Category:134 Engineering Professional Services: Difference between revisions

134.1 Introduction

When projected workloads are high and available MoDOT staffing resources are limited, the need may arise to solicit for consultant services. EPG 134 Engineering Professional Services is a guide for soliciting, selecting and managing consultant contracts with MoDOT. Professional services are defined under the federal law, The Brooks Act, 40 USC 1102. Most consulting services that MoDOT utilizes fall under the federal description of professional services, therefore MoDOT must follow the federal guidelines outlined in the Brooks Act for soliciting and selecting a consultant.

134.1.1 Federal Law

The Brooks Act, 40 USC 1102, 23 CFR 172.3 (Public Law 92-582, 1972) requires agencies to “promote open competition by advertising, ranking, selecting and negotiating contracts based on demonstrated competence and qualifications for the type of engineering and design services being procured, and at a fair and reasonable price.” This requirement applies to all federally funded projects. This is commonly referred to as Qualifications Based Selection or QBS, meaning a firm is chosen based on qualifications and not price.

134.1.2 State Law

Commonly referred to as the “Mini-Brooks Act”, the State of Missouri, in sections 8.285 thru 8.291 RsMO, requires Qualification Based Selection (QBS) for all architectural, engineering and land surveying professional services and reflects the language contained in the federal legislation. This requirement applies to ALL projects in Missouri regardless if it contains federal funds or not. Keep in mind that the federal laws supersede the state laws if the project has federal funding.

134.1.3 Consultant Qualification

Effective January 1, 2013, a consultant must be “qualified” to perform engineering services on any project. To become qualified the consultant will be required to do the following:

• Have a current Annual Financial Pre-Qualification with MoDOT

• Step-by-step instructions for becoming pre-qualified and a list of pre-qualified consultants can be found on MoDOT's Consultant Services webpage.

• This annual financial pre-qualification is good for one year.

• Have current E-Verify documents on file with MoDOT

• The E-Verify documentation is good for one year.

• Have taken the “basic” training course on Federal Aid Basics

• A list of available training courses can be found on the LPA Website under Training. For more information, refer to EPG 136.2 Certification and Training. This training course is required to be able to perform work on MoDOT and LPA projects.

• For consultants who wish to perform bridge design, MoDOT's Bridge Division also requires that the consultant submit a Bridge Experience Profile and a Personal Bridge Experience Record. These forms can be found on MoDOT’s consultant resources page. In addition, the consultant must have a QA/QC plan on file with MoDOT to perform bridge design. This QA/QC plan must be updated every 3 years. For more information, please contact MoDOT- Bridge Division.

The pre-qualification process complies with AASHTO Guidelines published in the Uniform Audit & Accounting Guide 2010 Edition, which will be incorporated into the Code of Federal Regulations, Title 23 (23 CFR). This pre-qualification process ensures that projects are in compliance with state and federal regulations.

Not Pre-Qualified. Although the pre-qualification process is preferred, and will be required after December 31, 2012, consultants who wish to respond to an RFQ who are not pre-qualified can do so provided that they meet the following requirements:

• Registered to do business in the State of Missouri
• Participate in the Federal Work Authorization Program, E-Verify
• Audited overhead or overhead rate calculation in the required format, (a sample format is available). (Prime Consultants & Sub-consultants >$25,000)
• Must be able to submit the Management Representation & Certification Form.

134.1.4 Conflict of Interest

A conflict of interest occurs when a consultant has a financial or personal interest in a federally funded project. To avoid a potential conflict of interest, see 23 CFR 1.33 for the federal law governing Conflict of Interest.

134.1.5 Suspension/Debarment

All consultants receiving individual awards for $100,000 or more and all subrecipients/subconsultants must certify that the organization and its principles are not suspended or debarred. Each MoDOT Project Manager should check the Non-procurement List. The Excluded Parties List Systems is also available at that website. Copies of the list may be obtained by purchasing a yearly subscription from the Superintendent of the Documents, US Government Printing Office, Washington, DC 20402 or by calling the Government Printing Office inquiry and Order Desk at (202)783-3238. The user will be required to record their name and organization for purposes of the Computer Matching and Privacy Act of 1988.

134.1.6 Frequently Asked Questions

A list of FAQs regarding consultant issues can be found on FHWA’s website.

134.2 Solicitation and Selection Process

When MoDOT needs consultant services, specific processes for soliciting and selecting a consultant must be followed. MoDOT must use the Qualifications Based Selection (QBS) for the procurement of engineering and design related services. This is mandated by both the federal and state law. See EPG 134.1.1 Federal Law and EPG 134.1.2 State Law for the applicable laws. If MoDOT does not follow the solicitation and selection process, federal funds could be jeopardized.

134.2.1 Professional Services Committee (PSC)

The PSC ensures that MoDOT follows State and Federal laws for the use of professional services. The committee is composed of the Assistant Chief Engineer, State Design Engineer (chair) and the State Bridge Engineer. At times the committee may incorporate additional members, such as the Transportation Planning Director for contracts involving a planning study, feasibility study or major investment study and the State Traffic Engineer will be a temporary member when the selection involves traffic modeling or Intelligent Transportation Systems (ITS) etc. On behalf of the committee, the Chair approves or rejects the selection of the consultant. The PSC provides comments as needed.

MoDOT is committed to getting the “best value for every dollar spent”. This is accomplished in the consultant selection by using the QBS process and selecting the most qualified consultant not the lowest bidder. The PSC ensures that MoDOT follows the QBS process for all MoDOT consultant procurements with the exception of the Design-Build projects where the Design Build Project Director is responsible for ensuring QBS is followed.

The PSC committee chair approval is required at several stages.

1. The PSC chair approves the district or division engineer’s request to solicit consultants to provide professional services for MoDOT.

2. For contracts involving interviews or presentations, the PSC chair approves the “short list” first and is invited to attend the interview or presentations.

3. For standard contracts and supplemental agreements, the PSC chair approves the consultant selection, the negotiated number of man-hours and the “not to exceed” amount of the contract concurrent with the execution of the contract. The PSC and division liaisons provide review and comment to the chair prior to approval.

4. For on-call, hourly rate contracts, the PSC chair approves district and division consultant selections for master agreements.

134.2.2 Consultant Solicitation and Selection Process - Standard Solicitation Method

Outlined below is the step-by-step process for Standard Consultant Solicitation and Selection Method. The standard solicitation method is used for the majority of MoDOT Consultant projects. This method gives all consultants equal consideration during the solicitation process.

134.2.2.1 Solicitation and Selection Step 1 – PE Funding

After the need to procure a consultant has been identified, the MoDOT Project Manager (PM) or Contract Administrator (CA) must first ensure that Preliminary Engineering (PE) funds are identified in the STIP for this project and if applicable, the TIP or appropriate MoDOT Budget. The PM/CA should work with their District Planning Manager if there is a need to revise the STIP and/or TIP to adjust the funding levels to match the project costs.

134.2.2.2 Solicitation and Selection Step 2 – PM/CA to Submit Solicitation & Request Letter to PSC

The PM/CA will work with the core team members to develop a more detailed scope of services for the consultant contract. The PM/CA will also need to identify the following items prior to sending a request to solicit for a consultant services to the PSC:

1. Construction Project Information – Project Description

2. Construction Project Information – Fiscal Year for Construction Project Award

3. Construction Project Information – Estimated project construction amount

4. Scope of Services – Detailed description of anticipated consultant services.

5. Project Funding – Total consultant contract costs (not to exceed amount).

6. Project Funding – Total consultant contract costs broken down by fiscal year.

7. Project Funding – Anticipated budget to be used for consultant services.

8. Project Funding – State or federal funds for PE. All projects must be evaluated to determine if it will have federal assistance. Work with your Design Liaison Engineer to make this determination.

