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Home My WebLink AboutPW Caltrans Local ProceduresAgenda Item No: 4.j Meeting Date: September 4, 2018 SAN RAFAEL CITY COUNCIL AGENDA REPORT Department: Public Works Prepared by: Bill Guerin, Director of Public Works City Manager Approval: ________ File No.: 07.04.12 TOPIC: CONSULTANT SELECTION PROCESS SUBJECT: RESOLUTION ADOPTING CHAPTER 10 OF THE CALTRANS LOCAL ASSISTANCE PROCEDURES MANUAL, ENTITLED “CONSULTANT SELECTION”, AS THE PROCESS BY WHICH THE CITY RETAINS ARCHITECTURAL AND ENGINEERING CONSULTANT SERVICES RELATED TO FEDERAL AND STATE FUNDED TRANSPORTATION PROJECTS RECOMMENDATION: Adopt the resolution as presented. BACKGROUND: The City of San Rafael manages many capital improvement projects every year, some of which are funded with federal or state grants. The federal government has granted Caltrans oversight authority of these federal funds, which are administered by Caltrans Office of Local Assistance. As the administering agency of federal and state funds, Caltrans has created the Local Assistance Procedures Manual (Manual) which guides, directs, and outlines all the requirements that cities across the State of California are required to adhere to when receiving federal or state funds on transportation projects. The Manual undergoes frequent updates to incorporate changes in federal law and procedures. ANALYSIS: The most recent major update to the Manual requires the City to specifically adopt Chapter 10 of this Manual for the selection of architectural and engineering consultants. While the City has always followed the process and procedures outlined in the most current version of the Manual, Caltrans now requires Council adoption to insure City staff are fully aware of the current federal requirements. Chapter 10 of the Manual sets forth requirements to be included in City Requests for Proposals (RFPs) and subsequent consultant proposals, including but not limited to, having a clearly defined scope of work, staff performing an independent cost analysis of what the consultant contract may cost prior to receiving proposals, procedures for ____________________________________________________________________________________ FOR CITY CLERK ONLY Council Meeting: 9/04/2018 Disposition: Resolution No. 14573 SAN RAFAEL THE CITY WITH A MISSION SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2 evaluating and scoring of proposals, and certain financial documents required to be submitted at the time proposals are received. FISCAL IMPACT: There is no fiscal impact associated with this item. OPTIONS: The City Council has the following options to consider relating to this matter: 1.Adopt the resolution as presented. 2.The City Council may decline to adopt the resolution, in which case the City would become ineligible to use federal or state funds for consultant services for projects administered through Caltrans Office of Local Assistance. RECOMMENDED ACTION: Adopt the resolution as presented. ATTACHMENTS: 1. Resolution 2. Chapter 10, Consultant Selection, of the Local Assistance Procedures Manual RESOLUTION NO. 14573 A RESOLUTION OF THE SAN RAFAEL CITY COUNCIL ADOPTING CHAPTER 10 OF THE CALTRANS LOCAL ASSISTANCE PROCEDURES MANUAL, ENTITLED “CONSULTANT SELECTION”, AS THE PROCESS BY WHICH THE CITY RETAINS ARCHITECTURAL AND ENGINEERING CONSULTANT SERVICES RELATED TO FEDERAL AND STATE FUNDED TRANSPORTATION PROJECTS ______________________________________________________________________________ WHEREAS, the City of San Rafael receives transportation funds from the Federal and State governments through the California Department of Transportation (“Caltrans”) Office of Local Assistance; and WHEREAS, Caltrans recently updated Chapter 10 of the Local Assistance Procedures Manual (“LAPM”), entitled “Consultant Selection”; and WHEREAS, Chapter 10 of the LAPM now requires that all cities and counties in California receiving federal or state funding for consultant services adopt the outlined policies and procedures in order to receive federal or state reimbursements; NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of San Rafael hereby adopts Chapter 10 of the Local Assistance Procedures Manual, entitled “Consultant Selection”, as the process and procedures to be followed when requesting proposals and awarding consultant contracts for federal and state funded transportation project. I, LINDSAY LARA, Clerk of the City of San Rafael, hereby certify that the foregoing resolution was duly and regularly introduced and adopted at a regular meeting of the Council of said City on Tuesday, the 4th day of September 2018, by the following vote, to wit: AYES: NOES: ABSENT: COUNCILMEMBERS: Bushey, Colin, Gamblin, McCullough & Mayor Phillips COUNCILMEMBERS: None COUNCILMEMBERS: None _______________________________ LINDSAY LARA, City Clerk Local Assistance Procedures Manual Chapter 10 Consultant Selection Page i of viii January 2018 Chapter 10 Consultant Selection CONTENT SECTION PAGE 10.1 General ............................................................................................................................................................ ……1 Introduction ...................................................................................................................................................... 1 Architectural and Engineering Consultants ...................................................................................................... 1 Non A&E Consultants ........................................................................................................................................ 2 Selecting the Project ......................................................................................................................................... 2 Subcontracted Services ..................................................................................................................................... 2 Organizational and Consultant Conflicts of Interest ......................................................................................... 2 Federal Regulation Governing Conflict of Interest (23 CFR 1.33) Requires that: ............................................. 2 Consultants Performing Work on Multiple Phases of Federal-aid Projects ..................................................... 3 Authorization to Proceed .................................................................................................................................. 4 10.2 Identifying & Defining a Need for Consultants ...................................................................................................... 4 Appointing the Contract Administrator ............................................................................................................ 4 Determining the Project Schedule .................................................................................................................... 5 Segmenting Consultant Work ........................................................................................................................... 6 Figure 10-2: Segmenting Consultant Work ...................................................................................................... 6 Specify Products to be Delivered ...................................................................................................................... 6 Scope of Consultant Work ................................................................................................................................ 6 Non-Discrimination Clause ............................................................................................................................... 7 Disadvantaged Business Enterprise (DBE) Participation ................................................................................... 7 Reporting DBE Commitments and DBE Information ........................................................................................ 7 For Contracts with No DBE Goals: .................................................................................................................... 8 Reporting DBE Final Utilization (Contracts with or without Goals): ................................................................. 8 Estimated Cost of Consultant Work .................................................................................................................. 8 Determine Type of Contract ............................................................................................................................. 9 Determine Method of Payment ...................................................................................................................... 10 Actual Cost-Plus-Fixed Fee .............................................................................................................................. 10 Cost Per Unit of Work ..................................................................................................................................... 11 Specified Rates of Compensation ................................................................................................................... 11 Lump Sum or Firm Fixed Price ........................................................................................................................ 12 Local Assistance Procedures Manual Chapter 10 Consultant Selection Page ii of viii January 2018 10.3 A&E Consultant Audit and Review Process ......................................................................................................... 12 Audit Guidance Available ................................................................................................................................ 13 Allowable Costs ............................................................................................................................................... 13 Approval or Acceptance of Indirect Cost Rate ................................................................................................ 14 Financial Review Performed Prior to Contract Execution .............................................................................. 15 Local Agencies’ Responsibilities ...................................................................................................................... 16 Consultants’ Responsibilities (Both prime consultants and subconsultants) ................................................. 16 10.4 Consultant Selection Methods ............................................................................................................................ 24 One-Step RFP .................................................................................................................................................. 24 One-Step RFQ .................................................................................................................................................. 24 Two-Step (RFQ Followed by RFP) .................................................................................................................... 24 10.5 Consultant Selection Using the One-Step RFP Method ....................................................................................... 27 Appoint Consultant Selection Committee ...................................................................................................... 27 Develop Technical Criteria for Evaluation of Proposals .................................................................................. 27 Develop Schedule for Consultant Selection .................................................................................................... 27 Prepare RFP ..................................................................................................................................................... 27 Financial Management and Accounting System Requirements ..................................................................... 29 Advertise for Consultants ............................................................................................................................... 29 Issue/Publish RFP ............................................................................................................................................ 29 Conduct Proposer’s Conference or Answer Written Questions ..................................................................... 29 Receive and Evaluate Technical Proposals ..................................................................................................... 29 Develop Final Ranking and Notify Consultants of Results .............................................................................. 30 Negotiate Contract with Top-Ranked Consultant ........................................................................................... 30 10.6 Consultant Selection Using the One-Step RFQ Method ...................................................................................... 32 Appoint Consultant Selection Committee ...................................................................................................... 32 Develop Technical Criteria for Evaluation of Qualifications ........................................................................... 32 Develop Schedule for Consultant Selection .................................................................................................... 33 Prepare RFQ .................................................................................................................................................... 33 Financial Management and Accounting System Requirements ..................................................................... 34 Advertise for Consultants ............................................................................................................................... 34 Issue/Publish RFQ ........................................................................................................................................... 34 Receive/Evaluate Statements of Qualifications and Develop Shortlist .......................................................... 35 Notify Consultants of Shortlist ........................................................................................................................ 35 Interview Top-Ranked Consultants ................................................................................................................. 35 Develop Final Ranking and Notify Consultants of Results .............................................................................. 36 Conduct Scoping Meeting ............................................................................................................................... 36 Local Assistance Procedures Manual Chapter 10 Consultant Selection Page iii of viii January 2018 Request Cost Proposal .................................................................................................................................... 36 Negotiate Contract with Top-Ranked Consultant ........................................................................................... 37 10.7 Consultant Selection Using the Two-Step RFQ/RFP Method .............................................................................. 38 Combined RFQ and RFP .................................................................................................................................. 38 10.8 Completing the Project ........................................................................................................................................ 39 Develop the Final Contract ............................................................................................................................. 39 Review and Approval of Contracts ................................................................................................................. 39 Retention Clauses ........................................................................................................................................... 45 Review of Local Agency Actions ...................................................................................................................... 45 Execute Contract and Issue Notice to Proceed to Consultant ........................................................................ 40 Administer the Contract ................................................................................................................................. 41 Substitution of Consultant Personnel and Subconsultants ............................................................................ 41 Invoicing (or Progress Payments) ................................................................................................................... 42 Contract Amendments .................................................................................................................................... 43 Performance Evaluation ................................................................................................................................. 43 Project Records ............................................................................................................................................... 44 10.9 Miscellaneous Considerations ............................................................................................................................. 45 Engineering Services Under $150,000 ............................................................................................................ 45 Noncompetitive Negotiated Contracts (Sole-Source) .................................................................................... 46 Personal Services Contracts ............................................................................................................................ 47 Retaining a Consultant as an Agency Engineer or in Management Support Role .......................................... 48 Construction Engineering Services ................................................................................................................. 51 10.10 Non-A&E Consultants .......................................................................................................................................... 51 Definition ........................................................................................................................................................ 51 Intelligent Transportation System (ITS) Projects ............................................................................................ 51 Cost Proposal Worksheet ............................................................................................................................... 54 10.11 References ........................................................................................................................................................... 56 Figures PAGE Figure 10-1: A&E Contract Perocurement Process Workflow Diagram………………………………………………………….V Figure 10-2: Segmenting Consultant Work…………………………………………………………………………………………………….6 Figure 10-3: Standard Indirect Cost Rate Schedule………………………………………………………………………….……………23 Figure 10-4: Consultant Selection Flowchart …………………………………………………………………………….……………...…26 Figure 10-5: Consultant in a Management Support RoleFlowchart………………………………………………….…..….…...51 Local Assistance Procedures Manual Chapter 10 Consultant Selection Page iv of viii January 2018 Table PAGE Table 10- 1: Summary of Required/Non-Required Activities for Small Purchase Procedure……..........