Local Assistance Procedures Manual Chapter 10 Consultant Selection

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Chapter 10 Consultant Selection Contents

10.1 FEDERALLY-FUNDED A&E CONTRACTS

10.1.1 General

Introduction Definition of an Architectural and Engineering Consultant Architectural and Engineering Consultants Non-A&E Consultants Selecting the Project Subcontracted Services Organizational and Consultant Conflicts of Interest Consultants Performing Work on Multiple Phases of Federal-aid Projects Miscellaneous Considerations Authorization to Proceed

10.1.2 Identifying & Defining a Need for Consultants

Designate Contract Administrator Segmenting Consultant Work Specify Products to be Delivered Scope of Consultant Work Title VI Assurances Non-Discrimination Clause Disadvantaged Business Enterprise (DBE) Participation Estimated Cost of Consultant Work Determine Type of Contract Determining the Project Schedule Determine Method of Payment Cost-Plus-Fixed Fee Cost Per Unit of Work Specific Rates of Compensation Lump Sum Changes to Cost Proposal

10.1.3 A&E Consultant Audit and Review Process

Applicable Standards Audit Guidance Available Allowable Costs Safe Harbor Rate Approval or Acceptance of Indirect Cost Rates

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Cognizant Letters of Approval Caltrans Acceptance of Indirect Cost Rate Financial Review Performed Prior to Contract Execution Local Public Agency Responsibilities Consultant Responsibilities (both prime consultants and subconsultants) Independent Office of Audits and Investigations’ Responsibilities Audits and Reviews to be Performed Indirect Cost Rate Audits CPA Workpaper Reviews Contract Audits Incurred Cost Audits Audit Findings and Review Deficiencies

10.1.4 Consultant Selection Methods

One-Step RFP One-Step RFQ Two-Step (RFQ Followed by RFP)

10.1.5 Consultant Selection Using the One-Step RFP Method

Appoint Consultant Selection Committee Develop Technical Criteria for Evaluation of Proposals Develop Schedule for Consultant Selection Prepare RFP Financial Management and Accounting System Requirements Advertise for Consultants Conduct Proposer’s Conference or Answer Written Questions Receive and Evaluate Technical Proposals Develop Final Ranking and Notify Consultants of Results Negotiate Contract with Top-Ranked Consultant Initiate A&E Consultant Audit Process (Financial Document Review Request)

10.1.6 Consultant Selection Using the One-Step RFQ Method

Appoint Consultant Selection Committee Develop Technical Criteria for Evaluation of Qualifications Develop Schedule for Consultant Selection Prepare RFQ Financial Management and Accounting System Requirements Advertise for Consultants Issue/Publish RFQ Receive/Evaluate Statements of Qualifications and Develop Short List Notify Consultants of Short List

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Interview Top-Ranked Consultants Develop Final Ranking and Notify Consultants of Results Conduct Scoping Meeting Request Cost Proposal Negotiate Contract with Top-Ranked Consultant Initiate A&E Consultant Audit Process (Financial Document Review Request)

10.1.7 Consultant Selection Using the Two-Step RFQ/RFP Method Combined RFQ and RFP Categorize Work Establish Minimum Qualifications Issue RFQ Set-Up Evaluation Process Evaluate Qualifications and Add Firm to List Maintain List Issue RFP to Short-Listed Consultants Conduct Proposer’s Conference or Answer Written Questions Receive and Evaluate Technical Proposals Develop Final Ranking and Notify Consultants of Results Request Cost Proposal and Negotiate Contract with Top-Ranked Consultant Initiate A&E Consultant Audit Process (Financial Document Review Request)

10.1.8 Completing the Project

Develop the Final Contract Review and Approval of Contracts Execute Contract and Issue Notice to Proceed to Consultant Administer the Contract Substitution of Consultant Personnel and Subconsultants Invoicing (or Progress Payments) Contract Amendments Performance Evaluation Project Records Retention Clauses Review of Local Public Agency Actions

10.1.9 Miscellaneous Considerations

Agreements with Other Governmental Agencies Small Purchase Contracts Noncompetitive Negotiated Contracts (Sole-Source) Retaining a Consultant in a Management Support (CMSR) Role Construction Engineering Services

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10.1.10 Program Management

10.1.11 References

10.2 STATE-ONLY FUNDED A&E CONTRACTS

10.2.1 General

10.2.2 Definition of A&E

10.2.3 Minimum Audit Requirements

A. Written Procedures B. Conflict of Interest C. Records D. Full & Open Competition E. Selection Basis F. Publication G. Solicitation H. Cost Comparison I. Negotiations J. Audit and Review Process K. A&E Consultant Contract Form

