Memorandum
City of Lawrence
City Manager’s Office
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TO: |
David L. Corliss, City Manager
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FROM: |
Michelle Stevens, Intern Diane Stoddard, Assistant City Manager
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CC: |
Cynthia Boecker, Assistant City Manager
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Date:
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June 24, 2009 |
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RE: |
Contracting for Professional Services
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On May 19, 2009, the City Commission held a study session (see Staff Memo and Attachments, Memo on Selection of Professional Services, and Staff Memo on Professional Contracting) and discussed the topic of the City’s purchasing policy related to the selection of vendors for professional services. The City Commission requested that staff provide more information about how other cities procure professional services and more information about how other cities take into account cost as a factor in such procurements. Also, there was interest in the Brook’s Act and federal requirements related to Qualification Based Selection (QBS). This memo will provide additional information on these subjects and also provide some suggested alternatives for City Commission consideration and direction.
City’s Purchasing Procedures for Contracting for Professional Services:
Chapter 5 of the City’s purchasing procedures addresses this issue, sets forth the City’s policy and identifies the procedure that will be followed for the selection of vendors providing professional services. The procedures cover acquisition of a variety of professional services, including financial services, engineering services, architectural services, etc. The policy indicates that “award shall be made to the offeror determined to be the best qualified on the basis of demonstrated competence and qualification for the type of services required, and at fair and reasonable prices.”
The procedures call for the issuance of a Request for Proposals to vendors. Included in the RFP is a request for a breakdown of estimated project costs. However, costs are not routinely provided related to the acquisition of engineering services, though a summary estimate of required effort typically is included, as are standard billing rates. The primary reason that total cost is not provided by vendors is because in most cases, a scope for the work is not yet defined.
For engineering services, the “qualifications based selection process” (QBS) is utilized. QBS emphasizes the most qualified design team for the project at hand. Typically, the City Commission receives a request from staff to commence negotiations with the most qualified firm. Negotiations regarding scope and fees do not commence until the most qualified firm has been identified. Typically, the agreement, which includes the scope and fee, is then presented to the City Commission for authorization at the conclusion of negotiations. The reason that a detailed scope of services is typically not formulated prior to the selection of a consultant is to directly involve the chosen consultant in the formulation of a scope of services to take advantage of the consultant’s expertise and view of the project.
It is important to note that the City’s current process does include the negotiation of fees during the negotiation phase to ensure fair and reasonable fees. However, it does appear that perhaps staff could improve its communication with the City Commission regarding fees for projects by reporting how the negotiated fee compares to “standard” fees for similar services as a percentage of the project budget. This step might improve the information available to the City Commission and the public at the time of contract authorization.
Procurement Processes of other Area Cities
Other area cities were contacted regarding their procurement practices. Additionally, the Commission indicated a desire to learn more about the procedures utilized by Johnson County. Johnson County’s process is also summarized.
Kansas City, MO: (QBS) Ordinance No. 040191 in the City’s Code of Ordinances addresses architect, engineering and land surveying services selection. It states that the City will form a selection committee to select the best qualified firm and negotiate a contract with the selected firm. If negotiations are unsuccessful then the city will move to the next best qualified firm and so forth.
Lenexa: (Value Selection) The City puts forth the procedures for the purchase of professional services in Section C of their purchasing procedures. The City defines professional services as services that require technical expertise or knowledge of a specialized field. This procedure is used for acquiring a variety of services, including: architects, engineers, planning consultants, etc. The selection of the consultant is based upon use and evaluation of a RFP or RFQ process. The City assembles a selection committee that solicits general qualification proposals and letters of interest from the consultants. The consultants also submit costs proposals under a separate cover. The committee will then review the materials (including cost proposals) and select a consultant. However, cost is only one factor and is not the deciding factor. The City staff then negotiates the contract scope and fees with the consultant.
Manhattan: (QBS) Resolution No. 040505-A in the City’s Policy Manual addresses the selection of engineering and architectural services. A Selection Committee is assembled to review proposals and recommend the most qualified firm. The City does give preference to firms that have their principle office within the Manhattan City limits. Price is not a principle factor on which firm is selected. It is not until after the most qualified firm has been identified that scope and fee negotiations occur. If negotiations are not successful due to an inability to agree upon scope of work or fees, then the negotiations begin with the next qualified firm. When a contract is presented to the City Commission, the fees as a percentage of the total construction cost are reported against a set of fee guidelines.
