DAR File No. 38508

Administrative Services, Purchasing and General Services

Rule R33-9

Insurance Procurement

Notice of Proposed Rule

(Repeal and Reenact)

DAR File No.: 38508
Filed: 05/13/2014 11:16:14 AM

RULE ANALYSIS

Purpose of the rule or reason for the change:

The reason for the repeal and reenactment is because the Division of Purchasing and General Services is updating this rule to comply with the provisions of the Procurement Code, Title 63G, Chapter 6a, and to match recent legislation (S.B. 179 of the 2014 General Legislative Session, including S.B. 190 from the 2013 General Legislative Session, and S.B. 153 from the 2012 General Legislative Session).

Summary of the rule or change:

This rule establishes the procedures for cancellations, rejections, and debarment for bids, requests for proposals, and other solicitations. This rule is being updated to comply with the provisions of the Utah Procurement Code, Title 63G, Chapter 6a, and to match recent legislation. The substantive changes in this rule are that insurance procurement has been renumbered to Rule R33-25 and modifications have been made to cancellations, rejections, and debarment sections. (DAR NOTE: The proposed new Rule R33-25 is under DAR No. 38522 in this issue, June 1, 2014, of the Bulletin.)

State statutory or constitutional authorization for this rule:

• Title 63G, Chapter 6a

Anticipated cost or savings to:

the state budget:

The state's budget will not be affected, because this rule simply establishes the procedures for cancellations, rejections, and debarment for bids, requests for proposals, and other solicitations. If there is any impact, it is created by the statute. This rule merely implements the statute.

local governments:

Local governments' budgets will not be affected, because this rule simply establishes the procedures for cancellations, rejections, and debarment for bids, requests for proposals, and other solicitations. If there is any impact, it is created by the statute. This rule merely implements the statute.

small businesses:

Small businesses' budgets will not be affected, because this rule simply establishes the procedures for cancellations, rejections, and debarment for bids, requests for proposals, and other solicitations. If there is any impact, it is created by the statute. This rule merely implements the statute.

persons other than small businesses, businesses, or local governmental entities:

No other person's budget will be affected, because this rule simply establishes the procedures for cancellations, rejections, and debarment for bids, requests for proposals, and other solicitations. If there is any impact, it is created by the statute. This rule merely implements the statute.

Compliance costs for affected persons:

There are no compliance costs for any person, because this rule simply establishes the procedures for cancellations, rejections, and debarment for bids, requests for proposals, and other solicitations. If there is any impact, it is created by the statute. This rule merely implements the statute.

Comments by the department head on the fiscal impact the rule may have on businesses:

There is no fiscal impact on businesses. If there is any impact, it is created by the statute. This rule merely implements the statute.

Kimberly Hood, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Administrative Services
Purchasing and General Services
Room 3150 STATE OFFICE BLDG
450 N STATE ST
SALT LAKE CITY, UT 84114-1201

Direct questions regarding this rule to:

• Alan Bachman at the above address, by phone at 801-538-3105, by FAX at 801-538-3313, or by Internet E-mail at abachman@utah.gov
• Paul Mash at the above address, by phone at 801-538-3138, by FAX at 801-538-3882, or by Internet E-mail at pmash@utah.gov
• Chiarina Bautista at the above address, by phone at 801-538-3240, by FAX at 801-538-3313, or by Internet E-mail at cgleed@utah.gov

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

07/01/2014

This rule may become effective on:

07/08/2014

Authorized by:

Kent Beers, Director

R33. Administrative Services, Purchasing and General Services.

[R33-9. Insurance Procurement.

R33-9-101. Standard Bidding Method.

All new or renewal liability insurance purchases regardless of premium size and all other new or renewal insurance purchases over $5,000 annual premium will be made after advertisement for public bid, in accordance with these rules, except in cases of emergency for nonliability policies. In awarding the bid, the procurement officer shall consider the following:

(1) financial resources of agent, broker and underwriting company;

(2) quality of prior service rendered to the state;

(3) service facilities available in-state;

(4) service reputation;

(5) insurance experience and expertise;

(6) coverages and services to be provided; and

(7) any other reasonable factors which will provide the best possible coverage and service to the purchasing agency.

 

R33-9-102. Alternate Bidding Method.

To avoid oversaturation of limited primary or reinsurance markets, a two-step bidding method may be used at the option of the procurement officer.