10.2.4 References

10.3 NON-A&E CONTRACTS

Scope Determining Non-A&E Example of Determining Non-A&E Intelligent Transportation System (ITS) Projects Non-Infrastructure Projects Governing Regulations and Codes for Non-A&E Procurement of Non-A&E Consultant Contracts RFP Basic Requirements Additional Requirements and Evaluation Criteria Consultant’s Proposal Cost Proposal Worksheet DBE Consideration Administrative Requirements Oral Presentations Optional Cost-Effective / Public Interest Finding Protest / Appeals / Reinstatement Procedures

10.4 A&E OVERSIGHT PROGRAM AND PROCESS REVIEW

General Type of Reviews

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A&E Consultant Contract Form Review Review Findings and Deficiencies Sanctions

Exhibits Exhibit 10-B: Suggested Consultant Evaluation Sheet Exhibit 10-G: Individual A&E Task Order DBE Tracking Sheet Exhibit 10-I: Notice to Proposers DBE Information Exhibit 10-O1: Consultant Proposal DBE Commitment Exhibit 10-O2: Consultant Contract DBE Commitment Exhibit 10-Q: Disclosure of Lobbying Activities Exhibit 10-R: A&E Boiler Plate Agreement Language Exhibit 10-S: Consultant Performance Evaluation Exhibit 10-T: Conflict of Interest & Confidentiality Statement Exhibit 10-U: Consultant in Management Support Role Conflict of Interest and Confidentiality Statement

All LAPM Exhibits are located at:

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10.1 FEDERALLY-FUNDED A&E CONTRACTS

10.1.1 General

Introduction A Local Public Agency (LPA) may engage consultants to perform architectural, engineering, and related services to develop a Federal-aid funded project. LPAs requesting federal funds to reimburse Architectural and Engineering (A&E) Consultants must follow the selection and contracting procedures detailed in Section 10.1: Federally-Funded A&E Contracts of this chapter. LPAs using local funds to procure an A&E Consultant on a Federal-aid funded project and will not seek federal reimbursement for the consultant cost may choose not to follow the selection and contracting procedures detailed in Section 10.1 of this chapter.

Definition of an Architectural and Engineering Consultant 23 CFR 172 and California Government Code 4525 define A&E services as program management, construction management, feasibility studies (includes environmental studies and analysis), preliminary engineering, design, engineering, surveying, mapping or architectural related services.

Architectural and Engineering Consultants The Brooks Act (40 U.S.C.1101-1104) requires LPAs to award federally-funded engineering and design related contracts based on fair and open competitive negotiations, demonstrated competence, and professional qualifications (23 CFR 172), at a fair and reasonable price (48

CFR 31.201-3).

Cost proposals submitted to the LPA must be sealed and must not be included as a criterion for rating such consultants. After ranking, cost negotiations will begin with the most qualified consultant and only their cost proposal will be opened. Should negotiations fail or result in a price that the LPA does not consider fair and reasonable, negotiations must be formally terminated, and the LPA must then undertake negotiations with the second most qualified consultant.

If the negotiations with the second most qualified firm are not successful, negotiations must be formally terminated and the LPA must then undertake negotiations with the third most qualified consultant, and so on, until the price is determined to be fair and reasonable by the LPA.

In selecting an A&E consultant, a detailed technical proposal or qualifications proposal, and a proposed contract will be required.

Depending upon the scope of work, the required contract provisions may need to include the California State Prevailing Wages (Federal Payment of Predetermined Minimum Wage applies only to Federal-aid construction contracts). Prevailing wages will apply if the services to be performed will involve land surveying (such as flag persons, survey party chief, rodman, or chainman), materials sampling and testing (such as drilling rig operators, pile driving, crane operators), inspection work, soils or foundation investigations, environmental hazardous materials and so forth. California State Prevailing Wage information is available through the California Department of Industrial Relations (DIR) websites below:

Consultants will need to provide their Prevailing Wage Policy if their participation on the project includes prevailing wage work. The policy will include information on the accounting treatment of delta base and delta fringe, and verify the accounting treatment is consistent every year.

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• DIR FAQ website

• DIR Wage Determination website

Non-A&E Consultants Consultants other than A&E consultants may be selected using cost, cost and qualifications (best value), or other critical selection criteria. The procedures outlined in this chapter can be modified for selecting non-A&E consultants by adding a cost item to the contract proposal. For more details on non-A&E consultants, see Section 10.3: Non-A&E Contracts of this chapter.

Selecting the Project The LPA is responsible for selecting and initiating a Federal-aid financed transportation project.