9. Project Funding – Amount of PE dollars in the STIP

10. Project Funding – Cost Share/Cost Participation Information or federal earmark (if applicable)

11. DBE Requirements –Once the scope of work is defined, the MoDOT PM/CA must obtain a DBE Goal by sending the appropriate project information to MoDOT External Civil Rights (ECR) for review. The DBE goal shall be included in the PSC solicitation request letter and the solicitation itself. All consultant contracts that utilize federal funds must be reviewed by ECR regardless of the dollar amount of the contract.

12. Will consultant selection process include interviews or presentation – can be determined by the PSC

13. Period of Service – for the consultant contract.

14. Selection Process – for procurement of consultant (ex: Standard Solicitation, Modified Solicitation etc.)

15. Selection/Procurement Schedule – Anticipated schedule for procurement.

16. Anticipated Incentive/Disincentive Provisions – for the consultant contract (if applicable) See EPG 134.5.6 Incentive and Disincentive Program.

All of the items listed above are the criteria that must be included in the Solicitation and Request Letter that is prepared by the PM/CA and sent to the PSC. The solicitation must not contain any information concerning man-hours, labor rates or cost information. If a maximum known value is available to fund the professional services contract, it may be noted in the solicitation to avoid submission of letters by consultants unable to provide the services for the expenditure MoDOT has determined as reasonable for the projects. Cost information can only be considered after a consultant has been selected and a contract is being negotiated. The solicitation should contain ALL of the rating categories that will be used to rate the consultant. MoDOT must follow RsMO 8.289 when evaluating the consultant but additional criteria can be added as long as it is published in the solicitation.

134.2.2.3 Solicitation and Selection Step 3 – Central Office Review of Solicitation Request

After the PSC receives the Solicitation and Request Letter, it will be distributed to the appropriate MoDOT Divisions and Central Office staff for review. If any comments need addressed, Central Office staff will forward revision requests to the District. When all parties involved agree on the content of the consultant solicitation/request for qualifications (RFQ), the PSC chair approves the request and Central Office will post the RFQ to the MoDOT's Consultants Services webpage. An electronic notification of the RFQ is sent to Design Consultant Distribution List alerting interested parties of the opportunity.

134.2.2.4 Solicitation and Selection Step 4 – Consultant Response to the Solicitation/RFQ

Interested firms who wish to respond to the RFQ can submit a letter of interest. Beginning January 1, 2013, only firms listed on the Approved Annual Financial Pre-Qualification List will be considered eligible for MoDOT projects. Prior to January 2013, firm’s who have no experience with MoDOT, must submit a Statement of Qualifications (SOQ), with their letter of interest. The SOQ can be in the form of a brochure or other format which outlines the qualification of the firm’s employees and recent past experience in similar work. Refer to Missouri Revised State Statue Chapter 8 Section 8.289. Cost information shall not be provided from the consultant at this time in the solicitation process. Cost can only be considered after a consultant is selected and the contract is being negotiated.

134.2.2.5 Solicitation and Selection Step 5 – Selection of Consultant

When the RFQ expires, MoDOT will evaluate the letters of interest or SOQ. According to state law RsMO 8.291, MoDOT must list a minimum of 3 highly qualified firms and then select the firm best qualified to perform the work, based on the rating criteria outlined in the RFQ. It is not necessary to interview the firms, but should be considered. See Consultant Presentations and Interviews below for more information on presentations and interviews. When fewer than three responses are received, it is suggested that the RFQ be re-advertised at least once. If fewer than three responses are received again, then MoDOT must determine whether or not this is a suitable number of responses based on the nature and size of the project. Consider whether there was some aspect of the RFQ that was overly restrictive or otherwise had an adverse impact on the completion of the project. If the decision is made to move forward, then the district should document that the RFQ requirements were not restrictive, it was adequately publicized and that the one or two firms who responded were capable of performing the tasks outlined for the project. MoDOT will then rate all firms based on the criteria that was outlined in the RFQ. Performance evaluations from past MoDOT projects may be considered as part of the evaluation. Price quotations shall not be requested or used for consideration prior to selecting a firm. Price can only be determined AFTER the consultant is selected.

The Selection Team. The district and/or division forms a team to review the consultant responses and select a firm to provide the necessary services. In most cases, the team shall include at least three members, one of whom is from the Central Office (usually a Design or Structural Liaison Engineer). If a major component of the project is a specialty area supported only by Central Office staff, that division should be asked to participate as well. If the project is a federal full-oversight project, the Federal Highway Administration (FHWA) must be offered the opportunity to participate as a team member. Should another entity (KDOT, IDOT, MPO, city, county, etc.) be funding part of the cost of the work that entity must be offered the opportunity to participate as a member of the selection team. If the consultant’s team is expected to include a public involvement sub-consultant, the PSC, including the Community Relations Director, should be invited to participate on the team. Note: members of the PSC are non-voting members of the selection team.

Rating/Scoring the Consultants. The Consultant Rating Form, Fig. 134.2.2.5.1, can be used to rate and select the firm. The top 3-5 firms can be placed on a “short-list” for further evaluation. See Consultant Presentations and Interviews below for more information on presentations and interviews.

Listed below are items that may be considered when evaluating consultants.

• The consultant’s current personnel and their qualifications are evaluated based upon:

1. Brochures, résumés, and other data the firm submits that indicate in detail the education and experience of key personnel. If necessary, the team will personally interview firm members.

2. Personal knowledge of the past performance of key personnel.

3. The experience of the consultant’s key personnel in related work such as computer aided drafting and design, photogrammetry, traffic analysis, soil analysis, structural design, hydraulics, signalization, lighting, environmental documents, historic preservation, etc.

• The consultant’s firm is evaluated on experience in the type of design or other professional services required under the proposed contract (such as rural, urban, bridge, planning studies, environmental studies, etc.) and the complexity of those services.

• MoDOT’s past experience with the consultant for other engineering or professional services is evaluated based on:

1. The quality of the work the consultant has delivered for MoDOT.

2. The consultant evaluation forms for MoDOT contracts completed by MoDOT staff shall be reviewed to ensure the consultant has received a satisfactory or better rating. Ratings less than satisfactory will warrant further investigation to determine if noted deficiencies have been corrected. The evaluations can be found in the Design Consultant Database in Lotus Notes.

The Lotus Notes database can be accessed as follows:

A. Start Lotus Notes

B. Select File → Database → Open

C. Server = LNAPP2

D. In the Database window scroll down, select “DE,” and double click

E. Select “Design Consultant Database” and double click to open

3. The consultant’s past performance related to practical design should be considered separately from the overall performance.

• The consultant’s proximity to and familiarity with the project area.
• The adequacy of the consultant’s instant staffing, together with available additional staffing for the proposed service, is evaluated to ensure that the consultant can provide the required services in the desired time frame. The consultant’s present work load of existing MoDOT contracts for design or other professional services can be a factor in this determination.

Once a short list of firms has been developed, the selection team will rate these firms based on previously defined performance criteria to determine which is best suited to provide the professional services required. Each member of the selection team will individually develop a numeric score to rate each firm using the categories listed in Fig. 134.2.2.5.1. The team will, as a group, compare these scores and discuss how they were determined. The team must reach consensus on the consultant to select. The team will create a rating summary as outlined in Fig. 134.2.2.5.2 clearly indicating which firm has been recommended for selection and documenting the selection process. The documentation must include written text on how the scores were determined. This documentation will be kept in the project file. A copy of all documentation must be sent to the Central Office along with a letter (Fig. 134.2.2.5.3) requesting approval of the selected consultant. The team must receive approval before notifying the consultant that was selected or any other parties. The approved selection will be posted at MoDOT's Consultant Services webpage.

