HomeMy WebLinkAboutPW Caltrans Local Procedures____________________________________________________________________________________
FOR CITY CLERK ONLY
Council Meeting: January 18, 2022
Disposition: Resolution 15022
Agenda Item No: 5.k
Meeting Date: January 18, 2022
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: CALTRANS LOCAL PROCEDURES
SUBJECT: RESOLUTION ADOPTING CHAPTER 10 OF THE CALTRANS LOCAL
ASSISTANCE PROCEDURES MANUAL ENTITLED “CONSULTANT
SELECTION”, AS WELL AS ALL FUTURE UPDATES, AS THE PROCESS BY
WHICH THE CITY PROCURES ARCHITECTURAL AND ENGINEERING
CONSULTANT SERVICES RELATED TO FEDERAL AND STATE FUNDED
TRANSPORTATION PROJECTS
RECOMMENDATION: Adopt the resolution adopting Chapter 10 of the Caltrans Local Assistance
Procedures Manual entitled “Consultant Selection”, as well as all future updates, as the process
by which the City procures architectural and engineering consultant services related to federal
and state funded transportation projects.
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 the Caltrans Office
of Local Assistance. As the administering agency of federal and state funds, Caltrans has created
the Local Assistance Procedures Manual (LAPM) 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 LAPM undergoes frequent updates to
incorporate changes in federal law and procedures.
A recent update to the LAPM required the City to adopt Chapter 10 of the LAPM for the selection
of architectural and engineering consultants. While the City has always followed the process and
procedures outlined in the LAPM, Caltrans requires Council adoption to ensure City staff are fully
aware of the current federal requirements. Pursuant to City Council Resolution No. 14573, the
City approved adopting Chapter 10 of the LAPM on September 4th, 2018.
ANALYSIS: After submitting a copy of City Council Resolution No. 14573 for review, Caltrans
commented that the resolution did not have required language showing that the City’s adoption
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2
of Chapter 10 of the LAPM includes any future updates. In response, this resolution clarifies that
the City’s adoption of Chapter 10 includes future updates and changes to the chapter.
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, Caltrans Local Assistance Procedures Manual
RESOLUTION NO. 15022
RESOLUTION OF THE SAN RAFAEL CITY COUNCIL ADOPTING CHAPTER 10 OF THE
CALTRANS LOCAL ASSISTANCE PROCEDURES MANUAL ENTITLED “CONSULTANT
SELECTION”, AS WELL AS ALL FUTURE UPDATES, AS THE PROCESS BY WHICH THE CITY
PROCURES 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 which are administered through the Caltrans Office of Local Assistance; and
WHEREAS, Caltrans requires local agencies that receive federal or state funding for
consultant services to adopt by resolution Chapter 10 of the Local Assistance Procedures
Manual (LAPM), setting forth the policies and procedures to be used for consultant selection;
and
WHEREAS, pursuant to City Council Resolution No. 14826 on September 4, 2018, the
City Council adopted Chapter 10 of the LAPM; and
WHEREAS, City staff submitted Resolution No. 14826 to Caltrans for review. Caltrans
commented that the resolution did not have required language showing that the City’s adoption
of Chapter 10 also includes any future updates; and
WHEREAS, City staff has prepared this resolution to clarify that the City’s adoption of
Chapter 10 of the LAPM includes any future updates and changes.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SAN RAFAEL RESOLVES as
follows:
1. The Council hereby adopts Chapter 10 of the Caltrans Local Assistance Procedures
Manual entitled “Consultant Selection”, as well as all future updates to that chapter, as
the process by which the City procures architectural and engineering consultant
services related to 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 18th day of January 2022, by the following vote, to wit:
AYES: COUNCILMEMBERS: Bushey, Hill, Kertz, Llorens Gulati & Mayor Kate
NOES: COUNCILMEMBERS: None
ABSENT: COUNCILMEMBERS: None
LINDSAY LARA, City Clerk
Local Assistance Procedures Manual Chapter 10
Consultant Selection
Chapter 10 Consultant Selection
Contents
10.1 FEDERALLY FUNDED A&E CONTRACTS ........................................................................... vi
10.1.1 General ....................................................................................................................................1
Introduction ............................................................................................................................1
Definition of an Architectural and Engineering Consultant ....................................................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
Consultants Performing Work on Multiple Phases of Federal-aid Projects ...........................3
10.1.2 Identifying & Defining a Need for Consultants .........................................................................4
Appointing the Contract Administrator...................................................................................4
Segmenting Consultant Work ................................................................................................5
Figure 10-2: Segmenting Consultant Work...........................................................................6
Specify Products to be Delivered...........................................................................................6
Scope of Consultant Work .....................................................................................................6
Title VI Assurances ................................................................................................................6
Non-Discrimination Clause ....................................................................................................7
Disadvantaged Business Enterprise (DBE) Participation ......................................................7
Determine Type of Contract...................................................................................................8
Determining the Project Schedule .......................................................................................10
Determine Method of Payment ............................................................................................11
Cost-Plus-Fixed Fee ............................................................................................................11
Cost Per Unit of Work ..........................................................................................................11
Specified Rates of Compensation .......................................................................................12
Lump Sum ...........................................................................................................................12
10.1.3 A&E Consultant Audit and Review Process...........................................................................13
Applicable Standards...........................................................................................................13
Audit Guidance Available.....................................................................................................13
Allowable Costs ...................................................................................................................14
Safe Harbor Rate.................................................................................................................15
Approval or Acceptance of Indirect Cost Rates...................................................................16
Cognizant Letters of Approval .............................................................................................16
Caltrans Acceptance of Indirect Cost Rate..........................................................................16
Financial Review Performed Prior to Contract Execution....................................................17
Local Public Agencies’ Responsibilities ...............................................................................17
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Local Assistance Procedures Manual Chapter 10
Consultant Selection
Consultants’ Responsibilities (Both prime consultants and subconsultants).......................18
Independent Office of Audits and Investigations’ Responsibilities .......................................19
Audits and Reviews to be Performed ..................................................................................19
Indirect Cost Rate Audits .....................................................................................................19
CPA Workpaper Reviews ....................................................................................................20
Contract Audits ....................................................................................................................20
Incurred Cost Audits ............................................................................................................20
Audit Findings and Review Deficiencies..............................................................................21
10.1.4 Consultant Selection Methods ...............................................................................................22
One-Step RFP .....................................................................................................................23
One-Step RFQ.....................................................................................................................23
Two-Step (RFQ Followed by RFP) ......................................................................................23
10.1.5 Consultant Selection Using the One-Step RFP Method ........................................................25
Appoint Consultant Selection Committee ............................................................................25
Develop Technical Criteria for Evaluation of Proposals.......................................................25
Develop Schedule for Consultant Selection ........................................................................25
Prepare RFP........................................................................................................................26
Financial Management and Accounting System Requirements ..........................................27
Advertise for Consultants.....................................................................................................27
Conduct Proposer’s Conference or Answer Written Questions...........................................27
Receive and Evaluate Technical Proposals ........................................................................28
Develop Final Ranking and Notify Consultants of Results ..................................................28
Negotiate Contract with Top-Ranked Consultant ................................................................28
10.1.6 Consultant Selection Using the One-Step RFQ Method ....................................................30
Appoint Consultant Selection Committee ............................................................................30
Develop Technical Criteria for Evaluation of Qualifications.................................................30
Develop Schedule for Consultant Selection ........................................................................31
Prepare RFQ .......................................................................................................................31
Financial Management and Accounting System Requirements ..........................................32
Advertise for Consultants.....................................................................................................32
Issue/Publish RFQ...............................................................................................................32
Receive/Evaluate Statements of Qualifications and Develop Shortlist................................32
Notify Consultants of Shortlist..............................................................................................33
Interview Top-Ranked Consultants......................................................................................33
Develop Final Ranking and Notify Consultants of Results ..................................................34
Conduct Scoping Meeting....................................................................................................34
Request Cost Proposal........................................................................................................34
Negotiate Contract with Top-Ranked Consultant ................................................................35
10.1.7 Consultant Selection Using the Two-Step RFQ/RFP Method ................................................36
Combined RFQ and RFP.....................................................................................................36
Categorize work ...................................................................................................................37
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Local Assistance Procedures Manual Chapter 10
Consultant Selection
Establish Minimum Qualifications ........................................................................................37
Issue RFQ............................................................................................................................38
Set-Up Evaluation Process..................................................................................................39
Evaluate Qualifications and Add Firm to List.......................................................................39
Maintain List.........................................................................................................................39
Issue RFP to Pre-Qualified Consultants on List ..................................................................40
Conduct Proposer’s Conference or Answer Written Questions...........................................40
Receive and Evaluate Technical Proposals ........................................................................40
Develop Final Ranking and Notify Consultants of Results ..................................................41
Request Cost Proposal and Negotiate Contract with Top-Ranked Consultant....................41
10.1.8Completing the Project ...........................................................................................................42
Develop the Final Contract ..................................................................................................42
Review and Approval of Contracts ......................................................................................43
Execute Contract and Issue Notice to Proceed to Consultant.............................................44
Administer the Contract .......................................................................................................44
Substitution of Consultant Personnel and Subconsultants..................................................45
Invoicing (or Progress Payments)........................................................................................45
Contract Amendments .........................................................................................................46
Performance Evaluation ......................................................................................................47
Project Records ...................................................................................................................47
Retention Clauses ...............................................................................................................48
Review of Local Public Agency Actions...............................................................................48
10.1.9 Miscellaneous Considerations ...............................................................................................48
Agreements with Other Governmental Agencies.................................................................48
Small Purchase Contracts ...................................................................................................48
Noncompetitive Negotiated Contracts (Sole-Source)..........................................................49
Retaining a Consultant as an Agency Engineer or in Management Support Role ..............49
Construction Engineering Services......................................................................................52
10.1.10 Program Management .........................................................................................................52
10.1.11 References...........................................................................................................................53
10.2 STATE-ONLY FUNDED A&E CONTRACTS ..........................................................................55
10.2.1 General ..................................................................................................................................55
10.2.2 Definition of A&E....................................................................................................................56
10.2.3 Minimum Audit Requirements................................................................................................57
A. Written Procedures..........................................................................................................57
B. Conflict of Interest ...........................................................................................................57
C. Records...........................................................................................................................57
D. Full & Open competition..................................................................................................57
E. Selection Basis................................................................................................................57
F. Publication .......................................................................................................................57
G. Solicitation .......................................................................................................................58
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Local Assistance Procedures Manual Chapter 10
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H. Cost Analysis ..................................................................................................................58
I. Negotiations ......................................................................................................................58
10.3 NON-A&E CONTRACTS ........................................................................................................63
Scope...................................................................................................................................63
Determining Non-A&E .........................................................................................................63
Example of Determining Non-A&E ......................................................................................63
Intelligent Transportation System (ITS) Projects .................................................................64
Non-Infrastructure Projects..................................................................................................64
Governing Regulations and Codes for Non-A&E .................................................................65
Procurement of Non-A&E Consultant Contracts..................................................................65
RFP Basic Requirements ....................................................................................................65
Additional Requirements and Evaluation Criteria ................................................................66
Consultant’s Proposal ..........................................................................................................66
Cost Proposal Worksheet....................................................................................................67
DBE Consideration ..............................................................................................................67
Administrative Requirements...............................................................................................67
Oral Presentations Optional.................................................................................................68
Cost-Effective / Public Interest Finding................................................................................68
Protest / Appeals / Reinstatement Procedures ....................................................................68
10.4 A&E OVERSIGHT PROGRAM AND PROCESS REVIEW ....................................................69
General ................................................................................................................................69
Type of Reviews ..................................................................................................................69
Exhibit 10-C Review ............................................................................................................69
Review Findings and Deficiencies .......................................................................................70
10.5 SANCTIONS ...........................................................................................................................71
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Local Assistance Procedures Manual Chapter 10
Consultant Selection
Exhibits
Exhibit 10-A: A&E Consultant Financial Document Review Request
Exhibit 10-B: Suggested Consultant Evaluation Sheet
Exhibit 10-G: Individual A&E Task Order DBE Tracking Sheet
Exhibit 10-H: Sample Cost Proposal (Example #1 through #4)
Exhibit 10-I: Notice to Proposers DBE Information
Exhibit 10-K: Consultant Annual Certification of Indirect Costs and Financial Management System
Exhibit 10-O1: Consultant Proposal DBE Commitment
Exhibit 10-O2: Consultant Contracts DBE Commitment
Exhibit 10-Q: Disclosure of Lobbying Activities
Exhibit 10-R: A&E Boiler Plate Agreement Language
Exhibit 10-S: Consultant Performance Evaluation
Exhibit 10-T: Conflict of Interest & Confidentiality Statement
Exhibit 10-U: Consultant in Management Support Role Conflict of interest and Confidentiality Statement
All LAPM Exhibits are located at:
https://dot.ca.gov/programs/local-assistance/forms/local-assistance-procedures-manual-forms
Page v of ix
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Local Assistance Procedures Manual Chapter 10
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10.1 FEDERALLY FUNDED A&E CONTRACTS
Procurement Planning
1 2 3
Local Public Agency Local Public Agency Local Public Agency
*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 Conflict of
Interest (COI) and Scope of Work
(SOW) to DLA-HQ prior to
contract advertisement.
