414-070-0380 Feasibility Determination, Cost Analysis and Department Report (1) The Table of Contents for this rule is as follows: (a) Section 2: Generally (b) Section 3: Feasibility Determination (c) Section 4: Cost Analysis: Estimation of Department and Contractor Data (d) Section 5: Decision: Comparison of Compensation and Other Costs (e) Section 6: Decision: Comparison of Department and Contracting Costs (f) Section 7: Department Evaluation and Report (2) Generally. (a) Before conducting a Procurement for Services, the Department must, in the absence of a Feasibility Determination under Section (3) of this rule, conduct a Written Cost Analysis under sections (4) through (6) of this rule (Cost Analysis). (b) Responsibilities for the Conduct of the Cost Analysis. (A) If the Department has Authority, the Department must conduct the Cost Analysis for its Agency-specific Procurements; (B) If the Department does not have Authority, the Department must conduct the Cost Analysis for its Agency-specific Procurements to be procured by the Department of Administrative Services; (C) At the Department of Administrative Services’s request, the Department must contribute to the Cost Analysis for statewide Price Agreement Procurements; and (D) The Department of Administrative Services must conduct the Cost Analysis for statewide Price Agreement Procurements and Department of Administrative Services Procurements. (c) This rule applies to a Procurement for Services that the Department estimates will result in one or more Contracts with a value that exceeds $250,000 for the estimated term of the Contract(s) (Value), including incidental costs related to the Services, and Amendments. The Department must not fragment to avoid this threshold (see OAR 414-070-0360). (d) If a Procurement is conducted in accordance with this Rule, an Award is made, and one or more Amendments then increase the estimated contract’s value over $250,000, a Cost Analysis is not required at that time. (3) Feasibility Determination. The Department may proceed with the Procurement of Services without conducting a Cost Analysis if the Department makes Written findings that one or more of the Special Circumstances described in subsection (3)(b) make the Department’s use of its own personnel and resources to provide the Services not feasible (Feasibility Determination). (a) Approval of Feasibility Determination. (A) The Designated Procurement Director or delegate (DPD) of the Department must approve the Feasibility Determination for its Procurement; (B) If the Department does not have Authority, the DPD of the Department must approve the Feasibility Determination for the Department specific Procurement to be procured by the Department of Administrative Services on behalf of the Department; (C) The State Chief Procurement Officer must approve the Feasibility Determination for a statewide Price Agreement Procurement or DAS-specific Procurement. At DAS’ request, the Department’s DPD must cooperate with the Department of Administrative Services to prepare the findings for the Feasibility Determination for a statewide Price Agreement Procurement. (b) Special Circumstances. Special Circumstances include any circumstances, conditions or occurrences that would make the Services, if performed by the Department’s employees, incapable of being managed, utilized or dealt with successfully in terms of the quality, timeliness of completion, success in obtaining desired results, or other reasonable needs of the Department. Special Circumstances may include, but are not limited to, the follow circumstances: (A) Expertise. The DPD approves a determination that the Department lacks the specialized capabilities, experience, or technical or other expertise necessary to perform the Services. In making the finding, the Department must compare the Department’s capability, experience or expertise in the field most closely involved in performing the Services with a potential contractor's capability, experience or expertise in the same or a similar field. (B) Funding Requirement. The terms under which the Department receives a grant or other funds for use in a Procurement require the Department to obtain Services through an independent contractor; (C) Law Requirement. Other state or federal law requires the Department to procure Services through an independent contractor; (D) Real or Personal Property. The Procurement is for Services that are incidental to a contract for purchasing or leasing real or personal property, including service and maintenance agreements for equipment that is leased or rented; (E) Conflict of Interest; Unbiased Review. The Department cannot accomplish policy, administrative or legal goals, including but not limited to avoiding conflicts of interest or ensuring independent or unbiased findings in cases when using the Department’s existing personnel or persons the Department could hire through a regular or ordinary process would not be suitable; (F) Emergency Procurement. The Procurement is for Services to which the provisions of ORS 279B.080 apply; (G) Delay. The Procurement is for Services, the need for which is so urgent, temporary or occasional that attempting to perform the Services with the Department’s own personnel or resources would cause a delay that would frustrate the purpose for obtaining the Services; and (H) Services Completed within Six Months. The Services that the Department intends to procure will be completed within six months after the date on which the contract for the Services is executed. (c) Procurement File. All written determinations required in this section (3) must be made a part of the Procurement File in accordance with OAR 414-070-0310. (4) Cost Analysis: Estimation of Department and Contractor Data. (a) Costs of Using Agency’s Own Personnel and Resources. The Department must estimate the Department’s cost of performing the Services and consider cost factors that include: (A) Salaries or Wages and Benefits. The salary or wage and benefit costs for the employees of the Department who would be directly involved in performing the Services, to the extent those costs reflect the proportion of the activity of those employees in the direct provision of the Services. These costs include those salary or wage and benefit costs of the employees who inspect, supervise or monitor the performance of the Services, to the extent those costs reflect the proportion of the activity of those employees in the direct inspection, supervision or monitoring of the performance of the Services. (B) Material Costs. The material costs necessary to the performance of the Services, including the costs for space, energy, transportation, storage, raw and finished materials, equipment and supplies used or consumed in the provision of the Services. (C) Related Costs. (i) Costs incurred in planning for, training for, starting up, implementing, transporting and delivering the Services. (ii) Any costs related to stopping and dismantling a project or operation because the Department intends to procure a limited quantity of Services or to procure the Services within a defined or limited period of time. (iii) The miscellaneous costs related to performing the Services, including but not limited to reasonably foreseeable fluctuations in the costs