Consultant Presentations and Interviews

The majority of projects do not require interviews or presentations and the selection team may select a consultant based upon the available data used to develop the short list. The short list of consultants must first be approved by the PSC if the consultants will be required to interview or present. Fig. 134.2.2.5.4 is the short-list approval letter that must be sent to the PSC prior to notifying the firms that they have been short-listed. Specific conditions that allow the selection to take place without interviews or presentations are as follows:

• The scope and cost of the contract is considered to be minor or routine in nature.
• The district or division is very familiar with the qualifications and capabilities of all the short-listed firms from previous services or presentations and believes presentations or interviews will not increase knowledge of the short-listed firms.
• The need for an accelerated selection process due to the critical nature of the contract.

Consultant Presentations. When none of the criteria listed above are met, consultant presentations shall be considered. The leader of the selection team should provide the opportunity for the PSC to attend the presentations. Before the presentations, the selection team must determine the scoring criteria (Fig. 134.2.2.5.5) to be used. These criteria can include many variables, but each element must be assigned a point value and expectations for assigning the maximum points should be developed. See the sample letter, Fig. 134.2.2.5.6, inviting the consultant to present. Following these presentations, the selection team will reach consensus on which consultant will be selected to provide the professional services.

After each consultant presentation, the selection team moves to a private location to discuss the presentation. After the final presentation, each member of the selection team will individually develop a numeric score to rate each firm based on the pre-determined criteria and scoring process. Although use of the example is not required, the criteria and scoring process must be determined prior to the actual presentation. The team will, as a group, compare these scores and discuss how they were determined; the team must reach consensus on the consultant to select.

The team will create a rating summary (Fig. 134.2.2.5.2) for all the firms, clearly indicating which firm is recommended for selection and documenting the selection process. The rating summary is only one tool used in the selection. Although selection of the highest scoring firm is not required, if it is not selected the reasons must be documented. This documentation will be kept in the project file. A copy of all documentation must be sent to the Central Office along with a letter (Fig. 134.2.2.5.3) requesting approval of the selected consultant. The team must receive approval before notifying the consultant that was selected or any other parties. The approved selection will be posted at MoDOT's Consultant Services webpage.

Consultant Interviews. For a feasibility study, environmental assessment, environmental impact statement, major river bridge design, or major investment study or at the PSC direction, the selection team should conduct interviews with the short-listed firms. This requires considerable preparatory work; however, the selection team can limit the number of consultant staff and specify particular individuals as well as the opening topics. (See Fig. 134.2.2.5.7 sample letter to interview). The leader of the selection team should provide the opportunity for the PSC to attend the interviews. Before the interviews, the selection team must determine the interview questions to be asked along with a description of the correct type of answer. Depending on the complexity of the questions, 15 to 18 questions will fill the time allotted. Additionally, the scoring criteria to be used must be pre-determined. These criteria can include many variables, but each element must be assigned a point value and expectations for allocating the maximum points should be developed. The consultants should not be allowed to bring anything into the interview. A sample format for an interview (with time guidelines) follows:

During the interview, each team member individually scores the consultant as each question is answered. After each interview, the selection team discusses the consultant responses and averages the scores from the entire team. After the final interview, the team will, as a group, compare these scores and discuss how the firms rank; the team must reach consensus on the consultant to select. The team will create a rating summary clearly indicating which firm is recommended for selection and documenting the selection process. The rating summary is only one tool used in the selection. Although selection of the highest scoring firm is not required, if it is not selected the reasons must be documented. This documentation will be kept in the project file. A copy of all documentation must be sent to the Central Office along with a letter (Fig. 134.2.2.5.3) requesting approval of the selected consultant. The team must receive approval before notifying the consultant that was selected or any other parties. The approved selection will be posted at MoDOT's Consultant Services webpage.

134.2.3 Consultant Solicitation and Selection Process – Modified Solicitation Method

Under specific circumstances it may be determined that the standard solicitation process is not appropriate to follow the complete QBS process . Each circumstance will be evaluated on a project by project basis. The Modified Solicitation Method may be considered on projects with an accelerated schedule, the emergency nature of the work affecting public safety or is highly specialized knowledge that would result in few consultants responding to the RFQ. Examples of this specialized work are, Hazardous Waste Services, Wetland Mitigation, Urgent Bridge projects and Historic Preservation. The PM/CA will contact their Design Liaison Engineer to determine if the project needs requires a PSC Modified Solicitation Approval and if deemed appropriate, will complete and submit the PSC Modified Solicitation Approval Memo to Design for PSC review and approval.

One of the three special conditions listed below warrant modified solicitation letters of interest:

1. The critical nature of the work requires an accelerated selection process. The term “critical nature” refers to tasks required as a result of unanticipated events, legal actions or compliance with directives from regulatory agencies. However, the PSC chair will consider these requests on a case by case basis.

2. The scope of services requires highly specialized knowledge and expertise that limits the number of qualified firms. Examples are underwater bridge inspection, designs to address environmental mitigation, and cultural resource investigations.

3. The work qualifies for the small purchase category. This category includes those contracts with a cost less than $25,000 and required services that are outside the work categories for an hourly rate contract.

134.2.4 Consultant Solicitation and Selection Process – Standard Solicitation Method for On-Call/Hourly Rate Contracts

Hourly Rate Contracts – Every three years MoDOT request interested firms to respond to a Master Agreement RFQ, which lists specific work categories in a specific district or Central Office Divisions. The selected consultant is approved to only provide professional services under a MOU for the district/division in their selected work category. These contracts are used for quick delivery of small projects that are limited in scope and are not intended as a means of bypassing the normal selection and negotiation process. Each district/division evaluates the letters of interest from responding consultant and completes the consultant selection process, following RsMO 8.291 and request PSC approval of the selected consultants. Once the PSC approves the selection, the Design Division maintains a list of consultants approved to provide services under the Master Agreement-Hourly Rate Contracts. The following list the 19 specific work categories approved for the Master Agreement-Hourly Rate Contracts:

District Work Categories

1. Planning and Conceptual Studies Services

2. Roadway Design Services

3. Traffic Operations, Design and Micro-Modeling Services

4. Surveying Services

5. Construction and Materials Inspection and Testing Services

Division Work Categories

1. Intelligent Transportation Systems Services

2. Geotechnical Services

3. Bridge Design Services

4. Photogrammetric Services

5. Environmental Services – Hazardous Waste, Noise Studies; Special Studies; Green Initiative

6. Cultural Resource Services

7. Subsurface Utility Engineering

8. Right of Way – Surveying

9. External Civil Rights – DBE Extended Services

10. Non-Motorized Transportation Services

11. VE/Innovative Contracting

12. Traffic Engineering Services – Radio Frequency; ITS; Structure

13. General Services – Civil & Structural; Mechanical; Electrical; Landscape Architect; Architect and Interior Design; Surveying; Fire Protection; Hazardous Waste

14. Aviation

Deletions or additions to the master list require the PSC chair’s approval. The master list of selected consultant can be accessed at MoDOT’s public web page by selecting “Business with MoDOT” → “Consultant Services” →General Information for Design Consultants” → “Master Agreement Process”.

Information on the Master Agreement-Hourly Rate Contract pre-qualification process is available.

In order for the district to execute an MOU with a consultant, the selected consultant must be pre-qualified and have a current E-Verify on file.

To ensure that hourly rate contracts are used as intended, the PSC has established several guidelines:

1. The hourly rate contract may be executed for a maximum period of three years, although the master agreement may include provisions for a one year extension at the end of the three-year period.

