Minutes — Desert Hot Springs City Council, February 15, 2022 (part 1 of 2)

City of Desert Hot Springs

ACTION MINUTES
City Council Meeting
6:00 PM - Tuesday, February 15, 2022
Council Chambers
CLOSED SESSION - 4:30 P.M.

CALL TO ORDER
Mayor Pro Tem Gardner called the Closed Session to order at 4:30 P.M.

ROLL CALL

Present:

Council Members: Russell Betts, Roger Nuñez, Jan Pye
Mayor Pro Tem: Gary Gardner

Absent:

Mayor: Scott Matas (excused)

PUBLIC COMMENTS
None.

Jennifer Mizrahi, City Attorney, announced the Closed Session Items.

CLOSED SESSION:

1. CONFERENCE WITH LEGAL COUNSEL—EXISTING LITIGATION
(Paragraph (1) of subdivision (d) of Section 54956.9)
Name of case: Nadine Garcia, et al. v. City of Desert Hot Springs, et al.; 4th District Court of Appeal – Division 2; Case No. E075523

2. CONFERENCE WITH LEGAL COUNSEL—ANTICIPATED LITIGATION Initiation of litigation pursuant to paragraph (4) of subdivision (d) of Section 54956.9: One Potential Case

3. CONFERENCE WITH LEGAL COUNSEL—ANTICIPATED LITIGATION Initiation of litigation pursuant to paragraph (4) of subdivision (d) of Section 54956.9: One Potential Case

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City Council
February 15, 2022

4. PUBLIC EMPLOYEE PERFORMANCE EVALUATION (Gov Code Sec. 54957(b)
Title: City Manager
RECESS
REGULAR SESSION - 6:00 P.M.

CALL TO ORDER
Mayor Pro Tem Gardner called the Regular Session to order at 6:00 P.M.

ROLL CALL

Present:

Council Members: Russell Betts, Roger Nuñez, Jan Pye
Mayor Pro Tem: Gary Gardner

Absent:

Mayor: Scott Matas (excused)

INVOCATION
Mayor Pro Tem Gardner gave the Invocation.

PLEDGE OF ALLEGIANCE
Council Member Betts led the Pledge of Allegiance.

CITY ATTORNEY REPORT ON CLOSED SESSION
Jennifer Mizrahi, City Attorney, advised that there was no reportable action.

APPROVAL OF AGENDA
ACTION: Approve the February 15, 2022 Regular Meeting agenda, consider Item 7 prior to Item 6, and approve the Consent Calendar in its entirety.

Moved by Mayor Pro Tem Gardner
Seconded by Council Member Nuñez
Carried 4-0 by the following votes:

AYES: Betts, Nuñez, Pye, and Gardner
ABSENT: Matas

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City Council
February 15, 2022

PUBLIC COMMENTS
1) Matthew Garcia spoke regarding the cost of housing/rent. 2) Calvin Ludwigsen spoke regarding development around his neighborhood. 3) Kim Lee spokeshort term vacation rentals.
4) Alexander Bazley spoke regarding short term vacation rentals. 5) Doan Chau spoke regarding short term vacation rentals. 6) Walker Beverly spoke regarding weather related road closures. 7) Debra Haas spoke regarding short term vacation rentals. 8) William Ashman spoke regarding short term vacation rentals. 9) Gabriel Richards spoke regarding short term vacation rentals. 10) Andrew Spencer spoke regarding short term vacation rentals. 11) Joshua Woody spoke regarding short term vacation rentals. 12) Nuvea Cobb spoke regarding short term vacation rentals.

CITY MANAGER REPORT
Luke Rainey, City Manager, advised that Staff was assessing short term vacation rentals impacts.

Geoffrey Buchheim, Administrative Services Director, provided a financial update.

Christina Newsom, Compliance Manager, reported on a Code Enforcement clean-up case at 15th Avenue and Via Real.

Roberta Crncic, Executive Program Director, provide updates regarding Little League sign-ups and coaching, and the co-ed youth basketball league.

Erick Becerril, Community Development Director, reported on the Tour de Palm Springs event.

MAYOR AND COUNCIL MEMBER REPORTS
Council Member Pye reported on the various meetings and events she attended.

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City Council
February 15, 2022
Council Member Nuñez reported on the various meetings and events he attended.