The decision to begin project development is influenced by the project needs, its acceptability, the timing of studies, financing, and construction. The LPA must identify the project’s objectives including the general level of improvement or service, operating standards, maximum cost, and the target date for project completion before commencing any consultant selection process.

Subcontracted Services The consultant is responsible for performing the work required under the contract in a manner acceptable to the LPA. The consultant’s organization and all associated consultants and subconsultants must be identified in the proposal. If the consultant wishes to use a subconsultant not specified in the proposal, prior written approval must be obtained from the LPA. The subcontract must contain all required provisions of the prime contract. All subawards must include adequate oversight, management, and administration of engineering and design related consultant services and be administered in accordance with State laws and procedures specified in 23 U.S.C.106(g)(4) and 2 CFR 200.331-333.

Organizational and Consultant Conflicts of Interest In the procurement of contracts for engineering services by private consulting firms using Federal-aid highway funds, LPAs must take all the steps necessary to prevent fraud, waste, and abuse. The LPA must develop and maintain a written code of conduct governing the performance of its employees (including the contract administrator) engaged in the award and administration of Federal-aid highway funded contracts, including the prevention of conflicts of interest in accordance with 23 CFR 172.7(b)(4).

A conflict of interest occurs when a public official’s private interests and his or her public duties and responsibilities diverge or are not consistent. Conflicts of interest may be direct or indirect (e.g., as result of a personal or business relationship). The appearance of a conflict of interest should be avoided as an apparent conflict may undermine public trust if not sufficiently mitigated.

Federal Regulation Governing Conflict of Interest (23 CFR 172.7(b)(4)) requires that:

• LPA must maintain a written code of standards of conduct for employees engaged in the award and administration of engineering and design service contracts;

• No contracting agency employee who participates in the procurement, management, or administration of federal-funded contracts or subcontracts must have, directly or indirectly, any financial or other personal interest in connection with such contract or subcontract;

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• No person or entity performing services for a contracting agency in connection with a federal-funded project must have, directly or indirectly, any financial or other personal interest, other than employment or retention by the contracting agency, in any contract or subcontract in connection with such project;

• No person or entity performing services for a contracting agency in connection with a Federal-aid highway funded project must have, directly or indirectly, any financial or other personal interest in any real property acquired for the project;

• No contracting agency employees or agents must neither solicit nor accept gratuities, favors, or anything of monetary value from consultants, potential consultants, or parties to sub-agreements;

• LPA must promptly disclose in writing any potential conflict of interest to FHWA.

Consultants Performing Work on Multiple Phases of Federal-aid Projects LPAs may choose to hire the same consultant firm to perform construction engineering and/or inspection services on the same project on which the firm also performed design services. This can cause project delivery efficiencies, as the design firm is well-suited to verify that the project is being constructed in accordance with the design and can resolve issues related to the design on behalf of the contracting agency. However, this may also pose a potential conflict of interest if the firm has a vested financial interest in failing to disclose deficiencies in its design work product and seeks to insulate itself from pecuniary liability in subsequent phases of the project, such as minimizing or ignoring design errors and omissions, rather than serving the best interests of the contracting agency and the public. Procuring a different firm from the design firm to provide the construction engineering and/or inspection services provides another level of review and reduces the risk of, or potential for, a conflict of interest.

Although federal regulations do not expressly prohibit the same firm from providing services on subsequent phases, the LPAs are responsible for ensuring the public interest is maintained throughout the life of a project and that a conflict of interest, real or apparent, does not occur or is sufficiently mitigated by appropriate public agency controls. Prior to allowing a consulting firm to provide services on subsequent phases of the same project, the contracting agency must establish appropriate compensating controls in policies, procedures, practices, and other safeguards to ensure a conflict of interest does not occur in the procurement, management, and administration of consultant services.

When design and construction phase services are procured under a single solicitation, the selection of the consulting firm must be based on the overall qualifications to provide both design and construction phase services, which require different skill sets, experience, and resources. Procuring these services under different solicitations may result in selection of a more qualified firm to perform services in each phase, as the most qualified firm to perform design phase services may not be the most qualified firm to provide construction phase services. Similarly, the qualifications and capacity of a firm may change over time. As such, it may not be appropriate to contract with a consulting firm to provide construction phase services at the outset of a design phase, knowing that these services may not be needed for an extended period until the preconstruction phase of the project is complete and construction funding authorized. The contract with a consulting firm providing design phase services on a project may not be amended to include construction phase services unless the desired construction phase services were included within the original advertised scope of services and evaluation criteria of the solicitation from which a qualifications-based selection was conducted.