2. No single MOU will exceed a total cost of $100,000, nor shall a single job number have multiple MOUs executed for services that exceed a $100,000 total. MOUs within the $100,000 limit do not need prior PSC approval for execution and can be executed by the DE or division engineer. If a MOU is near the $100,000 limit, the PM/CA shall contact their Design Liaison Engineer to determine if the project will follow the guidance of EPG 134.2 Solicitation and Selection Process.

3. Requests for authorization to exceed the $100,000 limit should be made to the appropriate division. The division forwards the request to the PSC chair, who must obtain the authority of the Commission to execute the MOU. Typically, a standard contract will be used for the amount over the hourly rate limit.

Outlined below is the process of executing the Master Agreement for Hourly Rate Contracts.

1. The RFQ is posted to the web and electronic notification is sent to interested parties listed on the Design Consultant distribution list.

2. The district/division rates and develops a list of selected consultants.

3. The PSC chair approves the selection of consultants for specific work categories in each district/division.

4. Only Approved Pre-Qualified Consultants are eligible for Master Agreement. The pre-qualification information includes a schedule of hourly billing rates that are attached to the agreement as Exhibit 1. The pre-qualification process also includes a review of the firm’s overhead rates used to determine their hourly billing rates.

5. The master agreement will include hourly rates for each type of employee and each type of service. Since the amount of future services to be performed under the agreement is unknown, the allowable profit based upon direct labor cost is limited to 12 percent.

6. The Design Division develops a “Master Hourly Rate Agreement” to be executed by the selected consultant(s). This agreement outlines the basic conditions of the contractual relationship and specifies work category, billing rates, and overhead rates. The master agreement is the foundation for a Memorandum of Understanding (MOU) that the district later executes with a consultant to address the need for a specific scope of services in a specific work category.

7. Design Division instructs the consultant to submit two executed copies of the master agreement. The Design Division forwards the agreement to the CCO for approval as to form, then to the Commission Secretary for execution. Once MoDOT executes the agreement, the Commission Secretary retains one copy and returns the remaining copies to the Design Division. Design then distributes copies as detailed in EPG 134.4 Contract Approval, Execution and Distribution.

The district then follows the procedures below for executing individual MOUs to obtain services as the need arises.

The District Engineer or division engineer (with occasional exceptions) executes MOUs for hourly rate professional services as described in MHTC Policy “Delegation of Authority for Approval and Execution of Documents”.

1. After the MOU is determined to utilize state or federal funds, the PM/CA distributes copies of the executed agreement to the following Central Office Divisions , electronic notifications are preferred:

• Design
• Financial Services
• Audits and Investigations

2. A copy of the MOU with any supporting documentation and a cover letter serves as proper notification to the division. Financial Services will not pay any invoices related to the MOU if the agreement has not been received from the district/division. It is required to also submit the MOU and invoice to the Design division to accurately reflect Design Consultant Contract activities to the MHTC.

3. All original contracts, supplemental agreements, and MOUs will be executed by all parties prior to any services being performed under the contract. The consultant shall be given a written notice to proceed; documenting the date services can start being charged to the contract.

4. The PSC chair must approve any request from a consultant for a one-year extension of the contract beyond the original three-year period.

5. Consultants may change billing rates annually but the first change in billing rates cannot occur before the contract’s one-year anniversary and changes in rates apply only to MOUs executed after the date approved for the change.

6. A copy of the approved billing rates being used in the MOU should be attached to the MOU. Only approved personnel and rates are authorized for use and no overtime may be billed for services

134.3 Consultant Contract Negotiation

Price is negotiated after a consultant is selected and notified. This is the only time in the selection process when price can be considered. Beginning January 2013 only firms listed on the Approved Annual Financial Pre-Qualification List will be eligible to provide professional services to MoDOT. Additional scope beyond what was advertised in the RFQ cannot be negotiated into the contract.

The selected firm will need to use the provisional overhead rate that was accepted by MoDOT in that firms prequalification process with MoDOT. If the firm elects to voluntarily reduce their overhead rate the following language must be incorporated into the contract:

“The Company has voluntarily reduced its overhead rate to ___%. This rate will be used on all billings. Upon completion of these services outlined under this Agreement the final payment for these items will be based on accounting records of the Consultant incurred during the period of the Agreement. MoDOT reserves the right to require the actual audited overhead rates be used if those rates are less than the voluntarily reduced rate noted previously.”

134.3.1 Engineering Services Contract (ESC)

Contract negotiation starts once the selection is made and should follow the schedule provided in the solicitation. Consult CCO early in the negotiation phase for any proposed changes in the boilerplate agreement language. Modifications to the standard agreement language may be considered only where no other compromise can be reached to successfully negotiate the agreement, and must be approved “as to form” by CCO. If the PM/CA works with their Regional Counsel to approve the revisions to the boilerplate agreement, that Regional Counsel will need to approve the partially executed contract “as to form”. In general, no changes are allowed to the ESC.

The standard contracts can be found in the left panel of CCO’s website. Click the down arrow below “Contracts” and select “DE” to see a listing of all the standard contracts for the Design Division.

The MoDOT unit responsible for the contract, either the district or the division, provides the consultant with a printed, or PDF format electronic copy of the tentative contract. The tentative scope of services (including Specifications of Computer Deliverable Contract Plans) may be provided in a non-PDF electronic format. The PM/CA is responsible to complete the Consultant Contracts. Consultants do not receive electronic copies of MoDOT’s Sample Consultant Contract in a non-PDF format; any revisions to the standard consultant contract language must be approved by Chief Counsel’s input prior to execution of the contract.

After reviewing the tentative contract and scope of services, the consultant prepares a proposal containing a detailed estimate of cost that includes, man-hours, basic pay rates, pre-qualification accepted provisional overhead rates, direct costs and fixed fee. Each of these items is reviewed by MoDOT to ensure it is reasonable with respect to the type of work involved and anticipated size of the contract.

134.3.1.1 Liability Insurance

The MoDOT Standard Consultant Contract language includes provisions for the amount of liability insurance that the consultant must provide to cover claims that may result from errors, omissions, or negligent acts of the consultant. Insurance Certificate of Liability must meet Missouri’s Sovereign Immunity Limits. In rare instances, the PM/CA may request an Acceptance of MHTC Liability to reduce the insurance requirements on the consultants. This process must obtain PSC approval and follow the procedures outlined in the Acceptance of MHTC Liability, available through the CCO, depending on the nature and complexity of the services.

A copy of the certificate of liability insurance for the prime consultant is to be requested by the PM/CA and kept in the project files with the executed contract. It is the responsibility of the consultant to meet the insurance requirements of the contract. Receipt of the consultant’s certificate of insurance liability does not imply approval of the amounts.

134.3.1.2 Payment Bond

State statute requires that in the event that any subconsultants are used to supply at least twenty five thousand dollars ($25,000) worth of materials and/or labor not within the scope of environmental assessment services or licensed professional services as defined by Chapter 327, RSMo, the consultant shall require any such subconsultants to provide laborers and materialmen with adequate bond security.

The payment bond value shall equal the amount of the total subcontracted non-engineering services and applicable direct costs. If there is uncertainty about whether an item of work is considered as non-engineering or as an applicable direct cost, it should be included in the amount covered by the payment bond. Fully document all decisions regarding contracted services not included in the payment bond amount and retain in the project file until the contract has been closed and audited for final payments. A copy of the payment bond is to be requested by the project manager and kept in the district project files with the executed contract.

For more information on the payment bond language, see the standard engineering services contract on Chief Counsel’s intranet webpage.