*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
(independent cost estimate)
*Determine Type of Contract
(Project Specific or On-Call)
*Determine Method of Payment:
Lump Sum; Cost-Plus- Fixed-
Fee; Cost Per Unit of Work; or
Specific Rate of Compensation
*Submit Exhibit 9-D to DLAE
A&E = Architectural and Engineering
IOAI = Caltrans Independent Office of 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
Figure 10-1: A&E Contract Procurement Process Workflow Diagram
Page vi of ix
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Local Assistance Procedures Manual Chapter 10
Consultant Selection
Solicitation Documents and Advertisement
4 5 6
Local Public Agency Local Public Agency Local Public Agency
*Determine Solicitation Document;
RFP or RFQ
*Appoint Consultant Selection
Committee
*Collect signed Conflict of Interest
forms and Confidentiality
Statements (see Exhibit 10-T:
Conflict of Interest &
Confidentiality Statement) from
all members involved in process
*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
IOAI = Caltrans Independent Office of 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
Figure 10-1: A&E Contract Procurement Process Workflow Diagram-continued
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Local Assistance Procedures Manual Chapter 10
Consultant Selection
Evaluation and Selection of Consultant
Contract Negotiation
7 8 9
Local Public Agency Local Public Agency Local Public Agency
*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 *Notify proposers of
ranking/Short List
*Retain all original score sheets
and summaries
*Send out RFPs to Short List
(two-step process)
*Conduct Interview of Short List
(if needed)
*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: Boiler Plate Agreement
Language for standard
contract language and
provisions)
*Open and analyze cost
proposal from the Highest
Ranked firm
Caltrans IOAI
*Review and evaluate 10-A
package 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
IOAI = Caltrans Independent Office of 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
Figure 10-1: A&E Contract Procurement Process Workflow Diagram-continued
Page viii of ix
January 2022
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( )
-
-
-
Local Assistance Procedures Manual Chapter 10
Consultant Selection
Contract Negotiation
Contract Execution
10 11 12
Local Public Agency Local Public Agency Local Public Agency
*Negotiate contract costs with the
most qualified Consultant
*Prepare and retain record of cost
negotiations
*Initiate CT IOAI Financial Review
Section (LAPM Section 10.1.3)
and send documents (Exhibit
10-A: A&E Consultant Financial
Document Review Request), if
applicable, to Caltrans IOAI
*Receive and analyze findings of the
Financial Review Letter from CT
IOAI, if any
*Address and resolve all findings by
IOAI 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
* Complete Exhibit 10-C database to
DLA-HQ prior to award or after
award, but no later than the first
invoice
*Retain Exhibit 10-C
*Finalize contract, cost proposal
*Retain copy of contract Financial
Review Letter with acceptance,
denial, or adjustment of the ICR
*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
DLAE
*Prior to concurring with invoice
payment related to consultant
services, ensure that district
confirms submittal of Exhibit 10-
C and has a copy of the
executed consultant contract on
file and 10-O1 and 10-O2. Also,
check IOAI database to ensure
that Exhibit 10-K: Consultant
Annual Certification of Indirect
Costs and Financial
Management System, if
applicable, has been received by
IOAI
Caltrans IOAI
*Perform Incurred Cost Audit, if
selected
A&E = Architectural and Engineering
IOAI = Caltrans Independent Office of 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
Figure 10-1: A&E Contract Procurement Process Workflow Diagram-continued
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Local Assistance Procedures Manual Chapter 10
Consultant Selection
10.1.1 General
Introduction
A Local Public Agency (LPA) may engage consultants to perform architectural, engineering, and
related services to develop a federal-aid funded project. LPAs requesting federal funds to
reimburse A&E Consultants must follow the selection and contracting procedures detailed in
Section 10.1 of this chapter. LPAs using local funds to procure an A&E Consultant on a federal-
aid funded project and will not seek federal reimbursement for the consultant cost may choose
not to follow the selection and contracting procedures detailed in Section 10.1 of this chapter.
LPAs using local funds to procure a consultant in a management support role are required to
obtain FHWA approval, see Section 10.1.9: Retaining a Consultant as an Agency Engineer or in
Management Support Role of this chapter.
Definition of an Architectural and Engineering Consultant
23 CFR 172 and Government Code 4252 further defines A&E services as those private
consulting firms providing architectural, landscape architectural, engineering, environmental,
land surveying, construction engineering, or program management are termed Architectural and
Engineering (A&E) Consultants.
Architectural and Engineering Consultants
The Brooks Act (40 USC, Section 1104) requires LPAs to award federally funded engineering
and design related contracts based on fair and open competitive negotiations, demonstrated
competence, and professional qualifications (23 CFR 172), at a fair and reasonable price (48
CFR 31.201-3).
Cost proposals submitted to the LPA must be sealed and must not be included as a criterion for
rating such consultants. After ranking, cost negotiations will begin with the most qualified
consultant and only their cost proposal will be opened. Should negotiations fail or result in a
price that the LPA does not consider fair and reasonable, negotiations must be formally
terminated, and the LPA must then undertake negotiations with the second most qualified
consultant.
If the negotiations with the second most qualified firm are not successful, negotiations must be
formally terminated and the LPA must then undertake negotiations with the third most qualified
consultant, and so on, until the price is determined to be fair and reasonable by the LPA.
In selecting an A&E consultant, a detailed technical proposal or qualifications proposal, and a
proposed contract will be required.
Depending upon the scope of work, the required contract provisions may need to include the
California State Prevailing Wages (Federal Payment of Predetermined Minimum Wage applies
only to federal-aid construction contracts). Prevailing wages will apply if the services to be
performed will involve land surveying (such as flag persons, survey party chief, rodman or
chainman), materials sampling and testing (such as drilling rig operators, pile driving, crane
operators), inspection work, soils or foundation investigations, environmental hazardous
materials and so forth. California State Prevailing Wage information is available through the
California Department of Industrial Relations websites below:
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Consultants will need to provide their Prevailing Wage Policy if their participation on the project
includes prevailing wage work. The policy will include information on the accounting treatment of
delta base and delta fringe, and verify the accounting treatment is consistent every year.
• DIR FAQ website
• DIR Wage Determination website
• Caltrans Prevailing Wage Interpretive Guidance
Non-A&E Consultants
Consultants other than A&E consultants may be selected using cost, cost and qualifications
(best value) or other critical selection criteria. The procedures outlined in this chapter can be
modified for selecting non-A&E consultants by adding a cost item to the contract proposal.
For more details on non-A&E consultants, see Section 10.3: Non-A&E Contracts of this chapter.
Selecting the Project
The LPA is responsible for selecting and initiating a federal-aid financed transportation project.
The decision to begin project development is influenced by the project needs, its acceptability,
the timing of studies, financing, and construction. The LPA must identify the project’s objectives
including the general level of improvement or service, operating standards, maximum cost and
the target date for project completion before commencing any consultant selection process.
Subcontracted Services
The consultant is responsible for performing the work required under the contract in a manner
acceptable to the LPA. The consultant’s organization and all associated consultants and
subconsultants must be identified in the proposal. If the consultant wishes to use a
subconsultant not specified in the proposal, prior written approval must be obtained from the
LPA. The subcontract must contain all required provisions of the prime contract. All subawards
must include adequate oversight, management, and administration of engineering and design
related consultant services and be administered in accordance with State laws and procedures
specified in 23 U.S.C.106(g)(4) and 2 CFR 200.331.
Organizational and Consultant Conflicts of Interest
In the procurement of contracts for engineering services by private consulting firms using
federal-aid highway funds, LPAs must take all the steps necessary to prevent fraud, waste, and
abuse. The LPA must develop and maintain a written code of conduct governing the
performance of its employees (including the contract administrator) engaged in the award and
administration of federal-aid highway funded contracts, including the prevention of conflicts of
interest in accordance with 23 CFR 172.7(b)(4).
A conflict of interest occurs when a public official’s private interests and his or her public duties
and responsibilities diverge or are not consistent. Conflicts of interest may be direct or indirect
(e.g., as result of a personal or business relationship). The appearance of a conflict of interest
should be avoided as an apparent conflict may undermine public trust if not sufficiently
mitigated.
Federal Regulation Governing Conflict of Interest (23 CFR 172.7(b)(4)) requires that:
• LPA must maintain a written code of standards of conduct for employees engaged in the
award and administration of engineering and design service contracts;
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• No contracting agency employee who participates in the procurement, management, or
administration of federal funded contracts or subcontracts must have, directly or
indirectly, any financial or other personal interest in connection with such contract or
subcontract;
• No person or entity performing services for a contracting agency in connection with a
federal funded project must have, directly or indirectly, any financial or other personal
interest, other than employment or retention by the contracting agency, in any contract
or subcontract in connection with such project;
• No person or entity performing services for a contracting agency in connection with a
federal-aid highway funded project must have, directly or indirectly, any financial or other
personal interest in any real property acquired for the project;
• No contracting agency employees or agents must neither solicit nor accept gratuities,
favors, or anything of monetary value from consultants, potential consultants, or parties
to sub-agreements;
• LPA must disclose in writing any potential conflict of interest to FHWA.
Consultants Performing Work on Multiple Phases of Federal-aid Projects
LPAs 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 LPAs are responsible for ensuring the public interest is maintained
throughout the life of a project and that a conflict of interest, real or apparent, does not occur or
is sufficiently mitigated by appropriate public agency controls. Prior to allowing a consulting firm
to provide services on subsequent phases of the same project, the contracting agency must
establish appropriate compensating controls in policies, procedures, practices, and other
safeguards to ensure a conflict of interest does not occur in the procurement, management, and
administration of consultant services.
When design and construction phase services are procured under a single solicitation, the
selection of the consulting firm must be based on the overall qualifications to provide both
design and construction phase services, which require different skill sets, experience, and
resources. Procuring these services under different solicitations may result in selection of a
more qualified firm to perform services in each phase, as the most qualified firm to perform
design phase services may not be the most qualified firm to provide construction phase
services. Similarly, the qualifications and capacity of a firm may change over time. As such, it
may not be appropriate to contract with a consulting firm to provide construction phase services
at the outset of a design phase, knowing that these services may not be needed for an
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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
10.1.9: Miscellaneous Considerations in this chapter) and retain it in the LPA files.
Miscellaneous Considerations Authorization to Proceed
The Federal Highway Administration (FHWA) must give the LPA an Authorization to Proceed
(E-76) with the work prior to performing of any work for which federal reimbursement is to be
requested, (see the LAPM Chapter 3: Project Authorization). Eligible consultant contracts may
be procured using local funds prior to receiving the E-76, but reimbursement is for work
performed after the E-76 authorization date. If contract is procured using state or local funds,
federal procedures must have been followed if seeking federal reimbursement. For state funded
projects see Section 10.2: State-Only Funded A&E Contracts and LAPG Chapter 25: State
Programs for Local Agency Projects, for guidance on when work may proceed.
Copies of the Authorization to Proceed and the consultant contract must be retained in the LPA
project files for future audit.
10.1.2 Identifying & Defining a Need for Consultants
The need for a consultant is identified by comparing the project’s schedule and objectives with
the LPA’s capabilities, its staff availability of the required expertise, and its funding resources. If
the LPA does not have sufficient staff capabilities, it may solicit assistance from another agency,
or use a qualified private consultant to perform the required work.
If the LPA determines that there is a need to solicit assistance from another LPA, or to use a
consultant, the District Local Assistance Engineer (DLAE) should be notified if federal-aid funds
are to be requested for the project segment to be contracted out.
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 LPA employee or have
staff that is qualified to ensure the consultant’s work is complete, accurate, and consistent with
the terms and conditions of the consultant contract. On federal-aid contracts, the Contract
Administrator or staff members must be a full-time employee and familiar with the work to be
contracted out and the standards to be used. The Contract Administrator must also abide by the
laws, regulations and policies required as part of accepting federal or state funding for their
project. Non-compliance with the laws, regulations, and policies may result in loss of project
funding.
The Contract Administrator’s duties are listed in 23 CFR 172.9(d)(1) and include:
• Contract negotiation, contract payment, and evaluation of compliance performance, and
quality of services provided by the consultant;
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• Being familiar with the contract requirements, scope of services to be performed, and
products to be produced by the consultant;
• Being familiar with the qualifications and responsibilities of the consultant’s staff and
evaluating any requested changes in key personnel;
• Scheduling and attending progress and project review meetings, commensurate with the
magnitude, complexity, and type of work, to ensure the work is progressing in
accordance with established scope of work and schedule milestones;
• Documenting contract monitoring activities and maintaining supporting contract records
as specified in 2 CFR 200.333;
• Provides direction to ensure the proposed work is advertised properly;
• Prepares and distributes the Request for Qualifications (RFQ), description of work, and
Request for Proposals (RFP), if used;
• Prepares the draft contract;
• Arranges for preparation before an independent estimate of the value of the work to be
contracted out;
• Ensures that the selection procedures are followed;
• Analyzes the selected/best-qualified consultant’s cost proposal;
• Ensures contract audit and review procedure is followed;
• Ensures that fee/profit negotiation is conducted and keeps records;
• Serves as the LPA’s primary contact person for the successful consultant;
• Monitors the consultant’s progress and provides direction;
• Ensuring consultant costs billed are allowable in accordance with the Federal cost
principles and consistent with the contract terms as well as the acceptability and
progress of the consultant’s work;
• Identifies other LPA staff for the consultant to contact, if needed;
• Closes out the contract at completion, by processing the final invoice; completing a
mandatory consultant evaluation, and final DBE utilization reports (Exhibit 17-F: Final
Report Utilization of Disadvantaged Business Enterprises (DBE) and First-Tier
Subcontractors) or Exhibit 17-F1: Final Report-Utilization of Disadvantaged Business
Enterprises (DBE) and First-Tier Subcontractors for On-Call Contracts.
Segmenting Consultant Work
Consultant services are most effective when consultant work is segmented appropriately. The
extent of segmenting depends upon the type and complexity of the work. Combining preliminary
engineering tasks with the preparation of the required environmental analysis is normally
desirable. Preparing an Environmental Assessment (EA) or Environmental Impact Statement
(EIS) is more than simply writing a report. Assessment and impact reports include preliminary
engineering needed to analyze project alternatives and produce an engineering and planning
assessment. Initial project studies include only as much traffic and engineering analysis of
alternatives, as is needed to produce a sound EA or EIS (see LAPM Chapter 6 Environmental
Procedures and Standard Environmental Reference (SER) Chapters 31: Environmental
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Assessment (EA)/Finding of No Significant Impact (FONSI) and Chapter 32: Environmental
Impact Statement (EIS). Final design must not begin until NEPA environmental approval has
been received if federal reimbursement is desired.
Refer to Figure 10-2: 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
services the consultant is to provide. From a detailed scope of work, consultants respond to a
project advertisement; determine personnel and time requirements; and develop a technical
proposal. Therefore, the scope of work must be clear, concise, complete, and describe the
deliverables, standards for design and other work, quality control measures, acceptance criteria
and deadlines.
Title VI Assurances
Title VI Assurances Appendices A and E must be included in each consultant contract. Include
Title VI Assurances Appendices B, C, and D if applicable. The consultant must include the Title
VI Assurances Appendices A and E, and if applicable Appendices B, C, and D in all
subcontracts to perform work under the contract. Include Title VI Assurances Appendices B, C,
and D if applicable. Refer to Exhibit 10-R: A&E Boilerplate Agreement Language, Article XXXII
Title VI Assurances.
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Non-Discrimination Clause
The Non-Discrimination Clause (Exhibit 10-R: A&E Boilerplate Agreement Language, Article
XVI Non-Discrimination Clause and Statement of Compliance) must be included in each
consultant contract. The consultant must include the non-discrimination and compliance
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 an LPA
to comply with the DBE program, and take necessary steps to ensure that DBE firms have the
opportunity to participate in the projects. Refer to Chapter 9: Civil Rights and Disadvantaged
Business Enterprises for DBE requirements for A&E Consultant Contracts.
Estimated Cost of Consultant Work
An independent estimate for cost or price analysis is needed for all consultant contracts (23
CFR 172.7(a)(1)(v)(B)) to ensure that consultant services are obtained at a fair and reasonable
price. The estimate must be prepared prior to opening the cost proposal from the top-ranked
consultant, so the LPA has a cost comparison to evaluate the reasonableness of the
consultant’s cost proposal. The estimate, which is specifically for the use of the LPA’s
negotiating team, is to be kept confidential and maintained for records.
A good cost estimate can be prepared only if the scope of work is defined clearly. The scope of
work must include a list of the products or services which the consultant is required to deliver,
and a time schedule of when they must be delivered.
