Comparing Commercial and Federal Custodial Pricing

Jim Peduto Esq., CBSE Managing Partner American Institute for Cleaning Sciences

jim@aics.com

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GSA PWS-Commercial SOW Comparison

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GSA PWS-Commercial SOW Comparison

Cost Driver GSA PWS Commercial SOW Outcome Performance Based Task and Frequency Scope Expansive Limited to Janitorial Ambiguity High Low Quality Assurance Detailed QASP Contractor Consumables Included in Cost Cost Plus or Provided Incentives/Penalties Typical Rare Supervision Mandate Yes No Wage Scale Wage Determination or CBA Market or CBA

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GSA PWS-Commercial SOW Comparison Cost Impact

Cost Driver GSA PWS Commercial SOW Outcome Performance Based Task and Frequency Scope Expansive Limited to Janitorial Ambiguity High Low Quality Assurance Detailed QASP Contractor Consumables Included in Cost Cost Plus or Provided Incentives/Penalties Typical Rare Supervision Mandate Yes No Wage Scale Wage Determination/CBA CBA Wage Scale Wage Determination/CBA Market

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Price per Square Foot Benchmarking Issues

• PWS vs. task & frequency

• Quality expectations

• Wage rates

• Non-janitorial tasks

• GSA requirements

Zero-Based Pricing Process Map

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Opportunity 1: Choose Results or Methods

• Commercial contracts are typically based on task and frequency. GSA uses performance-based statement of work which in theory should leave the contractor free to choose the most effective methods of performance.

• In practice: The PWS often prescribes methods of performance. The result is a hybrid of performance-based and task and frequency.

• Impact: Increased cost as contractor try to balance the two competing approaches. Prices are based on “worst case” scenario.

• Action to consider: Properly draft performance-based or move to task and frequency based.

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Performance-Based Contracts Attributes

1. Describe the requirements in terms of results required rather than the methods of performance of the work.

2. Use measurable performance standards.

3. Describe how the contractor’s performance will be evaluated in a quality assurance plan.

4. Identify positive and negative incentives, when appropriate.

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Source: Contract Management Guidance Needed for Using Performance-Based Service Contracting GOA-02-1049 Contract Management

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Opportunity 2: Better Performance Metrics

• Commercial cleaning contracts do not typically include performance metrics*. Measuring performance is fundamental to performance-based contracts.

• In practice: In most government janitorial contracts performance metrics are not well defined or are ambiguous.

• Impact: Frequent disagreements over the extent to which performance meets the service agreement’s requirements.

• Action to consider: Identify and select key performance indicators (KPIs) for each agreement.

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*Commercial contracts usually include a cancellation for convenience clause (usually 30 days)

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Opportunity 3: Align Quality Assurance

• Commercial cleaning contracts task the service provider alone with quality assurance.

• In practice: The government’s and contractor’s quality assurance process occur in separate silos.

• Impact: The contractor and customer often expend substantial resources on quality assurance but use different approaches and processes. The result is a disconnect in each party’s view of performance.

• Action to consider: Align quality assurance in a way that both the government and contractor are using the same quality assurance process.

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Opportunity 4: Balance Incentives/ Penalties

• Commercial contracts do not typically include performance incentives and penalties.

• In practice, the government PWS only include penalties. Incentives are extremely rare.

• Impact: Penalties with no countervailing incentives, cause contractors to budget for penalties thereby inflating cost.

• Action to consider: Add incentives or remove penalties.

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Opportunity 5: Reporting/Non-Performance

• Commercial cleaning contracts do not typically include extensive reporting requirements found in government contracts because they include a cancellation clause (usually 30 days).

• In practice: Removing a non-performing AbilityOne contractor is a lengthy process (4-step process) and the reporting requirements are extensive.

• Impact: SourceAmerica and the government sometimes have little choice but to devote substantial time and effort to manage a contractor that is not meeting contractual requirements. The reporting requirements add substantial cost to the contract.

• Action to consider: Streamline reporting requirements and evaluate processes that address non-compliance more rapidly.

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Action List

Address space measurements

Develop meaningful benchmarks

Properly draft performance-based or move to task and frequency based.

Identify and select key performance indicators (KPIs) for each agreement.

Align quality assurance

Balance incentives/penalties

Streamline reporting requirements and evaluate processes that address non-compliance more rapidly

GSA Specification Cost Adds

Requirements not found in commercial statement of work

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Labor Drives Cost

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Scope Drives Labor

Scope Task List

Task Frequency

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Scope Drives Labor

Scope Task List

Task Frequency

The goal is to “compare apples to apples”

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• Hydraulic and oil spill control • Solid waste reporting • Green reporting • Call system • Security requirements • Asbestos awareness

training • Certifications for day care • QASP with deductions • 12 month agreement

• Day cleaning • Supervision requirement • Hardscape maintenance • Blind cleaning • Trash management • Integrated pest

management • Parking decks • Dock master position

GSA PWS-Commercial SOW Comparison Cost Impact-Recent Example

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GSA National Custodial Specification

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C.1.0.19 Performance Based Service Contracting

• This is a procurement strategy that seeks to issue technical requirements that set forth outcomes for performance instead of specific requirements on how to perform the service.

• This strategy shifts the risk of performance to the Contractor by allowing the Contractor to design the methods of achieving desired results as defined by the performance quality standards established by the Government.

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C.2.0 The Contractor Shall…

• Provide training/certifications for their employees that stress stewardship in cleaning practices. Current information on stewardship, training, educational materials and other issues can be found in ASTM E1971-05 or at the ASTM web site.

