DIVISION INFORMATION
INFORMATION
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Chapter 155 - Rules Defining An Equivalent Basis for Cost Comparision
Between State Employee and Private Contractor Provision of Service
Chapter 155 (Word)
State of Maine
Department of Administrative and Financial Services
Bureau of General Services
Division of Purchases
Table of Contents
Part One. General
- Section 1. Purpose and Scope
- This section states the purpose and scope of the Bureau of General Services'
rules governing the equitable selection of contractor personal services.
- Section 2. Definitions
- This section defines terms used in the rule. Terms may be found in the
text of the rule or the associated form s which require completion by
the agency/department and bidders. Statutory definitions relating to
the subject matter are contained in 5 MRSA 1825-A. Definitions.
Part Two. Construction of the Rule
- Section 1. Creating an Equal Basis
- This section discusses the issues with respect to the creation of an
equivalent basis for considering personal services proposals.
- Section 2. Responsibilities
- This section outlines the responsibilities of the Agency or Department
and the bidders when preparing requests and submitting proposals which
would result in a contract for personal services.
Part Three. Application and Forms
- Section 1. Applying the Provisions of the Rule
- This section requires the use of a standard calculation to determine
the best value to the State of Maine and suggests standard language to
be included in the request for proposal document.
- Section 2. Applicable Forms
- This section outlines the information required to be collected and suggests
a format for the collection, presentation, and analysis of the information.
Summary: This section states the purpose and scope
of the Bureau of General Services' rules governing the equitable selection
of contractor personal services.
- 1.1.1 Contracting for Personal Services Allowed.
5 MRSA 1816-A allows contracting for personal services when any number
of conditions is met. Generally examples include, but are not limited
to, services which are highly specialized or technical in nature, when
it's necessary to protect against a conflict of interest, if the location
is such that state employees are not available, or the services are urgent,
temporary or occasional in nature.
When contracting for personal services, agencies and departments are
required to utilize a process of competitive bidding.
- 1.1.2 Rules Assuring an Equivalent Basis for Cost Comparison.
Contracting for personal services as part of 5 MRSA 1816-A is permitted
to achieve actual cost savings when other conditions are met. However,
5 MRSA 1816-A, 2, I requires that an equivalent basis for cost comparison
between state employee and private contractor provision of services must
be calculated by rules adopted by the State Purchasing Agent to assure
that the private contractor provides the best value. All personal services
contracts are subject to this rule.
Summary: This section defines terms used in the rule.
Terms may be found in the text of the rule or the associated forms which
require completion by the agency/department and bidders. Statutory definitions
relating to the subject matter are contained in 5 MRSA 1825-A. Definitions.
Administrative Costs |
The charges made by a contractor
providing personal services to recruit, select, retain, train,
place, and supervise temporary workers; profit; and associated
allowed costs, calculated on an annualized basis per FTE. |
Classification Specification |
Positions so sufficiently alike with
respect to duties, responsibilities and authority that the same
descriptive title may be used with clarity to designate each
such position; the same knowledge, skill, and ability applied;
the same process used to recruit, qualify and examine persons
for each such position; and the same schedule of pay applied
with equity to each such position. |
Comparable Position |
A state position that completes job
duties similar to those being requested under a personal services
contract. Job duties of state workers must be those described
in a comparable classification specification. |
Competitive Bidding Process
CBP |
Depending on the circumstances, a
process which allows use of either a solicited proposal or quotation
for services from all known service providers in an area if the
expected annual contract value is less than twenty thousand dollars
(<$20,000). |
Cost Differentials |
In general, the difference between
the temporary worker base cost and the state worker base cost.
Cost differentials are calculated in the aggregate over the life
of the contract. |
Equivalent Basis
(see mathematical expression) |
The dollar value of an employee's
Fully Burdened Employee Cost (FBEC) less health benefits and
retirement benefits, calculated on an annualized basis.
Equivalent Basis = FBEC - (health insurance + retirement benefit
costs). |
Full Time Equivalent
FTE
(see mathematical expression) |
A computed statistic representing
the number of full-time employees that could have been employed
if the reported number of hours worked by part-time, temporary,
or intermittent employees had been worked by full-time employees.
This statistic is calculated by dividing the hours worked per
year by 2080 and is commonly reported as a whole number, decimal
or fraction.
Full Time Equivalent = hours worked in 12 months/2080 |
Fully Burdened Employee Cost
FBEC |
The total cost of an employee's salary
and benefits including the base salary and all premium adjustments
and stipends, state paid amounts for retirement, health, dental,
and life insurance, and the amount associated with workers' compensation.