All consultants acting in a management support role must complete Exhibit 10-U: Consultant in https://dot.ca.gov/-/media/dot-media/programs/local-assistance/documents/lapm/c10/10u.pdf

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Management Support Role Conflict of Interest and Confidentiality Statement (see Section 10.1.9: Miscellaneous Considerations in this chapter) and retain it in the LPA files.

Miscellaneous Considerations Authorization to Proceed The Federal Highway Administration (FHWA) must give the LPA an Authorization to Proceed (E-76) with the work prior to performing of any work for which federal reimbursement is to be requested, (see LAPM Chapter 3: Project Authorization). Eligible consultant contracts may be procured using local funds prior to receiving the E-76, but reimbursement is for work performed after the E-76 authorization date. If contract is procured using state or local funds, federal procedures must have been followed if seeking federal reimbursement. For state-funded projects see Section 10.2: State-Only Funded A&E Contracts and LAPG Chapter 25: State Programs for Local Agency Projects, for guidance on when work may proceed.

Copies of the Authorization to Proceed and the consultant contract must be retained in the LPA project files for future audit.

10.1.2 Identifying & Defining a Need for Consultants

The need for a consultant is identified by comparing the project’s schedule and objectives with the LPA’s capabilities, its staff availability of the required expertise, and its funding resources. If the LPA does not have sufficient staff capabilities, it may solicit assistance from another agency, or use a qualified private consultant to perform the required work.

If the LPA determines that there is a need to solicit assistance from another LPA, or to use a consultant, the District Local Assistance Engineer (DLAE) should be notified if Federal-aid funds are to be requested for the project segment to be contracted out.

Designate Contract Administrator The Contract Administrator is responsible for ensuring the quality of consultant contract products or services. The Contract Administrator is designated as soon as the need for consultant services is identified. The Contract Administrator is involved throughout the development of the selection process and the contract provisions, and in the administration of the consultant’s work. The Contract Administrator must be a qualified LPA employee or have staff that is qualified to ensure the consultant’s work is complete, accurate, and consistent with the terms and conditions of the consultant contract. On Federal-aid contracts, the Contract Administrator or staff members must be a full-time public employee and familiar with the work to be contracted out and the standards to be used. The Contract Administrator must also abide by the laws, regulations and policies required as part of accepting federal or state funding for their project. Non-compliance with the laws, regulations, and policies may result in loss of project funding.

The Contract Administrator’s duties are listed in 23 CFR 172.9(d)(1) and include:

• Contract negotiation, contract payment, and evaluation of compliance performance, and quality of services provided by the consultant;

• Being familiar with the contract requirements, scope of services to be performed, and products to be produced by the consultant;

• Being familiar with the qualifications and responsibilities of the consultant’s staff and evaluating any requested changes in key personnel;

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• Schedules and attends progress and project review meetings, commensurate with the magnitude, complexity, and type of work, to ensure the work is progressing in accordance with established scope of work and schedule milestones;

• Documents contract monitoring activities and maintaining supporting contract records as specified in 2 CFR 200.332-334;

• Provides direction to ensure the proposed work is advertised properly;

• Prepares and distributes the Request for Qualifications (RFQ), description of work, and Request for Proposals (RFP), if used;

• Prepares the draft contract;

• Arranges for preparation before an independent estimate of the value of the work to be contracted out;

• Ensures that the selection procedures are followed;

• Analyzes the selected/best-qualified consultant’s cost proposal;

• Ensures contract audit and review procedure is followed;

• Ensures that fee/profit negotiation is conducted and keeps records;

• Serves as the LPA’s primary contact person for the successful consultant;

• Monitors the consultant’s progress and provides direction;

• Ensures consultant costs billed are allowable in accordance with the federal cost principles and consistent with the contract terms as well as the acceptability and progress of the consultant’s work;

• Identifies other LPA staff for the consultant to contact, if needed;

• Closes out the contract at completion, by processing the final invoice; completing a mandatory consultant evaluation, and final DBE utilization reports (Exhibit 17-F: Final Report - Utilization of Disadvantaged Business Enterprises (DBE) and First-Tier Subcontractors or Exhibit 17-F1: Final Report - Utilization of Disadvantaged Business Enterprises (DBE) for A&E On-Call Contracts).