….........47 Exhibits Exhibits applicable to this chapter can be found at: http://www.dot.ca.gov/hq/LocalPrograms/lam/forms/lapmforms.htm Exhibit 10-A: A&E Consultant Audit Request Letter and Checklist Exhibit 10-B: Suggested Consultant Evaluation Sheet Exhibit 10-C: A&E Consultant Contract Reviewers Checklist Exhibit 10-H: Sample Cost Proposal (Example#1 thru #3) Exhibit 10-I: Notice to Proposers DBE Information Exhibit 10-K: Consultant Certification of Contract Costs and Financial Management System Exhibit 10-01: Consultant Proposal DBE Commitment Exhibit 10-02: Consultant Contracts DBE Commitment Exhibit 10-Q: Disclosure of Lobbying Activities Exhibit 10-R: A&E Sample Contract Language Exhibit 10-S: Consultant Performance Evaluation Exhibit 10-T: Panel Member Conflict of Interest & Confidentiality Statement Exhibit 10-U: Consultant in Management Support Role Conflict of interest and Confidentiality Statement Local Assistance Procedures Manual Chapter 10 Consultant Selection Page v of viii January 2018 Procurement Planning 1 2 3 *Select Project *Set Project Objectives *Determine Project Schedule *Obtain CTC Allocation/Federal Authorization to Proceed prior to beginning reimbursable work *LAPM Exhibit 10-U: Consultant in Management Support Role Conflict of Interest and Confidentiality Statement, if applicable: submit to DLA-HQ with Request for Federal Authorization to Proceed. *Identify Need for Consultant *Appoint Contract Administrator *Segment Project Work *Define SOW of A&E Consultant *Specify Products to be delivered *Estimate Cost of Consultant Work *Determine Type of Contract (Project Specific or on-call) *Determine MOP: Lump Sum; Actual Cost-Plus- Fixed-Fee; Cost Per Unit of Work; or Specific Rate of Compensation A&E = Architectural and Engineering A&I = Caltrans Audits and Investigations CT = Caltrans DBE = Disadvantaged Business Enterprise DLA = Division of Local Assistance DLAE = District Local Assistance Engineer DLA-HQ = Division of Local Assistance-Headquarters LAPG = Local Assistance Program Guidelines LAPM = Local Assistance Procedures Manual MOP = Method of Payment RFP = Request for Proposal RFQ = Request for Qualifications SOQ = Statement of Qualifications SOW = Statement/Scope of Work Local Agency Local Agency Figure 10-1: A&E Contract Procurement Process Workflow Diagram Local Agency ( )<===> ]<===> [ ] <===> Local Assistance Procedures Manual Chapter 10 Consultant Selection Page vi of viii January 2018 Solicitation Documents and Advertisement 4 5 6 *Determine Solicitation Document; RFP or RFQ *Appoint Consultant Selection Committee *Collect signed Conflict of Interest forms and Confidentiality Statements (see Exhibit 10-T: Panel Member Conflict of Interest & Confidentiality Statement) from all committee members *Determine Procurement Schedule *Develop Technical Criteria with level of importance (weights) for Evaluation of Proposals or the SOQ *Prepare RFP or RFQ documents *Include SOW, evaluation process/criteria, DBE goals, MOP and cost proposal format (see Exhibit 10-H: Sample Cost Proposal) minimum requirement of Proposal or SOQ, Notice to Proposers DBE Information (see Exhibit 10-I: Notice to Proposers DBE Information), submittal deadline *Advertise RFP or RFQ on public forum (newspaper, technical publications, Web Hosting Site, other local websites) *Issue RFP or RFQ (direct mailing, web posting) *Prepare to respond to RFP/RFQ questions *Conduct Proposers Conference, if applicable *Receive Proposals or SOQs A&E = Architectural and Engineering A&I = Caltrans Audits and Investigations CT = Caltrans DBE = Disadvantaged Business Enterprise DLA = Division of Local Assistance DLAE = District Local Assistance Engineer DLA-HQ = Division of Local Assistance-Headquarters LAPG = Local Assistance Program Guidelines LAPM = Local Assistance Procedures Manual MOP = Method of Payment RFP = Request for Proposal RFQ = Request for Qualifications SOQ = Statement of Qualifications SOW = Statement/Scope of Work Local Agency Local Agency Local Agency Figure 10-1: A&E Contract Procurement Process Workflow Diagram- continued [ ]<====> [ )<====> ( )<==> Local Assistance Procedures Manual Chapter 10 Consultant Selection Page vii of viii January 2018 Evaluation and Selection of Consultant Contract Negotiation 7 8 9 *Distribute Proposals or SOQs to Selection Committee members *Ensure Committee members receive the appropriate score sheet to use (see Exhibit 10-B: Suggested Consultant Evaluation Sheet) *Convene Selection Committee and evaluate submittals; Perform reference checks *Develop Final Ranking or Short List for Interviews *Notify proposers of ranking/Short List *Retain all original score sheets and summaries *Send out Invitations to Short List for Interviews *Conduct Interview of Short List *Develop Final Ranking of Consultants, and notify all interviewees *Retain all original score sheets and summaries *Provide a copy of Standard Contract language to top ranked consultant and invite for negotiations (see Exhibit 10-R: A&E Sample Contract Language for standard contract language and provisions) *Open and analyze cost proposal from the Highest Ranked firm *Initiate CT A&I Financial Review Section (LAPM Section 10-3) and send documents ( Exhibit 10-K: Consultant Certification of Contract Costs and Financial Management System) and/or Consultant Audit Request Letter and Checklist request ( Exhibit 10-A: A&E Consultant Audit Request Letter and Checklist), if applicable, to Caltrans A&I *Review and evaluate Exhibit 10-A and supporting documents, if applicable *Issue Financial Review Letter, if applicable *Perform contract audits and reviews, if applicable, or review of CPA audited ICR workpapers to issue Cognizant Letter of Approval A&E = Architectural and Engineering A&I = Caltrans Audits and Investigations CT = Caltrans DBE = Disadvantaged Business Enterprise DLA = Division of Local Assistance DLAE = District Local Assistance Engineer DLA-HQ = Division of Local Assistance-Headquarters LAPG = Local Assistance Program Guidelines LAPM = Local Assistance Procedures Manual MOP = Method of Payment RFP = Request for Proposal RFQ = Request for Qualifications SOQ = Statement of Qualifications SOW = Statement/Scope of Work Local Agency Local Agency Local Agency Caltrans A&I Figure 10-1: A&E Contract Procurement Process Workflow Diagram- continued l J <===> J<====>[ J<===> - ( ) Local Assistance Procedures Manual Chapter 10 Consultant Selection Page viii of viii January 2018 Contract Negotiation Contract Execution 10 11 12 *Negotiate contract costs with the most qualified Consultant *Prepare and retain record of cost negotiations *Receive and analyze findings of the Financial Review Letter from CT A&I, if any *Address and resolve all findings by A&I and incorporate into final contract and cost proposal *If negotiations with First ranked firm is unsuccessful, formally terminate cost negotiations with Consultant and begin Step 9 with next ranked consultant *Finalize contract, cost proposal *Prepare Contract Approval Checklist (Exhibit 10-C: A&E Consultant Contract Reviewers Checklist) *Retain copy of contract Financial Review Letter with acceptance, denial, or adjustment of the ICR *Send Exhibit 10-C to DLA-HQ for acceptance prior to award *Retain acceptance of Exhibit 10-C from DLA-HQ *Sign and Execute contract *Offer and conduct debriefing meetings with consultant who asked for one *Send copies of executed contract and DBE Commitment (Exhibits 10- O1: Consultant Proposal DBE Commitment and Exhibit 10-O2: Consultant Contract DBE Commitment) to DLAE *Close out contract procurement process *Prior to concurring with invoice payment related to consultant services, ensure that district confirms acceptance of Exhibit 10- C and has a copy of the executed consultant contract on file and 10- O1 and 10-O2. Also, check A&I database to ensure that LAPM Exhibit 10-K: Consultant Certifcation oif Contract Costs and Finanical Management System, if applicable, has been received by A&I *Perform Incurred Cost Audit, if selected A&E = Architectural and Engineering A&I = Caltrans Audits and Investigations CT = Caltrans DBE = Disadvantaged Business Enterprise DLA = Division of Local Assistance DLAE = District Local Assistance Engineer DLA-HQ = Division of Local Assistance-Headquarters LAPG = Local Assistance Program Guidelines LAPM = Local Assistance Procedures Manual MOP = Method of Payment RFP = Request for Proposal RFQ = Request for Qualifications SOQ = Statement of Qualifications SOW = Statement/Scope of Work Local Agency Local Agency Local Agency Caltrans A&I DLAE Figure 10-1: A&E Contract Procurement Process Workflow Diagram- continued <===> [ [ [ ] Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 1 of 58 January 2018 Chapter 10 Consultant Selection 10.1 GENERAL Introduction A local agency may engage consultants to perform architectural, engineering, and related services to develop a federal-aid or state funded project. Those private consulting firms providing architectural, landscape architectural, engineering, environmental, land surveying, construction engineering, or construction project management services are termed Architectural and Engineering (A&E) Consultants. Local agencies requesting federal or state funds to reimburse A&E Consultants must follow the selection and contracting procedures detailed in this chapter. Architectural and Engineering Consultants The Brooks Act (40 USC, Section 1104) requires local agencies to award federally funded engineering and design related contracts based on fair and open competitive negotiations, demonstrated competence, and professional qualifications (23 Code of Federal Regulations (CFR), Part 172), at a fair and reasonable price (48 CFR 31.201-3). Cost proposals submitted to the local agency, if above the small purchase procurement threshold, must be sealed and may not be included as a criterion for rating such consultants. After ranking, cost negotiations may begin with the most qualified consultant and only their cost proposal will be opened. Should negotiations fail or result in a price that the local agency does not consider fair and reasonable, negotiations must be formally terminated and the local agency 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 local agency 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 local agency. 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 websites below:  DIR FAQ website: http://www.dir.ca.gov/OPRL/FAQ_PrevailingWage.html  DIR Wage Determination website: http://www.dir.ca.gov/oprl/DPreWageDetermination.htm Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 2 of 58 January 2018 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. The Brooks Act and the audit and review process for approving ICR’s described in Section 10.3: A&E Consultant Audit and Review Process of this chapter are optional for non A&E Consultant contracts. Non-A&E contract procurement on highway projects must also comply with California State Public Contract Code, Section 10335-10381. For more details on non-A&E consultants, see Section 10.10Section 10.10: Non-A&E Consultants of this chapter. Selecting the Project The local agency is responsible for selecting and initiating a federal-aid or state 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 local agency 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 local agency. 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 local agency. The subcontract must contain all required provisions of the prime contract. Organizational and Consultant Conflicts of Interest In the procurement of contracts for engineering services by private consulting firms using federal-aid highway or state funds, local agencies must take all the steps necessary to prevent fraud, waste, and abuse. The local agency must develop and maintain a written code of conduct governing the performance of its employees engaged in the award and administration of federal-aid highway funded contracts, including the prevention of conflicts of interest. 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 1.33) Requires that:  No contracting agency employee who participates in the procurement, management, or administration of federal or state funded contracts or Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 3 of 58 January 2018 subcontracts shall have, directly or indirectly, any financial or other personal interest in connection with such contract or subcontract;  No person or entity performing services for a contracting agency in connection with a federal or state funded project shall 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 shall have, directly or indirectly, any financial or other personal interest in any real property acquired for the project. Consultants Performing Work on Multiple Phases of Federal-aid Projects Local agencies sometimes wish 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 local agencies are responsible for ensuring the public interest is maintained throughout the life of a project and that a conflict of interest, direct or indirect, 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 Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 4 of 58 January 2018 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 Management Support Role Conflict of Interest and Confidentiality Statement (see Section 10.9: Miscellaneous Considerations in this chapter) and retain it in the local agency files. Section 10.9: Miscellaneous Considerations Authorization to Proceed The Federal Highway Administration (FHWA) must give the local agency an Authorization to Proceed (E-76) with the work prior to performing of any work for which federal reimbursement is to be requested, (see the LAPM Chapter 3: Project Authorization). For state funded projects see the Local Assistance Program Guidelines (LAPG), Chapter 23: Local Agency State Transportation Improvement Program Projects, for guidance on when work may proceed. Copies of the Authorization to Proceed and the consultant contract must be retained in the local agency project files for future audit. 10.2 IDENTIFYING & DEFINING A NEED FOR CONSULTANTS The need for a consultant is identified by comparing the project’s schedule and objectives with the local agency’s capabilities, its staff availability of the required expertise, and its funding resources. If the local agency 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 local agency determines that there is a need to solicit assistance from another local agency, or to use a consultant, the District Local Assistance Engineer (DLAE) should be notified if federal-aid or state funds are to be requested for the project segment to be contracted out. Appointing the Contract Administrator The Contract Administrator is responsible for ensuring the quality of consultant contract products or services. The Contract Administrator is appointed 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 local agency 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 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. Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 5 of 58 January 2018 The Contract Administrator’s duties include, but are not limited to:  Ensures that all records, files and other documents related to contract procurement and management activities are retained in contract/project files;  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 local agency’s primary contact person for the successful consultant;  Monitors the consultant’s progress and provides direction;  Reviews and approves the consultant’s invoices and/or progress payments to ensure that billings are in accordance with the terms and conditions of the contract, and correspond accurately to the work performed during the billing period;  Identifies other local agency 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). Determining the Project Schedule The local agency 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. Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 6 of 58 January 2018 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 and Standard Environmental Reference (SER) Chapters 31: Environmental Assessment (EA) and Finding of No Significant Impact (FONSI) and Chapter 32: Environmental Impact Statement (E)). Final detailed design shall not begin until environmental clearance has been received if federal reimbursement is desired. Refer to Figure 10-2: Segmenting Consultant Work below, which illustrates several satisfactory ways to segment consultant activities. Figure 10-2: 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 Wt>U -tl'UCtlll 't>cl Wt>U-tructuncl More , ery Project Projects Difficult Complex With S imple With Co mplex Projects Projects Right of Way Right of Way Requirements Requirements Preliminary Engiut>t>ring ! Environmt>nta l Aua ly is I I Plans, S pecifications I I &Estimate Right of Way Activitie I I I I "tility Reloc ation I I I I I I Co n truction E ngineering Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 7 of 58 January 2018 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. Non-Discrimination Clause The Non-Discrimination Clause (Exhibit 10-R: A&E Sample Contract Language, Article XVI Statement of Compliance) must be included in each consultant contract. The consultant must include the nondiscrimination and compliance provisions of the Non-Discrimination Clause in all subcontracts to perform work under the contract. Disadvantaged Business Enterprise (DBE) Participation When administering federal-aid projects, federal regulations (49 CFR, Part 26) require a local agency to comply with the DBE program, and take necessary steps to ensure that DBE firms have the opportunity to participate in the projects. Such steps include the setting of goals to ensure DBE firms are considered by the proposing consultants and, when feasible, organizing the project schedule and task requirements to encourage participation in the contract by DBE firms. Local agencies should be fully aware of all of the subcontracting opportunities in their consultant contracts. For detailed information and requirement on the DBE Program, see LAPM Chapter 9: Civil Rights and Disadvantaged Business Enterprises. The consultant must ensure that certified DBE firms have the opportunity to participate in the performance of the contract and must take all necessary and reasonable steps to facilitate participation by DBE firms for such assurance. A DBE goal must be established by the local agency for each contract.. Exhibit 10-I: Notice to Proposers DBE Information must be included in the RFQ or RFP if the proposed contract will include federal-aid funds. The consultant must meet the goal by using DBEs, or if not able to meet the DBE goal, document that a good faith effort was made to meet the contract goal. Good faith efforts must be documented by the consultant and approved by the local agency (see Exhibit 15-H: DBE Information-Good Faith Efforts). If the consultant’s documented good faith efforts are found to be inadequate by the local agency, the consultant must be offered an opportunity for reconsideration. If a DBE subconsultant is unable to perform its subcontracted services and the goal is not otherwise met, the consultant must make a good faith effort to replace it with another DBE subconsultant to the extent needed to meet the DBE goal. For more detailed information see Exhibit 10-I. A contract provision for DBE Participation must be included in all consultant contracts with federal-aid funds. For sample contract clauses with and without specified DBE goals see Exhibit 10-R, Article XX Disadvantaged Business Enterprise (DBE) Participation. Reporting DBE Commitments and DBE Information For Contracts with DBE Goals:If the local agency has set a DBE goal, Exhibit 10-O1: Consultant Proposal DBE Commitment must be included in the proposal package provided to the local agency by each (prime consultant) proposer. The purpose of Exhibit 10-01 is to demonstrate the Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 8 of 58 January 2018 proposer’s commitment to meet the DBE goal set by the local agency. Exhibit 10-O2: Consultant Contract DBE Commitment, must be completed at the conclusion of cost negotiations, incorporated into the final agreement and a copy sent the DLAE. The purpose of this form is to capture DBE participation in accordance with 49 CFR, Part 26. This form must include the names, addresses, and phone numbers of DBE firms that will participate with a complete description of work or supplies to be provided by each, and the dollar value of each DBE transaction. When 100 percent of a subcontracted item of work is not to be performed or furnished by the DBE firm, a description of the exact portion of work to be performed or furnished by that DBE must be included in the DBE commitment, including the planned location of that work. A proposer certified as a DBE firm must describe the work it has committed to be performed with its own forces, as well as any other work that it has committed to be performed by the DBE subconsultant, suppliers, and trucking companies. The winning proposer must provide written confirmation from each DBE firm participating in the contract. A copy of a DBE’s quote will serve as written confirmation that the DBE is participating in the contract. If a DBE is participating as a joint venture partner, the proposer must submit a copy of the joint venture agreement. For Contracts with No DBE Goals: For contracts with no DBE contract goal, Exhibit 10-O1: Consultant Proposal DBE Commitment is not necessary and only Exhibit 10-O2: Consultant Contract DBE Commitment must be included in the award package and provided by the winning proposer. Reporting DBE Final Utilization (Contracts with or without Goals): Upon completion of the contract a summary of the DBE final utilization must be prepared, certified correct, and submitted on Exhibit 17-F: Final Report-Utilization of Disadvantaged Business Enterprise (DBE) and First-Tier Subcontractor or equivalent to the local agency showing total dollars paid to each subconsultant and supplier. Exhibit 17-F is reviewed by the local agency and certified as complete and accurate. The local agency must send the original, plus one copy of the completed Exhibit 17-F with the final invoice to the DLAE within 30 days after completion of the contract. 