingsport, Tenn. > City of Albuquerque, N.M. > Maryland Department of Transportation > City of Houston Administration & Regulatory Affairs, Texas > King County, Wash. > Laramie County Community College, Wyo.

> City of Grande Prairie, Alberta, Canada > Prince William County, Va. > South Carolina Department of Natural Resources, S.C. > Medical University of South Carolina > City of Cortez, Colo. > University of Maryland at College Park, Md. > City of Chesapeake, Va. > City of Columbia, S.C. > Placer County, Calif. > City of Winter Park, Fla. Celebrating 25 Years > Morris County, N.J. > Dallas Area Rapid Transit, Texas > City of Fort Smith, Ark. > Kentucky Department of Parks, Ky. > University of Mary Washington, Va. > City of Beaumont, Texas > Virginia Beach City Public Schools, Va. > City of Valdosta, Ga. > City of Roswell, Ga. > Muscogee County School District, Ga. > Missouri Southern State University, Mo. > Orange County, Texas > Summit County BMRDD, Ohio > Pellissippi State Tech Community College, Tenn. > Columbia Public School District, Mo. > City of La Porte, Texas > City of Longwood, Fla. > Eau Clair City / county Purchasing, Wis. > City of Las Cruces, N.M. > Clacasieu Parish Police Jury, La.

> Lee County Board of Commissioners, Fla. > Texas Department of Transportation, Texas > School Board of Broward County, Fla. > Charleston Commissioners of Public Works, S.C. > South Florida Water Management District, Fla. > Kansas City Police Department, Mo. > Spokane County, Wash. > Dakota County, Minn. > Gloucester County, Va. > Miami Dade College, Fla. > Miami Dade School Board, Fla. > University of Miami, Fla. > City of Topeka, Kan. > City of Punta Gorda, Fla. > City Utilities of Springfield, Mo. > St. Vrain Valley School District, Colo. > City of Lee’s Summit, Mo. > County of Lexington, S.C. > City of Port St Lucie, Fla. > Hall County Board of Commissioners, Ga. > New Castle County, Del. > Delaware River Port Authority, N.J. > City of Steamboat Springs, Colo. > Austin Community College District, Texas > Kentucky Transportation Cabinet, Ken. > Prince William County Public Schools, Va. > Philadelphia School District, Pa. > Comal County, Texas > Florida Department of Financial Services, Fla. > Multnomah County Purchasing, Ore.

RESOURCES [calendar of events] FACE-2-FACE COURSES

JULY Change Management for the Procurement Professional Date: July 26-27 Location: Longmont, Colo.

Instructor: Leslie Vallie, CPPO Hosted by: Rocky Mountain Governmental Purchasing Association Chapter of NIGP Contracting for Construction Services Date: July 16-17 Location: Phoenix, Ariz.

Instructor: Edward Pabor, CPPO, CDT, C.P.M. Hosted by: Arizona State Capitol Chapter of NIGP Developing and Managing RFPs Date: July 11-13 Location: Ocala, Fla. Instructor: Bobbye Marsala, CPPO, CPPB, C.P.M. Hosted by: North Central Florida Chapter of NIGP Developing and Managing RFPs Date: July 18-20 Location: Lakewood, Ohio Instructor: Elizabeth Lowe, CPPB Hosted by: Central Ohio Organization of Public Purchasers Chapter of NIGP Effective Contract Writing Date: July 10-11 Location: Indianapolis, Ind. Instructor: Michael Kolodisner, CPPO Hosted by: Indiana Chapter of NIGP Introduction to Public Procurement Date: July 16-18 Location: Portland, Ore. Instructor: Robin Rickard, CPPO, OPBC Hosted by: Oregon Public Purchasing Association, Inc. Chapter of NIGP Legal Aspects of Public Purchasing Date: July 10-12 Location: Baton Rouge, La. Instructor: Ronald King, CPPO, CPPB, VCO Hosted by: Louisiana Chapter of NIGP

Performance Based Requests for Proposals Date: July 19-20 Location: Winter Park, Fla. Instructor: John Miller, CPPO Hosted by: Central Florida Chapter of NIGP

ADVERTISER INDEX Advertiser .......................................................... Page Applied Industrial Technologies ......................... 23 E-Z GO ................................................................... 13 Fair Manufacturing, Inc......................................... 31 Ford Motor Company ......................................... 17 Grainger.....................................................................3 Imaging Supplies Coalition .....................................5 Intirion-MicroFridge ............................................. 19 John Deere ........................................................... IFC Liftmoore Inc. ........................................................ 15 Mastercard International................................... 6, 7 Public Sourcing Solutions .................................... 11 Siemens .................................................................. BC Staples Advantage ................................................. 18 Toyota....................................................................IBC U.S. Communities ....................................................9

Strategic Procurement Planning Date: July 11-13 Location: Linthicum, Md. Instructor: Tony Reed, CPPO Hosted by: Maryland Public Purchasing Association, Inc. Chapter of NIGP Strategic Procurement Planning Date: July 23-25 Location: Ames, Iowa Instructor: Barbara Johnson, CPPO, CPPB Hosted by: Iowa Public Procurement Association, Inc. Chapter of NIGP