134.3.2 Fixed Fee Review

The fixed fee is based on the complexity of the project, risk to the consultant, and the amount of sub consultant management and is the profit to the consultant. Fixed fees are calculations that are based upon direct salary costs. The percentage of the fixed fee to the direct salary costs must not exceed the MoDOT maximum allowable profit curve shown in Fig. 134.3.2 MoDOT Allowable Profit Curve. However, MoDOT does not allow a profit of more than 15 percent.

Fixed fees may not be calculated on direct expenses. Sub consultants are a direct expense to the prime consultant. Therefore, sub consultant expenses may not be included in the fixed fee calculations for the prime consultant. It should be noted that the “fixed fee” is fixed and will be paid in full even if the consultant does not use all of the hours in the contract. Care should be taken not to overestimate man-hours.

134.3.3 Man Hours Review

In order to establish a measure of “Fair & Reasonable” a pre-negotiation estimate is required by federal regulations in 49 CFR 18.36. The MoDOT PM/CA should develop an estimate based on the man-hours that MoDOT would require to perform the same service. The consultant man-hour estimate is reviewed and compared to the MoDOT estimate. The consultant’s fee proposal submittal must include detailed hours and cost breakdowns by sub-task and by job title. For any subtask on the scope, it should be known how many different people, how many hours per person, any direct expenses, etc. for the prime and any subs. Negotiations should occur to assure that man-hours in the contract are comparable to the MoDOT estimated hours and those from similar projects. PMs should confer with the appropriate Central Office liaison engineer for concurrence with the review. A draft of the contract is to be sent to Central Office Design, and/or appropriate MoDOT division, for review and if the total contract costs exceed $100,000, submittal to the Audit and Investigations Division for a pre-negotiations review. If the draft contract includes revisions to the boilerplate language, a copy of the draft contract should be sent to CCO for review.

134.3.4 Audit Pre-Negotiation Review

The PM/CA will submit the draft proposal to the Audit & Investigations Unit (AI) for a review of the overhead and salary rates in the proposal. Overhead and salary rates are subject to an audit review to test for allowability as required by 23 CFR 172.5 (c) and Part 31 of the Federal Acquisition Regulation (FAR).

• Audit Evaluation. The contract proposal is subjected to an audit evaluation if the total cost of the contract exceeds $100,000. An audit evaluation is also performed for a contract of any dollar amount if any of the following are true:

1. There is insufficient knowledge of the consultant’s accounting system.

2. There is previous unfavorable experience regarding the reliability of the consultant’s accounting system.

3. The contract involves procurement of new equipment or supplies for which cost experience is lacking.

• Hourly Rate or Lump Sum Contract Audit Evaluation. AI must review all consultant hourly rate master agreements prior to contract approval. Any lump sum contract for engineering services is required to have a pre-negotiation audit before approval. The chair of the PSC must be notified of the use of a lump sum contract prior to the solicitation or the request for letters of interest.

• Required Cost Documentation. Proper cost documentation consists of a detailed overhead schedule, financial statement information, and any other data necessary to show that the consultant has developed an acceptable accounting system and is aware of the FHWA’s cost eligibility and documentation procedures. Acceptable overhead and indirect costs must be in compliance with Part 36 of the Federal Acquisition Regulations Systems (FARS).

• Audit Results. The results of the audit evaluation are considered before contract negotiations are finalized. The audit evaluation verifies the inclusion of itemized costs that are evident and in accordance with sound accounting principles for the following:

1. Direct salary

2. Payroll additives

3. General overhead

4. Direct costs

5. Profit

The Annual Financial Pre-Qualification evaluation ensures that the consultant has an adequate system for segregating and accumulating reasonable, allocable, and allowable costs for the proposed work. The integrity of individual items is determined and inappropriate charges are subject to exclusion. The proposal may be returned to the consultant with suggestions for alterations and/or revisions. The contract is not finalized until all questionable audit matters have been resolved.

MoDOT reserves the right to negotiate any audited costs that are believed to be excessive. If project costs cannot be agreed to in a reasonable amount of time, termination of the negotiations may be considered and the next qualified consultant on the short list may be asked to submit an estimate of project costs.

134.3.5 Basis of Payment

The Design Consultant Engineering Services Contracts are actual cost contracts (excludes Master Agreements and MOUs). This means that all costs submitted for payment must be based on actual wages, overhead. Federal regulations (FAR Part 16.102) prohibit the use of cost plus a percentage of cost or percentage of construction costs as a method of compensation. The following methods maybe used as the basis of payment in a contract:

• Actual Cost Plus Fixed Fee
• Specific rates of pay (for emergency situations only)

Each Subcontractor or subconsultant must be identified in the contract. Subcontractor expenses should also be calculated based upon actual costs. Prompt payment of subconsultants is required per FAR Subpart 32.9.

Retainage is not allowed as a routine part of the contract i.e. blanket retainage is prohibited. Payment may be withheld on any particular work item that has not been completed in accordance with the contract. This can include work incidental to the work item, and required documentation directly related to the work.

Direct costs must be estimated using IRS mileage rates and per diem rates for Missouri. These rates can be found on the following web pages.

Mileage, subsistence and lodging must follow federal per diem guidelines.

• IRS Mileage Rate
• FY 2012 Per Diem Rates for Missouri

134.3.6 Subconsultants

The use of subconsultants is allowed provided that each firm is identified in the engineering services contract. DBE firms should be listed under Disadvantaged Business Enterprise (DBE) Requirements, and other subconsultants should be listed in Subconsultants. The use of 2^nd and 3^rd Tier subconsultants is not allowed, that is, only the prime consultant can have subconsultants, the subconsultants cannot have subconsultants.

134.3.6.1 Subconsultant Cost Exceeding $25,000

If the consultant is using a subconsultant with a cost exceeding $25,000, then the subconsultant shall include a detailed estimate of cost and an overhead rate breakdown (cost plus fixed fee breakdown). Fig. 134.3.6.1.1 lists common unallowable costs.

If the subconsultant is not pre-qualified with MoDOT then the firm shall also include their Management Representation and Certification Form. Each subconsultant in this category must show its overhead in the required format. Fig. 134.3.6.1.2 provides an example Overhead Schedule. The prime consultant is responsible for ensuring that all subconsultants comply with state and federal regulations, such as E-Verify, and are registered to do business in Missouri.

134.3.6.2 Subconsultant Cost NOT Exceeding $25,000

If the consultant is using a subconsultant with a cost that DOES NOT exceed $25,000 then a letter quote from the subconsultant can be submitted with the engineering service contract. The letter should quote the subconsultant’s cost shown in Exhibit III of the consultant contract. It is preferred however, that the subconsultants have cost plus fixed fee break down.

134.3.7 Ceasing Negotiation

If the district/division cannot negotiate a reasonable price with the consultant selected, they can formally cease negotiations with a formal written letter and begin negotiations with the next most qualified firm. After the district/division has ceased negotiations with the selected firm and have started negotiations with the next most qualified firm, they cannot go back to the first firm and start another round of negotiations; this is looked upon as price shopping and is unallowable. See the FHWA Consultant Services webpage for more information. If a contract cannot be negotiated with the second consultant, MoDOT may choose to negotiate with the third most qualified consultant. At any time, all proposals may be rejected and MoDOT can re-advertise the project with a revised scope.

134.3.8 Negotiation Documentation

All written correspondence with the consultant during the course of the negotiations is included in and made part of the project file for the consultant contract, including all email correspondence. Document in writing all verbal communication and personal visits with the consultant regarding the contract negotiations and also include in the project file. These records shall be maintained for a period of three years after the final invoice is submitted. If any litigation, claim, negotiation, audit or other action involving the records is started before the expiration of the three-year period, the records are retained until completion of the action and resolution of all issues arising from it or until the end of the three-year period, whichever is later.