This amount is found as the "total cost" on the employee
Position Profile Report. |
Health Benefit Costs |
Annualized dollar value of major
medical and dental insurance provided at the expense of the employer,
covering the employee only. For state workers, these are the
health and dental costs shown on the Position Profile Report. |
Job Duties |
The functional tasks of a position,
expressed in percentage of time per FTE, describing fundamental
responsibilities which account for five percent (5%) or more
of the work. Job duties for state workers must significantly
correlate to or be those listed in the classification specification
of the specific position. |
Lay-off Notice Cost
(see mathematical expression) |
The cost associated with the lay-off
notice period. This cost is the sum of total benefits and total
salary as taken from the Position Profile Report divided by 52
and multiplied by the number of weeks of the lay-off notice period.
Lay-off Notice Cost = FBEC/52 x Number of Weeks in Lay-off
Notice Period. |
Lay-off Notice Period |
The period of notice required for
lay-offs of state workers as specified in collective bargaining
agreements. |
Position Profile Report |
A report from the Budget and Financial
Management System produced for each authorized position in state
government summarizing the salary and benefit costs of the position. |
Request For Proposal
RFP |
A formal and structured inquiry published
by an agency or department of state government soliciting information
by which a selection may be made of a contractor to provide specific
services. |
Retirement Benefit Costs |
Annualized employer contributions
to Social Security or the Maine State Retirement System. Retirement
benefits for state workers are the sum of normal and unfunded
liability and administrative costs on behalf of the Retirement
System and health costs taken from the Position Profile Report. |
Social Security |
Contributions made by the employer
pursuant to the Federal Insurance Contributions Act. |
State Worker Base Cost
SWBC
(see mathematical expression) |
The cost to the state to utilize
state employees to provide services. This is calculated as the
Fully Burdened Employee Cost (FBEC) less health and retirement
benefits plus a supervisory adjustment, unemployment costs, and
the lay off notice cost at step 3 of the pay range.
SWBC = FBEC - (health insurance and retirement benefit costs)
+ supervisory adjustment + unemployment costs + lay off notice
cost. |
Supervisory Adjustment |
The estimated additional cost to
the State, calculated on an annualized basis, associated with
the need to add supervisory staff to deal with the administration
of state workers when temporary workers cannot be hired. It is
the product of the number of additional supervisors required
and the supervisors' compensation. |
Supervisor's Compensation |
The sum of the total salary and the
value of the total benefits, taken from the Position Profile
Report, for the supervisor of the comparable position. |
Temporary Worker Base Cost
TWBC
(see mathematical expression) |
The annualized cost for the provision
of temporary, non-civil service workers. This is calculated as
the annual value of the hourly wage less the combined health
and retirement benefits plus administrative costs.
TWBC = Hourly Wage Annualized - (health insurance and retirement
benefit costs) + administrative costs. |
Total Benefits |
The total benefits of a specific
position, taken from the Position Profile Report. |
Total Salary |
The total salary of a specific position,
taken from the Position Profile Report. |
Unemployment Costs |
The arithmetic mean of the state's
total unemployment costs over the preceding five years, or years
for which data are available, expressed as the product of a percentage
of the base cost and the state worker base salary over a 26 week
period.
Unemployment Costs = (( S State Unemployment Cost/ S State
Payroll) n1..n5 /n) * Annual Equivalent Cost * 0.5) The sum
of State Unemployment Costs divided by the sum of State Payroll
Costs for up to 5 years multiplied by the Annual Equivalent
Cost times 0.5. |
Summary: This section discusses the issues with respect
to the creation of an equivalent basis for considering personal services
proposals.
- 2.1.1 Recognizing the Need to Create an Equivalent Basis for
Comparison.
Personal services' contracting is permitted by statute when certain
conditions are met. Among the provisions listed is one to assure "...an
equivalent basis for comparison between state employee and private contractor
provision of services..." in rules adopted by the State Purchasing
Agent. The intent of the rule is then to create an equal basis for the
comparison of proposals.
- 2.1.2 Satisfying the Need to Create an Equivalent Basis for
Comparison.
It is the intent to consider cost as one of the factors in a decision.
Agencies and departments are faced with the dilemma of considering unequal
health and retirement benefit programs and any associated expense. A
challenge is to determine the value of the associated program expenses
for all parties to the bid and, effectively, consider the state as one
of the bidders. Equality can be introduced by removing health and retirement
benefit costs from the cost consideration for all parties, including
the state, to the bid.
- 2.1.3 Other Costs.
There are also other costs dealing with either the provision of service
by contractors or state employees. These are typically overhead and profit
and a supervisory adjustment, unemployment costs, and layoff notice costs.