Segmenting Consultant Work Consultant services are most effective when consultant work is segmented appropriately. The extent of segmenting depends upon the type and complexity of the work. Combining preliminary engineering tasks with the preparation of the required environmental analysis is normally desirable. Preparing an Environmental Assessment (EA) or Environmental Impact Statement (EIS) is more than simply writing a report. Assessment and impact reports include preliminary engineering needed to analyze project alternatives and produce an engineering and planning assessment. Initial project studies include only as much traffic and engineering analysis of alternatives, as is needed to produce a sound EA or EIS (see LAPM Chapter 6 Environmental Procedures, Standard Environmental Reference (SER) Chapter 31:Environmental Assessment (EA)/Finding of No Significant Impact (FONSI), and SER Chapter 32: Environmental Impact Statement (EIS). Final design must not begin until NEPA environmental approval has been received if federal reimbursement is desired.

Refer to Figure 10-1: Segmenting Consultant Work, which illustrates several satisfactory ways to segment consultant activities.

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Figure 10-1: Segmenting Consultant Work

Specify Products to be Delivered The Contract Administrator identifies the products and services to be delivered as a result of consultant contract work, and minimum qualification of consultant professionals and staff. These vary depending upon the type of projects and the phase of project development being addressed.

Scope of Consultant Work The scope of work, which the contract must include, is a detailed description of the products or services the consultant is to provide. From a detailed scope of work, consultants respond to a project advertisement, determine personnel and time requirements, and develop a technical proposal. Therefore, the scope of work must be clear, concise, complete, and describe the deliverables, standards for design and other work, quality control measures, acceptance criteria and deadlines.

Title VI Assurances Title VI Assurances Appendices A and E must be included in each consultant contract. Include Title VI Assurances Appendices B, C, and D if applicable. The consultant must include the Title VI Assurances Appendices A and E, and if applicable Appendices B, C, and D in all subcontracts to perform work under the contract. Include Title VI Assurances Appendices B, C, and D if applicable. Refer to Exhibit 10-R: A&E Boilerplate Agreement Language, Article XXXII Title VI Assurances. Disadvantaged Business Enterprises will be afforded full opportunity to submit bids in response to this invitation and will not be discriminated against on the grounds of race, color, sex, national origin, religion, age, or disability in consideration for an award.

Non-Discrimination Clause The Non-Discrimination Clause (Exhibit 10-R: A&E Boilerplate Agreement Language, Article XVI Non-Discrimination Clause and Statement of Compliance) must be included in each consultant contract. The consultant must include the non-discrimination and compliance https://dot.ca.gov/-/media/dot-media/programs/local-assistance/documents/lapm/c10/10r.pdf

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Disadvantaged Business Enterprise (DBE) Participation When administering Federal-aid projects, federal regulations (49 CFR 26) require the LPA to comply with the DBE program and take necessary steps to ensure that DBE firms have the opportunity to participate in the projects. Refer to LAPM Chapter 9: Civil Rights and Disadvantaged Business Enterprises for DBE requirements for A&E Consultant Contracts.

Estimated Cost of Consultant Work An independent estimate for cost or price analysis is needed for all consultant contracts (23 CFR 172.7(a)(1)(v)(B)) to ensure that consultant services are obtained at a fair and reasonable price. The estimate must be prepared prior to opening the cost proposal from the top-ranked consultant, so the LPA has a cost comparison to evaluate the reasonableness of the consultant’s cost proposal. The estimate, which is specifically for the use of the LPA’s negotiating team, is to be kept confidential and maintained for records.

A good cost estimate can be prepared only if the scope of work is defined clearly. The scope of work must include a list of the products or services which the consultant is required to deliver, and a time schedule of when they must be delivered.

It should be stressed that all work to be derived from the consultant services, such as preliminary design, environmental, or final design, must be clearly identified in the solicitation of consultant services (RFQ or RFP) and included in the cost estimate. The addition of work to the original scope by amendment should be avoided whenever possible. Contract modifications are required for any amendments to the terms of the existing contract that change the cost of the contract; significantly change the character, scope, complexity, or duration of the work; or significantly change the conditions under which the work is required to be performed.

Some of the costs estimating techniques are:

Analogous Estimating Analogous cost estimating is using the actual cost of a previous, similar contract as the basis for estimating the cost of the current contract. Analogous cost estimating is frequently used to estimate costs when there is a limited amount of detailed information about the project.

Analogous cost estimating is generally less accurate, and it is most reliable when previous projects are similar in fact, and not just in appearance, and it uses expert judgment.

Parametric Estimating Parametric estimating is a technique that uses statistical relationship between historical data and other variables to calculate a cost estimate for an activity resource. This technique can produce a higher level of accuracy depending upon the sophistication, as well as underlying resource quantity and the cost data. A cost example would involve multiplying the planned quantity of work by the historical cost per unit to obtain the estimated cost of the contract.

