4115-7-12 Fair market pricing for site-specific services.

(A) Purpose

This rule prescribes the policy, guideline, and procedures to be used in verifying the fair market price for custodial, lawn maintenance, and security services. Ohio department of transportation modern roadside rest sites are exempt from the following paragraphs of this rule: (B) (1) and (B) (3), (D) (1) to (D) (5), (E) (2) (b) (i) to (E) (2) (b) (iii) and (F) (1) to (F) (2).

(B) General provisions

(1) Bid comparison shall be the preferred method to verify the fair market price for the services outlined in this rule.

(2) Cost analysis may be used to verify fair market price for the services outlined in this rule if it is established that insufficient bid comparison data is available.

(3) Same-as comparison may be used to verify fair market price for the services outlined in this rule if specification comparison can support and establish that an exact match exists between the two sites. The weight of specification comparison is also required if survey or index numbers are utilized from a professional or trade organization.

(4) The state use committee (hereinafter referred to as the "committee") shall consider all custodial, lawn maintenance, and security services for addition to the committee's procurement list on a site-by-site basis.

(5) The central nonprofit agency (hereinafter referred to as the "CNA") or the qualified nonprofit agency may file an exception to any policy or guideline contained in this rule on a case-by-case basis utilizing the procedure outlined in rule 4115-7-15 of the Administrative Code.

(C) Base service

(1) The committee shall only consider fair market pricing on those service additions where cost elements represent usual and customary charges for the industry. These cost elements must exclude any rehabilitation-related costs.

(2) It is the intent of the committee to assure that services covered by this rule and on the procurement list are exclusively comprised of the following cost elements:

(a) Direct labor,

(b) Indirect labor,

(c) Payroll taxes,

(d) Holiday/vacation/sick leave benefits,

(e) Overhead/burden,

(f) Supplies,

(g) Equipment, and

(h) Equipment maintenance (see appendix A of this rule).

(3) Any additional cost elements would have to be considered by the committee on an exception basis as prescribed in rule 4115-7-15 of the Administrative Code.

(D) Fair market price verified by bid comparison

(1) If the service is currently being purchased competitively, the initial fair market price recommended to the committee by the qualified nonprofit agency or CNA shall be the average of those bids, adjusted for discounts received from responsive and responsible bidders, from the most recent procurement which are not more than twenty-five per cent above or below the award price.

(2) If it is found that the most recent award price was made to the lowest bidder, then the price recommended to the committee by the qualified nonprofit agency or CNA shall be the average of all bids from the most recent procurement received from responsive and responsible bidders, adjusted for discounts contained in a range not more than thirty-five per cent above the award price.

(3) If the bid information used is over one year old, the fair market price submitted may include the committee-approved, not-to-exceed inflation percentage for the appropriate year(s), for a maximum of two years factored in to compensate for bid aging.

(4) If bid comparison data is deemed insufficient, the CNA may allow the ordering office to advertise and solicit bids for the service to the private sector. The purchasing authority may make an award for a period not to exceed one year to the lowest, responsive and responsible private sector bidder. At the conclusion of the award period, the CNA shall, utilizing the bids obtained from the ordering office if they are sufficient, recommend a fair market price to the committee.

(5) The CNA shall submit the following documentation to the committee with the recommended fair market price:

(a) Bidders' list with amounts,

(b) Previous contract award price,

(c) Statement of work, and

(d) Qualified nonprofit agency prevailing wage survey.

(E) Fair market price verified by cost analysis

(1) If the service has not recently been purchased competitively, a three year price shall be verified by the evaluation and analysis of the costs assigned to each of the elements comprising the total fair market price submission. The three year price shall be comprised of a base year price with a not-to-exceed percentage of increase or decrease for two follow along years. Each follow along year is optional with the agreement of the qualified nonprofit agency and ordering office.

(2) Using the forms, format, and procedures as prescribed by the committee, the qualified nonprofit agency or CNA shall supply the committee with cost breakdown information on each element, taking into consideration the following:

(a) Direct labor wages

Direct labor wages shall be determined by the qualified nonprofit agency through the use of a community prevailing wage survey as described by the federal department of labor and the "Fair Labor Standards Act." A copy of the prevailing wage survey shall be presented to the committee.