134.3.9 Contract Assurances

Prior to executing a contract with a consultant, MoDOT will assure the following:

1. The consultant has been apprised of all applicable technical work requirements and administrative controls, including those of the FHWA and any other agencies that may have jurisdictions over the project.

2. After selection, the firm was provided all pertinent information relative to the desired engineering services or other professional services requested. The tentative contract set out the scope of the services in sufficient detail to provide the consultant with a definite knowledge of the services and results expected. The consultant was instructed to submit a proposal that indicated clearly identifiable, sufficiently detailed, and easily auditable charges for the work and/or units of work. These proposed charges (rates and man-hours) were reviewed for acceptability before negotiations proceeded.

3. Contracts include a requirement for a three-year retention of records after the final payment is made under the contract. On actual cost contracts, the consultant was informed that records must be open for inspection by authorized government personnel.

134.4 Contract Approval, Execution and Distribution

Once the district, the division, and AI agree to the man-hours, salary rates, overhead rates, direct costs, and fixed fee, the information is submitted to the PSC for review and for the PSC chair’s approval. See Fig. 134.4.1. The submittal letter to the PSC documents that the above procedures have been followed and the requirements of Brooks Act, 23 CFR 172 and RSMO Section 8 have been satisfied. When approved by the PSC, the standard contract language, the scope of services and the consultant’s cost proposal are made part of a formal agreement for execution.

MHTC authorization to execute the contract may be obtained in one of following ways:

• Projects in the Statewide Transportation Improvement Program (STIP)

• Projects Not Included in the STIP

To obtain authorization to execute contracts for projects that are not included in the approved STIP and have a contract ceiling exceeding $25,000, the contracts must be presented to the MHTC at a regularly scheduled monthly meeting. The appropriate division places these contracts on the Commission agenda for the next meeting. The District Engineer or division engineer should be prepared to discuss this item at the Commission meeting in case questions arise. After obtaining authorization to execute the contract from the Commission, the contract administrator forwards four copies of the contract, executed by the consultant, to CCO for approval as to form and then to the Commission Secretary, who has the appropriate individuals execute them.

The Commission’s approval of the STIP includes delegation of authority to execute professional services contracts for projects contained in the STIP. The district or division will forward two copies of the contract, executed by the consultant, to the Design Division, who will submit them to CCO for approval as to form, and then to the Commission Secretary, who has the appropriate individuals execute them.

Design Division distributes copies of the executed contract except for Bridge projects. After the contract is executed, one copy is provided to each of the following:

1. The consultant – should have original signature

2. The Commission Secretary keeps a copy with original signature

3. The project file in the district/division.

4. Design Division – adds to statewide tracking database for consultant activities

5. Audits and Investigations (for end of contract audit)

6. Financial Services – for paying invoices

If federal funds were used to finance the contract, Financial Services submits a copy of the executed contract to the FHWA Finance Section for approval. Federal funds will not be paid for charges to the contract prior to FHWA approval. Any supplemental agreements are also submitted to the FHWA after execution.

The project manger is responsible for sending a Notice to Proceed (NTP) Letter (Fig. 134.4.2) to the consultant. The NTP cannot be given prior to execution of the contract.

134.5 Consultant Contract Administration

A MoDOT employee will be assigned as the PM/CA for each contract, including contracts in which the services are for project management of a construction project or for contract administration. MoDOT's PM/CA is responsible for administering the contract and overseeing the consultant’s progress towards the provision of services required by the contract. Some of these responsibilities are:

1. Scheduling and attending progress meetings with the consultant and being involved in decisions leading to change orders or supplemental agreements.

2. Being familiar with the qualifications and responsibilities of the consultant’s staff.

3. Assuring that costs billed are consistent with the acceptability and performance of the consultant’s work.

4. Monitoring the consultant’s operations, as necessary, and adequately documenting contract performance (prior to final settlement of the contract) for later use.

5. Conducting interim technical and audit evaluations as deemed necessary during the performance of the consultant contract.

6. Completing performance evaluations in the Design Consultant Database at major milestones and at the completion of the contract. An evaluation is to be completed at least annually.

7. Notifying the Design Division, Financial Services and AI when a project is complete and finalized. The PM/CA should make arrangements with the Resident Engineer to be notified when construction is complete.

134.5.1 Invoicing

The consultant files a monthly invoice and progress report to the PM/CA. The invoice template found in Fig. 134.5.1.1 must be used for standard contracts and only Fig. 134.5.1.3 Blank Consultant Invoice - Hourly Rate Contracts must be used for Hourly-Rate/On-call contracts. Each invoice must be submitted with the necessary supporting documentation and must be numbered in sequential order and label the final invoice as FINAL. The invoice shall be based on the total incurred cost during the invoice period. Invoices should identify each task in the scope of work, as well as the employees and hours spent on each task during the billing period. Direct costs must also be shown by task. The MoDOT Consultant Invoice Checklist (Fig 134.5.1.2) for standard contracts and MoDOT On-Call/Hourly Rate Checklist (Fig. 134.5.1.4) can be used as tools to ensure all proper documentation is in place for each invoice in order for the invoice to be accepted and paid. Fig. 134.5.1.5 is available as an example of a filled-out invoice.

The PM/CA should make every effort to see that the consultant is paid in a timely manner, the goal being 30 days. Missouri law states that the consultant is entitled to interest if the invoice is not paid in 45 days. The 45-day period starts when all questions about the invoice have been addressed and agreed to by both parties.

The PM/CA sends a copy of the invoice to Financial Services with a cover letter stating that the PM/CA has reviewed the invoice and approves it for payment. A copy of the cover letter must also be sent to the Design Division so the amount invoiced can be tracked in the consultant database.

The letter should state the amount invoiced and also the percentage of the contract complete, the amount to be paid to the consultant to date, the activity code from which the funds should be taken, and that the invoice payment will not exceed the maximum amount payable on the contract. If the contract encompasses more than one job number, the cover letter and all invoices must clearly state how much is to be applied to each job number as well as the total contract. When the last invoice is submitted for payment, the cover letter should include a statement notifying Financial Services that the contract is complete.

If errors are found on the consultant invoice, the PM/CA should contact the consultant and request a corrected invoice. The PM/CA should never change an invoice. The invoice should be sent back to the consultant for corrects and they must re-date the invoice and re-submit to MoDOT. If the consultant makes an error and requests more reimbursement than allowed by the contract, the PM/CA may submit the invoice and authorize payment of an amount less than the invoice requests. The reasons for paying an amount different than the invoice requests must be clearly documented in the cover letter.

If the period of service in the contract has lapsed, a letter to extend the period of service signed by both MoDOT and the consultant must be completed prior to paying any invoices. For hourly-rate contracts the period of service is defined in the MOU not the Master Agreement.

Consultant invoices must be submitted electronically to the PM/CA and to Financial Services at

Contractual.Payments@modot.mo.gov.

Invoices for projects administered by the Bridge Division should be directed to

BRInvoiceAdmin@modot.mo.gov

and to

Financial Services at Contractual.Payments@modot.mo.gov.

Approval of invoiced amounts must be sent electronically to Financial Services at the link above and copied to Design for tracking at

DEInvoiceAdmin@modot.mo.gov.

Electronic payments to a consultant may be set up by submitting an “Electronic Funds Transfer” form. Information is available.