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C.5. Standard Services

• Stripping/Finishing/Sealing: GSA prescribes frequency. Minimum frequency is annual.

• Wood Floors: There shall be no water solutions used on wood flooring. There shall be no dry stripping methods used on wood flooring.

• Blind Dusting: GSA prescribes frequency. Minimum frequency is quarterly.

• Carpet Extraction: GSA prescribes frequency. Minimum frequency is annual.

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C.4.1 Key Sustainable Products (KSPs)

• Wastebasket liners (24" x 33" or smaller

• Paper towels

• Hand soap

• Multipurpose cleaner

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C.5.2. Exterior Maintenance

• C.5.2.3 Canopies

• C.5.2.4 Hard Surface Areas

• C.5.2.7 Graffiti Removal

• C.5.2.8 Excrement Removal (Human, Bird and Animal)

• C.5.2.9 Policing Outside Areas

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C.5.2.10 Fine Arts Collection

The Contractor shall work with the CO or their designee and Regional Fine Arts Officer to determine the best way to ensure that regular maintenance…

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C.5 4. Grounds Maintenance

• C.5.4.0 Landscape Erosion Management • C.5.4.1 Grounds Maintenance Services • C.5.4.2 Composting • C.5.4.3 Trees and Shrubs • C.5.4.4 Mulching • C.5.4.5 Mowing and Edging • C.5.4.6 Leaf Removal • C.5.4.7 Over Seeding, Dethatching And Plugging • C.5.4.8 Fertilization • C.5.4.9 Flowerbeds and Plants • C.5.4.10 Plant Replacements Due to Contractor Negligence • C.5.4.11 Soil and Ground Covers • C.5.4.12 Unimproved Grounds • C.5.4.13 Fence Lines • C.5.4.14 Weeds • C.5.4.15 Irrigation • C.5.4.16 Watering • C.5.4.17 Irrigation System Settings • C.5.4.18 Integrated Pest Management Plan (IPM)

C.10. Solid Waste/Trash/Recycling Management

• A solid waste/trash reduction and recycling management program, which is part of providing standard services, includes identifying and properly segregating all recyclable materials, composting materials, and Universal Wastes.

C.11. Environmental Reporting

• C.11.0 Recycling and Waste Reports

• C.11.1 Report Calculations

• C.11.2 Green Purchase Reports

• C.11.3 Integrated Pest Management Report

• C.11.4 Supporting Documentation

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C.12. Integrated Pest Management

• C.12.0 Preventive Pest Maintenance • C.12.1 Initial Pest Assessment • C.12.4 Pests Included and Excluded • C.12.6 Pest Control Plan • C.12.7 Pesticide Application • C.12.8 Structural and Procedural Recommendations • C.12.9 Record Keeping • C.12.10 Manner and Time to Conduct Service • C.12.11 Insect Control • C.12.12 Rodent Control

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C.13 Child Care Center

• The Contractor…shall perform the Child Care center services using the prescriptive based standards and frequencies delineated in the scope.

• Where Child Care specific standards and frequencies do not exist the Contractor shall first use the performance based standards in this contract.

• If no standards exist in this contract, the Contractor shall use industry standards to meet the requirements in this contract.

• Meet NAEYC Cleaning Standards and is incorporated within this specification.

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C.16 Communication Requirements

• Required frequencies for:

– Tenant meetings

– Quality control meetings

– Partnering meeting

– Joint service inspections

– Regional communication matrix

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Non-Commercial Requirements

• Deductions (G.7.)

• Reduction/Increase of Space (G.7.3., G.7.4., G.7.5.): No formula.

• Escort requirements (H.12.)

QASP Standards

• The Government may evaluate performance based on any or all of the following: tenant satisfaction, surveys, tenant interviews, periodic inspections, and service call documentation

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Dollarizing Building Uniques

Preparing for Contract Talks

Three steps to success

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Preparing for Contract Talks

• Inventory • Workload • Accurate Scope of Work

Do Your Homework

• Access productivity • Building characteristics • Unique spaces • Optimized cleaning process

Have the Right Rates

• Adjust tasks and frequencies • Identify large hour areas • Can they be modified? • Establish the performance impact

Adjust the PWS

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Handling a Reduction Request

1. Do your homework

• Accurate space inventory • Staffing hours are based on zero-based workload

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Handling a Reduction Request

2. Are the productivity rates appropriate? • Assess productivity: Does the productivity rate meet or exceed the

threshold? • Does the building have any special characteristics (density, configuration,

etc.) that justify production rates that are lower than the threshold? • Does the building have any unique space types or requirements that

require adjusting productivity? • Is the cleaning process fully automated?

o Back vacs o Autoscrubbers o Double buckets

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Handling a Reduction Request

3. How to modify the performance work statement • What adjustments can be made to the scope of work that underlies the

performance outcomes defined in the performance work statement?

• Use workloading data to identify areas that require the largest number of labor hours to service. These are the initial focus of your efforts. The areas most likely to produce significant savings are: trash removal, vacuuming, dusting, floor care.

• Determine whether the tasks and/or frequencies for the most time consuming areas can be modified without a perceptible service impact? If they can, are they sufficient to meet the customer’s cost objective?

• Determine the effect on the service level and the cost savings. Be able to quantify the saving and explicitly state the new performance outcome.

Question & Answers Jim Peduto Esq., CBSE

Managing Partner American Institute for Cleaning Sciences

jim@aics.com