Bottom-up Estimating This technique involves estimating the cost for individual work in the contract with the lowest level of detail. This detailed cost is then summarized or rolled up to determine a total cost of contract. Cost detail should include estimated hours per task, labor hourly cost for professional and non-professional classifications, subconsultant costs, other project direct costs, and profit.

Labor costs should be broken down to direct labor and indirect cost rates, if possible.

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If more than one project or phase of work is to be developed within the consultant contract, separate cost estimates are required for each project or phase of work. Separate cost estimates are required for each milestone and portion of the work expected to be subcontracted.

For on-call (as-needed) contracts, the cost estimate/analysis should include at minimum, a historical analysis of annual needs for consultant work, professional labor cost and market analysis, and reasonable profit analysis.

Determine Type of Contract Types of contracts to be used are described as follows:

• Project-specific contract is between the LPA and consultant for the performance of services and a defined scope of work related to a specific project or projects.

• Multi-phase contract is a project-specific contract where the defined scope of work is divided into phases which may be negotiated and executed individually as the project progresses.

• On-call contract is a contract that may be utilized for a number of projects, under which task or work orders are issued on an as-needed basis, for an established contract period and maximum total contract dollar amount. On-call contracts are typically used when a specialized service of indefinite delivery or indefinite quantity is needed for a number of different projects, such as construction engineering, design, environmental analysis, traffic studies, geotechnical studies, and field surveying, etc. Many agencies use these contracts to address peaks in workload of in-house engineering staff and/or to perform a specialized service which the agency does not have. On-call contracts must specify a reasonable maximum length of contract, not to exceed five (5) years, and a maximum total contract dollar amount (23 CFR 172.9(a)(3)). The maximum dollar amount for all contracts awarded under the solicitation must be stated in the solicitation. The maximum dollar amount is the aggregate of the on-call contracts anticipated to be awarded. For example, if the solicitation lists that up to five (5) contracts may be awarded, the aggregate amount of these five (5) contracts is the maximum contract dollar amount.

Setting maximum amount on each on-call contract under a multiple on-call solicitation does not meet the intent of 23 CFR 172. How many contracts are anticipated to be awarded must be stated in the solicitation. How task orders will be issued must be stated in the solicitation.

There are two options on how task orders must be awarded under multiple on-call contracts for the same type of service under the same solicitation:

1. Through an additional qualifications-based selection procedure also known as mini-RFP.

• Solicit task order to the multiple on-call consultants on the master on-call contracts o Master on-call contracts are contracts awarded to on-call consultants at the initial RFQ/RFP procurement process.

o Solicitation may be informal, e.g. email, letter, etc.; documentation is required.

Local Assistance Procedures Manual Chapter 10 o Evaluation criteria must be included in the solicitation. The mini- RFP contains evaluation criteria that matches the strengths of the qualified firms to the specifics of the known tasks, thereby selecting the most qualified firm for each task.

o The evaluation criteria can include:

i. availability of personnel,

ii. staff capabilities,

iii. DBE (10% or less of overall score); the overall DBE goal was established at the master on-call contract,

iv. completion of time,

v. experience of consultant

vi. specialized expertise, and past performance.

• Evaluate and rank proposals and select from the multiple on-call contracted consultants o Recommend at least three panel members to evaluate and rank o Evaluate based on criteria in mini-RFP solicitation

• Negotiate and award to the on-call contracted consultant o The mini-RFP or the task order will be negotiated with first ranked firm from each competition. Task order (mini-RFP) cost will be based on wage rates established in the master on-call contract, and the time and deliverable requirements in the task order.

• If only one proposal is received or there is an emergency, a Non- Competitive process must be justified, and Exhibit 12-F: Cost Effectiveness / Public Interest Finding / A&E Noncompetitive must be documented and signed by the DLAE

• Awarding task order to the multiple on-call consultants on a rotational basis does not meet the intent of the qualifications-based selection

• Exhibit 10-G: Individual A&E Task Order DBE Tracking Sheet must be used to track percentage of DBE after a task order is completed

• Each task order must have an Exhibit 10-O1: Consultant Proposal DBE Commitment and Exhibit 10-O2: Consultant Contract DBE Commitment as applicable

2. Regional basis where each on-call consultant is contracted to a designated area.

To maintain the intent of the Brooks Act (40 U.S.C.1101-1104) in promoting open competition and selection based on demonstrated competence and qualifications, on-call consultant contracts established through the RFQ process must meet the following requirements:

• Must define a general scope of work, complexity, and professional nature of services.

• Specify a task order procedure the LPA uses to procure project-specific work under the contract.