Olathe: (Value Selection) Chapter 3.50 sets forth the procurement policies. The City utilizes competitive sealed proposals for the procurement of professional services, technical items or equipment, complex services and the purchasing of nonstandard items. The vendor whose proposal is the most advantageous to the City, taking into consideration price and the evaluation factors of the RFP, shall be recommended to the City Council.
Overland Park: (QBS) Resolution No. 3506 sets forth the policies and procedures for the selection of professional consulting services within the scope of architecture, engineering and land surveying. The Administering Department initially determines which Firms will be invited to submit a proposal. At least three firms must be selected and then a formal letter is sent to each Firm asking them to provide a detailed proposal. The detailed proposals will include: a resume of its proposed project supervisor, the name of the principal who would be responsible for the work, current projects underway and estimated cost of each, the ability of the firm to meet required time schedules, a description of how the project would be conducted, and other facts it wishes to present in favor of the firm. A selection or staff committee will then select the firm to begin contract negotiation. The scope of service and the fee are included in the contract negotiation. If a contract can not be negotiated, then the City will move to the next recommended firm.
Shawnee: (Two Envelope System) Shawnee utilizes a pure two-envelope system. RFPs are distributed to firms. In most cases, the scope is fairly well defined and in some cases, some conceptual work regarding the process is done prior to the RFP, which narrows the scope. When firms respond to the RFP, they submit a written proposal and separate, sealed cost proposal. A City staff committee reviews the written proposals. Once the top firm is identified based on qualifications in the written proposal, the cost proposal envelope is opened. Negotiations commence with the top firm, utilizing the cost proposal in the envelope as a starting point. If negotiations with the top firm do not come to a successful conclusion, the second firm is then selected, their cost proposal opened and negotiations begin with that firm, and so on. All other cost proposals from unselected firms are returned to the unselected firms, unopened. Shawnee has not experienced problems with compliance with the Brooks Act since they rarely utilized KDOT or federal funds for design work, only construction.
Johnson County: (Hybrid QBS except QBS for federal projects) Procedure #110.165 addresses the policies and procedures for competitive procurements. The County’s RFPs process involves two steps. The first step consists of an Evaluation Committee scoring all responsive proposals on a 100 point scale. Factors include: firm experience performing similar work, key staff or firm personnel experience, responsiveness to the RFP, applicable resources, and project understanding/approach. This phase essentially utilizes QBS and identifies firms that will proceed to the second phase, or interview process.
During the second phase, those consultants invited for interviews submit a separate cost proposal to the County’s purchasing officials. The cost proposal is neither seen nor discussed by the members of the selection committee. The purchasing official ranks and assigns cost points ranging from 10-30% of the weighting of all of the factors involved in the selection. The weighting varies according to the importance of cost for a particular project over the other factors. The weighting is set early in the process.
Technical points assigned by the selection committee are merged with cost points by the purchasing official and a final ranking is determined. Negotiations commence with the highest ranked firm, utilizing the firms cost proposal as a starting point. The scope may change somewhat during these negotiations, which may have an effect on the final cost. Johnson County officials did indicate that typically, the project scope is fairly well defined in advance of the Request for Proposals/Qualifications being published.
The Johnson Count purchasing official did indicate that in situation in which federal funds are involved, cost proposals are not requested and the county meets the requirements of the Brooks Act because it is a pure QBS process. Specifically, projects involving the Johnson County airports were mentioned regarding this process modification.
Topeka: (QBS) Topeka utilizes a QBS process. RFPs are issued and firms respond to the RFP. Firms are ranked by qualifications. Cost information is not requested from the firms, until one firm has been identified as the most qualified. Occasionally, larger firms provide estimates of the number of hours involved and rates on past projects. However, this information is not required.
Alternatives for Consideration:
The following are some considerations for the City Commission regarding the subject of modifications to the City’s procurement of professional services.