for the items identified in this subsection (4)(a) over the expected duration of the Procurement. These costs exclude the Department’s indirect overhead costs for existing salaries or wages and benefits for administrators and exclude costs for rent, equipment, utilities and materials, except to the extent the cost items identified in this sentence are attributed solely to performing the Services and would not be incurred unless the Department performed the Services. (D) Other Information. The Department’s costs described in this subsection (4)(a)(A) do not constitute an exclusive list of cost information. The Department may consider other reliable information that bears on the cost to the Department of performing the Services. For example, if the Department has accounted for its actual costs of performing the Services under consideration, or reasonably comparable Services, in a relatively recent Services project, the Department may consider those actual costs in making its estimate. (b) Costs a Potential Contractor Would Incur. The Department must estimate the cost a potential Contractor would incur in performing the Services and consider cost factors that include: (A) Salaries or Wages and Benefits. The estimated salary or wage and benefit costs for a potential Contractor and potential Contractor’s employees who work in the business or industry most closely involved in performing the Services; and who would be necessary and directly involved in performing the Services or who would inspect, supervise, or monitor the performance of the Services. (B) Material Costs. The material costs necessary to the performance of the Services, including the costs for space, energy, transportation, storage, raw and finished materials, equipment and supplies used or consumed in the provision of the Services. (C) Related Costs. The miscellaneous costs related to performing the Services. These miscellaneous costs include but are not limited to reasonably foreseeable fluctuations in the costs listed in subsections (4)(b)(A) through (C) over the expected duration of the Procurement. (D) Other Information. The potential Contractor’s costs described in subsections (4)(b)(A) through (C) do not constitute an exclusive list of cost information. The Department may consider other reliable information that bears on the costs a potential Contractor would incur. For example, if in the recent past, the Department conducted a Solicitation that required cost information or permitted negotiation of price based on a cost analysis for Services reasonably comparable to the current Services, the Department may use that cost information in estimating the costs of current Services. (5) Decision: Comparison of Compensation and Other Costs. (a) The Department must compare: (A) The Department’s estimated costs under Subsection (4)(a) and (B) The Contractor’s estimated costs under subsection (4)(b). (b) Decision. If the Department’s costs exceed the Contractor’s costs under Subsection (5)(a) for the sole reason that the Contractor’s costs for salaries or wages and benefits under Subsection (4)(b)(A) are lower than the Department’s costs for salaries or wages and benefits under subsection (4)(a)(A), then the Department may not conduct the Procurement. (6) Decision: Comparison of Department and Contracting Costs. (a) If subsection (5)(b) does not apply, the Department must compare: (A) The Department’s estimated costs under Subsection (4)(a) and (B) The total estimated costs that the Department would incur in procuring the Services from a Contractor (Contracting Costs). (b) Profit Included. Contracting Costs include the Department’s estimate of Contractor’s profit in addition to the estimate of Contractor’s costs under subsection (4)(b). If the Department, in the reasonably near past, received Bids or Proposals for the performance of the Services under consideration, or reasonably comparable services, the Department may consider the pricing offered in those Bids or Proposals in making its estimate. Similarly, the Department may consider what it actually paid under a Contract for the same or similar services. For the purposes of these examples, the reasonably near past is limited to Contracts, Bids or Proposals entered into or received within the five (5) years preceding the date of the cost estimate. The Department must take into account, when considering the pricing offered in previous Bids, Proposals, or Contracts, adjustments to the pricing in light of measures of market price adjustments that apply to the Services, such as the Consumer Price Indexes. (c) Decision. If the Department’s Contracting Cost under this section is lower than the Department’s cost under subsection (4)(a), the Department may conduct the Procurement. If the Department’s Contracting Cost is higher than the Department’s cost under subsection (4)(a), the Department may not conduct the Procurement, unless the Exception of subsection (6)(d) applies. (d) Exception Based on Lack of Agency Personnel and Resources; Reporting. If the Department determines that it would incur less cost in providing the Services with its own personnel and resources, the Department may still conduct the Procurement if, at the time the Department intends to conduct the Procurement, the Department determines that it lacks personnel and resources to perform the Services within the time the Department requires the Services (Exception). When Department conducts a Procurement under this Exception, the Department must: (A) Make and keep a Written determination that it lacks personnel and resources to perform the Services within the time the Department requires the Services and the basis for the Department’s decision to conduct the Procurement; (B) Obtain the Written approval by the DPD of the Department of the Exception before the Department conducts the related Procurement. (C) Provide to the Emergency Board, each calendar quarter, copies of each Cost Analysis, Exception, and any other records described in this Subsection (6)(d); (D) Prepare a request to the Governor for an appropriation and authority necessary for the Department to hire personnel and obtain resources necessary to perform the Services that the Department procured under this Subsection (6)(d). The request must include a copy of the records that the Department provided to the Emergency Board under Subsection (6)(d)(C). (7) When the Department conducts a cost analysis in accordance with ORS 279B.033 or makes a determination under ORS 279B.036 in connection with a procurement for services related to information technology, the Department must provide the State Chief Information Officer and the Legislative Fiscal Office with copies of the final cost analysis the Department prepared under ORS 279B.033 or the final determination the Department made under ORS 279B.036. For purposes of this subsection, information technology is defined in ORS 291.045(1) and includes, but is not limited to, all present and future forms of hardware, software, and services for data processing, office automation, and telecommunications. Statutory/Other Authority: ORS 279A.065(5)(a) & Statutes/Other Implemented: ORS 279A.065(5)(a) &, ORS 279B.030, ORS 279A.070, ORS 279B.033 & ORS 279B.036 History: DELC 132-2024, adopt filed 06/26/2024, effective 07/01/2024