134.5.2 Supplemental Agreements

Supplemental agreements, are to be used to add/delete work within the scope of services that was advertised in the RFQ. Supplemental agreements cannot be used to increase the scope of work outside the RFQ or to increase overhead or fixed fee. For example, a no cost supplemental agreement can be executed to extend the period of service as outlined in the original consultant contract.

Each supplemental agreement must include new subconsultants, and changes to the scope of services, new cost estimates and schedule or period of service adjustments as applicable.

Costs associated with these “new” services may be covered by the unit costs included in the original contract or by a newly negotiated cost in the supplemental agreement. When a supplemental agreement to an hourly rate contract is needed, the unit salary costs for the service provided by the supplement must be the same as those salary costs contained in the MOU. Direct costs and overhead costs for the services contained in the supplemental agreement should reflect the costs that will be in effect during the performance of the service.

Once it is determined that the scope of services needs modification, the PM/CA follows the same negotiation process for the supplemental agreement that is followed for new contracts through submission to the PSC. Any change in the scope of services, whether it results in a change in cost or not, must be included in an approved supplemental agreement. If a DBE goal was established in the original contract it will continue to apply. The Scope and Estimate is to be sent to External Civil Rights for a DBE goal evaluation. The DBE participation should be tabulated in the supplemental agreement (DE1-FASUP). The agreement must be executed prior to the consultant receiving authorization to proceed with the modified scope of services.

When a supplemental agreement is necessary, additional funds to cover the added costs in the contract must be identified from the appropriate budget category and be approved as a necessary expenditure. The contract information is submitted to the PSC using PSC Approval to Execute Supplemental Agreement, Fig. 134.5.2. If approved and the total cost of the original contract plus the supplemental agreement exceeds $100,000 the supplemental agreement is then submitted to AI for a pre-audit of hourly billing rates and overheads, to CCO for approval as to form, and to the Commission Secretary for execution. A copy of the supplemental agreement is provided to the Federal Aid Section for obligation of additional federal funds, if applicable.

134.5.3 Consultant Contract Close-Out

To close out a consultant contract the PM/CA must notify Design and Financial Services that the last invoice is the FINAL invoice and to close out the contract. See EPG 134.5.1 Invoicing for information on invoicing and the appropriate email addresses to send the FINAL invoices.

Final Audit. MoDOT conducts a final audit to determine total allowable contract costs, unless the contract is on a firm, fixed-price basis. Allowable cost principles are identified based on the experience of MoDOT personnel in administering past contracts and in accordance with applicable requirements of 48 CFR Part 31, Federal Acquisition Regulation (FAR), and 23 CFR 172, Administration of Engineering and Design Related Service Contracts.

The PM/CA is responsible for notifying Design when the contract is substantially complete. The final audit may be conducted any time after the project is let; the consultant contract need not be completed for the final audit to be conducted.

Should MoDOT agree prior to contract execution that it is necessary for a consultant to purchase special equipment, materials, or property to accomplish the required services, MoDOT will establish a before and after value and will receive an appropriate credit for any residual values. This credit is passed on to FHWA.

134.5.4 Consultant Performance Appraisals

The MoDOT PM/CA must perform an evaluation (through the Lotus Notes Design Consultant Database) of the consultant’s performance under any engineering services contract with MoDOT at each project milestone and at a minimum, on an annual basis during the term of the consultant’s services provided by the contract. Input for the evaluation should be requested from other divisions that may have project experience with the company, such as the Environmental section, or Construction Division. MoDOT’s PM/CA also completes a final comprehensive evaluation of the consultant’s performance within 30 days after contract completion. The evaluation is included in the project file. MoDOT personnel complete another evaluation of the consultant’s performance within 30 days of completion of the construction phase of the project.

Upon completing any evaluation, furnish a copy to the consultant prior to meeting with the district or division project manager to discuss the evaluation. These evaluations are included in MoDOT’s Design Consultant Database and are used during consideration of the consultant for future work assignments. The PM/CA is defined as the project manager, or other person who is responsible for reviewing and approving the consultant’s invoices.

134.5.5 Restitution for Errors and Omissions

At times, errors or omissions in the project design or in the information provided for the project may become evident during a project’s bidding or construction phases. When this occurs, the causes surrounding the errors or omissions are investigated to determine a final resolution, which may require financial restitution. A face-to-face meeting between the DE and the consultant will take place to discuss the situation.

The procedure for investigating errors or omissions is:

1. Contractor/RE initializes a change order with the reason code – CD (Consultant Design Error). The RE and PM from Construction and Design review the change order and develop recommendation for action and assessment of both direct and indirect costs.

2. The District Construction and Material Engineer and the District Engineer review and provide comments.

3. The District Engineer reviews and makes final district recommendations. Form is forwarded to the Construction Division.

4. The Construction Division Liaison Engineer, the Design Division Liaison Engineer and CCO jointly make the final decision regarding pursuit of reimbursement. The district is informed of the decision.

5. If the decision is to pursue recovery of costs, then CCO drafts a “Letter of Notice” for the District Engineer’s signature.

6. The District Engineer sends the Letter of Notice to the Controller’s Division – Accounts Receivable Section (CT A/R) requesting an invoice be created. A copy is to be sent to the Design Division.

7. Upon receipt of DE’s Letter of Notice to the design consultant, Controller’s Division will create an invoice for the amount of the claim and submit it directly to the design consultant with the Letter of Notice. The revenue source code of 1814-05 “Design Consultant Claims” will be used to track reimbursement by design consultants.

8. If the consultant does not respond by the “respond by date” in the Letter of Notice, then the Design Liaison Engineer presents the background information to senior management, who make a decision whether or not to begin legal proceedings to pursue reimbursement of costs. If legal proceedings are pursued, Design Liaison Engineer notifies Controller’s Division – Accounts Receivable.

Should formal dispute resolution as detailed in EPG 134.6 Dispute Resolution be initiated during the above procedure, the following steps will ensure MoDOT receives payment:

1. The PM/CA, with the help of CCO, prepares and provides the controller with a letter from the State Design Engineer to the consultant indicating the Dispute Resolution Committee’s (DRC) decision and the dollar amount of restitution.

2. The controller prepares an invoice for the amount of the restitution payment and sends it to the consultant with the letter from the State Design Engineer. A copy of the letter and invoice is provided to the Design Division and the district. These documents indicate the payment is made to Department of Revenue – Credit State Road Fund and mailed to:

Missouri Department of Transportation

Controller’s Office

P.O. Box 270

Jefferson City, Mo. 65102

The controller will track the invoice to ensure payment is received from the consultant in a timely manner.

134.5.6 Incentive and Disincentive Program

MoDOT has instituted an incentive and disincentive program with the consulting industry to assure that consultants:

1. Deliver the most cost-efficient design that provides the right solution to the identified need (i.e., Practical Design)

2. Deliver quality plans

3. Deliver the roadway and bridge design plans on time as required in the contract

4. Prepare construction cost estimates that are within an acceptable range of the contract award amount.

The incentive and/or disincentives vary according to the listed category. This program will not be used on every MoDOT roadway and bridge design contract. The incentive and disincentives will be used in whole or in part on major projects that are critical to MoDOT accountability with the public. Fifty percent of the fixed fee is the maximum disincentive that can be incurred. When the district requests approval from the PSC chair to solicit consultant services, the approval will specify whether the contract will or will not include the incentive/disincentive program. Project specific incentives and disincentives will be noted in the contract agreement.

Cost-effective Design (Practical Design) and Quality Plans. The consultant’s performance on delivering the most cost-efficient design that provides the right solution for the identified need will become a part of the consultant performance evaluation. Quality of Plans will be based on the score for overall performance.