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• Task order work performed after the master on-call contract has expired will result in those costs being ineligible for federal or state reimbursement.

• If multiple consultants are to be selected and multiple on-call contracts awarded through a single solicitation for specific services, the number of consultants that may be selected or contracts that may be awarded must be identified.

• Specify procurement procedures in the contracts the LPA will use to award/ execute task orders among the consultants:

o Either through an additional qualification-based selection process (see the Two-Step RFQ/RFP process later in this chapter), OR o On regional basis whereby the region is divided into areas identified in the solicitation, and consultants are selected to provide on-call services for assigned areas only. The RFP may list multiple regions that allow consultants to crossover or be a “backup” to other consultants that for specifically documented reasons are not able to perform the work in their assigned region. Per 23 CFR 172.9 (a)(3)(iv)(B)(2), the “backup” option needs to be listed in the respective contracts.

An example of acceptable contract wording in multiple on-call contracts for the same type of service:

• “Agency has or will enter into three (3) task order contracts for performance of the Scope of Services identified in Exhibit “A”, including this Agreement (“CM Services Task Order Contracts”). The other CM Services Task Order Contracts are [identify other two contracts by agreement numbers and consultant firms].

The total amount payable by Agency for the CM Services Task Order Contracts must not exceed a cumulative maximum total value of Seven Million, Five Hundred Thousand Dollars ($7,500,000) (“NTE Sum”). It is understood and agreed that there is no guarantee, either expressed or implied that this dollar amount will be authorized under the CM Services Task Order Contracts through Task Orders. Each time a Task Order is awarded under any of the CM Services Task Order Contracts, the Agency must send written notification to Consultant and each of the other consultants entering into the CM Services Task Order Contracts. The notice must identify the total funds allocated under issued Task Orders, and the remaining unencumbered amount of the NTE Sum. Consultant acknowledges and agrees that Agency must not pay any amount under this Agreement that would exceed the NTE Sum, and Consultant must not enter into a Task Order that exceeds the NTE Sum.”

Determining the Project Schedule The LPA develops a schedule for performance of work and completion of the project. The schedule must include sufficient time to allow for:

• Selecting the consultant;

• Developing the consultant contract;

• Completing the A&E consultant contract audit process;

• Conducting meetings and project reviews.

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Determine Method of Payment The method of payment of contract must be specified. The following four methods are permitted under 23 CFR 172.9(b) depending on the scope of services to be performed (sample cost proposals are provided on the DLA Consultant Selection and Procurement website):

• Cost-Plus-Fixed Fee

• Cost Per Unit of Work

• Specific Rates of Compensation

• Lump Sum

The method of payment to the consultant must be set forth in the original solicitation, contract, and in any contract modification thereto. A single contract may contain different payment methods as appropriate for compensation of different elements of work. Markups are not allowed on any of the four methods of payment.

The cost plus a percentage of cost and percentage of construction cost methods of payment must not be used. Both of these methods are explicitly prohibited by 23 CFR 172.9(b).

Cost-Plus-Fixed Fee The consultant is reimbursed for costs incurred and receives an additional predetermined amount as a fixed fee (profit). Federal regulations require that profit be separately negotiated from contract costs. The determination of the amount of the fixed fee must take into account the size, complexity, duration, and degree of risk involved in the work. The fixed fee is not adjustable during the life of the contract. The fixed fee dollar amount must be clearly stated in the contract. See the DLA Consultant Selection and Procurement website for a useful tool on Profit/Fee Determination.

This method of payment is appropriate when the extent, scope, complexity, character, or duration of work cannot be precisely predicted. The fixed fee limit applies to the total direct and indirect costs. Fixed fees in excess of 15 percent of the total direct labor and indirect costs of the contract may be justified only when exceptional circumstances exist. The contract must specify a reasonable maximum length of contract period and a maximum total contract dollar amount (see Exhibit 10-R: A&E Boilerplate Agreement Language, Article V, Option 1). The contract cost proposal must identify all key employees and/or classifications to be billed. New key employees and/or classifications must be approved by the LPA before they incur work on the contract, or the costs can be questioned or disallowed. LPAs are not required to update the A&E Consultant Contract form when new key employees and/or classification are added to a contract; for more details, reference Section 10.1.8. Completing the Project.