These costs are more consistent in their content and intent, and would
be identified , and be part of the comparison protocol.
- 2.1.4 Supervisory Adjustment.
The table lists the number of additional Full Time Equivalent supervisors
involved with personnel administration required for the proposed numbers
of workers. The number of additional supervisory administrators required
is for the full complement of additional state employees and would be
prorated to reflect the actual number of positions. Note: The values
in column two, Numbers of Additional Supervisory Administrators Required,
may vary among agencies and departments.
Table 1.
Number of FTE Administrators per Additional FTE Employees |
Number of Additional State Employees
in FTEs |
Number of Additional Supervisory
Administrators Required |
0-6 |
0 |
7-12 |
0.5 |
13-18 |
1 |
19-24 |
1.5 |
25-30 |
2 |
31-36 |
2.5 |
- 2.1.5 Providing Information to Allow the Comparison.
As part of the Competitive Bidding Process, CBP, submission to the Division
of Purchases, the Agency or Department would be required to provide certain
information from each of the bidders as well as the Agency or Department
on forms stipulated for use by the Division of Purchases. Any proposal
received that does not have the required information must be rejected
as non-responsive to the CBP and eliminated from consideration.
Summary: This section outlines the responsibilities
of the Agency or Department and the bidders when preparing requests and
submitting proposals which would result in a contract for personal services.
- 2.2.1 Responsibilities of the Agency or Department.
The Agency or Department desiring to become involved in the CBP seeking
a personal services contract shall prepare a report on forms stipulated
for use by the Division of Purchases and submit the material to the Director,
Division of Purchases with the CBP to the Division for approval. The
report shall include, but not be limited to:
- a projection of all job duties being sought, summed in
hours by job duty and rounded to the nearest whole hour;
- the FTEs for each job duty;
- the comparable position for the job duties; and,
- the state worker base cost for each comparable position.
No CBP submission shall be released if the Director finds this report
to be inadequate, incorrect or inconsistent with the personal services
requested in the associated CBP.
- 2.2.2 Responsibilities of the Bidder.
The Director, Division of Purchases, shall develop standard language
for CBPs that describe the information required of bidders to allow calculation
of cost differentials. This shall include, but not limited to, the identification
of the temporary worker base cost for each position proposed. The Director
may require that the information required to calculate cost differentials
be submitted using a standard form. Proposals that do not provide the
information required must be rejected as non-responsive to the CBP and
be eliminated from consideration.
Summary: This section requires the use of a standard
calculation to determine the best value to the State of Maine and suggests
standard language to be included in the request for proposal document.
- 3.1.1 Including Standard Language and Demonstrating Best Value.
Agencies or Departments desiring to become involved in a CBP seeking
a personal services contract shall include standard language and a calculation,
both referenced below, in making a selection. The calculation must be
provided to the Division of Purchases for consideration by the State
Purchases Review Committee. No selection will be approved without this
information.
For each position the agency must demonstrate that the Temporary Worker
Base Cost [TWBC] multiplied by the number of FTEs is less than the State
Worker Base Cost [SWBC] multiplied by the number of FTEs in order to
allow consideration of that bidder's proposal. Should the calculation
result in the SWBC being less than the TWBC, there would be no further
consideration of that bidder's proposal.
- 3.1.2 Standard Language
In each proposal issued, the Agency or Department must include the following
standard language approved by the Division of Purchases.
Maine law and rules require a comparison to determine if
selecting the private contractor provides the best value to the State
Of Maine . The Division of Purchases has reviewed the data collection
forms and the proposed assessment method and considers these to be
compliant with statute and rule.
Summary: This section outlines the
information required to be collected and suggests a format for the collection,
presentation, and analysis of the information.
- 3.2.1 Bidder Information
A suggested format for use by bidders providing submissions for personal
services is shown below as a Bidder Position Cost Submission. NOTE:
A distinctive font has been used to better present the data to be entered
by the Agency/Department and the Bidder on the form. The position(s)
would be identified by the Agency or Department and shown in column titled, "Position
Name," together with the Annualized Hours for which the services
of the position(s) are required (column 2). To allow a proper comparison
to the State Employee data, this value would be "2080." Bidders
would be required to provide the Hourly Wage, the Annualized Value of
Health and Retirement Benefit Costs for the position(s), and the Annualized
Prorated Share of Administrative Costs for the position(s). The resulting
value(s) for the " Temporary Worker Base Cost TWBC " for
the position(s) would be computed and entered into the table.
