Or. Admin. Code § 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.
Notes
Statutory/Other Authority: ORS 279A.065(5)(a) & 279A.070
Statutes/Other Implemented: ORS 279B.025, 279B.270 & 279B.280
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