(b) Indirect labor

(i) Supervisory hours shall be limited to a total of eight per cent of the direct labor hours.

(ii) The wages for supervisors shall be no greater than fifty per cent above the direct labor rate.

(iii) Any requests to exceed the guidelines put forth in this paragraph shall be considered by the committee on an exception basis as prescribed by rule 4115-7-15 of the Administrative Code.

(c) Payroll taxes

(i) Allowable taxes are those customary to the private sector, unless stipulated in Chapter 3309. of the Revised Code and would be paid to the workers and supervisors providing the service. The maximum allowance is twelve per cent of the hourly wage for both direct and indirect positions.

(ii) Any request to exceed the guidelines put forth in this paragraph shall be considered by the committee on an exception basis as prescribed by rule 4115-7-15 of the Administrative Code.

(d) Holiday/vacation/sick leave benefits

(i) Allowable leave shall be established at one hundred twenty hours per year for each full-time equivalent position (two thousand eighty hours per year) as required for direct and indirect labor. Leave shall be prorated to cover positions that are not full-time.

(ii) Any request to exceed the guidelines put forth in this paragraph shall be considered by the committee on an exception basis as prescribed by rule 4115-7-15 of the Administrative Code.

(e) Overhead/burden

(i) The qualified nonprofit agency shall recover up to fifteen per cent of the direct and indirect labor totals for overhead expenses including, but not to exceed, the payroll taxes and benefits guidelines as defined in paragraphs (E) (2) (c) and (E) (2) (d) of this rule for costs associated with business-related contract administration.

(ii) Any request to exceed the guidelines put forth in this paragraph shall be considered by the committee on an exception basis as prescribed by rule 4115-7-15 of the Administrative Code.

(f) Supplies

(i) Using the forms, format, and procedures as prescribed by the committee, all expendable supplies shall be itemized, detailing unit of purchase, quantity, purchase price, and annual total cost.

(ii) If the supply is specified as a sole-source item by the ordering office, or is by nature sole-sourced, it can be explained as an exception.

(iii) For any single category expendable supply with an annual usage projected to be in excess of one thousand dollars, the qualified nonprofit agency or CNA shall supply three responsive and responsible competitive discounted quotes to the committee or present as part of the recommended fair market price supply, prices predicated upon the applicable state of Ohio general distribution contract or state term schedule. If three competitive quotations are used, the price submitted as part of the recommended fair market price shall be predicated upon the lowest responsive and responsible discounted quotation received.

(iv) Any request to exceed the guidelines put forth in this paragraph shall be considered by the committee on an exception basis as prescribed by rule 4115-7-15 of the Administrative Code.

(g) Equipment allowance

(i) Using the forms, format, and procedures as prescribed by the committee, all equipment shall be itemized, detailing unit of purchase, quantity, purchase price, amortization period, and annual amortization amount.

(ii) The acquisition price of equipment in excess of one thousand dollars per individual item and one thousand five hundred dollars per series of like items calculated into the recommended fair market price shall be determined by one of the following methods:

(A) Establishing price through the state of Ohio general distribution contract,

(B) State term schedule, or

(C) Competitive, quotation.

(iii) Competitive quotation shall require the solicitation and presentation to the committee of three written competitive, responsive, responsible, and discounted quotations, except as noted in paragraph (E) (2) (g) (v) of this rule. The allowable equipment cost calculated into the proposed fair market price shall be at the price represented by the lowest, responsive, and responsible competitive discounted quotation.

Common business practices shall be used for the acquisition of equipment priced under one thousand dollars per individual item and one thousand five hundred dollars per series of like items.

(iv) If the equipment is specified as a sole-source item by the ordering office, or is by nature sole-sourced, it can be explained as an exception.

(v) Any request to exceed the guidelines put forth in this paragraph shall be considered by the committee on an exception basis as prescribed by rule 4115-7-15 of the Administrative Code.

(h) Equipment amortization

(i) The committee shall provide an approved useful life table and all equipment shall be amortized and the cost recovered in accordance with the table.

(ii) Any request to exceed the guidelines put forth in this paragraph shall be considered by the committee on an exception basis as prescribed by rule 4115-7-15 of the Administrative Code.