(1) All interested agents and brokers would be required to qualify for final bidding according to reasonable selection criteria such as: similar accounts in office; size of firm; background of firm principles; specialized knowledge or expertise; and any other reasonable factors which will provide the best possible coverage for the purchasing agency. At least three unaffiliated brokers or agents must qualify for final bidding.

(2) The prequalified group of final bidders must submit a list of markets to the procurement officer in order of preference. The procurement officer will then, as equitably as possible, assign no more than five and no less than three markets to each final bidder, based upon their preferences.

Bidders will then submit an official bid for each assigned market, according to bid specifications.]

R33-9. Cancellations, Rejections, and Debarment.

R33-9-101. General Provisions.

(1) An Invitation for Bids, a Request for Proposals, or other solicitation may be canceled prior to the deadline for receipt of bids, proposals, or other submissions, when it is in the best interests of the procurement unit as determined by the procurement unit. In the event a solicitation is cancelled, the reasons for cancellation shall be made part of the procurement file and shall be available for public inspection and the procurement unit shall:

(a) re-solicit new bids or proposals using the same or revised specifications; or,

(b) withdraw the requisition for the procurement item(s).

 

R33-9-102. Re-solicitation.

(1) In the event there is no initial response to an initial solicitation, the chief procurement officer or head of a procurement unit with independent procurement authority may:

(a) contact the known supplier community to determine why there were no responses to the solicitation;

(b) research the potential vendor community; and,

(c) based upon the information in (a) and (b) require the conducting procurement unit to modify the solicitation documents.

(2) If the conducting procurement unit has modified the solicitation documents and after the re-issuance of a solicitation, there is still no competition or there is insufficient competition, the chief procurement officer or head of a procurement unit with independent procurement authority, shall:

(a) require the conducting procurement unit to further modify the procurement documents; or,

(b) cancel the requisition for the procurement item(s).

 

R33-9-103. Cancellation Before Award.

(1) When it is determined before award but after opening that the specifications, scope of work or other requirements contained in the solicitation documents were not met by any bidder or offeror the solicitation shall be cancelled.

(2) Solicitations may be cancelled before award but after opening all bids or offers when the procurement unit determines in writing that:

(a) inadequate or ambiguous specifications were cited in the solicitation;

(b) the specifications in the solicitation have been or must be revised;

(c) the procurement item(s) being solicited are no longer required;

(d) the solicitation did not provide for consideration of all factors of cost to the procurement unit, such as cost of transportation, warranties, service and maintenance;

(e) bids or offers received indicate that the needs of the procurement unit can be satisfied by a less expensive procurement item differing from that in the solicitation;

(f) except as provided in Section 63G-6a-607, all otherwise acceptable bids or offers received are at unreasonable prices, or only one bid or offer is received and the chief procurement officer or head of a procurement unit with independent procurement authority cannot determine the reasonableness of the bid price or cost proposal;

(g) the responses to the solicitation were not independently arrived at in open competition, were collusive, or were submitted in bad faith; or,

(h) no responsive bid or offer has been received from a responsible bidder or offer;

R33-9-104. Alternative to Cancellation.

In the event administrative difficulties are encountered before award but after the deadline for submissions that may delay award beyond the bidders' or offerors' acceptance periods, the bidders or offerors should be requested, before expiration of their bids or offers, to extend in writing the acceptance period (with consent of sureties, if any) in order to avoid the need for cancellation.

R33-9-105. Continuation of Need.

If the solicitation has been cancelled for the reasons specified in Rule R33-9-103(1)(f), (g), or (h) and the chief procurement officer or head of a procurement unit with independent procurement authority has made the written determination in Rule R33-9-103(1) and the conducting procurement unit has an existing contract, the division or a procurement unit with independent procurement authority may permit an extension of the existing contract under Section 63G-6a-802(7).

 

R33-9-201. Rejections and Debarments.

An issuing procurement unit may reject any or all bids, offers or other submissions, in whole or in part, as may be specified in the solicitation, when it is in the best interest of the procurement unit. In the event of a rejection of any or all bids, offers or other submissions, in whole or in part, the reasons for rejection shall be made part of the procurement file and shall be available for public inspection.

 

R33-9-202. Conformity to Solicitation Requirements.

(1)(a) Any bid or offer that fails to conform to the essential requirements of the solicitation shall be rejected.