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 is prepared in advance of requesting a cost proposal from the top-ranked consultant, so the local agency’s negotiating team has a cost analysis of the project to evaluate the reasonableness of the consultant’s cost proposal. The estimate, which is specifically for the use of the local agency’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 Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 9 of 58 January 2018 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. 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. 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 local agency and consultant for the performance of services and a defined scope of work related to a specific project or projects.  Multi-purpose or Multi-phased 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 for a number of projects, under which task or work orders are issued on an as-needed basis, for an established contract period. On-call contracts are typically used when a specialized service of indefinite delivery or indefinite quantity are 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 Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 10 of 58 January 2018 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 shall specify a reasonable maximum length of contract, not to exceed 5 years, and a maximum total contract dollar amount (23 CFR 172).  To maintain the intent of the Brooks Act (40 USC 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: o Must define a general scope of work, complexity, and professional nature of services. o Specify a task order procedure the local agency uses to procure project specific work under the contract. o No task order is valid unless the on-call contract is still enforced. For example, if the on call contract is expired, all task orders will become invalid. o If multiple consultants are to be selected and multiple on-call contracts awarded through a single solicitation for specific services: o Identify the number of consultants that may be selected or contracts that may be awarded.  Specify procedures in the contracts the local agency will use to award/execute task orders among the consultants:  Either through an additional qualification-based selection process (see the Two-Step RFQ/RFQ 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. Determine Method of Payment The method of payment of contract must be specified. Four methods are permitted depending on the scope of services to be performed:  Actual Cost-Plus-Fixed Fee (see Exhibit 10-H: Sample Cost Proposal, Example #1);  Cost Per Unit of Work (see Exhibit 10-H, Example #3);  Specific Rates of Compensation (see Exhibit 10-H, Example #2);  Lump Sum (see Exhibit 10-H, Example #1). Actual Cost-Plus-Fixed Fee The consultant is reimbursed for actual costs incurred and receives an additional predetermined amount as a fixed fee (profit). Federal regulations require that profit be separately negotiated Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 11 of 58 January 2018 from contract costs. The determination of the amount of the fixed fee shall 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. This method of payment is appropriate when the extent, scope, complexity, character, or duration of work cannot be precisely predicted. Fixed fees apply to the total direct and indirect costs. The contract shall specify a reasonable maximum length of contract period and a maximum total contract dollar amount (see Exhibit 10-H: Sample Cost Proposal Example #1 and Exhibit 10-R: A&E Sample Contract Language, Article V, Option 1 in this chapter). The contract cost proposal must identify all key employees and/or classifications to be billed. New key employees and/or classifications must be approved before they incur work on the contract or the costs can be questioned or disallowed. 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 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 shall also specify a reasonable maximum length of contract period and a maximum total contract dollar amount (see Exhibit 10-H, Example #3 and Exhibit 10-R, Article V Option 2). Specified 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. 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 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 consultant’s level of effort and the classification of employees used to perform the contracted work. The contract shall also specify a reasonable maximum length of contract period and a maximum total contract dollar amount (see Exhibit 10-H , Example #2 and Exhibit 10-R, Article V, Option 3). Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 12 of 58 January 2018 Lump Sum or Firm Fixed Price 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-H: Sample Cost Proposal, Example #1 and Exhibit 10-R: A&E Sample Contract 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 shall be based on percent of work complete or completion of clearly defined milestones. The contract cost proposal shall document the agreed upon progress payment and include the necessary milestones costs, or the percent work complete schedule. 10.3 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 funds. All proposed A&E contracts and supporting documents are subject to audit or review by Caltrans’ Independent Office of Audits and Investigations (A&I), 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. The local agencies, consultants, and subconsultants are responsible for complying with state, federal and specific contract requirements. Local agencies 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 the local agency and Caltrans, i.e. Master Agreements;  Project Program Supplemental Agreements;  23 United States Code (U.S.C.), Section 112 – Letting of Contracts;  40 U.S.C., Chapter 11: the Brooks Act;  23 CFR, Chapter 1, Part 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, Chapter 1, Part 31- Contract Cost Principles and Procedures;  48 CFR, Chapter 99 – Cost Accounting Standards (CAS), Subpart 9900; Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 13 of 58 January 2018  2 CFR, Part 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 4525-4529; and  Proposed contract terms and conditions. See section 10.10 “References” of this Chapter for links to above referenced standards. AUDIT GUIDANCE AVAILABLE The American Association of State Highway Officials, Uniform Audit & Accounting Guide (AASHTO Audit Guide), which is referred to frequently in this section, is an invaluable tool to guide local agencies, consultants and certified public accountants (CPA) through the requirements for establishing, and audits of, FAR compliant Indirect Cost Rate (ICR). The AASHTO Audit Guide is used extensively as an industry guide in the audit and review process. The local agency may seek financial and accounting assistance from its own internal audit staff and independent CPAs for compliance. The consultant may seek professional guidance in selecting its independent CPA. See also the AASHTO Audit Guide, Ch 2.5 C. Selection of CPA Firm as Overhead Auditor for guidance in the selection process. Training is also offered by FHWA’s National Highway Institute (see http://www.nhi.fhwa.dot.gov/default.aspx). Courses offered include:  Using the AASHTO Audit Guide for the Procurement and Administration of A&E Contracts (FHWA-NHI-231028)  Using the AASHTO Audit Guide for the Development of A&E Consultant Indirect Cost Rates (FHWA- NHI-231029)  Using the AASHTO Audit Guide for the Auditing and Oversight of A&E Consultant Indirect Cost Rates (FHWA-NHI-231030) If consultants seek training that provides resources on how to build an ICR and basic timekeeping, there are Indirect Cost Rate and Timekeeping webinars created by the Washington State Department of Transportation (WA DOT). The link to the webinars is available at http://www.dot.ca.gov/hq/audits/. For training and additional information provided by the Caltrans Local Assistance, visit Caltrans Local Assistance Blog at http://www.localassistanceblog.com/. For FHWA’s Q&A for ICRs and audits, and A&E related services, visit FHWA at http://www.fhwa.dot.gov/programadmin/172qa.cfm. ALLOWABLE COSTS 23 USC 112 (b)(2)(B) provides that any A&E contract or subcontract awarded, whether funded in whole or in part with Federal-aid highway funds in furtherance of highway construction projects, shall be performed and audited in compliance with the Federal cost principles. Local agencies are required to perform a cost analysis to ensure all costs are Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 14 of 58 January 2018 allowable in compliance with federal and state requirements and retain documentation of negotiation activities and resources. Hourly rate(s) for each key personnel and/or classification of employee(s) proposed in cost proposals must be reasonable for the work performed and actual, allowable, and allocable in accordance with the Federal cost principles. Costs shall be allowable only if the cost is incurred and cost estimates included in negotiated prices are allowable in accordance with the federal and state regulations and procedures, and contract provisions. Local agency may use a sample Cost Analysis Worksheet (See Exhibit 10-H1 through 4). Indirect costs incurred by local agencies are required to apply consultant or subconsultant’s ICR, which has been accepted by Caltrans to contracts. An ICR is valid for the one-year applicable accounting period. ICRs shall be updated on an annual basis in accordance with the consultant’s annual accounting period and in compliance with the Federal cost principles. For further guidance, refer to 23 CFR Part 172.11(b)(1). If the firm is subject to CAS, the firm must use the applicable indirect cost rate for the contract. A consultant’s accepted ICR for its one-year applicable accounting period shall be applied to contracts; however, once an ICR is established for a contract, it may be extended beyond the one-year applicable period, through the duration of the specific contract, provided all concerned parties agree. Agreement to the extension of the one-year applicable period shall not be a condition or qualification to be considered for the work or contract award. The contract must clearly specify the ICR period if it is beyond the one-year applicable period and agreed by all concerned parties. Consultants shall account for costs appropriately and maintain records, including supporting documentation, adequate to demonstrate that costs claimed have been incurred, are allocable to the contract, and comply with the Federal cost principles. A&I and representatives of the Federal Government have the right to conduct an audit of all costs. If the costs are subsequently determined to be unallowable, these costs are subject to repayment. For further guidance, refer to 23 CFR Part 172 and 48 CFR Part 31. Generally, whenever the local agencies, consultants and contractors are unable to provide requested information, it shall be viewed that the required actions were either never performed or not properly recorded. Therefore, retention of all the relevant documents is not only required but also important as it minimizes negative findings, disallowed costs and assumptions. For more references, refer to Applicable Standards in this chapter. APPROVAL OR ACCEPTANCE OF INDIRECT COST RATES Cognizant Letters of Approval A cognizant approved ICR refers to the ICR established by an audit in accordance with GAGAS or CPA Workpaper Review in accordance with GAGAS to test compliance with the Federal cost principles and accepted by a cognizant agency. Once reasonable assurance is obtained, the cognizant agency establishes and approves the ICR and a cognizant approval letter is issued. A cognizant agency may be the home state Department of Transportation (DOT) (the state where the consultant’s accounting and financial records are located), a federal agency, or a State transportation agency to which Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 15 of 58 January 2018 cognizance for the particular ICRs of a consulting firm has been delegated or transferred in writing. When providing cognizant ICR approval, the cognizant agency may perform either an ICR audit or review of an audit report and related work performed by, and the workpapers prepared by a CPA in accordance with GAGAS. Caltrans Acceptance of Indirect Cost Rate When the ICRs have not been established by a cognizant agency, Caltrans shall perform an audit or review of a consultant’s and subconsultant’s ICR to provide reasonable assurance of compliance with the Federal cost principles. An audit or review may consist of one or more of the following:  Conduct a risk-based review of the ICR calculation and supporting documents;  Perform an audit in accordance with GAGAS and issuing an audit report;  Review and accept an audit report and related workpapers prepared by a CPA or another State Transportation Agency; The outcome of an audit or review is for Caltrans to approve or accept the ICR so that it can be relied upon for future contracts with the consultant for a given one-year accounting period and for reliance by other contracting agencies using the same consultant. Local agencies shall ensure that only approved or accepted ICRs of consultants for the applicable one-year accounting period be applied to contracts, if rates are not under dispute. Local agencies may check A&I’s website for consultant’s approved or accepted ICRs. All approved or accepted ICRs are issued an Acceptance Identification (ID) number by A&I that is posed to A&Is website at http://www.dot.ca.gov/hq/audits/. This ID number should be referenced on all future contracts that use the same fiscal year ICR. ICRs that have not been accepted by Caltrans will not be eligible for indirect cost payment. An ICR approved by a cognizant agency may be used across states for the one-year applicable accounting period but an ICR accepted by Caltrans may only be applied to A&E contracts entered into with the Caltrans and local agencies. Local agencies include Cities, Counties, Metropolitan Planning Organization, Special Districts, and Regional Transportation Planning Agency that receive federal funds from Caltrans. Financial Review Performed Prior to Contract Execution All consultants, including prime and subconsultants, on a proposed contract with a dollar value greater than $150K are subject to a financial review of the ICR by A&I. The financial documents required are detailed in the Exhibit 10-A, A&E Consultant Financial Review Request Letter and Exhibit 10-A Checklist. A&I will review the ICR financial documents to either accept, adjust, or reject the rate prior to contract execution using a risk-based approach as dictated by factors that include but are not limited to:  History of satisfactory performance and professional reputation of consultant;  Prior FAR compliant history and audit frequency;  Financial stability;  Conformance to terms and conditions of previous contracts;  General responsiveness and responsibility;  The approximate dollar amount of all A&E contracts awarded to the consultant by Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 16 of 58 January 2018 Caltrans or a local agency in California within the last three calendar years;  The number of states in which the consultant does business;  The type and complexity of the consultant’s accounting system;  The relevant professional experience of any CPA performing audits of the consultants indirect cost rate;  Assessment of consultant’s internal control. Responses to internal control questionnaire, see AASHTO Audit Guide, Appendix B;  Stability of organizational staffing. For ICRs that have been adjusted or rejected by A&I, the consultant must provide a revised cost proposal that reflects the adjusted or excluded indirect costs. Local Agencies’ Responsibilities Local Agencies are responsible for obtaining all required ICR supporting documentation from A&E prime consultants and sub-consultants as outlined in Exhibit 10-A (A&E Consultant Audit Request Letter) and the Exhibit 10A-Checklist. Local Agencies are responsible for forwarding these documents to A&I for review and acceptance of the ICR. Local agencies are also required to ensure that A&I has copies of the Exhibit 10-K “Consultant Certification of Contract Costs and Financial Management System” and Exhibit 10-H “Cost Proposal” for all consultants, both prime and sub-consultants. The ICR included in Exhibit 10-H must match the ICR included in the Exhibit 10-K and the consultant’s ICR schedule. For contracts spanning more than one year, local agencies are responsible for ensuring the Exhibit 10-K and cost proposals are updated annually unless all concerned parties agree to fix the ICR for the term of contract, and this is clearly specified in the contract. The Exhibit 10-H “Cost Proposal” includes contract costs: direct salary or wage rates, fixed fees, other direct costs, indirect costs, total costs, and certification for the costs. Local agencies must perform and retain documentation of activities and resources used to support that a cost analysis has been performed to establish that costs and elements were determined to be fair and reasonable in accordance with Federal cost principles. All contract supporting documentation must be retained by the local agency in project files for the required retention period. Unsupported costs may be disallowed and required to be returned to Caltrans. Having proper documentation policy and procedures, trained staff and organized project files are essential for demonstrating that costs claimed and reimbursed have been incurred, are eligible, allowable, and allocable to the contract and comply with federal cost principles. Contracts below $150,000 are not subject to the Caltrans Financial Document Review but local agencies are required to establish that all costs are in compliance with the Federal cost principles, 23 CFR Part 172 and other applicable requirements are met. All documents listed above and cost analysis documents are required to be retained in the project files to demonstrate compliance. Consultants’ Responsibilities (Both prime consultants and subconsultants) A&E prime consultants and sub-consultants in contract with local agencies using state or federal-aid highway fund should refer to Exhibit 10-A and the 10-A Checklist for the ICR Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 17 of 58 January 2018 financial documents required to be submitted to their local agency for forwarding to A&I. Consultants must complete the “Annual Certification of Indirect Costs and Financial Management System” (Exhibit 10-K) that attests that the ICR rate proposed is in compliance with FAR (48 CFR Part 31) and that the consultant’s financial management system is adequate to accumulate and segregate, reasonable, allowable and allocable direct and indirect project costs. For all future contracts in one fiscal year, the consultant need only provide a copy of the Exhibit 10-K to the Local Agency. The Exhibit 10-A and 10-K should be submitted to the local agency who will forward a copy to A&I along with all other related and required financial documents. Consultants must also follow all the federal, state, and contract requirements outlined above in the Section above, “Applicable Standards”. Each contracting consultant must ensure its ICR is not combined with any parent company’s or subsidiaries’ ICR. ICR schedules should be prepared using the accrual basis of accounting and presented in compliance with the Federal cost principles for both the prime consultant and subconsultants. All workers employed on public works project must be paid the prevailing wage rate determined by the Director of the Department of Industrial Relations according to the type of work and location of the project. http://www.dir.ca.gov/Public- Works/Prevailing- Wage.html. Prime and subconsultant consultants must include prevailing wage rate information in the cost proposal (see Exhibit 10-H1-3 for example) and provide a Prevailing Wage Rate Policy on company letterhead, signed and dated. The policy must document their accounting treatment for prevailing wage deltas and including the following information:  Description of types of work they perform which require payment of prevailing wage rates  Explanation of how the firm pays prevailing wage deltas to affected employees (e.g. pay directly to employee as single amount to cover delta base and delta fringe, pay delta base to employee and pay delta fringe amount to a third party plan, etc.)  