(i) Equipment maintenance

(i) The committee shall provide an approved schedule for the allowance of maintenance money for equipment with an acquisition cost in excess of one thousand dollars per individual item and one thousand five hundred dollars per series of like items which have not been fully amortized.

(ii) An allowance of up to twenty per cent of one year's amortization rate for equipment with an acquisition cost in excess of one thousand dollars per individual item and one thousand five hundred dollars per series of like items may be allocated for preventative and corrective maintenance for equipment which has been fully amortized.

(iii) Any request to exceed the guidelines put forth in this paragraph shall be considered by the committee on an exception basis as prescribed by rule 4115-7-15 of the Administrative Code.

(j) Equipment disposal

(i) All equipment with an acquisition cost in excess of one thousand dollars or one thousand five hundred dollars per series of like items which has been fully depreciated against and has fully recovered one hundred per cent of the original acquisition cost for the qualified nonprofit agency through state use service, shall be considered to retain a residual value of ten per cent of the original acquisition cost at the time of disposal.

(ii) The residual value amount shall be deducted from the acquisition cost of replacement equipment included with the next fair market price proposal using the forms, format, and procedures prescribed by the committee.

(iii) If it is determined that the equipment being disposed of has a residual value greater than ten per cent of the acquisition cost, the qualified nonprofit agency or CNA shall submit a bill of sale or certificate of trade-in for the amount of the residual value, to be deducted from the acquisition cost of replacement equipment included with the next fair market price proposal using the forms, format, and procedures prescribed by the committee.

(iv) If it is determined that the equipment being disposed of contains no residual value, the qualified nonprofit agency or CNA shall, using the forms, format, and procedures prescribed by the committee, document that the ordering office has inspected the equipment and certified it to be worthless.

(F) Fair market price verified by same-as comparison

(1) Site-to-site comparison

The qualified nonprofit agency and CNA must document that the requirements and specifications for the service at the site the committee is being requested to base comparison on, is exactly the same as the requirements and specifications for the service at the site the committee is considering for set aside on the procurement list.

(2) Survey and index comparison

At the discretion of the committee, industry surveys and indexes may be utilized to aid in the establishment of the fair market price. The committee shall publish a list of those surveys and indexes deemed appropriate. In no case shall the committee solely depend on an individual survey or index to arrive at a fair market price for a service site.

(G) Fair market price changes

(1) Initial price

(a) The committee shall verify the initial fair market price for a period of three years.

(b) The initial fair market price is for a period of one year.

(c) Along with the initial base year fair market price, the committee shall provide a not-to-exceed percentage of increase or decrease for each of the two follow along years.

(d) Each follow along year is optional with the agreement of the qualified nonprofit agency and ordering office.

(2) Inflation factor

The committee shall publish at the start of each state of Ohio fiscal year the allowable percentage of increase or decrease for site specific services.

(3) Mid-term revisions

If a qualified nonprofit agency, CNA, or ordering office feels that costs have increased or decreased beyond the allowable annual percentage established by the committee, the qualified nonprofit agency, CNA, or ordering office shall file an exception as outlined in rule 4115-7-15 of the Administrative Code, and shall be evaluated by the committee using cost analysis to establish the new fair market price for the site specific service.

(4) Follow along year option

If the qualified nonprofit agency and the ordering office exercise their option not to be bound by the fair market price developed for each follow along year, a new fair market price will be developed using procedures outlined in paragraph (g) (5) of this rule.

(5) Renewals

At the completion of the initial three year cycle, the CNA shall submit a new recommended fairmarket price predicated on cost analysis to the committee. The committee shall exercise its responsibility and privilege by setting a new fair market price for the service site using cost analysis. The committee shall also provide the qualified nonprofit agency and CNA a non-to-exceed percentage of increase or decrease for each of two follow along years.

Appendix A

Labor hours for Ohio department of transportation modern roadside rest sites shall be as required by the ordering office.

Replaces: 4115-7-10 (rescinded 10/9/97)

R.C. 119.032 review dates: 04/07/2003 and 04/07/2005

Promulgated Under: 119.03

Statutory Authority: 4115.33

Rule Amplifies: 4115.31 , 4115.32 , 4115.33 , 4115.34 , 4115.35

Prior Effective Dates: 9/29/77, 2/1/98