Name of Bidder |
1 |
2 |
3 |
4 |
5 |
|
Position Name |
Hourly Wage & Value of Benefits |
Annualized Hours |
Hourly Wage Annualized
(1 x 2) |
Value of Health & Retirement
Benefits (Annualized) |
Prorated Share of Administrative
Costs (Annualized) |
TWBC
(3 - 4 + 5) |
.. position 1 |
|
2080 |
|
|
|
|
.. position 2 |
|
2080 |
|
|
|
|
The actual Bidder Position Cost Submission for use by bidders responding
to proposals is found on the following page and is available in a paper
or electronic form.
State of Maine |
Enter Bidder's Name in the Cell Below
|
Bidder Position Cost
Submission |
Show the Bidder's Name in the box
at the upper right. It's possible to enter data which will calculate
the Temporary Worker Base Cost for up to two positions by making
entries in each of the tables below. See the instructions at
the top of each table concerning the detailed entries required.
Sheet access is limited; most cells are "write protected." |
Instructions: Make numerical entries
as dollars per hour to the right of (1), (4), and (6) in
the table below and type of name of the position replacing the
text "Enter the Name of the Position in this Cell @ (8) ." Other
cells are "write protected." |
Element |
Amount |
Explanatory Notes for Various Entries
and Position Name |
1. Wage and Value of All Benefits Expressed
as an Hourly Rate |
$0.00 |
Enter the Hourly Wage and the Value of All
Benefits paid to and on behalf of the Employee including FICA,
Insurance, and Stipends. |
2. Annualized Hours |
2080 |
Enter 2080 for one Full Time Equivalent. |
3. Annual Value of Wages & Benefits
paid to Employee |
$0.00 |
The cell formula calculates the Annual Value
of Wages and Benefits paid to the Employee; otherwise it's
the product of the values in (1) and (2) of the middle column. |
4. Hourly Rate of Benefits paid to the
Employee |
$0.00 |
Calculate and enter the Hourly Rate for Benefits
paid to the employee. |
5. Annual Value of Benefits paid to Employee |
$0.00 |
The cell formula calculates the Annual Value
of Benefits paid to the Employee; otherwise it's the product
of the values in (4) and (2) of the middle column. |
6. Hourly Rate of Prorated Share of Administrative
Costs |
$0.00 |
Calculate and enter the Hourly Rate of the
Prorated Share of Administrative Costs. |
7. Annual Value of Prorated Share of Administrative
Costs |
$0.00 |
The cell formula calculates the Annual Value
of the Prorated Share of Administrative Costs; otherwise it's
the product of the values in (6) and (2) of the middle column. |
8. Temporary Worker Base Cost for the
position named at the right. |
$0.00 |
Enter the Name of the Position in this Cell
Using the values in the middle column, begin with (3),
deduct the value of (5) and add the value in (7) to calculate
the Temporary Worker Base Cost for this position. |
Instructions: Make numerical entries
as dollars per hour to the right of (1), (4), and (6) in
the table below and type of name of the position replacing the
text "Enter the Name of the Position in this Cell @ (8) ." Other
cells are "write protected." |
Element |
Amount |
Explanatory Notes for Various Entries
and Position Name |
1. Wage and Value of All Benefits Expressed
as an Hourly Rate. |
$0.00 |
Enter the Hourly Wage and the Value of All
Benefits paid to and on behalf of the Employee including FICA,
Insurance, and Stipends. |
2. Annualized Hours |
2080 |
Enter 2080 for one Full Time
Equivalent. |
3. Annual Value of Wages & Benefits
paid to Employee |
$0.00 |
The cell formula calculates the Annual Value
of Wages and Benefits paid to the Employee; otherwise it's
the product of the values in (1) and (2) of the middle column. |
4. Hourly Rate of Benefits paid to the
Employee. |
$0.00 |
Calculate and enter the Hourly Rate for Benefits
paid to the employee. |
5. Annual Value of Benefits paid to Employee |
$0.00 |
The cell formula calculates the Annual Value
of Benefits paid to the Employee; otherwise it's the product
of the values in (4) and (2) of the middle column. |
6. Hourly Rate of Prorated Share of Administrative
Costs. |
$0.00 |
Calculate and enter the Hourly Rate of the
Prorated Share of Administrative Costs. |
7. Annual Value of Prorated Share of Administrative
Costs |
$0.00 |
The cell formula calculates the Annual Value
of the Prorated Share of Administrative Costs; otherwise it's
the product of the values in (6) and (2) of the middle column. |
8. Temporary Worker Base Cost for the
position named at the right. |
$0.00 |
Enter the Name of the Position in this Cell
Using the values in the middle column, begin with (3),
deduct the value of (5) and add the value in (7) to calculate
the Temporary Worker Base Cost for this position. |
- 3.2.2 Agency or Department Information
The format for use by Agencies and Departments when initiating proposals
for personal services is shown below.