It should be stressed that all work to be derived from the consultant services, such as
preliminary design, environmental or final design, must be clearly identified in the solicitation of
consultant services (RFQ or RFP) and included in the cost estimate. The addition of work to the
original scope by amendment should be avoided whenever possible. Contract modifications are
required for any amendments to the terms of the existing contract that change the cost of the
contract; significantly change the character, scope, complexity, or duration of the work; or
significantly change the conditions under which the work is required to be performed.
Some of the costs estimating techniques are:
Analogous Estimating:
Analogous cost estimating is using the actual cost of a previous, similar contract as the basis for
estimating the cost of the current contract. Analogous cost estimating is frequently used to
estimate costs when there is a limited amount of detailed information about the project.
Analogous cost estimating is generally less accurate, and it is most reliable when previous
projects are similar in fact, and not just in appearance, and it uses expert judgment.
Parametric Estimating:
Parametric estimating is a technique that uses statistical relationship between historical data
and other variables to calculate a cost estimate for an activity resource. This technique can
produce a higher level of accuracy depending upon the sophistication, as well as underlying
resource quantity and the cost data. A cost example would involve multiplying the planned
quantity of work by the historical cost per unit to obtain the estimated cost of the contract.
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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 LPA and consultant for the performance of
services and a defined scope of work related to a specific project or projects.
• Multi-phase contract is a project-specific contract where the defined scope of work is
divided into phases which may be negotiated and executed individually as the project
progresses.
• On-call contract is a contract that may be utilized for a number of projects, under which
task or work orders are issued on an as-needed basis, for an established contract period
and maximum total contract dollar amount. On-call contracts are typically used when a
specialized service of indefinite delivery or indefinite quantity is needed for a number of
different projects, such as construction engineering, design, environmental analysis,
traffic studies, geotechnical studies, and field surveying, etc. Many agencies use these
contracts to address peaks in workload of in-house engineering staff and/or to perform a
specialized service which the agency does not have. On-call contracts must specify a
reasonable maximum length of contract, not to exceed 5 years, and a maximum total
contract dollar amount (23 CFR 172). The maximum dollar amount for all contracts
awarded under the solicitation must be stated in the solicitation. The maximum dollar
amount is the aggregate of the on-call contracts anticipated to be awarded. For example,
if the solicitation lists that up to 5 contracts may be awarded, the aggregate amount of
these 5 contracts is the maximum contract dollar amount. Setting maximum amount on
each on-call contract under a multiple on-call solicitation does not meet the intent of 23
CFR172. How many contracts are anticipated to be awarded must be stated in the
solicitation. How task orders will be issued must be stated in the solicitation.
There are two options on how task orders must be awarded under multiple on-call
contracts for the same type of service under the same solicitation:
1. Through an additional qualifications-based selection procedure also known as
mini-RFP.
• Solicit task order to the multiple on-call consultants on the master on-call
contracts
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o Master on-call contracts are contracts awarded to on-call
consultants at the initial RFQ/RFP procurement process.
o Solicitation may be informal, e.g. email, letter, etc.; documentation
is required.
o Evaluation criteria must be included in the solicitation. The mini-
RFP contains evaluation criteria that matches the strengths of the
qualified firms to the specifics of the known tasks, thereby
selecting the most qualified firm for each task.
o The evaluation criteria can include:
i. availability of personnel,
ii. staff capabilities,
iii. DBE (10% or less of overall score); the overall DBE goal
was established at the master on-call contract,
iv. completion of time,
v. experience of consultant
vi. specialized expertise, and past performance.
• Evaluate and rank proposals and select from the multiple on-call
contracted consultants
o Recommend at least three panel members to evaluate and rank
o Evaluate based on criteria in mini-RFP solicitation
• Negotiate and award to the on-call contracted consultant
o The mini-RFP or the task order will be negotiated with first ranked
firm from each competition. Task order (mini-RFP) cost will be
based on wage rates established in the master on-call contract,
and the time and deliverable requirements in the task order.
• If only one proposal is received or there is an emergency, a Non-
Competitive process must be justified, and an Exhibit 12-F must be
documented and signed by the DLAE
• Awarding task order to the multiple on-call consultants on a rotational
basis does not meet the intent of the qualifications-based selection
• Exhibit 10-G must be used to track percentage of DBE per task order
2. Regional basis where each on-call consultant is contracted to a designated area.
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:
• Must define a general scope of work, complexity, and professional nature of
services.
• Specify a task order procedure the LPA uses to procure project specific work
under the contract.
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• Task order work performed after the master on-call contract has expired will
result in the costs being ineligible for federal or state reimbursement.
• If multiple consultants are to be selected and multiple on-call contracts awarded
through a single solicitation for specific services, the number of consultants that
may be selected or contracts that may be awarded must be identified.
• Specify procurement procedures in the contracts the LPA will use to award/
execute task orders among the consultants:
o Either through an additional qualification-based selection process (see
the Two-Step RFQ/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. The RFP may list multiple regions that allow
consultants to crossover or be a “backup” to other consultants that for
specifically documented reasons are not able to perform the work in their
assigned region. Per 23 CFR 172.9 (a)(3)(B)(2), the “backup” option
needs to be listed in the respective contracts.
An example of acceptable contract wording in multiple on-call contracts for the same
type of service:
• “Agency has or will enter into three (3) task order contracts for performance of
the Scope of Services identified in Exhibit “A”, including this Agreement (“CM
Services Task Order Contracts”). The other CM Services Task Order Contracts
are [identify other two contracts by agreement numbers and consultant firms].
The total amount payable by Agency for the CM Services Task Order Contracts
must not exceed a cumulative maximum total value of Seven Million, Five
Hundred Thousand Dollars ($7,500,000) (“NTE Sum”). It is understood and
agreed that there is no guarantee, either expressed or implied that this dollar
amount will be authorized under the CM Services Task Order Contracts through
Task Orders. Each time a Task Order is awarded under any of the CM Services
Task Order Contracts, the Agency must send written notification to Consultant
and each of the other consultants entering into the CM Services Task Order
Contracts. The notice must identify the total funds allocated under issued Task
Orders, and the remaining unencumbered amount of the NTE Sum. Consultant
acknowledges and agrees that Agency must not pay any amount under this
Agreement that would exceed the NTE Sum, and Consultant must not enter into
a Task Order that exceeds the NTE Sum.”
Determining the Project Schedule
The LPA develops a schedule for performance of work and completion of the project. The
schedule must include sufficient time to allow for:
• Selecting the consultant;
• Developing the consultant contract;
• Completing the A&E consultant contract audit process;
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• Conducting meetings and project reviews.
Determine Method of Payment
The method of payment of contract must be specified. The following four methods are permitted
under 23 CFR 172.9(b) depending on the scope of services to be performed:
• 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).
The method of payment to the consultant must be set forth in the original solicitation, contract,
and in any contract modification thereto. A single contract may contain different payment
methods as appropriate for compensation of different elements of work. Markups are not
allowed on any of the four methods of payment.
The cost plus a percentage of cost and percentage of construction cost methods of payment
must not be used. Both of these methods are explicitly prohibited by 23 CFR 172.9(b).
Cost-Plus-Fixed Fee
The consultant is reimbursed for costs incurred and receives an additional predetermined
amount as a fixed fee (profit). Federal regulations require that profit be separately negotiated
from contract costs. The determination of the amount of the fixed fee must take into account the
size, complexity, duration, and degree of risk involved in the work. The fixed fee is not
adjustable during the life of the contract. The fixed fee dollar amount must be clearly stated in
the contract. See the DLA A&E website for a useful tool on Profit/Fee Determination.
This method of payment is appropriate when the extent, scope, complexity, character, or
duration of work cannot be precisely predicted. The fixed fee limit applies to the total direct and
indirect costs. Fixed fees in excess of 15 percent of the total direct labor and indirect costs of
the contract may be justified only when exceptional circumstances exist. The contract must
specify a reasonable maximum length of contract period and a maximum total contract dollar
amount (see Exhibit 10-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 by the LPA before they incur work on the contract or the costs can be
questioned or disallowed. LPAs are not required to update the Exhibit 10-C: A&E Consultant
Contract Database when new key employees and/or classification are added to a contract. For
more details, reference Section 10.1.8. Completing the Project.
Cost Per Unit of Work
The consultant is paid based on specific item of work performed. The item of work must be
similar, repetitious and measurable, such as a specific geotechnical investigation and material
testing. This method of payment is appropriate when the cost per unit of work can be
determined with reasonable accuracy in advance, but the extent or quantity of the work is
indefinite. Contract payment provisions must specify what is included in the price to be paid for
each item. Any item of work not identified in the contract cost proposal is not eligible for
reimbursement. New items of work (those within the original scope of work only) must be
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amended into the contract before work is performed. The contract must 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. Other direct costs
regardless of amount are to be listed on the cost proposal.
This method of payment should only be used when it is not possible at the time of procurement
to estimate the extent or the duration of the work, or to estimate costs with any reasonable
degree of accuracy. This method should not be used for project specific contracts and is
recommended for on-call contracts for specialized or support type services, such as
construction engineering and inspection, where the consultant is not in direct control of the
number of hours worked, and it also requires management and monitoring of the consultant’s
level of effort and the classification of employees used to perform the contracted work. The
contract must also specify a reasonable maximum length of contract period and a maximum
total contract dollar amount (see Exhibit 10-H, Example #2 and Exhibit 10-R, Article V Option 3).
Lump Sum
The consultant performs the services stated in the contract for an agreed amount as
compensation, including a net fee or profit. This method of payment is appropriate only if the
extent, scope, complexity, character, duration, and risk of the work have been sufficiently
defined to permit fair compensation to be determined and evaluated by all parties during
negotiations (see Exhibit 10-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 must be based on percent of work
complete or completion of clearly defined milestones. The contract cost proposal must
document the agreed upon progress payment and include the necessary milestones costs, or
the percent work complete schedule.
Changes to Exhibit 10-H requiring resubmittal to Independent Office of Audits and Investigations
for review:
• Consultant/subconsultant name change
• New participating subconsultant’s ICR
• Change in ICR rate
Since these changes require an amendment, the LPA is to update the Exhibit 10-C: A&E
Consultant Contract Database.
A firm fixed price method of payment is not the same as lump sum. A firm fixed price contract
must not be amended.
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10.1.3 A&E Consultant Audit and Review Process
This section outlines the audit and review process for A&E contracts that at any time use
state or federal funds. All proposed A&E contracts and supporting documents are subject to
audit or review by Caltrans’ Independent Office of Independent Office of Audits and
Investigations (IOAI), other state audit organizations, or the federal government. Not all
proposed contracts will be audited or reviewed; rather, they will be selected on a risk-based
approach.
Applicable Standards
State and federal requirements listed below, and specific contract requirements, serve as
the standards for audits and reviews performed.
LPAs, consultants, and subconsultants are responsible for complying with state, federal, and
specific contract requirements. LPAs are responsible for determining the eligibility of costs
to be reimbursed to consultants.
Applicable standards include, but are not limited to:
• Caltrans Local Assistance Procedures Manual (LAPM);
• State and Federal agreements between LPAs and Caltrans, (i.e. Master
Agreements);
• Project Program Supplemental Agreements;
• 23 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 (FAR), Chapter 1, Part 31-Contract Cost
Principles and Procedures;
• 48 CFR, Chapter 99 – Cost Accounting Standards (CAS), Subpart 9900;
• 2 CFR 200 – Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards;
• United States Government Accountability Office, Government Auditing Standards -
Generally Accepted Government Auditing Standards (GAGAS);
• California Government Code sections 4525-4529; and
• Proposed contract terms and conditions.
See Section 10.1.11: References of this chapter for links to above referenced standards.
Audit Guidance Available
The American Association of State Highway and Transportation Officials, Uniform Audit &
Accounting Guide (AASHTO Audit Guide), which is referred to frequently in this section, is a
valuable tool to guide LPAs, consultants and Certified Public Accountants (CPA) through the
requirements for establishing, and audits of FAR compliant Indirect Cost Rates (ICR). The
AASHTO Audit Guide is used extensively as an industry guide in the audit and review
process.
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LPAs may seek accounting assistance from internal audit staff and an independent CPA for
compliance. The consultant may seek professional guidance in selecting its independent
CPA. See also the AASHTO Audit Guide, Ch 2.5C. Selection of CPA Firm as Overhead
Auditor for guidance in the selection process. Training is also offered by FHWA’s National
Highway Institute (see https://www.nhi.fhwa.dot.gov/home.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)
For training and additional information provided by Caltrans Local Assistance, visit the
Caltrans Local Assistance Blog. For FHWA’s Q&A for ICRs and audits, and A&E related
services, visit FHWA.
Allowable Costs
23 USC 112 (b)(2)(B) states 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, must be performed and audited in compliance with the Federal cost principles.
LPAs are required to perform a cost analysis to ensure all costs are allowable and 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 must
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. Examples of Cost Analysis Worksheets are provided at Exhibit 10-H1 through 4.
LPAs are required to apply Caltrans accepted consultant or subconsultant’s ICRs, to
contracts. An ICR is valid for the one-year applicable accounting period accepted or audited
by Caltrans. Consultants must update, on an annual basis, ICRs in accordance with the
consultant’s annual accounting period and in compliance with the Federal cost principles.
For further guidance, refer to 23 CFR 172.11(b)(1). If the consultant is subject to Cost
Accounting Standards (CAS), the consultant must use the applicable ICR for the contract.
A consultant’s accepted ICR for its one-year applicable accounting period must 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 must
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.
Consultants must account for costs appropriately and maintain records, including supporting
documentation, adequate to demonstrate that costs claimed have been incurred, and are
allowable, reasonable, and allocable to the contract, and comply with Federal cost principles.
IOAI and representatives of the Federal Government have the right to conduct an audit of all
contract costs. If the costs are subsequently determined to be unallowable, these costs are
subject to repayment. For further guidance, refer to 23 CFR 172 and 48 CFR 31.
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Generally, whenever LPAs, consultants and/or contractors are unable to provide requested
documentation, it must be viewed that the services were either not performed or the costs not
properly recorded. Retention of all documents is required as it reduces the possibility of audit
findings and disallowed costs. For more references, refer to Applicable Standards in this
chapter.
Safe Harbor Rate
Developing ICRs annually can place a significant burden on some small or new and emerging
A&E consulting firms that lack financial sophistication to develop an ICR, as well as on other
established A&E consulting firms that may not have previous experience with federally funded
contracts for which an ICR would have been developed in compliance with Federal cost
principles 48 CFR 31. This may create a barrier for otherwise eligible and qualified firms to
compete for federally funded contracts.
To help alleviate and remove potential barriers, the Division of Local Assistance (DLA) has
adopted Caltrans Division of Procurement and Contract’s (DPAC) Safe Harbor Rate (SHR)
process and rates which took into account LPAs’ data. The SHR information and rates can be
found at the following DLA A&E website: https://dot.ca.gov/programs/local-assistance/guidance-
and-oversight/consultant-selection-procurement. To request information regarding the SHR
methodology, email the DLA A&E branch at aeoversight@dot.ca.gov. Eligible A&E consultant
firms can choose to use the DLA SHR rate on new A&E contracts using federal-aid highway
funds executed by LPAs in the State of California.