Evaluation scores must be considered on all future contract selections. Consultants who perform poorly or who do not deliver cost-effective designs will not be considered for future contracts until they demonstrate to MoDOT that significant changes have been made within their company to address the concerns. The PSC will monitor this performance and MoDOT staff will be kept informed on the status of any firms that are not being allowed to compete for projects.

Deliver Roadway and Bridge Design Plans on Time.

Right of Way Plans. The project manager should use the flowchart below to determine whether the incentives or disincentive are applicable based on the scheduled delivery date contained in the current contract or supplemental agreement. If changes are made by MoDOT that impact scheduling, the letting date may be re-negotiated .

Final Plans, Surveys, and Estimates. The project manager should use the flowchart below to determine whether the incentive or disincentive is applicable based on the scheduled delivery date contained in the current contract or supplemental agreement. If changes are made by MoDOT that impact scheduling, the letting date will be re-negotiated.

Accurate Cost Estimates are critical for MoDOT to be able to deliver the program promised to the public. Program estimates are published in the STIP and each district programs sufficient projects each year to spend every dollar allocated. Poor estimating causes MoDOT numerous problems at letting. Once the project budget has been set it is then the design consultant’s responsibility to design a good project that satisfies the purpose and need within that budget. The project manager should use the flowchart below to determine whether the consultant qualifies for an incentive or disincentive based on their project estimates.

134.6 Dispute Resolution

Once a consultant is selected to work for MoDOT, circumstances may arise that lead to a dispute between MoDOT’s PM/CA and the consultant. In most cases, a complete understanding and recognition of each party’s concerns will result in successful resolution of the disagreement. However, when that is not the case, this dispute resolution procedure is used.

The relationship between the consultant and MoDOT is a professional contractual relationship. All parties to the contract should understand the dispute resolution process. The PM/CA and the consultant should make every attempt to fully understand the dispute and express honest statements of fact prior to initiating formal dispute resolution. In this context, the PM/CA is defined as the person who authorizes MoDOT’s payment of the consultant invoices.

Before initiating formal dispute resolution, the following activities should occur:

1. The district engineer, or division engineer (hereinafter indicated by “DE”) prepares a letter to the consultant outlining the contested issues.

2. The disputing parties (project manager level for both MoDOT and consultant) participate in a face-to-face meeting.

3. The consulting firm conveys the firm’s recommendations for resolving the dispute.

4. MoDOT’s representative discusses the consultant’s proposed resolution and responds in a letter, either accepting the proposal or offering a rebuttal.

5. MoDOT and the consultant attempt to negotiate a settlement.

If the PM/CA and the consultant reach an agreement that provides the consultant with payment greater, or less than the contract maximum, the PM/CA needs to initiate a supplemental agreement and follow normal procedures to get the supplemental agreement executed, including approval by the PSC. If no settlement is forthcoming, formal dispute resolution is initiated.

134.6.1 Initiating Formal Dispute Resolution

When attempts between the PM/CA and the consultant have failed to resolve the disagreement, the consultant should enumerate the firm’s concerns in a letter to the DE, thereby initiating formal dispute resolution. A Dispute Resolution File should be started by the PM/CA.

Disagreements may arise over the scope of services, fees, hours, the consultant evaluation, errors and omissions, or other issues. Initiation of the resolution process will in no way be reflected on negatively in the consultant’s performance evaluation. The consultant’s letter to the DE should specifically outline the disagreement and the consultant’s view of the issues. This detailed letter must include:

1. A clear description of the items that are being disputed

2. What the consultant desires to resolve the dispute

3. Background—the sequence of events that led to the dispute

4. Documentation to support the request

5. All correspondence between the parties relating to the items in dispute (including e-mail)

6. A listing of previous attempts to resolve the issue (including e-mail)

7. A copy of the contract and any supplemental agreements

Upon receiving the consultant’s letter and documentation, the DE will have the PM/CA prepare a similar letter, also addressed to the DE, outlining the administrator’s view of the disagreement with particular attention to the information in the consultant’s letter. MoDOT may also initiate formal dispute resolution by the PM/CA sending a letter, under the DE’s signature, to the consultant contact listed in the contract. The consultant should be directed to respond to the department’s letter. As a courtesy, the PM/CA should notify the consultant project manager before writing this letter.

134.6.2 Dispute Review by District or Division Engineer

The PM/CA transmits the letter documenting the issues of the dispute, with the consultant’s letter attached, to MoDOT’s DE for review. In addition, the DE also notifies the Assistant Chief Engineer, who chairs the PSC, and the State Design Engineer that formal dispute resolution has been initiated. With this notice, the State Design Engineer begins tracking the dispute resolution process. Whenever the two parties in the dispute reach a resolution, the State Design Engineer should be notified of the following:

1. Where in the process resolution was reached

2. The date resolution was reached

3. What resolution was reached

The DE evaluates the information in the letters, discussing it with the PM/CA and the consultant project manager as necessary.

134.6.3 Meeting of the Two Parties

The DE arranges a meeting with the consultant principal. If an agreement is reached after discussion between the DE and the consultant principal, the DE provides a letter to the firm indicating the terms of the agreement. However if agreement is still not reached, the dispute may be taken to the Dispute Resolution Committee.

134.6.4 Dispute Resolution Committee

The Dispute Resolution Committee (DRC) is comprised of the Assistant Chief Engineer (acting as chair), Director of External Civil Rights, and Chief Financial Officer. In preparation for the DRC’s meeting, the DE will share written details of the formal dispute resolution’s outcome to this point with the State Design Engineer who then facilitates the DRC procedures. The committee will review this information together with other background information, including the original letters from the PM/CA and the consultant project manager outlining the dispute. When the committee meets, all representatives of the disputing parties are given the opportunity to attend. The DRC discusses the issues with the disputing parties and tries to reach a resolution satisfactory to both parties. If a resolution cannot be reached, an offer of mediation is made to the two parties. Should both parties agree to use mediation to settle the claim, they will share the cost of mediation equally.

If an agreement is reached, the DRC sends the consultant a letter outlining the resolution of the dispute.

134.6.5 Mediation

A mediator is an outside party who facilitates a discussion between the disputing parties and enables them to explore options to reach agreement. Responsibility for dispute resolution is solely that of MoDOT and the consultant. The mediator has knowledge of the process and the general terms of the dispute but is not intimately knowledgeable of all project details.

After the consultant has accepted MoDOT’s offer for mediation, the State Design Engineer is responsible for making arrangements for a mediator. This includes selecting an approved mediator from a list (developed jointly by ACEC and MoDOT) and arranging the time and place of the meeting. Participants at the meeting are limited to the DE, the DRC’s chair, the consultant principal, and the mediator. Others, including the PM/CA and the consultant project manager, are not active participants in this meeting but may provide information if the mediator so requests. Legal representation is optional. The disputing parties are responsible for their own costs associated with the mediation but will share all expenses associated with the mediator equally.

Should the mediation result in the dispute’s resolution, the DRC sends the consultant a letter explaining the resolution of the dispute. However, should the mediation not result in resolution of the dispute, the issue is forwarded to MoDOT's Chief Engineer for final action.

134.6.6 Final Decision by the DRC

When mediation fails, the State Design Engineer will notify the DRC and MoDOT’s Chief Engineer and provide any additional information gathered during the mediation process. The Chief Engineer will review the information provided and if desired, meet with the members of the DRC to discuss the results of the dispute resolution process up to that point. Upon decision by the Chief Engineer, the State Design Engineer provides a letter to the DE and the consultant principal informing them of the decision. When the consultant receives the letter from the State Design Engineer outlining the decision of the Chief Engineer, the firm may respond; however, formal dispute resolution will have been completed and MoDOT will not entertain further appeals from the consultant.