(b) Any bid or offer that does not conform to the applicable specifications shall be rejected unless the solicitation authorized the submission of alternate bids or offers and the procurement item(s) offered as alternates meet the requirements specified in the solicitation.

(c) Any bid or offer that fails to conform to the delivery schedule or permissible alternates stated in the solicitation shall be rejected.

(2) A bid or offer shall be rejected when the bidder or offeror imposes conditions or takes exceptions that would modify requirements or terms and conditions of the solicitation or limit the bidder or offeror's liability to the procurement, since to allow the bidder or offeror to impose such conditions or take exceptions would be prejudicial to other bidders or offerors. For example, bids or offers shall be rejected in which the bidder or offeror:

(a) for commodities, protects against future changes in conditions, such as increased costs, if total possible costs to the procurement unit cannot be determined;

(b) fails to state a price and indicates that price shall be the price in effect at time of delivery or states a price but qualifies it as being subject to price in effect at time of delivery;

(c) when not authorized by the solicitation, conditions or qualifies a bid by stipulating that it is to be considered only if, before date of award, the bidder or offeror receives (or does not receive) an award under a separate solicitation;

(d) requires that the procurement unit is to determine that the bidder or offeror's product meets applicable specifications; or

(e) limits rights of the State under any contract clause.

(3) A bidder or offeror may be requested to delete objectionable conditions from a bid or offer provided doing so is not prejudicial to other bidders or offerors, or the conditions do not go to the substance, as distinguished from the form, of the bid. A condition goes to the substance of a bid or offer where it affects price, quantity, quality, or delivery of the procurement item(s) offered.

 

R33-9-203. Unreasonable or Unbalanced Pricing.

(1)(a) Any bid or offer may be rejected if the chief procurement officer or head of a procurement unit with independent procurement authority determines in writing that it is unreasonable as to price. Unreasonableness of price includes not only the total price of the bid or offer, but the prices for individual line items as well.

(b) Any bid or offer may be rejected if the prices for any line items or subline items are materially unbalanced. Unbalanced pricing may increase performance risk and could result in payment of unreasonably high prices. Unbalanced pricing exists when, despite an acceptable total evaluated price, the price of one or more line items is significantly over or understated as indicated by the application of cost or price analysis techniques. The greatest risks associated with unbalanced pricing occur when:

(i) startup work, mobilization, procurement item sample production or testing are separate line items;

(ii) base quantities and option quantities are separate line items; or

(iii) The evaluated price is the aggregate of estimated quantities to be ordered under separate line items of an indefinite-delivery contract.

(c) All bids or offers with separately priced line items or subline items shall be analyzed to determine if the prices are unbalanced. If cost or price analysis techniques indicate that an offer is unbalanced, the procurement unit shall:

(i) consider the risks to the procurement unit associated with the unbalanced pricing in determining the competitive range and in making the source selection decision; and

(ii) consider whether award of the contract will result in paying unreasonably high prices for contract performance.

(d) A bid or offer may be rejected if the procurement unit and the chief procurement officer or head of a procurement unit with independent procurement authority determine that the lack of balance poses an unacceptable risk to the State.

 

R33-9-204. Rejection for Nonresponsibility or Nonresponsiveness.

(1) Subject to Section 63G-6a-903, the chief procurement officer or head of a procurement unit with independent procurement authority shall reject a bid or offer from a bidder or offeror determined to be nonresponsible. A responsible bidder or offeror is defined in Section 63G-6a-103(42).

(2) In accordance with Section 63G-6a-604(3) the chief procurement officer or head of a procurement unit with independent procurement authority may not accept a bid that is not responsive. Responsiveness is defined in Section 63G-6a-103(43).

(3) When a bid security is required and a bidder fails to furnish the security in accordance with the requirements of the invitation for bids, the bid shall be rejected.

(4) The originals of all rejected bids, offers, or other submissions, and all written findings with respect to such rejections, shall be made part of the procurement file and available for public inspection.

 

R33-9-301. Rejection for Suspension/Debarment.

Bids, offers, or other submissions, received from any person that is suspended, debarred, or otherwise ineligible as of the due date for receipt of bids, proposals, or other submissions shall be rejected.

 

KEY: government purchasing, cancellations, rejections, debarment

Date of Enactment or Last Substantive Amendment: [1988]2014

Notice of Continuation: April 17, 2014

Authorizing, and Implemented or Interpreted Law: 63G-6a