Use and application of the SHR by eligible firms provides reasonable assurance of consultant
compliance with the Federal cost principles per 23 CFR 172.11(c)(2). A&E consulting firms
approved to use the established SHR will have their accounting system evaluated for
capabilities of accumulating and tracking direct labor for applying the SHR, as well as for billing
other direct costs by contract, segregating indirect costs, etc.
Use of the SHR is voluntary on behalf of the A&E consulting firm and LPAs. LPAs have the
discretion to determine certification of eligibility based on requirements shown on the following
SHR certification form: Consultant Firm Certification of Eligibility and Certification of Financial
Management System.
A&E consultant firms (prime and/or sub consultants) that have not had an ICR previously
accepted by a cognizant agency may elect and request to use the SHR in a contract by
submitting the completed SHR certification form, Consultant Firm Certification of Eligibility and
Certification of Financial Management System, including the Questionnaire for Evaluating
Consultant Firm’s Financial Management System section, and any other documents as needed.
This requirement is in addition to the A&E Consultant Audit and Review Process requirements
described in this chapter.
It is the LPA’s responsibility to:
• Collect and screen all requests to use the safe harbor indirect cost rate. See SHR
certification form, Consultant Firm Certification of Eligibility and Certification of Financial
Management System, including the Questionnaire for Evaluating Consultant Firm’s
Financial Management System section.
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• Submit all SHR documents to the Independent Office of Audits & Investigations (IOAI) as
part of the A&E Consultant Financial Document Review Request (Exhibit 10-A) package.
The IOAI email address is: Conformance.Review@dot.ca.gov.
Requests to use the safe harbor indirect cost rate must be accepted/approved by IOAI before
contracts are executed.
Approval or Acceptance of Indirect Cost Rates
Cognizant Letters of Approval
A cognizant approved ICR has been audited by a Cognizant agency (a State transportation
agency of the State where the consultant's accounting and financial records are located or a
State transportation agency to which cognizance for the particular indirect cost rate(s) of a
consulting firm has been delegated or transferred to in writing by the State transportation
agency where the consultant’s accounting and financial records are located) in accordance
with generally accepted government auditing standards to test compliance with the
requirements of the Federal cost principles (per 48 CFR 31) and the cognizant agency has
either 1) issued an audit report of the consultant's indirect cost rate or 2) conducted a review of
an audit report and related workpapers prepared by a certified public accountant and issued a
letter of concurrence with the audited indirect cost rate(s). The cognizant agency approves the
ICR and a cognizant approval letter is issued.
Caltrans Acceptance of Indirect Cost Rate
When the ICRs have not been established by a cognizant agency, Caltrans must perform an
audit or review of a consultant’s and subconsultant’s ICR(s) to provide reasonable assurance of
compliance with Federal cost principles.
An audit or review of the ICR may consist of one or more of the following:
• Perform a review to determine if the ICR was prepared in accordance with 23 CFR Part
172, and 48 CFR, Chapter 1, Part 31;
• Perform an audit to determine if the ICR was prepared in accordance with 23 CFR Part
172, and 48 CFR, Chapter 1, Part 31; and issue an audit report;
• Review and accept an ICR 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. LPAs must 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. LPAs may check IOAI’s website for
consultant’s approved or accepted ICRs. All approved or accepted ICRs are issued an
Acceptance Identification (ID) number by IOAI that is posted to IOAI’s website. This ID number
should be referenced on all future contracts that use the same fiscal year ICR. ICR can be fixed
for the life of the contract in prior written document or annually updated. Once it has been
updated, it must be annually updated and the most current fiscal year of ICR must be used.
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 with
Caltrans or LPA contracts using pass-through Caltrans funding. LPAs include Cities, Counties,
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Metropolitan Planning Organization, Special Districts, and Regional Transportation Planning
Agencies.
Financial Review Performed Prior to Contract Execution
All consultants, including prime and subconsultants, on a proposed contract with a dollar
value equal to or greater than $150K are subject to an ICR financial review by IOAI. The
financial documents required are detailed in Exhibit 10-A, A&E Consultant Financial Document
Review Request Letter and Exhibit 10-A Checklist. IOAI will review the ICR financial
documents to either accept or adjust the indirect cost 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;
• Experience of consultant with FAHP contracts;
• General responsiveness and responsibility;
• The approximate contract volume and dollar amount of all A&E contracts awarded to
the consultant by Caltrans or an LPA 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;
• For ICRs that have been adjusted by IOAI, the consultant must provide a revised cost
proposal that reflects the adjusted ICR.
Local Public Agencies’ Responsibilities
LPAs 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 Financial
Document Review Request and the Exhibit 10-A-Checklist. LPAs are responsible for
forwarding these documents to IOAI for review. LPAs are also required to ensure that IOAI
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. The proposed ICR, however, can be lower than
ICR in Exhibit 10-K and the consultant’s ICR schedule if the consultant elects to propose a
lower ICR. For contracts spanning more than one year, LPAs 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. ICR updates
are not required to IOAI if the ICR is fixed for the life of the contract. ICR’s are only reviewed
for consultants that are being awarded a contract, not consultants on a shortlist or
prequalified list.
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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. LPAs 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 LPA 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, reasonable, 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
LPAs are required to establish that all costs are in compliance with the Federal cost
principles, 48 CFR, Chapter 1, Part 31, 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.
Instructions are provided in the Exhibit 10-A on the requirements for submitting a complete
Financial Review packet. Financial packets can be e-mailed to:
conformance.review@dot.ca.gov.
Alternatively, if you do not have Internet access, you can mail Financial Review packets to:
Department of Transportation
Independent Office of Audits and Investigations
MS 2 Attention: External Audit Manager
P.O. Box 942874
Sacramento, CA 94274-0001
Consultants’ Responsibilities (Both prime consultants and subconsultants)
A&E prime consultants and subconsultants in contract with LPAs using state or federal-aid
highway funds should refer to Exhibit 10-A and the 10-A Checklist for the ICR financial
documents required to be submitted to their LPA. 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, Chapter 1, 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. The Exhibit 10-A and
10-K should be submitted to the LPA who will forward a copy to IOAI along with all other
related and required financial documents. For all future contracts within a same fiscal year,
the consultant needs to only provide a copy of the Exhibit 10-K to the LPA.
Consultants must 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 subsidiary’s ICR.
ICR schedules for both prime consultants and sub-consultants should be prepared using the
accrual basis of accounting and be presented in compliance with the Federal cost principles.
Figure 10-3 at the end of this chapter provides an example of a Standard Indirect Cost Rate
Schedule that consultants can use when preparing their own.
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For public works Prevailing Wage contracts, all workers 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.
For guidance see Caltrans’ Prevailing Wage Interpretive Guidance and webinar on IOAI’s
website.
When determined necessary, IOAI may request additional information, such as a labor
distribution summary and Executive Compensation Analysis (ECA). A consultant’s labor
distribution summary report is a labor expense report that detail all hours worked (paid and
unpaid) for a fiscal year, wages earned, and benefits accrued by all the consultant’s
employees. The labor summary report should include employee names, salaries, hourly
rates, total hours worked segregated by direct hours, indirect hours, paid time off hours, and
uncompensated hours and amounts.
An ECA is an evaluation by the consultant to determine the allowability and reasonableness
of executive compensation in compliance with Federal cost principles and the AASHTO Audit
Guide that can be based on either the National Compensation Matrix or independent
compensation surveys.
Independent Office of Audits and Investigations’ Responsibilities
After IOAI receives a consultant’s complete financial document packet (per Exhibit 10-A and
Exhibit 10-A Checklist) from the LPA, IOAI will review the proposed ICR and supporting
documents and notify LPAs in writing whether the proposed ICRs are accepted or adjusted.
Contracts will be executed after IOAI either accepts or adjusts 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 IOAI before executing the contract. An email
notification from IOAI serves as documentation to support an accepted ICR.
Audits and Reviews to be Performed
After contract execution, a consultant’s ICR may be subject to further detailed review or
audit by IOAI based on certain risk factors. Costs that are determined to be unallowable as
a result of the review or audit will be subject to repayment.
Indirect Cost Rate Audits
During an ICR audit, IOAI or an independent CPA will examine the consultant’s proposed
ICR for a one-year accounting period 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 172.11, 48 CFR 31
and other FAR and State requirements). As a result of the audit, the LPA will work with the
consultant to adjust the ICR 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. There is also a review
program at Appendix A which serves as a guide for CPAs and IOAI when performing ICR
audits and can also be used as a resource for consultants when preparing for an ICR audit.
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CPA Workpaper Reviews
During a workpaper review of a CPA audit of an ICR, IOAI will review the CPA’s audit
workpapers to determine whether to issue a Cognizant Letter of Approval for the ICR. The
CPA Workpaper Review determines 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.
Chapter 11 of the AASHTO Audit Guide provides information to the CPA on the required
audit disclosures.
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. 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, auditors will review a consultant’s financial management system
and contract cost proposal to determine if:
• The consultants’ accounting system is adequate to accumulate and segregate costs;
• Costs are reasonable, allowable, allocable and supported adequately;
• The contract contains all required fiscal provisions;
• Proper state and federal procurement requirements were followed.
Incurred Cost Audits
During an Incurred Cost Audit, auditors will review incurred contract costs to determine if:
• Cost data are maintained in an accounting system that adequately gathers, records,
classifies, summarizes, and reports accurate and timely financial data for direct and
indirect project costs by account;
• Costs are adequately supported, reasonable, allowable, and allocable;
• Costs incurred are in compliance with state and federal laws and regulations;
• Costs incurred are in compliance with the Master Agreement and Supplemental
Agreement;
• Costs incurred are in 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.
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Audit Findings and Review Deficiencies
If a consultant’s ICR is audited or reviewed, LPAs are responsible for ensuring all executed
and future contracts reflect the audited and adjusted fiscal year ICR(s). LPAs should request
reimbursement from the consultant for overpayment on rates that were adjusted down.
The LPAs may be subject to sanctions outlined in Section 10.5 Sanctions if the state or
federal government determines that any reimbursements to the consultant are the result of
lack of proper contract provisions, unallowable charges, unsupported activities, or an
inadequate financial management system.
Example of a FAR Compliant Indirect Cost Rate Schedule -Sample Consulting Company
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) $ -$ -$ -
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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
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.
This section outlines the audit and review process for A&E contracts that at any time use federal
and/or state funds. All proposed A&E contracts and supporting documents are subject to audit
or review by Caltrans’ Independent Office of Independent Office of Audits and Investigations
(IOAI), other state audit organizations, or the federal government. Not all proposed contracts will
be audited or reviewed; rather, they will be selected on a risk-based approach.
10.1.4 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
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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.
Beginning with Section 10.1.5: Consultant Selection Using the One–Step RFP Method, each of
the selection methods is explained in detail. Regardless of the method used, the LPA must
retain all consultant selection documentation in their project files as required by 23 CFR 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). Note that specifications
and requirements in the RFQ must cover all aspects of the final need. An RFP specific to the
project, task, or service must be included in the solicitation for evaluation of a consultant's
specific technical approach and qualifications.
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 LPAs 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. Regardless of any process utilized for prequalification of consultants or for an initial
assessment of a consultant's qualifications under a RFQ, a RFP specific to the project, task, or
service is required for evaluation of a consultant's specific technical approach and qualifications.
For more information, refer to description of on-call contract in Section 10.1.2: Identifying &
Defining a Need for Consultants. This method requires substantially more work and time than
the other two methods described above.
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Initiate Project Select Consultants
Complete First Step
ϖ Select Project
ϖ Set Project Objectives
ϖ Appoint Contract Administrator
ϖ 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
ϖ Lump Sum
ϖ Cost-Plus-Fixed-Fee
ϖ Cost Per Unit of Work
ϖ 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
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Local Assistance Procedures Manual Chapter 10
Consultant Selection
10.1.5 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. This procurement procedure usually involves a single step process with issuance of a
request for proposal (RFP) to all interested consultants. For non-A&E consulting contracts, a
cost proposal must 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 LPA 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 LPA of its responsibility to ensure that proper procurement procedures are followed
and all requirements are met.
LPA 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: 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. In-State or local
preference must not be used as factor in the evaluation, ranking, and selection phase. All non-
technical evaluation criteria, including DBE participation, must not exceed 10 percent (23 CFR
172.7(a)(1)(iii)(D)). All price or cost related items which include, but are not limited to, cost
proposals, direct salaries/wage rates, indirect cost rates, and other direct costs are prohibited
from being used as evaluation criteria.
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 LPA 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.
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Prepare RFP
The information required in an RFP solicitation includes the following:
• Description of project;
• Clear, accurate, detailed Scope of work, technical requirements, and qualifications;
• Services to be performed;
• Deliverables to be provided;
• Procurement schedule;
• Applicable standards, specifications, and policies;
• 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 concealed format. Cost proposals are requested from the highest ranked firm.
If these negotiations are formally terminated, the cost proposal is then requested from
the next highest ranked firm. See Exhibit 10-H: Sample Cost Proposal (Example 3) for
sample cost proposal formats;
• Contract audit and review process requirements (see Section 10.1.3: A&E Consultant
Audit and Review Process);
• Proposal format and required contents;
• Method, criteria and weighting for selection;
• Requirements for any discussions that may be conducted with three or more of the most
highly qualified consultants following submission and evaluation of proposals;
• Specify contract type;
• Special provisions or contracts requirements;
• A DBE contract goal is specified in the solicitation (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 200.318(k) and 2 CFR
172.5(c)(18).
• Title VI of the Civil Rights Act of 1964 – disadvantage business enterprises will be
afforded full opportunity to submit bids in response to this invitation and will not be
discriminated against on the grounds of race, color, sex, national origin, religion, age, or
disability in consideration for an award.
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. A minimum of fourteen (14) calendar days is required between the time the
RFP is published and time that proposals must be submitted. More time may be required for
complex contracts or projects.
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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 must 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;
• References.
Financial Management and Accounting System Requirements
The LPA must ensure that consultant contract solicitation and advertising documents (RFPs)
clearly specify that contracts must not be awarded to a consultant without an adequate
financial management and accounting system as required by 48 CFR 16.301-3, 2 CFR 200, and
48 CFR 31. The LPA 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 must 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, Public Purchase, or posting the RFP on the LPA’s or other widely used
websites are all acceptable methods of solicitation.
To document website postings, the LPA should retain copies of screen shots displaying the
posted begin/end dates.
The LPA must keep a record of all consultants that have downloaded RFP online 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 LPA 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 LPA must publish or mail their
responses to any written questions to all consultants receiving the RFP. No response should be
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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
considered nonresponsive and rejected without evaluation. Late submittals, submittals to the
wrong location, or submittals with inadequate copies are considered nonresponsive and must
be rejected. Submittal of additional information after the due date must 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.
