00032661_Public Notice_FINAL_POSTED.docx

Department of Transportation Procurement Office 355 Capitol St. NE, MS 33 Salem, OR 97301 Phone: (503) 986-2710 Fax: (503) 986-5790

Sole Source Determination Notice for Supplies and Services

Date: 10/11/2024

The Oregon Department of Transportation (“ODOT”) intends to enter into a sole source contract with Avalara, Inc. of Seattle, Washington, pursuant to Oregon Revised Statute (“ORS”) 279B.075 and Oregon Administrative Rule (“OAR”) 125-247-0275. The purpose of the contract is to provide annual maintenance, support and licensing for Oregon’s Fuels Tax System (“OFTS”).

Subject of Contract: Annual maintenance, support and licensing for OFTS.

Supporting Documentation: The following attachments are incorporated into this public notice by reference:

· Attachment A – ODOT’s Sole-Source Determination and Justification for Supplies and Services

· Attachment B – ODOT’s Market Research Report

Background: ODOT administers the Motor Vehicle and Aircraft Fuels Taxes under ORS Chapter 319 and utilizes the OFTS to carry out this function. ODOT executed contract B30773 with Avalara, Inc. on March 29, 2013 for professional services, maintenance and support of OFTS.

OFTS utilizes the Avalara Government software, which is proprietary to Avalara, Inc.

OFTS and Avalara Government continues to meet ODOT’s business needs for a fuels tax collection system.

ODOT has determined pursuant to OAR 125-247-0275, that the Avalara Government software that OFTS utilizes is proprietary to Avalara, Inc. and there are no other firms that are able to perform the annual maintenance, support and licensing for the software.

Any affected person can submit a protest for this sole-source determination. Protests are due to Michael Day at michael.day@odot.oregon.gov no later than Friday, 10/18/2024 1:00 PM. Your protest must be in writing (email acceptable) and include the following:

1. A detailed statement of the legal and factual grounds for the protest.

2. A description of the resulting harm to you.

3. The relief requested.

Attachment A

SOLE-SOURCE DETERMINATION AND JUSTIFICATION

FOR SUPPLIES AND SERVICES

To: State Chief Procurement Officer Department of Administrative Services

From: Oregon Department of Transportation

Designated Procurement Officer: Melissa Canfield, DPO

Agency Analyst/Procurement Specialist: Michael Day

Date: August 1, 2024

Re: Sole Source Determination pursuant to Oregon Revised Statute (ORS) 279B.075 and Oregon Administrative Rule (OAR) 125-247-0275

1. Authority to enter into a Sole-Source Contract: DAS Delegation Agreement No. 1095-20

2. Estimated Total Value of Contract: $2,800,000.00

3. Subject of Contract: Software procured from and supported by Avalara, Inc.

4. Background:

In 2015, the Oregon Department of Transportation (ODOT) implemented the Oregon Fuels Tax System (OFTS) to enhance the administration of fuel taxes. The primary purpose of OFTS is to facilitate fuel tax licensees in filing motor vehicle fuel, use fuel tax reports, and to support Aircraft fuel taxes collected by dealers for Jet Fuel and Aviation Gasoline, available for sales, use, and distribution. Additionally, OFTS supports Oregon’s road usage charge program, allowing private sector account managers to submit quarterly tax reports. Furthermore, the system has the flexibility to support other tax programs within the agency.

The current Oregon Fuels Tax System relies on software procured from and supported by Avalara Inc. (OregonBuys Contract Number: PO-73000-00003603). This software has successfully served its intended purpose and a new contract with a new expiration date is now necessary.

On July 16, 2021, ODOT issued a Request for Information (RFI) through OregonBuys, the state’s new procurement system (Solicitation Number: S-73000-00000259). ODOT evaluated responses from potential vendors, seeking information on their capabilities, experience, cost, project duration, and ability to support the Avalara system. Firms contacted through the RFI process were: Avalara Inc., Innovative Software, and FAST Enterprises.

On November 21, 2022, ODOT issued a Request for Proposal (RFP) through OregonBuys (Solicitation Number: S-73000-00001917). Despite being on the market for six weeks, the RFP received only one respondent: Avalara, Inc. Subsequently, Avalara, Inc. was awarded the contract in February 2023.

On March 29, 2023, ODOT and Avalara signed Contract Amendment 5, extending support, maintenance, and licensing for the system through June 30, 2024. Amendment 5 was approved by DAS on February 14, 2023 (OregonBuys Number: REQ-DASBO-00030682). This extension allowed the system to continue functioning while negotiations between Avalara, Inc. and ODOT continued.

Regrettably, despite diligent efforts, negotiations with Avalara Inc. did not yield a mutually acceptable contract. On March 11, 2024, ODOT officially declared the RFP a failure.

On June 17, 2024, ODOT and Avalara signed Contract Amendment 6, extending support, maintenance, and licensing for the system through June 30, 2026. Amendment 6 was approved by DAS on May 19, 2024 (OregonBuys Number: REQ-73000-00064194). This extension allows the system to continue functioning while negotiations between Avalara, Inc. and ODOT continue.

It is ODOT’s intent to execute a Sole-Source Procurement contract with Avalara no later than June 30, 2026.

5. Findings:

ODOT supports a Sole-Source Determination with the attached Market Research Report, which includes the following factual information:

1. Vendor Lock-In: Their proprietary data mapping ensures smooth data transfer between ODOT and the Avalara Inc. revenue system.

2. Cost Efficiency: Switching vendors would be financially impractical due to the associated cost of implementing a new fuels tax revenue system estimated at over $2M.