Cost Per Unit of Work The consultant is paid based on specific item of work performed. The item of work must be similar, repetitious, and measurable, such as a specific geotechnical investigation and material testing. This method of payment is appropriate when the cost per unit of work can be determined with reasonable accuracy in advance, but the extent or quantity of the work is indefinite. Contract payment provisions must specify what is included in the price to be paid for each item. Any item of work not identified in the contract cost proposal is not eligible for reimbursement. New items of work (those within the original scope of work only) must be amended into the contract before work is performed. The contract must also specify a https://dot.ca.gov/programs/local-assistance/guidance-and-oversight/consultant-selection-procurement https://dot.ca.gov/programs/local-assistance/guidance-and-oversight/consultant-selection-procurement

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Specific Rates of Compensation The consultant is paid at an agreed and supported specific fixed hourly, daily, weekly, or monthly rate, for each class of employee engaged directly in the work. Such rates of pay include the consultant’s estimated costs and net fee (profit). Federal regulations require that profit be separately negotiated from contract costs. The specific rates of compensation, except for an individual acting as a sole proprietor, are to include an hourly breakdown, direct salary costs, fringe benefits, indirect costs, and net fee. Other direct costs may be included, such as travel and equipment rentals, if not already captured in the indirect cost rate. Other direct costs regardless of amount are to be listed on the cost proposal.

This method of payment should only be used when it is not possible at the time of procurement to estimate the extent or the duration of the work, or to estimate costs with any reasonable degree of accuracy. This method should not be used for project-specific contracts and is recommended for on-call contracts for specialized or support type services, such as construction engineering and inspection, where the consultant is not in direct control of the number of hours worked, and it also requires management and monitoring of the consultant’s level of effort and the classification of employees used to perform the contracted work. The contract must also specify a reasonable maximum length of contract period and a maximum total contract dollar amount (see Exhibit 10-R: A&E Boilerplate Agreement Language, Article V Option 3).

Lump Sum The consultant performs the services stated in the contract for an agreed amount as compensation, including a net fee or profit. This method of payment is appropriate only if the extent, scope, complexity, character, duration, and risk of the work have been sufficiently defined to permit fair compensation to be determined and evaluated by all parties during negotiations (see Exhibit 10-R: A&E Boilerplate Agreement Language, Article V: Option 4).

Normally, a lump sum contract will be paid in full at end of the contract when completed.

However, a lump sum contract can be negotiated with progress payment if feasible. The progress payment must be based on percent of work complete or completion of clearly defined milestones. The contract cost proposal must document the agreed-upon progress payment and include the necessary milestones costs, or the percent work complete schedule.

A firm fixed price method of payment is not the same as lump sum. A firm fixed price contract must not be amended.

Changes to Cost Proposal Changes to the cost proposal requiring resubmittal to Independent Office of Audits and Investigations (IOAI) for review:

• Consultant/subconsultant name change

• New participating subconsultant’s Indirect Cost Rate (ICR)

• Change in ICR rate

Since these changes require an amendment, the LPA is to update the A&E Consultant Contract form.

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10.1.3 A&E Consultant Audit and Review Process

This section outlines the audit and review process for A&E contracts that at any time use state or Federal-aid highway funds in furtherance of highway construction projects. All proposed A&E contracts and supporting documents are subject to audit or review by Caltrans’ Independent Office of Audits and Investigations (IOAI), other state audit organizations, or the federal government. Not all proposed contracts will be audited or reviewed; rather, they will be selected on a risk-based approach.

Applicable Standards State and federal requirements listed below, and specific contract requirements, serve as the standards for audits and reviews performed.

LPAs, consultants, and subconsultants are responsible for complying with state, federal, and specific contract requirements. LPAs are responsible for determining the eligibility of costs to be reimbursed to consultants.

Applicable standards include, but are not limited to:

• Caltrans Local Assistance Procedures Manual (LAPM);

• State and Federal agreements between LPAs and Caltrans, (i.e., Master Agreements);

• Project Program Supplemental Agreements;

• 23 U.S.C., Section 112 – Letting of Contracts;

• 40 U.S.C., Chapter 11: the Brooks Act;

• 23 CFR 172 - Procurement, Management, and Administration of Engineering and Design Related Services;

• 23 CFR, Chapter 1- Federal Highway Administration, Department of Transportation;

• 48 CFR, Federal Acquisition Regulation (FAR), Part 31- Contract Cost Principles and Procedures;

• 48 CFR, Chapter 99 – Cost Accounting Standards Board, Office of Federal Procurement Policy, Office of Management and Budget

• 2 CFR 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards;

• United States Government Accountability Office, Government Auditing Standards - Generally Accepted Government Auditing Standards (GAGAS);

• California Government Code sections 4529.5 and 4529.10-4529.20; and

• Proposed contract terms and conditions.

See Section 10.1.11: References of this chapter for links to above referenced standards.

Audit Guidance Available The American Association of State Highway and Transportation Officials (AASHTO), Uniform…