The justification should state that the solicitation did not contain conditions or requirements that
arbitrarily limited competition per 23 CFR 172(a)(1)(iv)(D) and competition is determined to be
inadequate and it is not feasible or practical to re-compete under a new solicitation per 23 CFR
172(a)(3)(iii)(C). If only one proposal is received, a Non-Competitive process must be justified
and an Exhibit 12-F 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 must 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 evaluates each proposal; interviews the three or more highest ranked
consultants (short listed) if noted in solicitation; 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. The LPA
may have an established procedure adopted for conducting debriefings but may also consider
the following: 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 Indirect Costs and Financial Management
System of Costs and Financial Management System and Exhibit 10-A: A&E Consultant
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Financial Document Review Request, whichever is applicable (see Section 10.1.3: 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 consultants 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
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 LPA. At the
completion of successful cost negotiations, all remaining sealed envelopes containing cost
proposals must be returned to consultants.
Cost proposals in electronic form must 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
must not be opened by the LPA or any private entity that the LPA uses to store the cost
proposals. Any concealed cost proposals of the unsuccessful consultants must be returned
unopened or properly disposed of in accordance with the LPA’s written policies and procedures.
The independent cost estimate, developed by the LPA 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. Items necessary for the
independent cost estimate include, hours/detailed work, direct labor costs, indirect labor costs,
other direct costs, and profit/fee. Agencies must retain documentation of how the cost estimate
was developed. 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 10.1.3: A&E Consultant
Audit and Review Process in this chapter). LPA Contract Administrator ensures that all required
documentations are provided to Caltrans IOAI within 10 days of written request, including all
documents for a Financial Review, if applicable. Caltrans IOAI 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 IOAI
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.
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The consultant’s ICR is not a negotiable item. A lower rate cannot be negotiated by the LPA.
The LPA and the consultant will agree on the final cost proposal and incorporate into final
contract. Retain all documentation related to negotiations.
Before executing the consultant contract, the LPA must review contract to ensure that all federal
and state requirements have been met (see A&E Consultant Procurement Checklist:
https://dot.ca.gov/programs/local-assistance/environmental-and-other-policy-issues/consultant-
selection-procurement for sample template) and adjustment or denial of ICR as identified in the
Financial Review Letter has been included in the final cost proposal, if applicable.
Prior to contract award, or after contract award but no later than the first invoice, the LPA must
submit a completed Exhibit 10-C for all new federal funded A&E consultant contracts using the
database at https://dla.dot.ca.gov/fmi/webd/Exhibit%2010-C (please use Firefox or Chrome if
not supported by your browser). Submission of Exhibit 10-C to the Exhibit 10-C database is not
required for non-A&E consultant contracts.
If there are any changes requiring an amendment to the contract after submittal of Exhibit 10-C,
refer to Section 10.1.8: Contract Amendments.
10.1.6 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 LPA standards that will be used in the contract.
Participation by a Caltrans district representative is at the option of the LPA and subject to the
availability of the DLAE staff. Caltrans participation on the interview panel does not relieve the
LPA of its responsibility to ensure that proper procurement procedures are followed and all
requirements are met.
LPA 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
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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 LPA should consult with the DLAE before making major changes to the suggested
approach.
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 10.1.3: 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 in the solicitation (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 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 must not
change (be different than) in the executed contract;
• Staff resumes;
• Related projects that key personnel have worked on;
• Qualifications/experience of the firm;
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• 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 LPA must ensure that Consultant contract solicitation and advertising documents (RFQs)
clearly specify that contracts must not be awarded to a consultant without an adequate financial
management and accounting system as required by 48 CFR 16.301-3, 2 CFR 200, and 48 CFR
31. The LPA 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 must 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 LPA should retain copies of screen shots displaying the posted begin/end dates.
In the second approach, the LPA 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 LPA for the RFQ. The RFQs must 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 LPA must publish the RFQ online and also issue the RFQ to all consultants responding to
newspaper advertisement. The LPA must 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.
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
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location, and submittals with inadequate copies are considered nonresponsive and must be
rejected. Submittal of additional information after the due date must 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 an Exhibit 12-F 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
if interviews were an option in the solicitation. 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 LPA may answer any
questions concerning the scope of work to be contracted out, if not done earlier during the
solicitation. In addition, the LPA 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 LPA in writing. It is required 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 must be completed, and other information gathered before the
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 must 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:
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• 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 LPA
must 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.
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.
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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 Indirect Costs and Financial Management
System and Exhibit 10-A: A&E Consultant Financial Document Review Request, whichever
applicable (see Section 10.1.3: 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 LPA reviews the cost
proposal and compares it with the LPA’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 LPA the services or products required at a fair and reasonable cost. The independent cost
estimate, developed by the LPA 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 must be returned to consultants.
Cost proposals in electronic form must 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
must not be opened by the LPA or any private entity that the LPA uses to store the cost
proposals. Any concealed cost proposals of the unsuccessful consultants must be returned
unopened or properly disposed of by permanently deleting the cost proposals in accordance
with LPA’s written policies and procedures.
A contract audit and review may be required (see Section 10.1.3: A&E Consultant Audit and
Review Process earlier in this chapter). LPA Contract Administrator is responsible for the
submittal of all required documentations to Caltrans IOAI in a timely fashion, including all
documents for a Financial Review, if applicable. Caltrans IOAI 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 IOAI 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;
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• 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 LPA.
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 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 LPA must review contract to ensure that all federal
and state requirements have been met (see A&E Consultant Procurement Checklist at
https://dot.ca.gov/programs/local-assistance/guidance-and-oversight/consultant-selection-
procurement), and receive Caltrans IOAI’s Financial Review acceptance letter, if applicable.
Prior to contract award, or after contract award but no later than the first invoice, the LPA must
submit a completed Exhibit 10-C for all new federal funded A&E consultant contracts using the
database at https://dla.dot.ca.gov/fmi/webd/Exhibit%2010-C (please use Firefox or Chrome if
not supported by your browser).
If there are any changes to the contract after submittal of Exhibit 10-C, refer to Section 10.1.8:
Contract Amendments.
10.1.7 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. This procurement procedure involves a
two-step process with issuance of a request for qualifications (RFQ) whereby responding
consultants are evaluated and ranked based on qualifications and an RFP is then provided to
three or more of the most highly qualified consultants. The two-step method leads to an
executed project specific contract.
A different process may also be used that includes assessing minimum qualifications of
consultants to perform services under general work categories or areas of expertise through a
prequalification process whereby annual statements of qualifications and performance data are
encouraged. These consultants are not ranked, and an RFP must be submitted to the entire list
for evaluation and consideration. Regardless of any process utilized for prequalification of
consultants or for an initial assessment of a consultant's qualifications under a RFQ, a RFP
specific to the project, task, or service is required for evaluation of a consultant's specific
technical approach and qualifications.
The initial steps in this method (up to the development and notification of the shortlist) are
similar to the steps followed when using the One-Step RFQ method. At this point, the
consultants from the shortlist are issued an additional 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 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 not clearly known, very complex or
unusual.
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The Two-Step RFQ/RFP is also well suited for procuring multiple on-call contracts through a
single solicitation (see Section 10.1.2 Determine Type of Contract). The outcome of the first
step RFQ will be multiple contracts, or on-call list of consultants. For multiple on-call contracts,
project work will be procured through subsequent competition or mini-RFPs amongst the on-call
consultants.
LPAs may also use the Two-Step RFQ/RFP method to:
1. Develop and maintain a pre-qualified file/list of consultant firms by specific work
categories or areas of expertise. This list includes all consultants that meet the minimum
published pass/fail requirements. The pre-qualified list can be updated annually or at
least every two years and must be maintained by the agency. This list has not gone
through the evaluation process.
2. Create a short list of evaluated and ranked consultants that leads to executed contracts
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 when the scope of work is very
complex or unusual.
Categorize work
Descriptions of the categories of work, deliverables and the minimum qualification standards for
each category must be clearly identified.
The LPA may prequalify consulting firms in the following (or more) categories:
• Roadway Design
• Bridge Design
• Bridge Inspection
• Traffic Engineering
• Environmental Services
• Roadway Construction Inspection and Administration
• Landscape Architecture
• Land Surveying
• Intelligent Transportation System (ITS)
• Federal–aid Highway Project Development Support Services
Establish Minimum Qualifications
In an effort to ensure quality performance and results, a consultant should be required to meet
certain minimum qualifications to be eligible for consideration in the pre-qualification process.
General criteria guidelines should be established for consultant selection for a pre-qualified list.
The criteria may be established by an individual or a panel of subject matter experts for the
specific task of developing the criteria. Some agencies also establish appropriate weights for
each criterion. It may be necessary to modify the criteria to fit specific cases. When a RFQ is
published, it should state the criteria that will be used in the selection process.
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Criteria for evaluating statements of qualifications, may include but are not limited to:
• Special expertise and experience of the firm’s key employees
• Proposed staffing (include number of licensed and specialized staff) for the project and
previous experience of those identified
• Experience of the firm and their personnel on previous projects similar to the one under
consideration
• Consultant DBE Commitment document (see Exhibit 10-O1)
• Professional references by the firm with the LPA
• Understanding of the project by the firm as demonstrated by their approach to organizing
and management of the work
• Current workload of the firm and their ability to meet the proposed project schedule
• Quality of previous performance by the firm with the LPA
• Use of sub-consultants to accomplish work on the project
• Equipment the firm has available and proposes to use as compatibility with Computer-
Aided Drafting and Design (CADD) and other equipment proposed to be used in
accomplishing the work
• Familiarity with federal, state, and local codes, requirements, standards, and procedure
• Examples of minimum qualifications for work categories above are provided here based
on Caltrans best practices
Issue RFQ
The need for services of a consulting firm may be advertised in appropriate national, state, and
local publications and web sites. Notices can also be sent to firms known to be qualified to do
specific work, to professional societies, and to recognized Disadvantaged Business Enterprises
(DBE) organizations. The advertisements and notices seek statements of interest and
qualifications from consultants who are interested in the project. The DBE goal is established at
the master on-call contract and included in the solicitation document.
The SOQ should list consulting firm details, names of principals, office locations, personnel by
discipline, project experience and examples, current workload, types of service the firms are
qualified to perform, and previous performance. Also, resumes of key persons, specialists, and
other associates that may be assigned to the project or projects should be included. This
information should be the basis for evaluating and placing a consulting firm on a general pre-
qualification list.
Federal regulations require that any procedures related to pre-qualifying consultant cannot
restrict competition.
Pre-qualification of consultants may be allowed as a condition for submitting a technical
proposal for a contract only if the period between the date of the issuance of the RFP and the
deadline for submitting a technical proposal affords sufficient time to enable a consultant to
obtain pre-qualification status.
Another practice is to qualify consultants on a project-by-project basis. This is accomplished for
some agencies by advertising or publishing notices in national, state, and local publications for
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needed services for specific, individual projects. These notices include a precise project
location, a defined preliminary scope of services to be performed, a specific schedule within
which the work is to be completed, and a list of products and deliverables to be provided by the
consultant. Specific project advertisements usually are published when the proposed project is
large and complex, in-house resources are not available, special expertise is required, or the
objectivity of an outside authority is desired.
Appropriate Federal-aid requirements should be complied with on Federal-aid projects.
Set-Up Evaluation Process
The first step in the evaluation process is to determine that each SOQ contains all forms,
qualifications and other information required by the RFQ. Otherwise, the submittals may be
considered nonresponsive and rejected without evaluation. Documentation of when each SOQ
was received must be maintained in the project files. Copies of date stamped envelope covers
or box tops are recommended.
If all required information is not provided, a SOQ may be considered nonresponsive and
rejected without evaluation. Late submittals, submittals to the wrong location, or submittals with
inadequate copies are considered nonresponsive and must be rejected. Submittal of additional
information after the due date must not be allowed.
The LPA must establish a process by which SOQs are evaluated and consultants who are
deemed meeting the minimum qualifications are accepted and placed on a per-qualified list.
Whether the LPA has a “committee” of experts evaluating the SOQs or individuals responsible
for the evaluation, the process must be well defined, open and transparent. The pre-qualification
process must also allow for consultants to be re-evaluated in cases of denials. The LPA must
specify how long the pre-qualified list last, not to exceed two years. Federal regulation
recommends refreshing the SOQs on an annual basis.
LPA 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.
Evaluate Qualifications and Add Firm to List
All SOQs received should first be reviewed for completeness. Each response must contain all
required forms and any other information requested in the advertisement. The response may be
considered incomplete and rejected without further evaluation if all required information is not
provided or if the submittal is late.
The qualifications of all responding firms are then reviewed according to established evaluation
criteria or factors. The agency then establishes a short list of at least three consultants that are
determined to be the most highly qualified to perform the required work. Firms not selected
should be notified in writing.
Maintain List
Pre-qualification of a consultant expires in two years. Pre-qualified consultants must renew their
pre-qualification status every two years. Firms can apply to be on the list at any time. After a
period of two years, firms should re-apply (repeat the process of submitting SOQs) to be on the
list. In addition to the required two-year renewal process, the consultant should also be required
to update the firm’s organizational structure within one year when there is a corporate/affiliate
change, ownership control, type of work expertise, capacity, or any other major change.
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If the consultant does not meet the minimum requirements and their SOQ is rejected, the
committee must respond to the consultant explaining the reason for their rejection. The
consultant is allowed to reapply to be on the list again provided the reasons for rejection are
corrected.
The list of qualified firms can be maintained online through the agency’s website. Firms can also
apply to be on the list through the agency website for ease of operation.
Issue RFP to Pre-Qualified Consultants on List
An RFP is sent to the short-listed firms. The RFP should indicate the content of the technical
proposal, technical review procedures, anticipated schedule of activities, scope of work, project
description, where the technical proposals are to be delivered, the number of copies required,
and the due date.
Some agencies receive the technical proposal orally as part of an interview conducted for this
purpose. In these cases, written documentation may not be required.
Items typically required in a technical proposal include:
• Work plan
• Organization plan
• Schedule for meeting time frame
• Available computer equipment and programs
• Staffing plan and resumes including sub-consultants
• Pre-award audit/financial package information (if deemed appropriate)
• Examples of similar work previously completed
• Sub-consultants, DBE, their proposed participation, and other related information
Conduct Proposer’s Conference or Answer Written Questions
The LPA 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 LPA 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 technical proposal contains all forms and other
information required by the RFP. If all required information is not provided, a technical proposal
may be considered nonresponsive and rejected without evaluation. Late submittals, submittals
to the wrong location, or submittals with inadequate copies are considered nonresponsive and
must be rejected. Submittal of additional information after the due date must not be allowed.
Documentation of when each technical proposal was received must be maintained in the project
files. Copies of date stamped envelope covers or box tops are recommended.
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A consultant selection committee with a minimum of three members is appointed at the
beginning of the consultant selection process. The members of the consultant selection
committee must evaluate each technical proposal according to the technical criteria listed in the
RFP. A minimum of three technical proposals must be received and evaluated.
If only two technical proposals are received, a justification must be documented to proceed with
the procurement. If only one technical proposal is received, a Non-Competitive process must be
justified, and an Exhibit 12-F 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 must 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
technical proposal, interviews the three or more highest ranked consultants (shortlisted), and
develops a final ranking of the highest ranked consultants. All consultants that submitted
technical 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.