3. Risk Mitigation: Continuity with a proven vendor reduces risks associated with transitioning to a new provider. This system is a major infrastructure system providing a large amount of income for the agency. Additionally, other business lines within ODOT use this system as their revenue tracking system.

4. Custom Integrations: ODOT has customized integrations with the Avalara Inc. system that meet our unique business needs.

5. Unique Expertise: Avalara Inc. holds proprietary ownership of the Avalara Inc. revenue system and does not allow other entities to provide maintenance, support, and licensing for their systems.

6. Historical Performance: Over the last 10 years, Avalara Inc. has provided exceptional system support, maintenance, and licensing services for their Avalara Inc. revenue system.

A. Market Research Overall Finding.

Avalara Inc. is the only service, maintenance, and licensing provider of the Avalara Inc. revenue system, and they are the best choice for our next contract for the ODOT fuels tax revenue system.

And

B. Findings of Fact pursuant to OAR 125-247-0275(2).

1. Pursuant to OAR 125-247-0275(2)(a): Compatibility.

ODOT has customized integrations with the Avalara Inc. system that meet our unique business needs. Their proprietary data mapping ensures smooth data transfer between ODOT and the Avalara Inc. revenue system.

2. Pursuant to ORS 279B.075 (2)(b): Exchange of Software or Data.

Avalara Inc. holds proprietary ownership of the Avalara Inc. revenue system and does not allow other entities to provide maintenance, support, and licensing for their systems.

3. Pursuant to ORS 279B.075 (2)(d): Other findings.

1. Cost Efficiency: Switching vendors would be financially impractical due to the associated cost of implementing a new ODOT fuels tax revenue system estimated at over $2M.

2. Risk Mitigation: Continuity with a proven vendor reduces risks associated with transitioning to a new provider. This system is a major infrastructure system providing a large amount of income for the agency. Additionally, other business lines within ODOT use this system as their revenue tracking system.

Attachment B

Oregon Fuels Tax Revenue System Market Research Report Sole-Source Procurement Justification

BACKGROUND

ODOT performed a Request for Information (RFI) to evaluate potential vendors, seek information on their capabilities, experience, system cost, project duration, and ability to support our current revenue system, ODOT Fuels Tax System (OFTS). ODOT performed a Request for Proposal (RFP) to solicit proposals for fuels tax revenue systems. After a lengthy solicitation, Avalara Inc. was the only bidder. After intent to award was given to Avalara Inc., ODOT explored enhancements of the system. After analysis, ODOT found the enhancements not cost-effective and failed the RFP.

Due to RFP language, ODOT is unable to use the RFP to issue a contract solely for maintenance, support, and licensing. ODOT is pursuing a sole-source contract with Avalara Inc. so that they can continue to provide maintenance, support, and licensing for our current Avalara Inc. fuels tax revenue system.

OBJECTIVE

The objective of this market research study is to justify that Avalara Inc. is the sole provider capable of supporting the Avalara Inc. fuels tax revenue system.

MARKET RESEARCH SOURCES

A comprehensive market research study was performed using the following techniques:

1. Request for Information (RFI) Process:

· We evaluated RFI responses from potential vendors, seeking information on their capabilities, experience, cost, project duration, and ability to support the Avalara system.

· Firms contacted through the RFI process (RFI Analysis: Table 1):

1. Avalara Inc.

2. Innovative Software

3. FAST Enterprises

2. Request for Proposal (RFP) Process:

· We evaluated RFP responses from vendors who expressed interest in providing Avalara Inc. revenue system support.

· Firms analyzed through the RFP process:

1. Avalara Inc.

FINDINGS

Based on the research, the following findings support our position:

1. Unique Expertise:

· Avalara Inc. holds proprietary ownership of the Avalara Inc. revenue system and does not allow other entities to provide maintenance, support, and licensing for their systems.

2. Custom Integrations:

· ODOT has customized integrations with the Avalara Inc. system that meet our unique business needs.

3. Historical Performance:

· Over the last 10 years, Avalara Inc. has provided exceptional system support, maintenance, and licensing services for their Avalara Inc. revenue system.

4. Vendor Lock-In:

· Their proprietary data mapping ensures smooth data transfer between ODOT and the Avalara Inc. revenue system.

5. Cost Efficiency:

· Switching vendors would be financially impractical due to the associated cost of implementing a new fuels tax revenue system estimated at over $2M.

RISKS OF NOT PERSUING A SOLE-SOURCE CONTRACT WITH AVALARA INC.

1. Disruption of services

2. Learning curve and training costs

3. Data migration challenges

4. Loss of vendor lock-in with customizations

5. Loss of institutional knowledge

FINDINGS

Avalara Inc. is the only service, maintenance, and licensing provider of the Avalara Inc. revenue system, and they are the best choice for our next contract for the ODOT fuels tax revenue system.

REFERENCES

· RFI Bid Solicitation, OregonBuys Solicitation Number: S-73000-00000259 (RFI #00116)

· RFP Bid Solicitation, OregonBuys Solicitation Number: S-73000-00001917

· Current Contract, OregonBuys Contract Number: PO-73000-00003603

· RFI Analysis: Table 1

RFI Analysis

Cloud: $200K x 10 = $2M

Support: $160K to $540K x 10 = $1.6M - $5.4M $45/user/month (27 internal = $14,580/yr.)

Cloud storage: $40/GB/year (x 380GB =$15,200 )

Add to ODOT's existing OLIVR system on-prem: 50% of cloud so $900K-$1M; $1M x 10 = $10M

Table 1 image1.png