Accounting method used for prevailing wage delta base costs  Accounting method used for prevailing wage delta fringe costs  Effect on firm’s most recently completed indirect cost rate For guidance see Caltrans’ Prevailing Wage Interpretive Guidance on A&I’s website www.dot.ca.gov/audits Consultant’s labor distribution summary report is a labor expense report that detail all hours worked (paid and unpaid), wages earned, and benefits accrued by all of the consultant’s employees. The labor summary report should detail, but not be limited to, employee names, salaries, hourly rates, total hours worked, direct hours, indirect hours by type, general ledger accounts, paid time off hours, uncompensated hours and amounts, etc. Executive compensation analysis is an evaluation by the consultant to determine the allow ability and reasonableness of executive compensation in compliance with the Federal cost principles and AASHTO Audit Guide. The executive compensation analysis using the Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 18 of 58 January 2018 National Compensation Matrix or independent compensation surveys demonstrates and supports the allow ability and reasonableness of executive compensation. Audits and Investigations’ Responsibilities After A&I receives a complete financial document packet (per Exhibit 10-A) from the local agency, A&I will review the consultants’ proposed ICR and supporting documents and then notify consultants and local agencies in writing whether the proposed ICRs are accepted, adjusted, or denied. Caltrans A&I and representatives of the federal government have the right to conduct a final audit of all costs. If the costs are subsequently determined to be unallowable, these costs are subject to repayment. Contracts will be executed after A&I either accepts, adjusts, or rejects the ICR and a revised final cost proposal (if applicable) is received. Correction of the final cost proposal, however, does NOT need to be cleared through Caltrans A&I before executing the contract. The letter of acceptance along with the executed contract shall be retained in the project file. Failure to reflect the adjusted or denied ICR in a revised final cost proposal may result in the disallowance of costs. Instructions are provided in the Exhibit 10-A on how to submit a complete Financial Review packet. Submit documents for Financial Review requests to conformance.review@dot.ca.gov. Alternatively, if you do not have Internet access, you can mail Financial Review packets to Caltrans’ A&I mailing address: Department of Transportation Independent Office of Audits and Investigations, MS 2 Attention: External Audit Manager P.O. Box 942874 Sacramento, CA 94274-0001 AUDITS AND REVIEWS TO BE PERFORMED An audit, as defined in 23 CFR 172.3, is defined as a formal examination, in accordance with professional standards of a consultant’s accounting systems, incurred cost records, and other cost presentations to test the reasonableness, allow ability, and allocability of costs in accordance with the Federal cost principles (as specified in 48 CFR part 31.) AASHTO Audit Guide Chapter 1.3 defines an audit as a formal examination, in accordance with professional standards, of accounting systems, incurred cost records, and other cost presentations to verify their reasonableness, allowability, and allocability for negotiating agreement fees and for determining allowable costs to be charged to government contracts. Audit objectives include the identification and evaluation of all activities that contribute to, or have an impact on, proposed or incurred costs related to government contracts. Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 19 of 58 January 2018 Indirect Cost Rate Audits During an ICR audit, the auditors (A&I or independent CPAs) will examine the consultant’s proposed ICR for the applicable one-year accounting period on the proposed contract to ensure that unallowable costs have been removed from the indirect costs, that allowable costs have been correctly measured and properly charged and allocated, and that the ICR has been developed in accordance with the Federal cost principles (as specified in 23 U.S.C. Section 112(b)(2)(B), 23 CFR Part 172.11, 48 CFR Part 31 and other FAR and State requirements. As a result of the audit, the local agency will work with the consultant to adjust the ICR and contract costs, if applicable, where disallowed costs are identified based on audit recommendations. For guidance regarding the existing policies and procedures set forth in the federal regulations, and acceptable ICR schedules, refer to the AASHTO Audit Guide, Chapter 5, and Figure 10-3 Standard Indirect Cost Rate Schedule in this Chapter. The review program in the AASHTO Audit Guide, Appendix A, should be used as a guide in performing ICR audits. This review program is used for reviews of CPA audited ICR workpapers. CPA Workpaper Reviews During a workpaper review of a CPA audit of an ICR, A&I will review the CPA’s audit workpapers to determine whether it is appropriate to issue a Cognizant Letter of Approval or accept the ICR. The CPA Workpaper Review is conducted to determine whether: (a) the CPA’s audit of the ICR was conducted in accordance with generally accepted government auditing standards (GAGAS), (b) the CPA adequately considered the auditee’s compliance with the Federal cost principles and related federal and state laws and regulations, and (c) the audit report format and contents are acceptable. Figure 10-3 Standard Indirect Cost Rate Schedule provided at the end of this chapter provides required format and contents. Chapter 11 of the AASHTO Audit Guide provides information for the audit and required disclosures. CPAs are required to furnish copies of their workpapers as requested. A CPA Workpaper Review may apply to all contracts selected for review. The outcome of the CPA Workpaper Review is a Cognizant Letter of Approval or Caltrans Acceptance of ICR. The review program in the AASHTO Audit Guide, Appendix A, is used in performing CPA Workpaper Reviews. IMPORTANT NOTE FOR CPAs: Contracts receiving state or federal funds are highly scrutinized. Materiality levels tend to be lower and more testing is required. GAGAS provides that auditors may find it appropriate to use lower materiality levels as compared with the materiality levels used in non-GAGAS audits because of the public accountability of government entities and entities receiving government funding, various legal and regulatory requirements, and the visibility and sensitivity of government programs. Use of the AASHTO Audit Guide should be used as a tool for performing audits and attestations of A&E firms. Contract Audits During a Contract Audit or Review, auditors will review contracts and the consultants’ financial management system and contract cost proposal to determine if:  The consultants’ accounting system is adequate to accumulate and segregate costs; Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 20 of 58 January 2018  Costs are reasonable, allowable, and allocable and are supported adequately;  The contract contains all required fiscal provisions and the provisions are verbatim;  Proper state and federal procurement requirements were followed; and  Other audits/reviews of the contract as necessary. Incurred Cost Audits During an Incurred Cost Audit auditors will review incurred contract costs to determine if:  Cost data are maintained in an acceptable accounting control system that gathers, records, classifies, analyzes, summarizes, and report accurate and timely financial data, which includes subsystems such as project and other direct costs, compensation, billing, and labor.  Costs are adequately supported;  Reasonable, allowable, and allocable;  Compliance with state and federal laws and regulations;  Compliance with the Master Agreement and Supplemental Agreement:  Compliance with the fiscal provisions stipulated in the contract; and  The terms required by the Master Agreement and federal laws and regulations are in the contract. AUDIT FINDINGS AND REVIEW DEFICIENCIES If audited or reviewed, local agencies are responsible for ensuring contracts, cost proposals, and ICR(s) are modified to conform to audit and review recommendations as necessary, and to ensure that audit findings and review deficiencies are resolved in a timely manner. Failure to do so may result in costs being disallowed. The local agencies may be subject to sanctions outlined in LAPM Chapter 20: Deficiencies and Sanctions if the state or federal government determines that any reimbursements to the consultant are the result of the lack of proper contract provisions, unallowable charges, unsupported activities, or an inadequate financial management system. Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 22 of 58 January 2018 FAR Compliant, Inc. - Statement of Direct Labor, Fringe Benefits, and General Overhead For the year ended December 31, 20xx Description General Ledger Balance Unallowable FAR Reference Total Proposed Home Office Field Office Direct Labor $123,456,789 ($934,568) (1)(15) $122,522,221 $85,765,555 $36,756,666 Fringe Benefits Vacation/Paid Leaves $17,283,950 $17,283,950 $12,098,765 $5,185,185 Payroll Taxes $1,530,864 ($30,617) (15) $1,500,247 $1,050,173 $450,074 Medical Insurance $10,864,197 $10,864,197 $7,604,938 $3,259,259 401K Match $4,938,272 $4,938,272 $3,456,790 $1,481,481 Incentives and Bonus $15,308,642 ($3,123,456) (2) $12,185,186 $8,529,630 $3,655,556 Other Employee Benefits $2,515,280 ($553,433) (3) $1,961,847 $1,373,293 $588,554 Total Fringe Benefits $52,441,206 ($3,707,506) $48,733,700 $34,113,590 $14,620,110 General & Administrative Overhead Indirect Overhead Labor $72,696,030 ($4,452,541) (1)(2)(4)(15) $68,243,489 $65,790,948 $2,452,541 Purchased Labor/Subconsultants $22,433,019 ($22,433,019) (5) $ - $ - $ - Office Rent $12,345,679 ($987,654) (6) $11,358,025 $11,038,025 $320,000 Supplies & Utilities $5,753,086 $5,753,086 $4,027,160 $1,725,926 Postage and Shipping $1,770,000 $321,456 (5) $2,091,456 $1,464,019 $627,437 Equipment and Maintenance $3,812,346 $3,812,346 $2,512,789 $1,299,557 Depreciation Expense $6,202,469 ($1,345,678) (7) $4,856,791 $3,205,482 $1,651,309 Interest $123,456 ($123,456) (8) $ - $ - $ - Dues and Subscription $123,456 ($12,345) (9) $111,111 $77,778 $33,333 Advertising & Marketing $427,406 ($45,678) (10) $381,728 $267,210 $114,518 Vehicles $5,896,123 ($147,403) (5)(11)(14) $5,748,720 $4,024,104 $1,724,616 Bad debts $12,345 ($12,345) (12) $ - $ - $ - Legal and Accounting Services $3,713,580 ($222,815) (13) $3,490,765 $3,490,765 $ - Fines and Penalties $80,000 ($80,000) (16) $ - $ - $ - Total General & Admin. Overhead $135,388,995 ($29,541,478) $105,847,517 $95,898,280 $9,949,237 Total Indirect Costs $154,581,216 $130,011,870 $24,569,347 Indirect Cost Rates 126.17% 151.59% 66.84% Figure 10.3: Standard Indirect Cost Rate Schedule Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 23 of 58 January 2018 FAR References: (1) FAR 31.202: Uncompensated overtime. (2) FAR 31.205-6: Profit distribution and excess of the reasonable compensation. (3) FAR 31.205-46, 31.205-14 & 31.205-51: Meals not for valid business purposes and associated with lobbying and lacking adequate support (4) FAR 31.201-2: Administrative staff costs billed to projects/clients. (5) FAR 31.201-2: Subconsultant labor and other direct costs billed to and paid by contracts/clients. (6) FAR 31.205-36 and 31.205-17: Capital lease costs, rent paid in excess of reasonable costs, and idle facilities and capacity costs. (7) FAR 31.201-2 & 31.205-6: Costs relates to personal use by employees and luxury vehicles. (8) FAR 31.205-20: Interest and other financial costs not allowable. (9) FAR 31.201-2: Non-business related dues and subscriptions. (10) FAR 31.205-1: Costs for advertisement and public relations costs and trade show expense including labor. (11) FAR 31.205-46(d) and 31.205-6(m)(2): Personal use of vehicle and lack of mileage logs and business purpose. (12) FAR 31-205-3: Bad debts and collection costs. (13) FAR 31.205-27 and 31.205-47: Reorganization and capital raising related costs and costs incurred in connection with violation of a law or regulation by the consultant. (14) FAR 31.205-46: Unreasonable costs and costs not supported by documents and lack of business purpose. (15) FAR 31.201-6(a) & CAS 405-40: Labor costs associated with unallowable costs. (16) FAR 31.205-15: Fines and penalties resulting from violations of laws and regulations. Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 24 of 58 January 2018 10.4 CONSULTANT SELECTION METHODS Figure 10-4: Consultant Selection Flowchart shows the three methods normally used in selecting a consultant. They are:  One-Step RFP;  One-Step RFQ;  Two-Step RFQ/RFP. The method used depends upon the scope of work, the services required, the project’s complexity, and the time available for selection of the consultant. In addition, there are other methods used in special situations such as noncompetitive procurement and small purchases under $150,000. Beginning with Section 10.5: Consultant Selection Using the One–Step RFP Method Using the One-Step RFP Method each of the selection methods is explained in detail. Regardless of the method used, the local agency shall retain all consultant selection documentation in their project files as required by 23 CFR Part 172. One-Step RFP The One-Step RFP method may be used for Project–specific contracts when the scope of work is well defined or for Multi-phased contracts where the defined scope of work is divided into phases. Other considerations include when the consultant’s services are highly specialized and there are few qualified consultants. One-Step RFQ The One-Step RFQ method is used when the requested services are specialized, or the scope of work is defined broadly and may include multiple projects. Typical services are preliminary engineering, surveying, environmental studies, preparation of Plans Specifications and Estimate (PS&E) and environmental documents, or construction management. This method or the two step selection process is used for procurement of on-call contract(s). Two-Step (RFQ Followed by RFP) The Two-Step RFQ/RFP method may be used when the scope of work is complex or unusual. This method also may be preferred by local agencies that are inexperienced about negotiations and procedures for establishing compensation. However, the Two-Step RFQ/RFP method is recommended for procurement of multiple on-call contracts, or on-call list, through a single solicitation. For more information, refer to description of on-call contract in Section 10.2: Identifying & Defining a Need for Consultants. This method requires substantially more work and time than the other two methods described above. Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 25 of 58 January 2018 Initiate Project Select Consultants Complete First Step Select Project Set Project Objectives Appoint Contract Administrator Determine Project Schedule Identify need for consultant Define Scope of Consultant Work Specify Products to be delivered Determine Method of Consultant Selection Segment Project Work Establish DBE Goals Estimate Cost of Consultant Work Determine Type of Contract Lump Sum Cost-Plus-Fixed-Fee Cost Per Unit of Work Specific Rates of Compensation Appoint Consultant Selection Committee and Develop Schedule for Selection Appointment Consultant Selection Committee and Development Schedule for Selection Develop Technical Criteria for Evaluation of Proposals Prepare Request for Proposal Advertise for Consultants (RFQ) Appoint Consultant Selection Committee and Develop Schedule for Selection Advertise for Consultants (RFQ) Develop Qualification Criteria for Evaluation of Proposals Develop Qualification Criteria for Evaluation of Proposals Receive Statements of Qualifications Receive Statements of Qualifications Advertise for Consultants Evaluate Statements of Qualifications & Develop Shortlist Evaluate Statements of Qualifications & Develop Shortlist Issue Request for Proposal (RFP) Notify Consultants of Shortlist Notify Consultants of Shortlist Issue Request for Proposal (RFP) Conduct Consultant’s Conference or Answer Written Questions Receive and Evaluate Technical Proposals Interview & Develop Final Ranking of Consultants Notify Consultants of Results *Request Cost Proposal & Negotiate Contract with Top-Ranked Consultant Develop Contract Initiate A&E Consultant Audit Process (Figure 10-2) Negotiate Contract with Next Highest Ranked Consultant until Successful Evaluate Reference Checks & Other Information Gathered Independantly Evaluate Reference Checks & Other Information Gathered Independently Interview & Develop Final Ranking of Consultants Notify Consultants of Results *Request Cost Proposal & Negotiate Contract with Top-Ranked Consultant Develop Contract Initiate A&E Consultant Audit Process (Figure 10-2) Negotiate Contract with Next Highest Ranked Consultant until Successful Interview Top-Ranked Consultants Conduct Consultant’s Conference or Answer Written Questions Receive and Evaluate Technical Proposals Develop Final Interview & Ranking of Consultants Notify Consultants of Results *Request Cost Proposal & Negotiate Contract with Top-Ranked Consultant Develop Contract Initiate A&E Consultant Audit Process (Figure 10-2) Negotiate Contract with Next Highest Ranked Consultant until Successful Evaluate Reference Checks & Other Information Gathered Independently “One-Step, RFP” Method: Request for Proposal followed by Negotiation (Use when there are few consultants) “One-Step, RFQ” Method: Request for Qualifications followed by Interviews and Negotiation (Use when there are many consultants) “Two-Step, RFQ/RFP” Method: Request for Qualifications followed by Request for Proposal and Negotiation (Use when scope of work is complex) Develop Final Contract Execute Contract Issue Notice to Proceed to Consultant Administer Contract Complete Project Conduct Consultant’s Conference or Answer Written Questions Conduct Consultant’s Conference or Answer Written Questions Notify Consultants of Short-List Notify Consultants of ShortList Same as “One-Step RFQ” Method Same as “One-Step RFP” Method Receive Conformance Letter from A&I and Implement Findings Figure 10-4: Consultant Selection Flowchart I I I I I I • c;r I • 1 I I I I • I ~, I I I I .... I ~ .... f-+ .... .... ___,. .... .... ... ... ------I I I I I I I I V I I I I -I I I • I .... I i.- I I I I I i.