Request Cost Proposal and Negotiate Contract with Top-Ranked Consultant
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.
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.
Cost proposal (for both prime and all subconsultants) and contract audit and review documents,
such as Exhibit 10-K and Exhibit 10-A, whichever applicable (see Section 10.1.3: A&E
Consultant Audit and Review Process), will be submitted in a separate sealed envelope.
After the top-ranked consultant submits a sealed cost proposal, the LPA reviews the cost
proposal and enters into negotiations. The goal of negotiation is to agree on a final contract that
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delivers to the LPA the services or products required at a fair and reasonable cost. The
independent cost estimate, developed by the LPA 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 must be returned to consultants.
A contract audit and review may be required (see Section 10.1.3: A&E Consultant Audit and
Review Process). The LPA Contract Administrator is responsible for the submittal of all required
documentations to Caltrans IOAI in a timely fashion, including all documents for a Conformance
Review, if applicable. Negotiations may be completed after receipt of the Caltrans IOAI
Conformance Letter. 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
• Other Direct Cost items, and profit or fee
The consultant’s ICR is not a negotiable item. A lower rate cannot be negotiated by the LPA.
The LPA and the consultant will agree on the final cost proposal and incorporate into final
contract.
Before executing the consultant contract, the LPA must review contract to ensure that all federal
and state requirements have been met (see A&E Consultant Procurement Checklist at
https://dot.ca.gov/programs/local-assistance/guidance-and-oversight/consultant-selection-
procurement for sample template).
10.1.8 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 LPA and consultant have agreed to a fair and
reasonable price, and (3) a letter, if applicable, is released by Caltrans IOAI 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. Sample contract language and format have been
included as Exhibit 10-R: A&E Boilerplate Agreement Language.
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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) must be reviewed by
the LPA 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 Annual Certification of Indirect Costs and Financial
Management System (for Prime and Subs), and Exhibit 10-A: A&E Consultant Financial
Document Review Request and Checklist and all supporting documents, if applicable
(contracts at or above $150,000), have been submitted to Caltrans IOAI;
• 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 Database 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.
• Is not disbarred or suspended from state or federally funded contracts. Per 23 CFR
172.7(b)(3) “A contracting agency shall verify suspension and debarment actions and
eligibility status of consultants and subconsultants prior to entering into an agreement or
contract in accordance with 2 CFR 1200 and 2 CFR 180.”
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 must provide for LPA reviews at
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appropriate stages during performance of the work, to determine if any changes or other actions
are warranted.
The contract must provide that the consultant and subconsultants must 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 LPA authorized
representatives; and copies thereof must 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 LPA and must be retained for a three-year
period after processing of the final voucher by 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. All executed on-call
contracts must have a begin and end date. All executed project specific or multiphase contracts
must have a begin date and should have an end date prior to the Project End Date. Work
performed after the Project End Date is not eligible for reimbursement; see LAPM Chapter 3.
LPA consultant selection and contract execution costs may be reimbursable.
For on-call contracts, a fully executed copy of the contract with original signatures will be sent 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. Task
order expiration dates must not exceed the Master On-call agreement end date.
Administer the Contract
Project work begins as specified in the contract after the notice to proceed is issued to the
consultant. Thereafter, the LPA 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.
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• 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 LPA. Refer to LAPM Chapter 9: Civil Rights & Disadvantaged Business Enterprise and
49 CFR Part 26 for DBE substitution requirements. 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 LPA prior to use of a different subconsultant on
the contract.
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 LPA.
For federal reimbursement of consultant costs on a project, the LPA 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
• Exhibit 10-O2: Consultant Contract DBE Commitment
• Copy of issued task order and Exhibit 10-O2 for the task order for on-call contracts.
DLAE must confirm that the LPA has submitted copies of Exhibit 10-K: Consultant Annual
Certification of Indirect Costs and Financial Management System (for Prime and
Subconsultants) to Caltrans IOAI and agency has submitted Exhibit 10-C: Consultant Contract
Database to Caltrans.
The LPA is to follow the procedures given in LAPM Chapter 5: Invoicing, to obtain
reimbursement of federal or state funds.
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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 must 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).
There is no prescribed format for contract amendments. They may take the form of letter-type
agreements meeting the legal requirements of the LPA, 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 by formal
amendment. Failure to amend a contract prior to the ending date will make the subsequent
costs ineligible for federal and state reimbursement. Task orders are not considered an
amendment and therefore not appropriate to extend the terms of the contract.
All contract amendments must be negotiated following the same procedures as the negotiation
of the original contract and must be in writing and fully executed by the consultant and LPA
before reimbursable work begins on the amendment. For any additional engineering and design
related services outside of the scope of work established in the original solicitation, a contracting
agency must either procure the series under a new solicitation, perform the work itself using
agency staff, or use a different, existing contract under which the services would be within the
scope of work. Overruns in the costs of the work must not automatically warrant an increase in
the fixed fee portion of a cost plus fixed fee reimbursed contract. Permitted changes to the
scope of work or duration may warrant consideration for adjustment of the fixed fee portion of
cost plus fixed fee or lump sum reimbursed contracts. If an emergency exists of such magnitude
that a delay cannot be tolerated, the LPA 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 LPA
funding. Section 10.1.3: A&E Consultant Audit and Review Process of this chapter must apply
to the entire contract and must be completed prior to execution of the contract amendment. For
contracts greater than or equal to $150,000, submit an Exhibit 10-A to IOAI for all amendments
on consultant/subconsultant's name change, amending an ICR, or adding new subconsultant's
ICR. ICRs that have not been accepted by IOAI are not eligible for federal or state
reimbursement. For contracts with original amounts under $150,000 but subsequently became
greater than or equal to $150,000 after amendment, IOAI Financial Document Review is not
required. If there are any changes to the contract after submittal of Exhibit 10-C, the LPA must
submit an updated Exhibit 10-C to https://dla.dot.ca.gov/fmi/webd/Exhibit%2010-C prior to the
first invoice after the contract has been amended. Submission of Exhibit 10-C to Caltrans HQ is
not required for non-A&E consultant contracts. All amendments must incorporate any current
requirements of the federal regulations including the federal fiscal provisions and submit Exhibit
10-C to the Exhibit 10-C: A&E Consultant Contract Database prior to the first invoice after the
contract has been amended (please use Firefox or Chrome if not supported by your browser).
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Performance Evaluation
Pursuant to 23 CFR 172.9(d)(2) 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 LPA.
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
200). These records must 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 200.333).
For audit purposes, project records and documentation must 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, Exhibit 10-O2: Consultant Contract DBE Commitment), Exhibit 10-G:
Individual A&E Task Order DBE Tracking Sheet, Exhibit 17-F: Final Report – Utilization
of DBE and First-Tier Subcontractors or Exhibit 17-F1: Final Report-Utilization of
Disadvantaged Business Enterprise (DBE) for On-Call Contracts, and Exhibit 17-O: DBE
Certification Status Change.
• 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
Annual Certification of Indirect Costs and Financial Management System) for contracts
over $150,000 or more;
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• A&E Consultant Audit Request Letter and Checklist (Exhibit 10-A: Consultant Financial
Document Review Request) for contracts at or over $150,000 and all supporting
documentation.
• Executed consultant contracts, cost proposals and amendments (see Exhibit 10-R: A&E
Boilerplate Agreement Language and Exhibit 10-H: Sample Cost Proposal);
• Contract oversight and progress meeting documents;
• Progress and final payments, and supporting documentation;
• Performance evaluation (see Exhibit 10-S: Consultant Performance Evaluation);
• Consultant contract checklists (see Exhibit 10-C: A&E Consultant Contract Database);
• Accounting records documenting compliance with State and federal administrative
requirements;
• Certifications and Conflict of Interest forms (Exhibit 10-T: Conflict of Interest &
Confidentiality Statement, all personnel involved in the procurement of the agreement
should complete Exhibit 10-T Exhibit 10-U: Consultant in Management Support Role
Conflict of Interest and Confidentiality Statement and Exhibit 10-Q: Disclosure of
Lobbying Activities, as appropriate). Exhibit 10-Q is included in the solicitation and must
be completed if the consultant needs to disclose any lobbying activities.
Retention Clauses
At the option of the LPA, a retention clause may be included in the consultant contract. A
retention clause in the consultant contract is recommended (see Exhibit 10-R: A&E Boilerplate
Agreement Language, Article VIII).
Review of Local Public 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 LPA 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 Database is to be completed prior to award, or after
contract award but no later than the first invoice. A copy of Exhibit 10-C must be retained in the
LPA project files.
10.1.9 Miscellaneous Considerations
Agreements with Other Governmental Agencies
Intergovernmental or inter-entity agreements are encouraged if appropriate. If another
governmental agency is requested to do work or provide services to an agency, an interagency
agreement is needed. See 2 CFR 200 and CA Government Codes 10340 and 11256.
Small Purchase Contracts
Contracts that are less than $250,000 are considered small contracts in accordance with federal
regulations. However, within the State of California, there is no recognized small purchase
procedure and all A&E contracts are procured using qualifications based selection and not cost.
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For federal contracts that are less than $250,000 and are not anticipated to exceed this amount,
the agency must use either Section 10.2: State-Only Funded A&E Contracts or the federal
guidance for contracts greater than $250,000. If the contract is anticipated to exceed $250,000,
use one of the accepted procurement procedures listed in the previous sections. Small
contracts using the simplified acquisition procedure (State-Only funded section) must not
exceed $250,000 or the additional costs are considered not reimbursable. The entire contract
could also be considered ineligible by FHWA depending on circumstances. The scope of work,
project phases, and contract requirements must not be broken down into smaller components to
permit the use of small purchase procedure. DBE requirements apply for all federally funded
projects.
Noncompetitive Negotiated Contracts (Sole-Source)
Procurement by noncompetitive proposals may be used only when the award of a contract is
infeasible under sealed bids or competitive proposals (23 CFR 172.7(a)(3)).
FHWA considers these types of contracts as Sole Source contracts and should be used only in
very limited circumstances. An Exhibit 12-F prepared by the LPA 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/A&E Noncompetitive.
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 LPA must:
• 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 LPA must carefully document details of the special conditions, obtain Caltrans approval on
the Exhibit 12-F and retain all documents in the project files for future Caltrans’ or FHWA’s
review.
Retaining a Consultant as an Agency Engineer or in Management Support Role
An LPA may retain qualified consultants in a management support role on its staff in
professional capacities for 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.
• 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.
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• 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, typically 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 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 LPA 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. Consultants
in a Management Support Role funded by local or state funds must have approval from FHWA
to be considered qualified to manage federal projects or consultants providing services on
federal projects.
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 LPA and the consultant specifying the LPA
engineering services to be performed;
• Written designation by the LPA of the responsibilities and authority of the consultant as
an agency engineer;
• For a federal-aid project, completion of Exhibit 10-T: 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 must 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 federal-aid project, an LPA consultant in a management support role must 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 LPA 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 LPA’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.
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o Where benefiting more than a single federal-aid project, allocability of consultant
contract costs for services related to a management support role must 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
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 must 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 LPA (subgrantee) must 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
must 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.
• Subparagraph of 23 CFR 172.7(b) requires that the LPA must receive approval from
FHWA. In addition, any federal-aid projects designated as Projects of Division Interest
may also need approval from FHWA.
• Liability insurance should normally be required from the consultant (errors and
omissions, etc.).
For federally funded projects, LPAs 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 LPA must submit a request for approval via email, the Scope of Work (SOW) and
Conflict of Interest (COI) Policy to the Division of Local Assistance-Headquarters (DLA-
HQ) at aeoversight@dot.ca.gov, prior to solicitation.
• Once the LPA receives FHWA’s written response, the LPA may need to revise the
documents reflecting FHWA’s opinions and can proceed with the RFQ.
• After consultant selection, the LPA must 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. LPA will receive FHWA’s approved Exhibit 10-U via
email.
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Figure 10-5: Consultant in a Management Support Role Flowchart
Construction Engineering Services
Under federal-aid regulations and state policy, the primary responsibility for general supervision
of construction must remain with the LPA. The LPA 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 LPA in charge of the project and the
consultant’s construction engineering staff.
If a technical inspection consultant is to provide professional assistance to the LPA, a formal
consultant contract must be executed which follows this chapter’s requirements. The contract
must 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 LPA.
10.1.10 Program Management
According to 23 CFR 172.5, LPAs are required to adopt written policies and procedures
prescribed by Caltrans. As such, the LPA must adopt Caltrans Local Assistance Chapter 10:
Consultant Selection, which contain the A&E policies and procedures.
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DLAE
DLA-HQ
aeoversight@dot.ca.gov
FHWA
No YES
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To meet this requirement, LPAs are required to email and provide one of the following
documents to the DLA Office of Guidance and Oversight (OGO) at aeoversight@dot.ca.gov:
1. A Board Resolution showing that the LPA is adopting Caltrans LAPM Chapter 10; OR
2. An official letter signed by the LPA’s Public Works Director or equivalent manager
addressed to the DLA OGO Office Chief, stating that the agency is adopting Caltrans
LAPM Chapter 10
The DLA A&E website includes an example of the adoption resolution and letter. These
examples are for reference only; the appropriate language to be used is determined by the
individual agency.
LPAs are responsible for providing all resources necessary for the procurement, management,
and administration of A&E consultant contracts including subcontracts. Ensuring consultant
costs billed are allowable in accordance with the Federal cost principles and consistent with the
contract terms as well as the acceptability and progress of the consultant's work;
• Monitoring the consultant's work and compliance with the terms, conditions, and
specifications of the contract;
• Preparing a consultant's performance evaluation when services are completed and using
such performance data in future evaluation and ranking of consultant to provide similar
services;
• Closing-out a contract;
• Retaining supporting programmatic and contract records, as specified in 2 CFR 200.333
and the requirements of this part;
• Determining the extent to which the consultant, which is responsible for the professional
quality, technical accuracy, and coordination of services, may be reasonably liable for
costs resulting from errors and omissions in the work furnished under its contract;
• Assessing administrative, contractual, or legal remedies in instances where consultants
violate or breach contract terms and conditions, and providing for such sanctions and
penalties as may be appropriate; and
• Resolving disputes in the procurement, management, and administration of engineering
and design related consultant services.