A form must be completed for the position(s) for which personal services
are requested, identifying the job duty descriptions and projecting the
annual hours by duty. The form is available in a spreadsheet format with
cell formulas provided to aid completion.
State of Maine |
|
State Worker Base
Cost Development Worksheet and Bid Comparison |
|
Part One. Identifying
Job Duties and Projected Annual Hours |
|
Instructions:
Show the agency name in the space provided. The Projected Job
Duty Descriptions and percentage of time associated with each
should be for a position which would be named below. That State
Equivalent Classification Name and Total Project Annual Hours
must be entered on the Bidders' Proposal Form. |
Agency Name |
|
|
|
enter the Agency Name |
|
Show Projected
Job Duty Descriptions Below (Make up to 6 entries with Corresponding
Estimated Annual Hours per Job Duty ) |
Estimated Annual
Hours |
1 > |
|
|
2 > |
|
|
3 > |
|
|
4 > |
|
|
5 > |
|
|
6 > |
|
|
Position Classification
Name |
Number |
0.00 |
Make entries
in all cells with a distinctive blue colored type face. |
Enter the Position
Name and Number Above for the Duties Described. Total Projected
Annual Hours will be summed and should be the basis for the
bidder proposal. |
Total Projected Annual Hours |
Part Two. Developing
the State Worker Base Cost for the Position |
This section
of the form allows development of the State Worker Base Cost
for the position named above. Make entries to the right of the
text on lines 1, 2, 3, 6, 7 and 8. The values in boxes 4 , 9,
10 and 11 will be entered as a result of cell formulas in the
sheet. |
1 |
For the Position Named Above,
enter the Fully Burdened Employee Cost at the right . . . |
$0.00 |
|
2 |
Enter the cost of all Health Insurance
at the right . . . |
$0.00 |
|
3 |
Enter the costs associated with
Retirement at the right . . . |
$0.00 |
|
4 |
Costs of all Health
Insurance and Retirement are summed and appear at the right
. . . |
$0.00 |
5 |
The value on line
4 is deducted from the Fully Burdened Employee Cost on line
1 |
$0.00 |
6 |
Show the number of Supervisor
FTE's at the right |
0.00 |
|
The percentage
for unemployment costs is an average of the last five years of
state experience with the payment carried for 26 weeks. The Layoff
Notice Cost is based on the Fully Burdened Employee Cost. |
7 |
Show the number of Employee FTE's
supervised at the right |
0.00 |
|
8 |
Show the Supervisor's Compensation
at the right . . . |
$0.00 |
|
9 |
Divide Supervisor by Employee
FTE's, then multiply by Compensation & show at the right
. |
$0.00 |
10 |
Enter the Unemployment Costs,
calculated elsewhere, in the space at the right . . . |
$0.00 |
0.16% |
Show the State Percentage
at the left |
11 |
Enter the Layoff Notice Cost,
calculated elsewhere, in the space at the right . . . |
$0.00 |
2 |
Show No. of Weeks
in Layoff Notice Period |
12 |
Sum the values on lines 5, 9,
10, and 11 and show the result at the right . . . |
$0.00 |
|
This value is the State Worker Base
Cost
|
Part Three. Comparison
with Bidder's Amount for this Position |
|
For the
bidders participating in the proposal and answering with forms
and data, show the name(s) and the associated amount(s) for this
position only. The values should be compared to the amount shown
on line 12 in Part Two in order to have an indication of the "best
value" calculation required in statute. |
13a |
Enter the Bidder's Name and Amount
for this Position at right |
Name |
TWBC Amount |
|
13b |
Enter the Bidder's Name and Amount
for this Position at right |
Name |
TWBC Amount |
13c |
Enter the Bidder's Name and Amount
for this Position at right |
Name |
TWBC Amount |
13d |
Enter the Bidder's Name and Amount
for this Position at right |
Name |
TWBC Amount |
13e |
Enter the Bidder's Name and Amount
for this Position at right |
Name |
TWBC Amount |
13f |
Enter the Bidder's Name and Amount
for this Position at right |
Name |
TWBC Amount |
- 3.2.3 Advice to Agencies/Departments and Bidders.
The two forms described above are intended to allow determination of "Best
Value." Any RFP issued would require submission of the usual and
customary sheets and schedules required by the Division of Purchases
to describe the actual scope of services for which the proposal is describing.
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