-I I r I • I I ~~ I I -+ I ~ r I I I • I ~ • I I I -----L---+ .... ~ ~ -f-+ --f---+, ::- I --• + I I I I -I • I I I I I I I I I I I • I I I ~ i._ I I I f I ! ... + I • I I I • ,, + I I I • ~ J. .. ~ .. ... ... ... I • I I-.._ I I I I I Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 26 of 58 January 2018 Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 27 of 58 January 2018 10.5 CONSULTANT SELECTION USING THE ONE-STEP RFP METHOD Of the three methods discussed, this one is most easily modified for non-A&E consulting contracts. For non-A&E consulting contracts, a cost proposal shall be part of the RFP and the selection criteria. For A&E contracts, the cost proposal is not requested until the consultants have been final ranked based upon their submitted technical proposal. Appoint Consultant Selection Committee A consultant selection committee with a minimum of three members is appointed at the beginning of the consultant selection process. The committee reviews materials submitted by consultants, develops a shortlist of qualified consultants, and develops a final ranking of the most qualified proposals. Representation on the committee includes the Contract Administrator and subject matter experts from the project’s functional area. The members should be familiar with the project/segment to be contracted out and with the local agency standards that will be used in the contract. Participation by a Caltrans district representative is at the option of the agency and subject to availability of the DLAE staff. Caltrans participation on the interview panel does not relieve the local agency of its responsibility to ensure that proper procurement procedures are followed and all requirements are met. Local agency Contract Administrator ensures that all committee members meet the conflict of interest requirements (23 CFR 172) by completing and signing a conflict of interest statement prior to selection process initiation. A sample conflict of interest form is provided in Exhibit 10-T: Panel Member Conflict of Interest & Confidentiality Statement. Develop Technical Criteria for Evaluation of Proposals The Contract Administrator is responsible for developing the technical criteria, and their relative importance which are used to evaluate and rank the consultant proposals. The criteria and relative weights must be included in the RFP, and the same criteria and relative weights must be used in the evaluation sheets. Failure to include criteria and relative weights and to use the same criteria and weights during the evaluation will result in the contract costs being ineligible for federal or state reimbursement. Exhibit 10-B: Suggested Consultant Evaluation Sheet is a recommended evaluation sheet with criteria and rating points for A&E consultants, where cost is not used as a rating factor. This format is not mandatory, but it is recommended in the interest of developing consistency among the hundreds of agencies and consultants operating in the state. The local agency should consult with the DLAE before making major changes to the suggested approach. Develop Schedule for Consultant Selection Before the contract is advertised, the Contract Administrator completes a contract procurement schedule including key dates for consultant selection activities. The Contract Administrator should confirm key dates with all selection committee members before completing the schedule. Prepare RFP The information required in a RFP includes the following: Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 28 of 58 January 2018  Description of project;  Scope of work;  Schedule of work (including estimated start and end dates of the contract);  Method of payment, and cost proposal requirements. The cost proposal is submitted in a separate sealed envelope. See Exhibit 10-H: Sample Cost Proposal (Example 3) for sample cost proposal formats;  Contract audit and review process requirements (see Section 10.3: A&E Consultant Audit and Review Process);  Proposal format and required contents;  Method, criteria and weighting for selection;  A DBE contract goal is specified (see Exhibit 10-I: Notice to Proposers DBE Information), if a federal-aid contract;  Consultants acting in a management support role requirements Exhibit 10-U: Consultant in Management Support Role Conflict of Interest and Confidentiality Statement;  Protest procedures and dispute resolution process per 2 CFR Part 200.318(k). The RFP specifies the content of a proposal, the number of copies required, due date, mailing address, and a physical address where the submittals may be hand delivered if different from the mailing address. Two to four weeks is usually allowed between the time the RFP is published and time that proposals must be submitted. More time may be required for complex contracts or projects. Items typically required in a technical proposal include:  Work plan (specify what is to be covered);  Organizational chart;  Schedule and deadlines;  Staffing plan;  Proposed Team—complete for prime consultant and all key subconsultants;  Key personnel names and classifications—key team members identified in the original proposal/cost proposal shall not change (be different than) in the executed contract;  Staff resumes;  Names of consultant’s project manager and the individual authorized to negotiate the contract on behalf of the consulting firm;  Consultant DBE Commitment document, see Exhibit 10-O1: Consultant Proposal DBE Commitment; Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 29 of 58 January 2018  References. Financial Management and Accounting System Requirements The local agency must ensure that consultant contract solicitation and advertising documents (RFPs) clearly specify that contracts shall not be awarded to a consultant without an adequate financial management and accounting system as required by 48 CFR Part 16.301-3, 2 CFR Part 200, and 48 CFR Part 31. The local agency must ensure the selected consultants have adequate financial management systems as required by the applicable federal regulations. Advertise for Consultants The solicitation process for consultant services shall be by public advertisement, or by any other public forum or method that assures qualified in-State and out-of-State consultants are given a fair opportunity to be considered for award of contract. The minimum length of advertisement is 14 calendar days. Advertisement of the RFP in a major newspaper of general circulation, technical publications of widespread circulation, professional associations and societies, recognized DBE organizations, web hosting or clearing houses known for posting government contract solicitations such as BidSync, Planetbids, or posting the RFP on the local agency’s or other widely used websites are all acceptable methods of solicitation. To document website postings, the local agency should retain copies of screen shots displaying the posted begin/end dates. Issue/Publish RFP The local agency shall publish the RFP on line and also issue the RFP to all consultants responding to newspaper advertisement. The local agency shall keep a record of all consultants that have downloaded RFP on line as well as those receiving an RFP through other means, to ensure that any inquiry responses, addendums, or amendments to the RFP are given to all consultants that received the RFP. Conduct Proposer’s Conference or Answer Written Questions The local agency may allow for clarification of the RFP by inviting submittal of written questions or by conducting a proposer’s conference, or by doing both. The local agency must publish or mail their responses to any written questions to all consultants receiving the RFP. No response should be given to verbal questions. It is important that all competing consultants receive the same information. If a proposer’s conference is to be held, the exact time and place must be specified in the RFP. Attendance at a proposer’s conference normally is not mandatory. However, consultants not attending the conference do not receive notes from the meeting unless they request the notes. Receive and Evaluate Technical Proposals The Contract Administrator must verify that each proposal contains all of the forms and other information required by the RFP. If all required information is not provided, a proposal may be Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 30 of 58 January 2018 considered nonresponsive and rejected without evaluation. Late submittals, submittals to the wrong location, or submittals with inadequate copies are considered nonresponsive and shall be rejected. Submittal of additional information after the due date shall not be allowed. Documentation of when each proposal was received must be maintained in the project files. Copies of date stamped envelope covers or box tops are recommended. The members of the consultant selection committee must evaluate each proposal according to the technical criteria listed in the RFP. Minimum of three proposals must be received and evaluated. If only two proposals are received, a justification must be documented to proceed with the procurement. If only one proposal is received, a Non Competitive process must be justified and a Public Interest Finding (PIF) must be documented and signed by the DLAE. In either case, the re- advertisement of the RFP should be considered as an option. The committee must also evaluate reference checks and other information gathered independently. Reference checks shall be completed and other information gathered before the interviews are conducted. If necessary, the results of the reference checks or other information may be discussed with the highest ranked qualified consultants at the interviews. Develop Final Ranking and Notify Consultants of Results The selection committee discusses and documents the strengths and weaknesses of each proposal; interviews the three or more highest ranked consultants (short listed); and develops a final ranking of the highest ranked consultants. All consultants that submitted proposals must be informed about the final ranking of consultants. It is important that all competing consultants receive the same information. Most consultants will request information as to why they were not the highest ranked. Therefore, the selection committee should keep notes as to why a particular consultant was not selected. When a consultant requests debriefing, the reasons for not being selected must be objective reasons. The consultant should not be compared to others, and should not be provided with information about other consultants during this debriefing. Normally, the Contract Administrator does the debriefing; however, any member of the selection committee may be designated to do the debriefing. Negotiate Contract with Top-Ranked Consultant Cost proposal (for both Prime and all Subconsultant), and contract audit and review documents such as Exhibit 10-K: Consultant Certification of Contract Costs and financial Management System of Costs and Financial Management System and Exhibit 10-A: A&E Consultant Audit Request Letter and Checklist, whichever applicable (see Section 10.3: A&E Consultant Audit and Review Process) should be submitted in a separate sealed envelope. Typically, the cost proposals are submitted by the short listed consultants only, at time of interview. However, if time is of the essence and it can be justified, or if no interviews are planned, the cost proposal can be requested from all consultant with their technical proposal. The cost proposal for the most qualified consultant will be opened and used to begin negotiations. If agreement cannot be reached, then negotiations proceeds to the next most qualified consultant. Each consultant’s cost proposal must remain sealed until negotiations Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 31 of 58 January 2018 commence with that particular consultant. The goal of negotiations is to agree on a final contract that delivers the services, or products required at a fair and reasonable cost to the local agency. At the completion of successful cost negotiations, all remaining sealed envelopes containing cost proposals shall be returned to consultants. Cost proposals in electronic form shall be submitted separately from the RFP and contained in a secure database that is inaccessible to the members involved in the A&E consultant contract procurement process. Only the cost proposal of the most qualified consultant will be requested to be sent to the members. Cost proposals of unsuccessful consultants are confidential and shall not be opened by the local agency or any private entity that the local agency uses to store the cost proposals. Any concealed cost proposals of the unsuccessful consultants must be properly disposed of by permanently deleting the cost proposals and/or any copy of the cost proposals. The independent cost estimate, developed by the local agency in advance of requesting a cost proposal from the top-ranked consultant, is an important basis and tool for negotiations or terminating unsuccessful negotiations with the most qualified consultant. It can be revised, if needed, for use in negotiations with the next most qualified consultant. A contract audit and review may be required (see Section 10.3: A&E Consultant Audit and Review Process in this chapter). Local agency Contract Administrator ensures that all required documentations are provided to Caltrans A&I within 10 days of written request, including all documents for a Financial Review, if applicable. Caltrans A&I will not proceed with a Financial Document Review until all required documentation is completed correctly and submitted. Negotiations should be finalized after addressing all deficiencies noted in the Caltrans A&I Financial Review Letter if applicable. An indirect cost audit may be performed within the record retention period of the contract. Items typically negotiated include:  Work plan;  Schedule and deadlines (for deliverables and final duration of contract);  Products to be delivered;  Classification, wage rates, and experience level of personnel to be assigned;  Cost items, payments, and fees. Fee is required to be negotiated as a separate element  Hours, level of effort by task and/or classification The consultant’s ICR is not a negotiable item. A lower rate cannot be negotiated by the local agency. The local agency and the consultant will agree on the final cost proposal and incorporate into final contract. Before executing the consultant contract, the local agency must review contract to ensure that all federal and state requirements have been met (see Exhibit 10-C: A&E Consultant Contract Reviewers Checklist), and adjustment or denial of ICR as identified in the Financial Review Letter has been included in the final cost proposal, if applicable. Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 32 of 58 January 2018 Prior to contract award, the local agency must submit a completed Exhibit 10-C signed by the Contract Administrator for all new or amended federal and/or state funded A&E consultant contracts to aeoversight@dot.ca.gov for Caltrans review and acceptance. If there are any changes to the contract after Caltrans acceptance of Exhibit 10-C, the local agency must notify Caltrans and provide a copy of an updated Exhibit 10-C and all contract amendments to aeoversight@dot.ca.gov. Execution of an A&E consultant contract without Caltrans acceptance may result in ineligibility for reimbursement. Submission of Exhibit 10-C to Caltrans HQ for acceptance is not required for non-A&E consultant contracts. 10.6 CONSULTANT SELECTION USING THE ONE-STEP RFQ METHOD The RFQ method is used when the services being procured are specialized, or the scope of work is defined broadly and may include multiple projects. Appoint Consultant Selection Committee A consultant selection committee with a minimum of three members is appointed at the beginning of the consultant selection process. The committee reviews and scores the materials submitted by consultants in response to the RFQ, develops a shortlist of qualified consultants, interviews those consultants, and develops a final ranking of the most qualified consultants. Representation on the committee includes the Contract Administrator and subject matter experts from the project’s functional area. The members should be familiar with the scope of work to be contracted out and with the local agency standards that will be used in the contract. Participation by a Caltrans district representative is at the option of the local agency and subject to the availability of the DLAE staff. Caltrans participation on the interview panel does not relieve the local agency of its responsibility to ensure that proper procurement procedures are followed and all requirements are met. Local agency Contract Administrator ensures that all committee members meet the conflict of interest requirements (23 CFR 172) by completing and signing a conflict of interest statement prior to selection process initiation. A sample conflict of interest form is provided in Exhibit 10- T: Panel Member Conflict of Interest & Confidentiality Statement. Develop Technical Criteria for Evaluation of Qualifications The Contract Administrator is responsible for developing the technical criteria, and their relative importance which are used to evaluate and rank the consultant qualifications. The criteria and relative weights must be included in the RFQ, and the same criteria and relative weights must be used in the evaluation sheets. Failure to include criteria and relative weights and to use the same criteria and weights during the evaluation will result in the contract costs being ineligible for federal or state reimbursement. Exhibit 10-B: Suggested Consultant Evaluation Sheet is a recommended evaluation sheet with criteria and rating points for A&E consultants, where cost is not used as a rating factor. This format is not mandatory, but it is recommended in the interest of developing consistency among the hundreds of agencies and consultants operating in the state. The local agency should consult with the DLAE before making major changes to the suggested approach. Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 33 of 58 January 2018 Develop Schedule for Consultant Selection Before a contract is advertised, the Contract Administrator completes a contract procurement schedule including key dates for consultant selection activities. The Contract Administrator should confirm target dates with all selection committee members before completing the schedule. Prepare RFQ As a minimum, the RFQ generally includes the following:  General description of the services or project(s);  Scope of work;  Schedule of work (including contract begin and end dates);  Method of payment, and cost proposal requirements. The cost proposal is submitted in a separate sealed envelope. See Exhibit 10-H: Sample Cost Proposal for sample cost proposal formats;  Contract audit and review process requirements (see Section 10.3: A&E Consultant Audit and Review Process);  Statement of Qualification (SOQ) format and required content to be submitted;  Method and criteria and weights for selection;  A DBE contract goal is specified (see Exhibit 10-I: Notice to Proposers DBE Information), if a federal-aid contract;  Consultants acting in a management support role requirements Exhibit 10-U: Consultant in Management Support Role Conflict of Interest and Confidentiality Statement; Protest procedures and dispute resolution process per 2 CFR Part 200.318(k). The RFQ specifies the content of the SOQ, the number of copies required, due date, mailing address, and a physical address where the submittals may be hand delivered if different from the mailing address. Two to four weeks is usually allowed between the time the RFQ is published and time that SOQs must be submitted. More time may be required for complex contracts or scope of work. Items typically required in a statement of qualification include:  Qualifications of key personnel (including consultant project manager) proposed for the contract. Key team members identified in the original proposal/cost proposal shall not change (be different than) in the executed contract;  Staff resumes;  Related projects that key personnel have worked on;  Qualifications/experience of the firm; Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 34 of 58 January 2018  Organizational chart;  Forecast or Schedule of work;  Consultant DBE Commitment document, see Exhibit 10-O1: Consultant Proposal DBE Commitment;  References. Financial Management and Accounting System Requirements The local agency must ensure that Consultant contract solicitation and advertising documents (RFQs) clearly specify that contracts shall not be awarded to a consultant without an adequate financial management and accounting system as required by 48 CFR Part 16.301-3, 2 CFR Part 200, and 48 CFR Part 31. The local agency must ensure the selected consultants have adequate financial management systems as required by the applicable federal regulations. Advertise for Consultants The solicitation process for consultant services shall be by public advertisement or any other public forum or method that assures qualified in-State and out-of-State consultant are given a fair opportunity to be considered for award of contract. The RFQ must contain sufficient project work information, so that interested consultants can submit an appropriate SOQ. Advertisements for RFQ may take one of two approaches. The most common is an advertisement or publication of the RFQ in a major newspaper of general circulation, technical publication of widespread circulation, professional associations and societies, recognized DBE organizations, web hosting or clearing houses known for posting contract solicitations such as Bid Sync, PlanetBids, or posting the RFQ on other widely used websites. To document website postings, the local agency should retain copies of screen shots displaying the posted begin/end dates. In the second approach, the local agency advertises the availability of the RFQ in a major newspaper of general circulation, technical publications of widespread circulation, professional associations and societies, recognized DBE organizations, or through a web hosting or clearing houses known for posting contract solicitations such as BidSync or PlanetBids, and requests that interested consultants send a letter of interest to the local agency for the RFQ. The RFQs shall then be sent to those firms who indicated interest in the RFQ. In some cases, it may be desirable to advertise nationwide for a particular project or service. This approach provides a registry for firms who received the RFQ and therefore facilitates the broadcast of any revisions or addenda to the RFQ, if necessary. Issue/Publish RFQ The local agency shall publish the RFQ online and also issue the RFQ to all consultants responding to newspaper advertisement. The local agency shall keep a record of all consultants that have downloaded the RFQ on line as well as those receiving an RFQ through other means, to ensure that any inquiry responses, addendums, or amendments to the RFQ are given to all consultants that received the RFQ. Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 35 of 58 January 2018 Receive/Evaluate Statements of Qualifications and Develop Shortlist The first step in the evaluation process is to determine that each SOQ contains all forms and other information required by the RFQ. Otherwise, the submittals may be considered nonresponsive and rejected without evaluation. Late submittals, submittals to the wrong location, and submittals with inadequate copies are considered nonresponsive and shall be rejected. Submittal of additional information after the due date shall not be allowed. Documentation of when each proposal was received must be maintained in the project files. Copies of date stamped envelope covers or box tops are recommended. Minimum of three proposals must be received and evaluated. If only two proposals are received, a justification must be documented to proceed with the procurement. If only one proposal is received, a Non-Competitive process must be justified and a Public Interest Finding (PIF) must be documented and signed by the DLAE. In either case, the re-advertisement of the RFP should be considered as an option. The consultant selection committee reviews the submitted SOQ according to the published evaluation criteria and weighting factors. The committee makes an independent random check of one or more of the consultant’s references. This check applies to major subconsultants also. The committee establishes a shortlist of consultants who are considered to be best qualified to perform the contract work. The shortlist includes enough qualified consultants to ensure that at least three consultants are interviewed. Notify Consultants of Shortlist All consultants that submitted an SOQ must be notified of the results of the review. The notification also identifies those consultants (short list) that will be requested to attend interviews. Most consultants will request information as to why they were not placed on the shortlist. Therefore, the selection committee should keep notes why a particular consultant was not selected for the shortlist. When a consultant requests a debriefing, the reasons given for not being selected must be objective reasons. Consultants should not be compared with each other during the debriefing. Normally, the Contract Administrator does the debriefing; however, any member of the selection committee may be designated to do the debriefing. Interview Top-Ranked Consultants Each consultant to be interviewed is given a copy of the draft of the proposed contract, defining the detailed scope of work, and/or description of required services, and other information. This should be sent with the initial notification of the interview. Between the time of the notification of the shortlist and interviews, the local agency may answer any questions concerning the scope of work to be contracted out, if not done earlier during the solicitation. In addition, the local agency may conduct additional reference checks for each consultant to be interviewed. Consultants should submit their questions about the RFQ and receive their answers from the local agency in writing. It is requiredt that all consultants on the shortlist receive the questions and answers and are given the same information. The committee should evaluate reference checks and other information that is gathered independently. Reference checks shall be completed and other information gathered before the Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 36 of 58 January 2018 interviews are conducted. If necessary, the results of the reference checks and other information may be discussed with the consultant at the interview. Interviews are to be structured and conducted in a formal manner. Each consultant shall be allowed the opportunity to make a presentation if desired; however, a time limit should be specified. Interview questions are prepared in advance. Two types of questions may be asked:  Questions that are to be asked of all competing consultants, and  Questions relating to each specific consultant, based upon the reference checks, and the strengths and weaknesses identified during evaluation of the SOQ The agency can request competing consultants to bring additional information or examples of their work to the interviews; if the additional information facilitates the interview or evaluation process. Additional information requested should be kept at a minimum, that is, only information required to select the most qualified consultant for the contract. The selection committee or local agency shall not gather additional information concerning the consultants after the interviews are completed. Develop Final Ranking and Notify Consultants of Results All consultants interviewed must be informed about the final ranking of consultants. It is important that all competing consultants receive the same information. Most consultants will request information as to why they were not selected as the most qualified. Therefore, the selection committee should keep notes as to why a particular consultant was not selected. When a consultant requests debriefing, the reasons for not being selected must be objective. Consultants should not be compared with each other or provided with information about other consultants during the debriefing. Normally, the Contract Administrator does the debriefing; however, any member of the selection committee may be designated to do the debriefing. The next two sections provide guidance when the RFQ is solicited for specialized services and additional information is required prior to cost negotiations with consultant. For on-call contracts, skip the next two sections and begin Negotiation phase. Conduct Scoping Meeting The Contract Administrator meets with the first-ranked consultant’s project manager to review the project, and to ensure that the consultant has a complete understanding of the work that is required. The consultant is shown as much material as is available regarding the project. Any technical questions regarding the project are answered for the consultant. Request Cost Proposal The first-ranked consultant is asked to provide a cost proposal to perform the work described in the draft contract and discussed at the scoping meeting. The work is to be performed according to the conditions described in the draft contract using the payment method described therein. Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 37 of 58 January 2018 Alternatively, if time is of the essence and it can be justified, sealed cost proposals may be requested from all of the consultants on the shortlist. If the contract involves more than one project, the consultant must provide a separate cost proposal for each project in addition to a summary cost proposal for the total contract. If the contract involves milestones, the consultant must furnish a separate cost proposal for each milestone with a summary cost proposal for the total costs. If the contract involves subconsultants, the prime consultant must include a separate cost proposal for each subconsultant. Each subconsultant’s cost proposal must follow the same format as the prime consultant’s cost proposal. Negotiate Contract with Top-Ranked Consultant Cost proposal (for both Prime and all Subconsultant), and contract audit and review documents such as Exhibit 10-K: Consultant Certification of Contract Costs and Financial Management System and Exhibit 10-A: A&E Consultant Audit Request Letter and Checklist, whichever applicable (see Section 10.3: A&E Consultant Audit and Review Process) will be submitted in a separate sealed envelope. Typically, the cost proposals are submitted by the short listed consultants only, at time of interview. However, if time is of the essence and it can be justified, or if no interviews are planned, the cost proposal can be requested from all consultant with their statements of qualification. After the top-ranked consultant submits a sealed cost proposal, the local agency reviews the cost proposal and compares it with the local agency’s confidential detailed independent cost estimate and enters into negotiations. The goal of negotiation is to agree on a final contract that delivers to the local agency the services or products required at a fair and reasonable cost. The independent cost estimate, developed by the local agency in advance of requesting a cost proposal from the top-ranked consultant, is an important basis and tool for negotiations. Negotiations should commence with the most qualified consultant. If agreement on a fair and reasonable price cannot be reached, negotiations should then be formally terminated. Negotiations then proceed to the next most qualified consultant, and so on. Each consultant’s cost proposal must remain sealed until negotiations commence with that particular consultant. At the completion of successful cost negotiations, all remaining sealed envelopes containing cost proposals shall be returned to consultants. Cost proposals in electronic form shall be submitted separately from the RFQ and contained in a secure database that is inaccessible to the members involved in the A&E consultant contract procurement process. Only the cost proposal of the most qualified consultant will be requested to be sent to the members. Cost proposals of unsuccessful consultants are confidential and shall not be opened by the local agency or any private entity that the local agency uses to store the cost proposals. Any concealed cost proposals of the unsuccessful consultants must be properly disposed of by permanently deleting the cost proposals and/or any copy of the cost proposals. A contract audit and review may be required (see Section 10.3: A&E Consultant Audit and Review Process earlier in this chapter). Local agency Contract Administrator is responsible for the submittal of all required documentations to Caltrans A&I in a timely fashion, including all Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 38 of 58 January 2018 documents for a Financial Review, if applicable. Caltrans A&I will not proceed with a Financial Review until all required documentation is completed correctly and submitted. Negotiations may be completed after receipt of the Caltrans A&I Financial Review Letter. An indirect cost audit may be performed within the record retention period of the contract. The items typically negotiated include:  Work plan;  Staffing plan;  Schedule (including contract begin and end dates);  Products to be delivered;  Classification, wage rates, and experience level of personnel to be assigned;  Cost items, payments and fee. Fee is required to be negotiated as a separate element. The consultant’s ICR is not a negotiable item. A lower rate cannot be negotiated by the local agency. For on-call contracts, typically a price agreement is reached based on specific rate of compensation for the term of the contract. The subsequent task orders (or mini agreements for individual project work) is negotiated based on actual cost plus fee, or lump sum, which is derived from the wage rates agreed upon earlier for the on-call contract. Before executing the consultant contract, the local agency must review contract to ensure that all federal and state requirements have been met (see Exhibit 10-C: A&E Consultant Contract Reviewers Checklist), and receive Caltrans A&I’s Financial Review acceptance letter, if applicable. Prior to contract award, the local agency must submit a completed Exhibit 10-C signed by the Contract Administrator for all new or amended federal and/or state funded A&E consultant contracts to aeoversight@dot.ca.gov for Caltrans review and acceptance. If there are any changes to the contract after Caltrans acceptance of Exhibit 10-C, the local agency must notify Caltrans and provide a copy of an updated Exhibit 10-C and all contract amendments to aeoversight@dot.ca.gov. Execution of an A&E consultant contract without Caltrans acceptance may result in ineligibility for reimbursement. Submission of Exhibit 10-C is not required for non-A&E consultant contracts.. 10.7 CONSULTANT SELECTION USING THE TWO-STEP RFQ/RFP METHOD Combined RFQ and RFP Selecting consultants using the Two-Step RFQ/RFP method requires combining certain steps from each of the other two methods previously described. The consultants are rated based upon both their qualifications and their technical proposals. The initial steps in this method (up to the development and notification of the shortlist) are the same as the steps followed when using the One-Step RFQ method. At this point, the consultants from the shortlist are issued an RFP. The remaining steps are the same as the later steps followed in the One-Step RFP method. The combination of these steps is indicated in Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 39 of 58 January 2018 Figure 10-4: Consultant Selection Flowchart. Because it is a combination of the One-Step RFQ and One-Step RFP methods, this method of consultant selection requires more work and time than the other two methods. Consequently, the combined RFQ/RFP method is recommended for use only when the scope of work is very complex or unusual. The Two-Step RFQ/RFP is also well suited for procuring multiple on-call contracts through single solicitation. The outcome of the first step - RFQ will be multiple contracts, or on-call list of consultants with cost/price agreements. The subsequent project work will be procured thru individual competition or mini-RFPs amongst the on-call consultants. 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. 10.8 COMPLETING THE PROJECT Develop the Final Contract The Contract Administrator requests a revised cost proposal from the consultant after: (1) negotiations have been completed, (2) the local agency and consultant have agreed to a fair and reasonable price, and (3) a letter, if applicable, is released by Caltrans A&I that accepts, denies or makes an adjustment to the proposed ICR. The Contract Administrator should review the revised cost proposal to ensure that all the items and changes discussed during negotiation were included. This revised cost proposal then becomes the final cost proposal, is attached to and made a part of the consultant contract. For informational purposes, sample contract language and format have been included as Exhibit 10-R: A&E Sample Contract Language. The Contract Administrator has responsibility to ensure that the final negotiated contract is complete and has verified that all required backup documents have been provided. Copies of the contract are sent to the consultant for signature first. Review and Approval of Contracts Proposed contracts for consultant services (including subcontracted work) exceeding $150,000, must be reviewed by the local agency to verify that:  Compensation is fair and reasonable and includes prevailing wage rates, if applicable;  Work activities and schedules are consistent with the nature and scope of the project;  DBE goal Exhibit 10-O2: Consultant Contract DBE Commitment is included for all contracts regardless of goal.;  Exhibit 10-K: Consultant Certification of Contract Costs and Financial Management System (for Prime and Subs), and Exhibit 10-A: A&E Consultant Audit Request Letter and Checklist and all supporting documents, if applicable, have been submitted to Caltrans A&I; Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 40 of 58 January 2018  If applicable, adjustment or denial of the ICR identified in the Financial Review Letter have been included in the final cost proposal;.  Exhibit 10-C: A&E Consultant Contract Reviewers Checklist must be used to ensure that required documentation has been provided;  A cost proposal (see Exhibit 10-H: Sample Cost Proposal), must include the costs of materials, direct salaries, payroll additions, other direct costs, indirect costs, fees, and backup calculations. Before approving a contract for consulting services, the Contract Administrator must be satisfied that the consultant’s organization:  Is qualified to perform the services required;  Is in a position, considering other work commitments, to provide competent and experienced personnel to perform the services in the time allowed;  Is fully aware of all applicable federal and state laws including implementing regulations, design standards, specifications, previous commitments that must be incorporated into the design of the project, and administrative controls including those of Caltrans and FHWA.  Has an adequate financial management system as required by the applicable federal regulations. The contract must provide for a defined level of acceptability and a statement to the effect that the consultant may be required to modify its work as necessary; to meet that level of acceptability as defined in the contract. The contract shall provide for local agency reviews at appropriate stages during performance of the work, to determine if any changes or other actions are warranted. The contract shall also provide that the consultant establish a working office at a place acceptable to the local agency. The contract shall provide that the consultant and subconsultants shall maintain all books, documents, papers, accounting records, and other information pertaining to costs incurred. Such materials must be available for inspection and audit by federal, State, and local agency authorized representatives; and copies thereof shall be furnished, if requested. Following final settlement of the contract accounts with the State or FHWA, such records and documents may be archived at the option of the local agency, but in any event shall be retained for a three-year period after processing of the final voucher by the State or FHWA. Execute Contract and Issue Notice to Proceed to Consultant The Contract Administrator sends the consultant a fully executed copy of the contract with an original signature and issues a notice to proceed. Funds may not be used to reimburse the agency for any work or costs incurred before the Authorization to Proceed is issued, or for consultant costs incurred prior to the execution of the consultant contract. Local agency consultant selection and contract execution costs may be reimbursable. Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 41 of 58 January 2018 For on-call contracts, a fully executed copy of the contract with original signatures will be send to the consultant. Each subsequent task order (for individual project) will be accompanied with a copy of the signed task order and a Notice to Proceed, once it is negotiated and approved. Administer the Contract Project work begins as specified in the contract after the notice to proceed is issued to the consultant. Thereafter, the local agency manages and administers the contract to ensure that a complete and acceptable product is received on time, within standards, and within budget and terms of the contract. Contract administration activities help to ensure that contractual obligations are completed satisfactorily. Generally, these activities include:  Monitoring project progress and compliance with contract requirements;  Receiving, reviewing and assessing reports, plans, and other required products/deliverables;  Receiving and reviewing state prevailing wages. (See Department of Industrial Relations websites below. o DIR FAQ website: http://www.dir.ca.gov/OPRL/FAQ_PrevailingWage.html o DIR Wage Determination website: http://www.dir.ca.gov/oprl/DPreWageDetermination.htm  Reviewing invoices to ensure costs claimed are in accordance to the method of payment and contract cost proposal, approving payments;  If new consultant personnel are added or substituted, labor rates must be verified prior to approving invoices.  Record keeping and reporting;  Controlling costs;  Identifying changes to the scope of work and preparation of amendments (must ensure that any changes to the scope is within the constraints of the original RFP/RFQ;  Completing the consultant performance evaluations (see Exhibit 10-S: Consultant Performance Evaluation). Substitution of Consultant Personnel and Subconsultants After contract execution the consultant should not substitute key personnel (project manager and others listed by name in the cost proposal) or subconsultants without prior written approval from the local agency. To do so can result in the costs being ineligible for federal or state reimbursement. The consultant must request and justify the need for the substitution and obtain approval from the local agency prior to use of a different subconsultant on the contract. Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 42 of 58 January 2018 The proposed substituted person must be as qualified as the original, and at the same or lower cost. For engineering types of consultant contracts, the consultant’s project manager must be a registered engineer in the State of California. Invoicing (or Progress Payments) The frequency and format of the invoices/progress payments are to be determined by the contract. Program Supplement Agreements (see LAPM Chapter 3: Project Authorization) need to have been prepared prior to any payments being requested. Payments to the consultant are to be in arrears. In other words, the consultant must have actually incurred and paid the costs before invoicing the local agency. For federal or state reimbursement of consultant costs on a project, the local agency must submit the following to the DLAE, for each consultant or consulting firm used on the project (failure to do so will result in the consultant’s invoices for reimbursement being returned to the agency unprocessed):  Copy of Executed Consultant contract;  Exhibit 10-O1: Consultant Proposal DBE Commitment (federally funded projects only);  Exhibit 10-O2: Consultant Contract DBE Information (federally funded projects only; DLAE must confirm that the local agency has submitted copies of Exhibit 10-K: Consultant Certification of Contract Costs and Financial Management System (for Prime and Subconsultants) to Caltrans A&I and received acceptance of Exhibit 10-C: Consultant Contract Reviewers Checklist from Caltrans. Invoices should include the following:  Prepared on the consultant’s letterhead;  Signed by the consultant’s project manager;  Have a unique invoice number;  Appropriate documentation attached;  If the contract involved milestones, each milestone should be invoiced separately;  If the contract involved subconsultants, a separate invoice for each subconsultant should be attached in the same format as the prime consultant’s invoice and should be included in the summary of the prime consultant’s invoice. The following are requirements associated with each invoice that the local agency should include:  A summary of the reimbursements to-date and a summary of the funds remaining in the contract. This should be compared to the local agency’s own record of reimbursements to-date and a summary of the funds remaining in the contract.  A summary of all payments to-date and funds remaining in the contract for each subconsultant. Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 43 of 58 January 2018 The local agency is to follow the procedures given in LAPM Chapter 5: Invoicing, to obtain reimbursement of federal or state funds. Contract Amendments Contract amendments are required to modify the terms of the original contract for changes such as extra time, added work, or increased costs. Only work within the original advertised scope of services shall be added by amendment to the contract. The addition of work outside the original advertised scope will make that work ineligible for federal or state reimbursement (see Q&As at: http://www.fhwa.dot.gov/programadmin/172qa_01.cfm). There is no prescribed format for contract amendments. They may take the form of letter-type agreements meeting the legal requirements of the local agency, clearly outlining the changes and containing a mutually agreed upon method of compensation. Such agreements must conform to the requirements of this manual with regard to payment. A consultant contract may be amended at any time prior to the expiration date of the original contract. The most common amendment is to extend the ending date of the contract. All contract amendments must be fully executed before the ending date of the contract. Failure to amend a contract prior to the ending date will make the subsequent costs ineligible for federal and state reimbursement. For on-call consultant contracts, the amendment is restricted to the work (task order) that has already been started by the consultant and can not include any new work. All contract amendments must be in writing and fully executed by the consultant and local agency before reimbursable work begins on the amendment. If an emergency exists of such magnitude that a delay cannot be tolerated, the local agency and the consultant may agree on an amendment initiating the work, so that reimbursable work may begin. The initiating amendment is then followed by a final amendment once the full scope of the emergency work is known and agreed to by both parties. In both cases, sufficient funding should be included in the amendments to pay for all work to be performed by the consultant. The final amendment must be executed as quickly as possible. Failure to fully comply with this section may result in the loss of local agency funding. Section 10.3: A&E Consultant Audit and Review Process of this chapter shall apply to the entire contract and must be completed prior to execution of the contract amendment. Performance Evaluation Pursuant to 23 CFR §172.9(d) agencies are required to prepare an evaluation of the consultant when the project has been completed. The Contract Administrator evaluates the consultant’s performance after the consultant’s final report has been submitted, and the Contract Administrator has conducted a detailed evaluation with the consultant’s project manager. See Exhibit 10-S: Consultant Performance Evaluation for a suggested format for use by the local agency. Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 44 of 58 January 2018 Project Records Federal-Aid Highway Program funding recipients and sub-recipients must maintain adequate and readily accessible project performance and financial records, supporting documents, and other records considered pertinent to the grant agreement and in compliance with Federal laws and regulations (e.g., 23 USC 112; 40 USC 1101-1104, 23 CFR 172, 48 CFR 31, and 2 CFR Part 200). These records shall be maintained for a minimum of three (3) years following issuance of the final voucher from FHWA (forwarded by Caltrans) and the closure of all other pending matters (2 CFR Part 200.333). For audit purposes, project records and documentation shall be kept for three (3) years after payment of the final federal or state voucher. Among the records to be retained are as follows (not an all-inclusive list):  Copies of RFPs and RFQs, changes, addendums, etc. and bidder’s list;  Documentation of DBE participation (including Exhibit 10-O1: Consultant Proposal DBE Commitment and Exhibit 10-O2: Consultant Contract DBE Commitment);  Solicitation and advertisement records;  Identification of selection committee members;  Record of receiving proposals, statement of qualifications;  Evaluation and ranking records such as original score sheets from all panel members, short list questions and other documentation (see Exhibit 10-B: Suggested Consultant Evaluation Sheet);  Independent cost estimate (prepared in advance of requesting a cost proposal from the top-ranked consultant);  Record of negotiations (to include a separate negotiation of profit in accordance with federal guidelines);  Financial Review Letter and Cognizant Agency Letter, when applicable;  CPA-audited ICR Audit Report or Approved State DOT Cognizant Indirect Rate Letter, if any;  Consultant Certification of Costs and Financial Management (Exhibit 10-K: Consultant Certification of Contract Costs and Financial Management System) for contracts over $150,000 or more;  A&E Consultant Audit Request Letter and Checklist (Exhibit 10-A: A&E Consultant Audit Request Letter and Checklist) for contracts over $150,000 and all supporting documentation.  Executed consultant contracts, cost proposals and amendments (see Exhibit 10-R: A&E Sample Contract Language and Exhibit 10-H: Sample Cost Proposal);  Contract oversight and progress meeting documents;  Progress and final payments, and supporting documentation; Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 45 of 58 January 2018  Performance evaluation (see Exhibit 10-S: Consultant Performance Evaluation);  Consultant contract checklists (see Exhibit 10-C: A&E Consultant Contract Reviewers Checklist);  Accounting records documenting compliance with State and federal administrative requirements;  Certifications and Conflict of Interest forms (Exhibit 10-T: Panel Member Conflict of Interest & Confidentiality Statement, Exhibit 10-U: Consultant in Management Support Role Conflict of Interest and Confidentiality Statement and Exhibit 10-Q: Disclosure of Lobbying Activities, as appropriate). Retention Clauses At the option of the local agency, a retention clause may be included in the consultant contract. The usual retained amount is five percent; appropriate securities on deposit may be substituted for the retention. A retention clause in the consultant contract is recommended (see Exhibit 10-R: A&E Sample Contract Language, Article XXXI). Review of Local Agency Actions Federal-aid or state reimbursement is contingent on meeting the federal or state requirements and can be withdrawn, if these procedures are not followed and documented. The local agency files are to be maintained in a manner to facilitate future FHWA or Caltrans process reviews and audits. As specified in the Review and Approval of Contracts above, the Contract Administrator must review the proposed consultant contract before execution. Exhibit 10-C: A&E Consultant Contract Reviewers Checklist is to be completed and signed. A copy shall be emailed to Caltrans at aeoversight@dot.ca.gov prior to contract award for acceptance. This acceptance of Exhibit 10-C must be retained in the local agency project files. 10.9 MISCELLANEOUS CONSIDERATIONS Engineering Services Under $150,000 The procurement of consultant services by Small Purchase Procedures is in accordance with 23 CFR 172.7(a)(2) and 48 CFR 2.101. Local agencies should be fully aware that consultant services costing in aggregate no more than $150,000 per contract may be obtained through a relatively simple and informal method of procurement. This informal method must be sound and appropriate for the consulting services procured and the project files must contain justification for the selection. The method of procurement shall be an open and competitive process in selecting consultants and should consider a minimum of three different consultants whenever possible. The Brooks Act and the consultant audit process described in Section 10.3: A&E Consultant Audit and Review Process of this chapter do not apply to consultant service contracts under $150,000. Although this method of procurement is informal, it must still comply with Sections 10.1: General, 10.2: Identifying & Defining a Need for Consultants Completing the Project, and Section 10.9: Miscellaneous Considerations, of this chapter. Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 46 of 58 January 2018 Project splitting should not be used to take advantage of the small purchase procedure in order to circumvent the Brooks Act. Table 10-1: Summary of Required/Non-Required Activities for Small Purchase Procedure REQUIRED NOT REQUIRED  Competitive process (collect three bids)  Conflict of interest determination  Assigned Contract Administrator  Defined scope of work/schedule of deliverables/start and end dates for contract  Defined deliverables/Prime and Subconsultant responsibilities  DBE goal for contract; Exhibit 10-O1: Consultant Proposal DBE Commitment, Exhibit 10-O2: Consultant Contract DBE Commitment  Cost estimate prior to receiving bids  Best method of payment determination  Contract provisions/clauses  Evaluation of consultant, justification of selection  Contract management responsibilities Exhibit 10-C: A&E Consultant Contract Reviewers Checklist  No RFP/RFQ  No Selection/Evaluation Panel  No Evaluation criteria disclosure requirements  No record of costs/profit negotiations No audit and review requirement of contract (no Exhibit 10-A: A&E Consultant Audit Request Letter and Checklist or Exhibit 10-K: Consultant Certification of Contract Costs and Financial Management System) Price or rate quotation may be considered in the selection of A&E consultants on contracts below $150,000 and must be documented in the project files. Qualified small business firms shall be considered for selection on federal-aid and state reimbursed contracts. Additionally, on federal-aid contracts, qualified DBE firms shall be considered for selection, and the appropriate federal contract language shall be included. The full amount of any contract modification or amendment that would cause the total contract amount to exceed the Federal simplified acquisition threshold (currently established at $150,000) would be ineligible for federal funding. Also, FHWA reserves the right to withdraw all federal-aid funding from a contract if it is modified or amended above the applicable established simplified acquisition threshold. Noncompetitive Negotiated Contracts (Sole-Source) Procurement by noncompetitive proposals may be used only when the award of a contract is infeasible under small purchase procedures, sealed bids or competitive proposals (23 CFR 172.7(a)(3)). Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 47 of 58 January 2018 FHWA considers these types of contracts as Sole Source contracts and should be used only in very limited circumstances. A Public Interest Finding prepared by the local agency and approved by Caltrans is required before establishing these services (23 CFR 172.7(a)(3); also see Exhibit 12-F: Cost-Effectiveness/Public Interest Finding. Conditions under which noncompetitive negotiated contracts may be acceptable include:  Only one organization is qualified to do the work;  An emergency exists of such magnitude that cannot permit delay;  Competition is determined to be inadequate after solicitation of a number of sources. The local agency shall:  Follow its defined process for noncompetitive negotiation;  Develop an adequate scope of work, evaluation factors, and cost estimate before solicitation;  Conduct negotiations to ensure a fair and reasonable cost. The local agency must carefully document details of the special conditions, obtain Caltrans approval on a Public Interest Finding and retain all documents in the project files for future Caltrans’ or FHWA’s review. A Public Interest Finding (see Exhibit 12-F: Cost-Effectiveness/Public Interest Finding) is not required for a local agency to be reimbursed for contract administration activities associated with non-infrastructure type projects such as many Safe Routes to School or Transportation Alternatives Program projects. However, an indirect cost allocation plan must be approved in order to be reimbursed for this work (see http://www.fhwa.dot.gov/legsregs/directives/policy/indirectcost.htm). Personal Services Contracts A personal services contract is characterized by the employer-employee relationship created between the local agency and the contract personnel who essentially perform similar duties as the employees. When personal engineering services less than $150,000 or non-engineering consultant or vendor services for non-infrastructure programs are needed and federal or state reimbursement will be sought, these services may be obtained through Small Purchase Procedures up to a limit of $150,000 each. The $150,000 is a cumulative limit for services provided by any individual consultant or consulting firm. Such services must be under the direction and control of a full-time employee of the local agency in responsible charge. Compensation for construction engineering services should be based on actual costs incurred, plus a fixed fee, or in the case of individual compensation on an agreed-upon hourly or daily rate. Lump sum payments should not be used for construction engineering services. For personal service contracts, the following information must be documented by the local agency and retained in the project files: Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 48 of 58 January 2018  Explanation of the services needed, and why they cannot be provided by the local agency;  Name and qualification of the consultant, who provided the services;  Documentation of the fees showing how the fee was calculated, and that it is reasonable by comparative standards;  Any other records needed to show compliance with federal-aid program regulations. Retaining a Consultant as an Agency Engineer or in Management Support Role A local agency may retain qualified consultants in a management support role on its staff in professional capacities for state funded or federal-aid projects such as:  A City Engineer (or equivalent) who manages the engineering unit for the city, providing oversight of a project, series of projects, managing or directing work of other consultants or contractors on behalf of the City, selecting other consultants, approving changes to schedule, scope, deliverables or costs, and approving invoices  A County Engineer (or equivalent) who manages the engineering unit for the county such as duties described above.  A Project Manager (or equivalent) who manages and oversees a project, series of projects or the work of other consultants and contractors on behalf of the public agency  A Program Manager (or equivalent) who manages and oversees an element of a highway program, function, or service on behalf of the public agency However, a consultant in a management support role is not:  A consultant engineer performing project-specific design, and/or construction contract administration and construction engineering for the public agency  A consultant “project manager” performing contract management on behalf of the consultant on the public agency’s consultant contract.  A consultant providing support to administrative duties such as federal authorization process, labor compliance activities, and other management and administrative tasks. The use of a consultant in a management support role should be limited to unique or very unusual situations. These situations require a thorough justification as to why the local agency cannot perform the management. Consultants used in management support roles must be selected using the same procedures as those for other consultants specified in this chapter. Eligibility for federal or state reimbursement for a consultant in a management support role requires the following:  Compliance with the selection procedures specified in this chapter;  Existence of a contract between the local agency and the consultant specifying the local agency engineering services to be performed; Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 49 of 58 January 2018  Written designation by the local agency of the responsibilities and authority of the consultant as an agency engineer;  For a state funded or federal-aid project, completion of Exhibit 10-T: Panel Member Conflict of Interest & Confidentiality Statement by all members (both consultants and employees) prior to participating in the Architect & Engineering (A&E) Selection Panel pertaining to the specific selection process and the firms being considered;  Selection of consultants for A&E management positions shall be by the use of qualification based selection procedures on an open and competitive basis resulting in a contract with defined beginning and ending dates not to exceed five (5) years;  For a state funded or federal-aid project, a local agency consultant in a management support role shall not: o Participate in, or exercise authority over the A&E selection process, if that consultant’s firm is one of the proposing firms, or subconsultant to a proposing firm; o Participate in, or exercise authority over management of work performed by the consultant’s firm, or to a consultant’s firm of which the local agency consultant firm is a subconsultant. This would include, but not be limited to, managing or directing the work, approving changes in the schedule, scope, or deliverables; and approving invoices. o Apply for or receive reimbursement of federal-aid funds for the local agency’s federal-aid project if either of the foregoing has occurred. However reimbursement for the construction contract portion of the project will still be allowed provided all other federal-aid requirements have been met. o Where benefiting more than a single federal-aid project, allocability of consultant contract costs for services related to a management support role shall be distributed consistent with the cost principles applicable to the contracting agency in 23 CFR 172.7(b)(5). If engineering services for a project are within the scope of the services described in the retained consultant’s contract, these services may be performed by the person or firm designated as an agency engineer. If the services are not within the scope, eligibility for federal or state reimbursement for these services require a new consultant contract to be developed using the selection procedures in this chapter. Retained consultants involved in the preparation of the RFP or RFQ shall not be considered in the selection of consultants for the resulting project specific work. When engineering or architectural consultants in a management support role are procured with federal-aid funds, the local agency (subgrantee) shall fully comply with the following:  Subparagraphs of 2 CFR 200.318 maintain a contract administration system and maintain a written code of standards. No employee, officer or agent of the subgrantee shall participate in selection, or in the award or administration of a contract supported by federal funds if a conflict of interest, real or apparent, would be involved. Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 50 of 58 January 2018  Subparagraph of 23 CFR §172.7(b) requires that the local agency shall receive approval from FHWA. In addition, any federal-aid projects designated as High Profile projects may also need approval from FHWA.  Liability insurance should normally be required from the consultant (errors and omissions, etc.). For federally funded projects, local agencies that solicit to hire A&E consultant(s) in a management support role must obtain FHWA approval prior to contract execution. In order for a contract for a consultant in a management support role to be federally eligible, the following are required prior to contract execution:  The local agency shall submit a request for approval via email the Scope of Work and Conflict of Interest Policy to the Division of Local Assistance-Headquarters (DLA-HQ) at aeoversight@dot.ca.gov, prior to solicitation.  Once the local agency receives FHWA’s written response, the local agency can proceed with the RFQ.  After consultant selection, the local agency shall submit the completed Exhibit 10-U: Consultant in Management Support Role Conflict of Interest and Confidentiality Statement to the DLA-HQ at aeoversight@dot.ca.gov. Local agency will receive FHWA’s approved Exhibit 10-U via email. Figure 10-5: Consultant in a Management Support Role Flowchart LPA - DLAE DLA-HQ 3e0versight@dot.ca gov FHWA No YES Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 51 of 58 January 2018 Construction Engineering Services Under federal-aid regulations and state policy, the primary responsibility for general supervision of construction must remain with the local agency. The local agency must also ensure that the work is performed in accordance with the approved plans and specifications, by employing or retaining as a consultant a registered engineer for construction engineering services on the project. All construction engineering activities performed by a consultant must be under the overall supervision of a full-time employee of the agency who is in responsible charge. These activities may include preparation of contract change orders, construction surveys, foundation investigations, measurement, and computation of quantities, testing of construction materials, checking of shop drawings, preparation of estimates, reports, and other inspection activities necessary to ensure that the construction is being performed in accordance with the plans and specifications. The construction engineering consultant’s contract defines the relative authorities and responsibilities of the full-time employee of the local agency in charge of the project and the consultant’s construction engineering staff. If a technical inspection consultant is to provide professional assistance to the local agency, a formal consultant contract must be executed which follows this chapter’s requirements. The contract shall provide for reviews at appropriate stages during performance of the work to determine if any changes or other actions are warranted. These reviews are to be made by the local agency. 10.10 NON-A&E CONSULTANTS Definition Services and planning studies that are not included in the definition of A&E related services or are not directly related to a construction project may be considered non-A&E. These services include Right-of-Way appraisal and acquisition activities, conducting public outreach during environmental clearance or construction, and Active Transportation Program educational and outreach activities. The determining factor for the required use of competitive negotiation/qualifications based selection procedures is whether the services being procured are related to a specific construction project and whether the services require work to be performed, provided by, or under the direction of a registered engineer or architect. If a planning study is to determine the need for improvements within a corridor, to conduct travel demand studies, or to obtain information on costs for planning and programming processes, the consultant may not need to be procured under a qualifications based selection process. Intelligent Transportation System (ITS) Projects Intelligent Transportation System (ITS) means electronic, communications, or information processing used singly or in combination to improve the efficiency or safety of a surface transportation system. ITS projects are those that in whole or in part, funds the acquisition of Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 52 of 58 January 2018 technologies or systems of technologies that provide significant contributions to the provision of one or more ITS user services as defined in the National ITS Architecture. The federal-aid procurement regulations identify three possible contract procurement procedures for ITS projects including engineering and design related services (or A&E), construction, and non-engineering/non-architectural (or Non-A&E). If ITS projects include physical installation of field devices and/or communications infrastructure, such as new traffic signals, new controller cabinets, changeable message signs, radio and computers, vehicle detectors, and conduits for cabling in the roadway, then that work and required equipment usually meets the definition of construction. The construction contract must be procured based on competitive bidding. If the ITS project involves considerable software development, system integration, hiring engineers and specialists for ITS design and installation support, inspection, design documentation, training and deployment, it would be considered an engineering and design services contract and the contract must be procured as an A&E consultant contract. However, if an ITS project does not meet either the definition of construction or engineering and design services, then the contract may be considered to be a Non-A&E consultant contract. Examples of Non-A&E consultant contracts are:  The procurement of hardware and software associated with incident management system  Software systems for arterial and freeway management systems  Operating the 511 traveler information service  Nonprofessional services for system support such as independent validation and verification, testing and specification development, and development of a concept of operations For more information regarding Intelligent Transportation Systems (ITS) Program procurement requirements, refer to LAPG, Chapter 13 LAPG Chapter 13: Intelligent Transportation Systems. Non-Infrastructure Projects  Non-infrastructure (NI) projects are those transportation-related projects that do not involve either engineering design, Right-of-Way acquisition (for additional guidance refer to LAPM Chapter 13), or the eventual physical construction of transportation facilities. Procurement of Non-A&E consultant contracts associated with non-infrastructure projects must follow Non-A&E procurement procedures described in this chapter. For more information on NI projects, refer to LAPM Chapter 3 Project Authorization. LAPM Chapter 3: Project Authorization. Procurement of Non-A&E Consultant Contracts Local agencies must use their own documented procurement procedures which reflect applicable state, local, and tribal laws and regulations, provided that the procurements conform to applicable federal laws and regulations (2 CFR Part 200). All non-A&E Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 53 of 58 January 2018 procurements for federal-aid funded projects must be conducted by competitive proposals in a manner providing full and open competition consistent with federal and state standards. Refer to California State Public Contract Code 10335-10381 for more information. a. Request for proposals must be publicized and all evaluation factors and their relative importance identified b. Proposals must be solicited from an adequate number of qualified sources (no less than three) c. Local agency must have a written procedure for evaluating proposals d. Consultants other than A&E consultants shall be selected using cost or cost and qualifications (best value) e. Public agencies contracting with other public agencies to perform work need an executed Memorandum of Understanding (MOU) or interagency agreement f. A consultant firm that was instrumental or listed in the application process for projects, such as ATP, is not entitled to be awarded a contract for its implementation without a competitive procurement. All federal/state funded contracts must be competitively solicited. Determining Need for Consultant To identify if a non-A&E professional services contract is needed, consider the following:  Types of services needed  Special licensing (not considered A&E)  How necessary are the services  When are the services needed  One-time or on-going services  Routine or extraordinary/unique  Scope of Work Preparing the Request for Proposal An RFP for professional services should be as detailed and precise as possible and include minimum qualification requirements, solicitation and award time frames, term of agreement, scope of work, evaluation criteria and process, and technical proposal and performance specifications. Be sure to attach complete scopes of work outlining local agency and consultant responsibilities and all special provisions for the work/services needed, and have all funding approved. Local agency contacts, or the Contract Administrator should be identified in the RFP. An example RFP is provided on the Local Assistance Website at http://www.dot.ca.gov/hq/LocalPrograms/AE/index.htm and may be modified. Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 54 of 58 January 2018 Scope of Work Clear and concise scopes of work are critical elements of service contracts. SOWs must be detailed and specific and be organized in a logical manner. Sort work details by similar actions or requirements. Clearly define roles and responsibilities of consultant and local agency. Agency Contract Administrator should write SOWs to indicate what qualifications are required to perform the work and to express when, where, and how the work/service is to be performed. Technical Proposal The Technical proposal should include the following information:  Consultant Project Manager – qualifications, roles and responsibilities.  Methodology - description of work and overall approach, specific techniques that will be used and specific administrative and operations expertise to be used.  Workplan and Work Schedule - the technical proposal should include activities and tasks, and their delivery schedule.  Personnel - List of personnel who will be working on the project, and their resumes.  Facilities and resources (If applicable) - Explanation of where the services will be provided and what type of equipment is needed to perform services.  Sub-contracts - Identify all sub-contracts that are to be used, description of each and the work by each sub-consultant/sub-contractor. No work shall be subcontracted unless listed in the technical proposal. Sub-consultant resumes should be provided.  References - The technical proposal should provide at least three (3) clients for whom the proposer has performed work of similar nature to the request. Cost Proposal Worksheet The RFP should provide a standard format for cost proposal that all proposers must include in their technical proposal. The cost proposal format can be broken down by specific tasks, showing hourly labor rates, level of effort and material, and/or by milestones and deliverables. DBE Consideration DBE consideration is required on all federal-aid funded contracts including non-A&E.. Solicitation and Award of Contracts Advertisement for RFPs may be through the local agency website, local publications, and national publications. Minimum solicitation time is 14 calendar days. The solicitation should inform potential bidders that questions must be submitted in writing to the Agency Contract Manager/Administrator by a specified date and time. All pertinent technical information and answers to bidder’s questions shall be provided to all potential bidders. Written responses to all questions will be collectively compiled and provided as an addendum. Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 55 of 58 January 2018 Contracts may be modified or amended only if the contracts so provide. Amendments must be requested and executed prior to the termination date of the most recently approved original or amended contract. All records of contract activities shall be kept for three years after federal final voucher E-76 or state final voucher for State-Only funds. Costs are reimbursable after state allocation by the California Transportation Commission (CTC) and/or the issuance of the federal E-76. The per diem rate shall not exceed the state rate. Contract Managers are responsible for monitoring expenditures on all contracts and verifying categories of work that require prevailing wage. A person in Responsible Charge of contract management is required for all federally funded projects. Evaluation Criteria Review all eligible proposals (i.e., those filed on time and in the manner prescribed) to determine which ones meet the format requirements and the standards specified in the RFP. Proposals meeting the minimum standards and format requirements can then be rated or scored. Those proposals shall be submitted to an agency evaluation committee. The evaluation committee will evaluate and score proposals using the methods specified in the RFP. The contract must be awarded to the responsible proposer whose proposal is given the highest score by an evaluation committee. The Contract Administrator must verify that each proposal contains all of the forms and other information required by the RFP. If all required information is not provided, a proposal may be considered nonresponsive and rejected without evaluation. Proposals without information regarding, or not meeting, the required DBE utilization goal or without a Good Faith Effort documentation, late submittals, submittals to the wrong location, or submittals with inadequate copies are considered nonresponsive and shall be rejected. Submittal of additional information after the due date shall not be allowed. Documentation of when each proposal was received must be maintained in the project files. Copies of date stamped envelope covers or box tops are recommended. Note that all criteria to be used to evaluate the technical proposals must have a logical foundation within the scope of work or within other technical requirements contained in the RFP. Each criterion must have a weight or level of importance, and it is recommended that total possible score for the evaluation criteria be one hundred (100) points. The proposed cost should be at least thirty percent (30%) of total points in evaluation criteria. To establish effective competition, a minimum of three proposal must be evaluated. If only two proposals are received, a justification must be documented to proceed with the procurement. If only one proposal is received, a Non-Competitive process must be justified and a Public Interest Finding (PIF) (LAPM Exhibit 12-F: Cost-Effective/Public Interest Finding) must be documented. In either case, the re-advertisement of the RFP should be considered as an option. The committee must also evaluate reference checks and other information gathered independently. Reference checks shall be completed and other information gathered before the interviews are conducted. If necessary, the results of the reference checks or other information may be discussed with the highest ranked qualified consultants at the interviews. Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 56 of 58 January 2018 Oral Presentations Oral presentations are optional. The evaluation criteria must include factors/sub-factors and weights used to score the proposers performance at the oral presentation. The evaluation committee will only be able to score each proposer based upon this criteria. The Contract Manager/Administrator should develop a set of questions related to the scope of work or the project to be asked during the evaluation committee question and answer (Q & A) section of the oral presentations. All proposers are asked the same questions for consistency. Protest/Appeals/Reinstatement Procedures Both state and federal regulations require well-defined protest/reinstatement procedures. It is essential that the procedures include a reasonable opportunity for the prospective consultant to present his/her case. The appeals procedures strengthens the process by which the contracting agency reaches its ultimate goal and helps defends its action against a claim of lack of due process. A termination clause and a provision for settlement of contract disputes are required. Protest procedures and dispute resolution processes should be in accordance with 2 CFR 200.318(k) 10.11 REFERENCES  23 CFR, Part 172 Administration of Engineering and Design Related Service Contracts http://www.ecfr.gov/cgi-bin/text-idx?rgn=div5&node=23:1.0.1.2.3  40 USC, Section 1104 Brooks Act http://www.fhwa.dot.gov/programadmin/121205.cfm  41 CFR Public Contracts and Property Management http://www.ecfr.gov/cgi-bin/text-idx?tpl=/ecfrbrowse/Title41/41tab_02.tpl  41 USC Public Contracts http://law.onecle.com/uscode/41/index.html  23 USC Letting of Contracts http://www.fhwa.dot.gov/map21/docs/title23usc.pdf  48 CFR, Chapter 1, Part 15.404 https://www.acquisition.gov/far/html/FARTOCP15.html Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 57 of 58 January 2018  48 CFR, Chapter 1, Part 31 https://www.acquisition.gov/far/html/FARTOCP15.html  Title 48, Part 16 – Types of Contracts http://www.elaws.us/subscriber/signin?returnurl=http://federal.elaws.us/cfr/title/4/10 /2013/title48/chapter1/part16&IsHistory=1&AspxAutoDetectCookieSupport=1  48 CFR 27, Subpart 27.3 – Patent Rights under Government Contracts https://www.law.cornell.edu/cfr/text/48/part-27/subpart-27.3  48 CFR 31.201-3 https://www.gpo.gov/fdsys/pkg/CFR-2011-title48-vol1/pdf/CFR-2011-title48-vol1-sec31- 201-6.pdf  48 CFR, Chapter 99 – Cost Accounting Standards, Subpart 9900 https://www.gpo.gov/fdsys/granule/CFR-2002-title48-vol7/CFR-2002-title48-vol7-chap99  2 CFR Part 200 http://www.ecfr.gov/cgi-bin/text- idx?SID=eb0db4a32ce93fdc5815e6fe58791d9d&mc=true&tpl=/ecfrbrowse/Title02/2cfr200_ main_02.tpl  49 CFR, Part 26 Participation by Disadvantaged Business Enterprises in Department of Transportation Financial Assistance Programs http://www.ecfr.gov/cgi-bin/text-idx?tpl=/ecfrbrowse/Title49/49cfr26_main_02.tpl  American Association of State Highway and Transportation Officials (AASHTO) Uniform Audit and Accounting Guide http://audit.transportation.org/Pages/default.aspx  Caltrans Division of Procurement and Contracts Website http://www.dot.ca.gov/dpac/index.html  California Labor Code, Section 1775 http://law.onecle.com/california/labor/1775.html  Government Auditing Standards (GAS) issued by the United States Government Accountability Office http://www.gao.gov/yellowbook/overview  Government Code Sections 4525 through 4529.5 http://www.leginfo.ca.gov/cgi-bin/displaycode?section=gov&group=04001- 05000&file=4525-4529.5 Local Assistance Procedures Manual Chapter 10 Consultant Selection Page 58 of 58 January 2018  OMB Circular A-110 Uniform Administrative Requirements for Grants and Agreements With Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations https://www.whitehouse.gov/omb/circulars_a110  Standard Environmental Reference (SER) http://www.dot.ca.gov/ser/