10.1.11 References
2 CFR Part 200
http://www.ecfr.gov/cgi-bin/text-
idx?SID=eb0db4a32ce93fdc5815e6fe58791d9d&mc=true&tpl=/ecfrbrowse/Title02/2cfr200_main_02.t
pl
2 CFR Part 215 Uniform Administrative Requirements for Grants and Agreements with
Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations
https://www.govinfo.gov/app/details/CFR-2012-title2-vol1/CFR-2012-title2-vol1-part215/context
23 USC Letting of Contracts
http://www.fhwa.dot.gov/map21/docs/title23usc.pdf
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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
https://www.govinfo.gov/app/details/USCODE-2011-title40/USCODE-2011-title40-subtitleI-
chap11/context
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
https://www.govinfo.gov/content/pkg/USCODE-2009-title41/html/USCODE-2009-title41.htm
48 CFR, Chapter 1, Subpart 15.404
https://www.acquisition.gov/far/part-15
48 CFR, Chapter 1, Part 31
https://www.acquisition.gov/far/part-31
48 CFR, Chapter 1, Part 16 – Types of Contracts
https://www.acquisition.gov/far/part-16
48 CFR 27, Chapter 1, Subpart 27.3 – Patent Rights under Government Contracts
https://www.acquisition.gov/far/part-27
48 CFR, Chapter 1, Subpart 31.201-3 – Determining Reasonableness
https://www.acquisition.gov/far/part-31
48 CFR, Chapter 99 – Cost Accounting Standards, Part 9904
https://www.acquisition.gov/chapter_99
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
https://audit.transportation.org/
Caltrans Division of Procurement and Contracts Website
http://www.dot.ca.gov/dpac/index.html
California Labor Code, Section 1775
https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=LAB§ionNum=1775
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 and Sections 4529.10 through 4529.20
https://leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?lawCode=GOV&division=5.&title=1.&
part=&chapter=10.&article=
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https://leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?lawCode=GOV&division=5.&title=1.&
part=&chapter=10.1.&article=
Standard Environmental Reference (SER)
http://www.dot.ca.gov/ser/
10.2 STATE-ONLY FUNDED A&E CONTRACTS
A&E
State-Only
Division of Local Assistance Minimum Requirements
for State-only funded A&E Contracts
A. Written Procedures
B. Conflict of Interest
C. Records
D. Full & Open Competition
E. Selection Basis
F. Publication
G. Solicitation
H. Cost Analysis
I. Negotiations
J. Audit and Review Process
K. Exhibit 10-C: A&E Consultant Contract Database
10.2.1 General
LPAs are required to follow all applicable local and state regulations including those
listed in LAPM Chapter 10 in accordance with their State Master Agreement. Although
the requirements listed in this section are minimum requirements, the LPA must use
good engineering judgment and best practices to document their processes and
procedures when procuring A&E contracts utilizing qualifications based selections.
LPAs using local funds to procure an A&E Consultant on a state-only funded project
and will not seek state reimbursement for consultant cost may choose not to follow the
selection and contracting procedures detailed in Section 10.2 of this chapter.
All consultants must comply with 48 CFR 31: Contract Cost Principles and Procedures.
Also, consultants and LPAs must comply with 2 CFR 200: Uniform Administrative
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1111
1111
1111
1111
1111
1111
1111
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Requirements, Cost Principles, and Audit Requirements for Federal Awards, excluding
sections 200.318-200.326 Procurement Standards (reference Federal Highway
Administration December 4, 2014 Memorandum Action: 2 CFR 200 Implementation
Guidance).
Agency state-only funded (SOF) agreements must contain the required federal fiscal
provisions from 2 CFR 200 in all Division of Local Assistance funded agreements.
Exhibit 10-R: A&E Boilerplate Agreement Language contains 2 CFR 200 requirements
and may also be used in SOF agreements. Depending upon the scope of work, the
required contract provisions may need to include the California State Prevailing Wages.
All proposed A&E contracts and supporting documents (including state-only funded) are
subject to audit or review by Caltrans’ Independent Office of Independent Office of
Audits and Investigations (IOAI), other state audit organizations, or the federal
government and required to follow LAPM Section 10.1.3 A&E Consultant Audit and
Review Process.
For consultant contracts, procured with local or state funds, to provide services for
federal-aid projects, or to oversee or manage other consultants providing these
services, the Consultant in Management Support Role process must be completed to be
eligible for reimbursement. Refer to Section 10.1.9 Miscellaneous Considerations:
Retaining a Consultant as an Agency Engineer or in a Management Support Role.
DBE contract goals are not required for state-only funded contracts.
This guidance is for contracts utilizing state funds only. If any federal funds are added or
reimbursed, the federal process must be followed.
Non-A&E consultant contracts reference Section 10.3: Non-A&E Contracts.
Reference: California Government Code Title 1, Division 5, Chapter 10, Contracts with
Private Architects, Engineering, Land Surveying, and Construction Project Management
Firms §4525-4529.5.
10.2.2 Definition of A&E
Architectural, landscape architectural, engineering, environmental, and land surveying
services includes those professional services of an architectural, landscape
architectural, engineering, environmental, or land surveying nature as well as incidental
services that members of these professions and those in their employ may logically or
justifiably perform.
Construction project management means those services provided by a licensed
architect, registered engineer, or licensed general contractor. Any individual or firm
proposing to provide construction project management services must provide evidence
that the individual or firm and its personnel carrying out onsite responsibilities have
expertise and experience in construction project design review and evaluation,
construction mobilization and supervision, bid evaluation, project scheduling, cost-
benefit analysis, claims review and negotiation, and general management and
administration of a construction project.
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Environmental services mean those services performed in connection with project
development and permit processing in order to comply with federal and state
environmental laws.
Reference: California Government Code §4527
10.2.3 Minimum Audit Requirements
A. Written Procedures
Local agencies shall follow the minimum requirements listed below in addition to any
local laws and regulations.
Reference: California Government Code §4526
B. Conflict of Interest
The LPA must develop and maintain a written code of conduct governing the
performance of its employees engaged in the award and administration of state funded
contracts, including the prevention of conflicts of interest.
References:
California Government Code §4526
California Government Code §1090
California Government Code §4529.12
C. Records
Local agencies shall keep adequate records of all contracts including the procurement,
project management, accounting and financial administration.
References:
California Government Code §4529.14
California Government Code §4006
D. Full & Open competition
All A&E contracts shall be procured through a qualifications-based selection utilizing
open and fair competition. Evaluate at least three consultants using published
evaluation criteria and rank these firms in order of preference. If less than three
consultants are evaluated, provide justification for agency file.
References:
California Government Code §4526
California Government Code §4527
E.Selection Basis
Selection of a firm shall be based on qualifications and the order of ranked preference.
References:
California Government Code §4526
California Government Code §4527
F.Publication
Solicitations for A&E contracts shall be in a manner that is open and competitive.
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Reference: California Government Code §4527
G. Solicitation
The solicitations shall include published evaluation criteria to rank in order of
preference. Clearly define expectations in the solicitation in order to evaluate firms.
Reference: California Government Code §4527
H. Cost Analysis
An independent cost comparison to the consultant’s cost proposal shall be done in
order to ensure the contract is negotiated at a fair and reasonable price.
Reference: California Government Code §4528
I. Negotiations
Negotiations must be documented to verify a fair and reasonable contract has been
executed using public funds.
Reference: California Government Code §4528
J. Audit and Review Process
A&E contracts procured by public agencies shall be subject to standard accounting
practices and may require financial and performance audits. All agencies shall follow
the Audit and Review Process as stated in Section 10.1.3: A&E Consultant Audit and
Review Process.
Exhibit 10-A: A&E Consultant Financial Document Review Request.
Reference: California Government Code §4529.14
K. Exhibit 10-C: A&E Consultant Contract Database
Exhibit 10-C: A&E Consultant Contract Database must be completed at
https://dla.dot.ca.gov/fmi/webd (please use Firefox or Chrome if not supported by your browser)
prior to contract award, or after contract award but no later than the first invoice for all new
state-only funded A&E consultant contracts.
If there are any changes requiring an amendment to the contract after submittal of Exhibit 10-C,
the LPA must submit an updated Exhibit 10-C to https://dla.dot.ca.gov/fmi/webd/Exhibit%2010-
C prior to the first invoice after the contract has been amended. Submission of Exhibit 10-C to
Caltrans HQ is not required for non-A&E consultant contracts
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CA Government Code References
California GOV §1090
(a) Members of the Legislature, state, county, district, judicial district, and city officers or employees shall not be
financially interested in any contract made by them in their official capacity, or by any body or board of which they
are members. Nor shall state, county, district, judicial district, and city officers or employees be purchasers at any
sale or vendors at any purchase made by them in their official capacity.
(b) An individual shall not aid or abet a Member of the Legislature or a state, county, district, judicial district, or city
officer or employee in violating subdivision (a).
(c) As used in this article, “district” means any agency of the state formed pursuant to general law or special act,
for the local performance of governmental or proprietary functions within limited boundaries.
California GOV §4006
Plans, specifications, work authorizations describing work to be performed, and all other information referred to in
this chapter are open to inspection and examination as a public record.
California GOV §4525
For purposes of this chapter, the following terms have the following meaning:
(a) “Firm” means any individual, firm, partnership, corporation, association, or other legal entity permitted by law
to practice the profession of architecture, landscape architecture, engineering, environmental services, land
surveying, or construction project management.
(b) “State agency head” means the secretary, administrator, or head of a department, agency, or bureau of the
State of California authorized to contract for architectural, landscape architectural, engineering, environmental,
land surveying, and construction project management services.
(c) “Local agency head” means the secretary, administrator, or head of a department, agency, or bureau of any
city, county, city and county, whether general law or chartered, or any district which is authorized to contract for
architectural, landscape architectural, engineering, environmental, land surveying, and construction project
management services.
(d) “Architectural, landscape architectural, engineering, environmental, and land surveying services” includes
those professional services of an architectural, landscape architectural, engineering, environmental, or land
surveying nature as well as incidental services that members of these professions and those in their employ may
logically or justifiably perform.
(e) “Construction project management” means those services provided by a licensed architect, registered
engineer, or licensed general contractor which meet the requirements of Section 4529.5 for management and
supervision of work performed on state construction projects.
(f) “Environmental services” means those services performed in connection with project development and permit
processing in order to comply with federal and state environmental laws. “Environmental services” also includes
the processing and awarding of claims pursuant to Chapter 6.75 (commencing with Section 25299.10) of Division
20 of the Health and Safety Code.
California GOV §4526
Notwithstanding any other provision of law, selection by a state or local agency head for professional services of
private architectural, landscape architectural, engineering, environmental, land surveying, or construction project
management firms shall be on the basis of demonstrated competence and on the professional qualifications
necessary for the satisfactory performance of the services required. In order to implement this method of
selection, state agency heads contracting for private architectural, landscape architectural, professional
engineering, environmental, land surveying, and construction project management services shall adopt by
regulation, and local agency heads contracting for private architectural, landscape architectural, professional
engineering, environmental, land surveying, and construction project management services may adopt by
ordinance, procedures that assure that these services are engaged on the basis of demonstrated competence
and qualifications for the types of services to be performed and at fair and reasonable prices to the public
agencies. Furthermore, these procedures shall assure maximum participation of small business firms, as defined
by the Director of General Services pursuant to Section 14837.
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In addition, these procedures shall specifically prohibit practices which might result in unlawful activity including,
but not limited to, rebates, kickbacks, or other unlawful consideration, and shall specifically prohibit government
agency employees from participating in the selection process when those employees have a relationship with a
person or business entity seeking a contract under this section which would subject those employees to the
prohibition of Section 87100.
California GOV §4527
In the procurement of architectural, landscape architectural, engineering, environmental, land surveying, and
construction project management services, the state agency head shall encourage firms engaged in the lawful
practice of their profession to submit annually a statement of qualifications and performance data.
(a) When the selection is by a state agency head, statewide announcement of all projects requiring architectural,
landscape architectural, engineering, environmental, land surveying, or construction project management services
shall be made by the agency head through publications of the respective professional societies. The agency
head, for each proposed project, shall evaluate current statements of qualifications and performance data on file
with the agency, together with those that may be submitted by other firms regarding the proposed project, and
shall conduct discussions with no less than three firms regarding anticipated concepts and the relative utility of
alternative methods of approach for furnishing the required services and then shall select therefrom, in order of
preference, based upon criteria established and published by him or her, no less than three of the firms deemed
to be the most highly qualified to provide the services required.
(b) When the selection is by a local agency head, the agency head may undertake the procedures described in
subdivision (a). In addition, these procedures shall specifically prohibit practices which might result in unlawful
activity including, but not limited to, rebates, kickbacks, or other unlawful consideration, and shall specifically
prohibit government agency employees from participating in the selection process when these employees have a
relationship with a person or business entity seeking a contract under this section.
California GOV §4528
(a) When the selection is by a state agency head the following procedures shall apply:
(1) The state agency head shall negotiate a contract with the best qualified firm for architectural, landscape
architectural, engineering, environmental, land surveying, and construction project management services at
compensation which the state agency head determines is fair and reasonable to the State of California or the
political subdivision involved.
(2) Should the state agency head be unable to negotiate a satisfactory contract with the firm considered to be
the most qualified, at a price the agency head determines to be fair and reasonable to the State of California
or the political subdivision involved, negotiations with that firm shall be formally terminated. The state agency
head shall then undertake negotiations with the second most qualified firm. Failing accord with the second
most qualified firm, the state agency head shall terminate negotiations. The state agency head shall then
undertake negotiations with the third most qualified firm.
(3) Should the state agency head be unable to negotiate a satisfactory contract with any of the selected firms,
the state agency head shall select additional firms in order of their competence and qualification and continue
negotiations in accordance with this chapter until an agreement is reached.
(b) When the selection is by a local agency head, the local agency head may undertake the procedures
described in subdivision (a).
California GOV §4529
This chapter shall not apply where the state or local agency head determines that the services needed are more
of a technical nature and involve little professional judgment and that requiring bids would be in the public interest.
California GOV §4529.12
All architectural and engineering services shall be procured pursuant to a fair, competitive selection process
which prohibits governmental agency employees from participating in the selection process when they have a
financial or business relationship with any private entity seeking the contract, and the procedure shall require
compliance with all laws regarding political contributions, conflicts of interest or unlawful activities.
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California GOV §4529.14
Architectural and engineering services contracts procured by public agencies shall be subject to standard
accounting practices and may require financial and performance audits as necessary to ensure contract services
are delivered within the agreed schedule and budget.
California GOV §4529.20
This act seeks to comprehensively regulate the matters which are contained within its provisions. These are
matters of statewide concern and when enacted are intended to apply to charter cities as well as all other
governmental entities.
Federal Highway Administration Memorandum 2 CFR Part 200
Implementation Guidance 12/4/2014
Attachment A: FHWA 2 CFR Part 200 Uniform Guidance – Questions and Answers
Question 21: “Will the FHWA/USDOT provide a waiver of the requirements in 2 CFR 200.317 for subrecipients to
comply with State procurement requirements or other policies and procedures approved by the State (200.317)?”
Answer: Yes. The USDOT requested and received an OMB waiver of the requirements in 2 CFR 200.317
concerning procurement by subrecipients. This waiver provides an exception to the requirement for all
subrecipients of a state to follow the procurement requirements in Sections 200.318 through 200.326. The waiver
will allow States and subrecipients to continue to use state-approved procurement procedures as they did under
part 18 prior to the adoption of the Uniform Guidance.
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Figure 10.2 State-Only Funded Procurement Criteria
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To comply w ith CA Government Code (GC) 4525-4529.5, 48 Code of Federal Regulations (CFR) Part 31: Contract Cost Principles and Procedures, 2 CFR Part 200: Unifor m
Admi nistrative Requirements, Cost Principles, a nd Audit Requ irem ents for Federal Awards (excluding sections 200.318-200.326), Ca ltrans Lo cal Assistance Procedures Manual (LAPM)
a nd o ther applica bl e STATE and FEDERAL regulations.
