Or. Admin. R. 125-247-0170

Current through Register Vol. 63, No. 8, August 1, 2024

Section 125-247-0170 - Life Cycle Costing

(1) Policy.

(a) Analysis. Life Cycle Costing provides a method of analysis, considering Sustainability and analyzing total cost of ownership as part of the best value of the purchased Goods (Products). The method applies to the development of Life Cycle Costing criteria for a Solicitation, collection of Product information about Life Cycle, evaluation of Offers, selection of Contractor(s), and award of Contract(s). Using this method, Agency does not award a Contract based solely on the lowest price, and a low Bid would include Life Cycle Costing.

(b) Planning. Agency must consider using Life Cycle Costing during planning for Competitive Sealed Bidding or Proposals. Life Cycle Costing is optional for other sourcing methods under this Division 247.

(c) Services Related to the Product. Agency may also consider the costs of Services related to a Product, including other Sustainability criteria.

(2) Definitions:

(a) "Life Cycle" means the life cycle of a Product, including conception, design, manufacture, service, and disposal. The design of the Product may allow for a repetitive lifecycle: material extraction, manufacturing/production, transportation, utilization/reuse, and disposal/recycling, which leads to the beginning of a new cycle.

(b) "Life Cycle Cost" means the total cost of acquiring, operating, supporting and (if applicable) disposing of the Product being acquired.

(c) "Life Cycle Costing" means an analysis method that quantifies Life Cycle Costs, including the costs of acquiring, operating, supporting and disposing of a Product. The method may also include any additional Costs that relate to adverse impacts of a Product, for example, impacts to the environment or public health.

(d) "Products" means goods, supplies, equipment, or materials.

(3) Life Cycle Costs. Life Cycle Costing considers the acquisition costs of a Product, and includes all associated costs of ownership, such as purchase price, shipping, maintenance and repair, longevity, and disposition costs at the end of life. For complex Products, several Contracts may be required and acquisition costs may involve research and development as well as production, delivery, and installation of the Product. Other costs expected to occur over the anticipated life of the Product may be added to the acquisition costs, based upon a reasonable determination by the Agency. Examples of other typical Life Cycle Costs include the following:

(a) Switching costs associated with changing from the current Product to another model or brand of the Product. Typically, such costs may include: removal, shipping, training, and replacement of peripheral equipment and consumables that support the Product. The Agency may also consider increased project management or additional transition time.

(b) Operating and support costs, including third party contract costs, associated with equipment, supplies, utilities, fuel, and services needed to operate and maintain an operational system.

(c) Disposal costs, including third party contract costs, associated with removing equipment from service and disposing of it. Evaluations that consider Life Cycle Cost should also consider any significant salvage, reuse, or resale value at the time of disposal.

(4) Solicitation Requirements. If Life Cycle Costing will be considered and applied, the Solicitation must:

(a) Describe to prospective Offerors how Life Cycle Costing will be considered and applied in the evaluation process and award decision.

(A) If the Agency plans to make an Award based solely on the lowest evaluated cost resulting from Life Cycle Costing, the Solicitation must describe an evaluation process that includes Life Cycle Costing. For example, an Invitation to Bid must include quantifiable total Life Cycle Costs as a part of the bid evaluation methodology and award, and the lowest total Life Cycle Cost would be considered the low Bid.

(B) If the Agency plans to make an Award based on an evaluation of other factors than the lowest cost, the Solicitation for Proposals or Quotes must describe an evaluation process that includes Life Cycle Costing. For example:

(i) A Request for Proposals may include Life Cycle Costs as a part of the total points awarded for costs. All Life Cycle Costs will be calculated, and the lowest total Life Cycle Cost is awarded the maximum points allocated for cost in the Solicitation; or

(ii) A Request for Proposals may separate Life Cycle Costs and assign to them a weight or points in addition to other defined costs and non-cost criteria in the evaluation process.

(b) Provide relevant information for the evaluation of the Offer; for example, projected Product usage, operating environment, and operating period.

(c) Describe the information that an Offeror must provide in the Offer, including relevant Life Cycle Costs and supporting information. Examples include:

(A) Average unit price, including production and operational costs,

(B) Delivery, shipping and transportation costs,

(C) Any response to switching costs identified in the Solicitation,

(D) Unit operating and support costs (for example, staffing and technical assistance, energy, parts requirements, scheduled maintenance, and training),

(E) Unit disposal costs (for example, the cost of removing equipment from the State facility),

(F) Unit salvage, reuse, or residual value,

(G) Any information related to testing, demonstrations, or interviews, and

(H) Other Product information related to Life Cycle and Sustainability.

(5) Solicitation Options. The Solicitation may:

(a) Provide for adjustments to the Life Cycle Costs if the costs continue over a period of years, for example, inflation or cost uncertainty, and

(b) Include third party estimates of a Product's Life Cycle.

(6) Award Decision. The Agency must evaluate Offers only as set forth in the Solicitation and in accordance with OAR 125-247-0600.

Or. Admin. R. 125-247-0170

DAS 4-2004, f. 11-23-04, cert. ef. 3-1-05; DAS 5-2006, f. & cert. ef. 5-31-06; DAS 6-2008, f. & cert. ef. 7-2-08; DAS 4-2013, f. 12-17-13, cert. ef. 1-1-14; DAS 3-2018, amend filed 12/14/2018, effective 1/1/2019

Statutory/Other Authority: ORS 279A.065(5)(a) & 279A.070

Statutes/Other Implemented: ORS 279B.025, 279B.270 & 279B.280