AUGUST Alternative Dispute Resolution Date: Aug. 27-28 Location: Linthicum, Md. Instructor: Kenneth Hayslette, CPPO, C.P.M., CPCM Hosted by: Maryland Public Purchasing Association, Inc. Chapter of NIGP

Contract Administration Date: Aug. 8-10 Location: Linthicum, Md. Instructor: Steven Updike, CPPB, FCPA, FCCM, FCN Hosted by: Maryland Public Purchasing Association, Inc. Chapter of NIGP

ONLINE COURSES

JULY – AUGUST CPPB Online Prep Date: Wednesday, July 11 – Wednesday, Aug. 15 Instructor: Bill Hertwig, CPPO, CPPB, C.P.M., A.P.P. CPPO Online Prep Date: Wednesday, July 11 – Wednesday, Aug. 15 Instructor: Rob Rickard, CPPO, OPBC

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www.govpro.com • GOVERNMENT PROCUREMENT | 31

BACK PAGES [fred marks]

Facts, lies and negotiations arin Matthews and I have had an ongoing discussion about negotiation tactics for several years. He raised an interesting question recently about “How do you know if someone is lying?” I think the real answer is that someone always is, but it’s your job as a professional to determine to what extent the lying takes place. We all stretch the facts a bit in negotiation. I have always maintained that I “paint with a broad brush,” but I never outright lie or deceive. I don’t think that’s what a representative of a public body should ever do.

The more I thought about the question, the more I realized there is no one answer; it’s a combination of feelings, facts and intangibles. Unless there is an outright statement such as “the sky is a lovely shade of mauve today” (whatever mauve is) and it’s bright blue, then you have to depend on your professional training.

First, do your research! Find out everything you can about your opposite number and their company. Do they use aggressive tactics as a routine or is it just the person on the other side of the table? What is their position in the marketplace? Are they leaders or just entering into a particular area of specialization? Do any of your colleagues have experience with them? Have you had their financials reviewed by someone who can give you an opinion about their financial health?

Now comes the tough part, the intangibles. Look at their body language: Are their arms crossed, do they look you in the eye when they speak to you, do they talk down to you or are condescending in their tone? Professional language is important; I’ve never liked bullying tactics or yelling. It shows a lack of respect. If someone says “trust me,” I generally don’t.

Do they use exaggerated responses like gasping for air or a phony sense of shock? Do they flinch when you say something? Professional attire and demeanor are also important. Do you feel comfortable in their presence?

Do they agree with everything you say? All negotiations are like two tectonic plates rubbing against each other looking for a common ground. When things go too easily, I suspect something is wrong.

Old adage: “If it looks too good to be true, it usually is.”

Do they use techniques such as “good cop, bad cop?” The best way to defuse that is to say something like “I think I saw this in a James Cagney black-and-white movie from the 1930’s. You’re not really trying this, are you?” That should send a strong signal to them.

Do they try to impose artificial deadlines on you? “This will come to a complete halt if we don’t reach an agreement by ____.” Frankly, the world will not come to an end if you don’t reach an agreement by a certain time. Do they use terms like “take it or leave it”? That’s just a bluff, and I love to call them on that. The way to counter that is to keep questioning why they ask that and what you want to do is flush out why they did that.

Never let your emotions show unless it’s with a purpose. Keep a calm demeanor unless you want to send a very strong signal to the other party. And don’t walk out. The reality is that you have to go back in at some point and you don’t want to look foolish doing it. Find a reason to take a break (“I think we could all do with a break, lets come back in 15 minutes”). That will give you and your team a chance to talk things over.

I’m just scratching the surface about the topic. Put this on your list of things to talk about at staff meetings, take a course, do practice negotiations, talk to people who are successful at it.

Most of them are honest, frank and forthright people who want to accomplish something.

And practice until you are mauve in the face; it’s the only way to get better.

D

FREDERICK MARKS, CPPO, VCO, is a retired purchasing officer who has held positions as a supervising buyer for the Port Authority of New York and New Jersey as well as director of material management for Northern Virginia Community College. Contact Marks at fmarks@mindspring.com.

32 | APRIL/MAY 2012

there hasn’t been a fleet vehicle like this since, well, today.

The Prius Plug-in is the most advanced member of the Prius Family, combining an extended all-electric mode with proven hybrid technology. You also get the convenience of plug-in charging with rapid recharge times: 3 hours 1,2

with a standard 120V household outlet or 1.5 hours with a 240V outlet. The ability to choose between electric and hybrid gives people the freedom to drive more, see more and do more. It’s a new kind of Prius. And it’s just the right vehicle for your fleet. Call 1- 800 -732 -2798 or visit fleet.toyota.com

Prototype shown with options. Production model will vary. 1 Prius Plug-in EV mode works under certain conditions up to near freeway speeds for approximately 10-15 miles on a full charge.

Sudden acceleration or climate control usage may prevent EV mode usage. 2 CAUTION! When driving a hybrid vehicle, pay special attention to the area around the vehicle. Because there is little vehicle noise in electric-only mode, pedestrians, people riding bicycles or other people and vehicles in the area may not be aware of the vehicle starting off or approaching them, so take extra care while driving. ©2011 Toyota Motor Sales, U.S.A., Inc.

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