A .
B.
C.
D.
E.
F.
G.
H.
I.
J.
K.
A&E Consultants
Requirements for LGAs that use State f unding Use State requi reme nts be low
Written Procedures GC4526
Co nfl ict o f Interest GC 1090, GC 4527(b), GC 4529.12
Records GC 4529.14, 4006
Fu ll & Open Compet it ion GC 4526, GC 4527, GC 4529.12
Select ion Basis GC 4526*, 4527
Publicati on GC4527
Solic it at ion GC4527
Cost Analysi s GC4528
Negot iations GC4528
A&I A ud it & Review Process GC 4529.14, LAPM Ch . 10, 2 CFR 200
Exhi bit 10-C: A&E Consultant Cont ract Database LAPM Ch . 10.2
•Mini Brooks Act -State regulation req uiring t he initial selection of enginee ring and arch itecture firms be based upo n qualifications and expe rience rather than by price. Price
is t hen l ater negotiated.
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10.3 NON-A&E CONTRACTS
Scope
This section covers the procurement requirements for the services that are not included in
Section 10.1 Federally Funded A&E Contracts and Section 10.2 State-Only Funded A&E
Contracts. This guidance is for contracts utilizing federal-aid funds and state funds. Federal
regulations refer to state and local regulations for non-A&E type contracts. Although LPAs are
required to follow 2 CFR 200: Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards for all contracts, the Procurement Standards section 200.318-
200.326 is exempt. The guidance in this section follows the established regulations in the
California Public Contract Code. Depending upon the scope of work, the required contract
provisions may need to include the California State Prevailing Wages.
LPA must designate one person within the LPA as a contract manager.
(PCC 10348.5)
LPAs using local funds to procure non-A&E Consultants on a federal-aid funded or state-only
funded project and will not seek federal or state reimbursement for consultant cost may choose
not to follow the selection and contracting procedures detailed in Section 10.3 of this chapter.
Determining Non-A&E
After identifying that there is a need for consulting services, the LPA must determine that the
services needed are more of a technical nature and involve minimal professional judgement and
that requiring a cost proposal would be in the public’s best interest. These type of consultant
services that are not directly related to a highway construction project or that are not included in
the definition of engineering and design related services are considered non-A&E. The services
must not be included in Section 10.2.2 Definition of A&E.
The determining factor 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.
Example of Determining Non-A&E
Material testing has been requested to ensure quality assurance on a construction project. The
service includes only performing the material test and providing material test data. Although the
service is related to a construction project, the overall service did not provide an evaluation or a
discipline report. In this example, the LPA can determine that the service provided is more of a
technical nature and is therefore a non-A&E service.
The following is a list of the more common non-A&E services:
• Right-of-Way Appraisal
• Right-of Way acquisition activities
• Conducting public outreach during environmental clearance or construction
• Active Transportation Program educational and outreach activities
• Intelligent Transportation System (ITS)
• Non-Infrastructure
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• Local Roadway Safety Plan (LRSP) associated with Highway Safety Improvement
Program (HSIP)-funded projects
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
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 (A&E),
construction, and non-engineering/non-architectural (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 software development,
system integration, hiring engineers and specialists for ITS design and installation support,
inspection, design documentation, training and deployment, it may be considered an
engineering and design services contract and the contract must be procured as an A&E
consultant contract. If the scope of work is unclear as to whether it is an A&E type of work,
contact aeoversight@dot.ca.gov for assistance.
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;
For more information regarding Intelligent Transportation Systems (ITS) Program procurement
requirements, refer to 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.
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Governing Regulations and Codes for Non-A&E
When procuring non-A&E services with federal-aid funds, LPAs must comply with 2 CFR 200:
Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal
Awards, excluding sections 200.318-200.326 Procurement Standards (reference Federal
Highway Administration December 4, 2014 Memorandum Action: 2 CFR 200 Implementation
Guidance, Attachment A). LPAs must follow the same policies and procedures that the State
uses for procurement with its non-Federal funds. When procuring non-A&E services with
federal-aid and state-only funds, the governing procurement code is Public Contract Code
10335-10381.
Procurement of Non-A&E Consultant Contracts
All non-A&E procurements contracts must be conducted in a manner providing full and open
competition consistent with federal and state standards. LPA must meet the code of conduct
governing the performance of its employees engaged in the award and administration of
federal-aid and state-funded contracts, including the preventions of conflict of interest in PCC
10410.
The following are the fundamental rules when procuring a non-A&E consultant contract.
1. The request for proposal (RFP) must not limit the competition directly or indirectly to any
one consultant. The RFP must be publicized, and all evaluation factors and their relative
importance identified (PCC 10339).
2. Splitting a single transaction into a series of transactions for the purpose of evading the
procurement requirements is not allowed (PCC 10329).
3. LPA must secure at least three competitive proposals for each contract. (PCC 10340)
When receiving less than three proposals, refer to the Cost-Effective/Public Interest
Finding in this section as an alternative to re-advertisement.
4. No proposals must be considered which have not been received at the place, and prior
to the closing time as stated in the RFP (PCC 10344(a)).
5. LPA must have a written procedure for evaluating proposals (PCC 10344).
RFP Basic Requirements
There are two general types of consulting service contract solicitations:
A. Request for Proposal using Cost only
B. Request for Proposal using Cost and Qualifications
The LPA must include the following in the request for proposal:
A. A clear, precise description of the work to be performed or services to be provided.
B. Description of the format that proposals must follow and the elements they must contain.
C. The standards the agency will use in evaluating proposals. This includes qualifications
and certifications if applicable.
D. The date the proposals are due.
E. The procurement schedule that the LPA will follow in reviewing and evaluating the
proposals.
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(PCC 10344)
Additional Requirements and Evaluation Criteria
Additional Requirements for Request for Proposal using Cost only
A. LPA must require consultants to submit their proposals and cost in a separate, sealed
envelope.
B. LPA must determine those that meet the format requirements and the standards
specified in the request for proposal.
C. The sealed envelopes containing the price and cost information for those proposals that
meet the format requirements and standards must then be publicly opened and read.
D. Contract must be awarded to the lowest responsible consultant meeting the standards.
(PCC 10344(b))
Additional Requirements for Request for Proposal using Cost and Qualifications
A. LPA must include in the proposal the description of the evaluation and scoring method.
Substantial weight in relationship to all other criteria utilized must be given to the cost
amount proposed by the consultant.
B. LPA must determine those that meet the format requirements specified in the RFP.
C. LPA evaluation committee must evaluate and score the proposals using the methods
specified in the RFP. All evaluation and scoring sheets must be available for public
inspection after the committee scoring process. Evaluation committee should comply to
the prevention of conflict of interest in PCC 10410.
D. The non-A&E contract must be awarded to the consultant whose proposal is given the
highest score by the evaluation committee.
(PCC 10344(c))
When using RFP (Cost and Qualifications), the criteria used to evaluate the consultant’s
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.
An example RFP for non-A&E is provided on the Local Assistance website at https://dot.ca.gov/-
/media/dot-media/programs/local-assistance/documents/ae/files/rfp-example-non-ae.docx and
may be modified.
Submission of Exhibit 10-C: A&E Consultant Contract Database to Caltrans HQ is not required
for non-A&E consultant contracts.
Consultant’s Proposal
The consultant’s proposal should include the following information:
• Consultant Project Manager – qualifications, roles and responsibilities.
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• 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 must 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 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.
LPA is not required to award a contract if it is determined that the contract price is not
reasonable (PCC 10340(c)).
DBE Consideration
DBE consideration is required on all federal-aid funded contracts including non-A&E.
Administrative Requirements
Advertisement for RFPs may be through the LPA website, local publications, and national
publications. Minimum solicitation time is 14 calendar days. The solicitation should inform
potential qualified consultants 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 consultant’s questions must be provided to all potential consultants. Written
responses to all questions will be collectively compiled and provided as an addendum.
A proposal may be considered nonresponsive and rejected without evaluation if all required
information is not provided. Proposals without information regarding, or not meeting, the
required DBE utilization goal or without a Good Faith Effort documentation (see Exhibit 15-H:
Proposer/Contractor Good Faith Efforts), late submittals, submittals to the wrong location, or
submittals with inadequate copies are considered nonresponsive and must be rejected.
Submittal of additional information after the due date must 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.
No consultant who has been awarded a consulting service contract may be awarded a
subsequent contract for the services or goods which are required as an end product of the
consulting service contract, unless the subcontract is no more than 10 percent of the total
monetary value of the consulting services contract. Excludes A&E contracts.
(PCC 10365.5)
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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 must 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 must 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.
Oral Presentations Optional
When oral presentations are required by the LPA, 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
these 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.
The committee must also evaluate reference checks and other information gathered
independently. Reference checks must 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.
Cost-Effective / Public Interest Finding
A minimum of three proposal must be evaluated to establish effective competition. Any agency
that has received less than three proposals on a contract must document the names and
addresses of the firms or individuals it solicited for proposals. Prepare an explanation as to why
less than three proposals were received. When only two proposals are received, a justification
must be documented to proceed with the procurement. When only one proposal is received, a
Non-Competitive process must be justified and a Public Interest Finding (PIF) (Exhibit 12-F:
Cost-Effective/Public Interest Finding/A&E Noncompetitive) must be documented. In either
case, the re-advertisement of the RFP should be considered as an option. Retain document as
supporting documentation in the contract file.
(PCC 10340(c))
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 strengthen 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 PCC 10345.
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10.4 A&E OVERSIGHT PROGRAM AND PROCESS REVIEW
General
The A&E Oversight Branch is responsible for the oversight of consultant contracts procured by
LPAs complying with federal regulations 23 CFR 172 and 23 USC 112, and state regulations
California Government Code 4525.
For locally administered federal-aid highway projects, A&E consultant contract oversight reviews
will be performed by Caltrans’ Local Assistance A&E Oversight Engineers (A&EOEs). DLAE
staff should participate in the reviews.
Type of Reviews
The purpose of A&E consultant contract oversight reviews is to verify LPA compliance with
federal and state consultant contract administration requirements. A risk-based approach has
been identified by the A&E branch to aid LPAs with compliance that includes requiring agencies
to complete and submit Exhibit 10-C prior to contract award, or after contract award but no later
than the first invoice. The objective is to create a database documenting all consultant contracts
and to perform process reviews on a sample of contracts for the annual performance measures
report.
Although the risk-based approach is the submittal of Exhibit 10-C via the database, a process
review may be conducted on projects for reporting purposes and to determine accuracy of
Exhibit 10-C information.
Exhibit 10-C Review
The purpose of the Exhibit 10-C database is to provide oversight and guidance to an LPA
regarding consultant contract administration on a federal or state funded project prior to the
award of the contract. The database includes items considered critical for compliance with
federal and state regulations.
Subsequent process reviews may be performed on selected state and/or federal projects
requiring a greater degree of oversight if deemed necessary for agencies with a noncompliance
history.
The following factors may be used when selecting projects for subsequent review:
• LPAs with identified deficiencies during an Incurred Cost Audit
• Projects administered by agencies with previous sanctions/findings
• Lack of experienced/trained LPA personnel
• Request by LPA or DLAE for additional assistance
During subsequent process reviews, the A&EOE will meet with the LPA's consultant contract
administration team and discuss project record documentation requirements using the Exhibit
10-C database. The timing of these types of reviews is targeted for pre-advertisement, pre-
negotiations, and pre-award of the consultant contract. This will allow for any changes to take
place prior to execution or termination of negotiations for re-advertising. The A&EOE will also
explain new policies or procedures, discuss available training, and highlight common problem
areas and the means to avoid them.
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Review Findings and Deficiencies
Caltrans will not be involved in most project level reviews and approval activities. Instead, the
Process Review as outlined in this section is Caltrans’ primary method of ensuring that federal
and state requirements are met. During a Process Review of an LPA’s project files, errors
and/or deficiencies that may violate federal or state law or regulation could be found. If that
happens, federal and/or state funds may be withdrawn from a project depending on the severity
and circumstance of the deficiency, as well as the possibility of jeopardizing future federal
and/or state funding opportunities for the agency’s other projects.
It is important to note that the formal process review is not the only method of discovering
project deficiencies. Errors or deficiencies are discovered occasionally as part of the normal
routine of processing project submittals by DLAEs or DLA Area Engineers.
Review findings from any subsequent reviews will be forwarded to the LPA and the DLAE within
five business days. Deficiencies identified during a review may require development of a
corrective action plan by the LPA in consultation with the District within 30 calendar days of
receipt of the deficiency notification, unless the agency disagrees with the deficiencies identified
and appeals the decision as discussed below.
A list of common A&E consultant procurement-related deficiencies is found at the A&E website.
These examples, not all-inclusive, should assist LPAs with knowing common deficiencies found
in the past and the possible ramifications for those errors and deficiencies. The key to avoiding
possible sanctions is to follow the procedures outlined in this chapter and other appropriate
policies and guidelines, and if you have any questions, to consult your DLAE.
Corrective action plans, if required, will identify actions the LPA will take to address each
deficiency noted. Corrective actions may include the following: Re-advertising, modifications of
LPA policies and procedures, and participation in training to address systemic related
deficiencies. Project specific issues may require additional measures to remedy deficiencies to
ensure compliance with federal and state requirements and ensure reimbursement eligibility.
Corrective action plans must also include timelines for each action to be implemented. Failure to
provide and implement corrective actions may result in sanctions or federal/state ineligibility
notices against the project or LPA, and could prevent federal or state participation in all or a
portion of the project.
In the event the LPA disagrees with the deficiencies identified, the LPA will have 30 calendar
days from receipt of the deficiency notification to submit their written request for appeal in
accordance with the DLA’s Local Agency Dispute Resolution Process. If the appeal is denied,
the LPA will have 30 calendar days from receipt of the decision to submit their corrective action
plan.
The Dispute Resolution Process provides a means for the LPA to appeal a sanction that they
feel has been imposed upon them unfairly or they feel the penalty is too harsh for the error or
deficiency. This appeal process is not limited to just the appeal of sanctions; it can be used by
LPAs when they disagree with the decision, they receive from a district office.
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10.5 SANCTIONS
Depending on the severity and circumstances of the deficiencies which may require sanctioning
by Caltrans, the DLA or DLAE may impose one of the following sanctions:
• Freeze on all future programming of federal or state funds until corrective action is
implemented
• Freeze progress payments for a federal-aid project until the project’s deficiency is
corrected
• Percentage of federal or state funds for a project withdrawn
• All federal or state funds withdrawn from a project
The DLAE will be responsible for notifying the LPA of sanctions imposed. Whether or not
sanctions are imposed against an LPA, the LPA will be expected to develop a corrective action
plan and implement it to correct the deficiencies. LPAs will be given adequate time to develop
and implement their action plan. Failure to correct the deficiencies in a timely manner will be
grounds for imposing additional sanctions
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