Council Member Betts reported on the various meetings and events he attended.

Mayor Pro Tem Gardner reported on the various meetings and events he attended.

The City Council recessed at 7:00 P.M.

The City Council reconvened at 7:05 P.M.

Item 7 was considered at this time.

PUBLIC HEARINGS:

6. Transition From At-Large to By-District Elections (Public Hearing No. 1) Staff Report - SR-22-039 - Pdf
Recommendation:
1) Staff Report;
2) Entertain questions of Staff from the City Council;
3) Open the Public Hearing;
4) Take public testimony;
7) Close the Public Hearing;
8) City Council discussion and questions to Staff; and
9) Conclude the first Public Hearing receiving public testimony as part of the administrative record.

Jerryl Soriano, City Clerk, presented the staff report.

David Ely, Bear Demographics & Research, presented an overview of legal requirements to be considered, the criteria for creating district boundaries, and the public input process, and responded to questions.

Tizoc DeAztlan, DeAztlan Consulting, described the public input process and responded to questions.

Mayor Pro Tem Gardner opened the Public Hearing.

There was no public testimony.

Mayor Pro Tem Gardner closed the Public Hearing.

ADMINISTRATIVE CALENDAR:

7. Appointment to the Planning Commission to Fill One (1) Vacancy for Unexpired Term
Staff Report - SR-22-037 - Pdf

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City Council
February 15, 2022
Recommendation:

Ratify Mayor Pro Tem Gardner's appointment of Chris Wagstaff to the Planning Commission to fill one (1) vacancy consisting of an unexpired term through January 2023.

Item 7 was considered prior to Item 6.

Jerryl Soriano, City Clerk, presented the staff report.

ACTION: Ratify Mayor Pro Tem Gardner's appointment of Chris Wagstaff to the Planning Commission to fill one (1) vacancy consisting of an unexpired term through January 2023.

Moved by Council Member Betts
Seconded by Council Member Pye
Carried 4-0 by the following votes:

AYES: Betts, Nuñez, Pye, and Gardner
ABSENT: Matas

8. Ordinance Increasing the Salary for Planning Commissioners and Public Safety Commissioners
Staff Report - SR-22-023 - Pdf
Recommendation:

2.40.050 (Salaries of Police Commissioners) of Chapter 2.40 (Police Commission) of the Desert Hot Springs Municipal Code increasing the salary of City Commissioners."
Jerryl Soriano, City Clerk, presented the staff report.

ACTION: Approve Staff recommendation.

Moved by Council Member Betts
Seconded by Council Member Nuñez
Carried 4-0 by the following votes:

AYES: Betts, Nuñez, Pye, and Gardner
ABSENT: Matas

9. Resolution adopting Caltrans Local Assistance Procedures Manual Chapter 10: Consultant Selection
Staff Report - SR-22-036 - Pdf

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City Council
February 15, 2022
Recommendation:

Adopt a Resolution of the City Council of the City of Desert Hot Springs, California adopting Caltrans Local Assistance Procedures Manual Chapter 10:

Consultant Selection.

Daniel Porras, Assistant City Manager, presented the staff report and responded to questions.

ACTION: Approve Staff recommendation and adopt Resolution No. 2022-004.

Moved by Council Member Nuñez
Seconded by Council Member Pye
Carried 4-0 by the following votes:

AYES: Betts, Nuñez, Pye, and Gardner
ABSENT: Matas

10. Ordinance Prohibiting the Unlawful Possession of Catalytic Converters in the City of Desert Hot Springs
Staff Report - SR-22-029 - Pdf
Recommendation:

Introduce for First Reading and read by title only: "An Ordinance of the City Council of the City of Desert Hot Springs, California, adding Chapter 8.55 "Catalytic Converters" to the Desert Hot Springs Municipal Code establishing regulations prohibiting the unlawful possession of catalytic converters in the City" Steven Shaw, Deputy Police Chief, presented the staff report.

ACTION: Approve Staff recommendation.

Moved by Council Member Betts
Seconded by Council Member Nuñez
Carried 4-0 by the following votes:

AYES: Betts, Nuñez, Pye, and Gardner
ABSENT: Matas
CONSENT CALENDAR:

11. City Council Regular Meeting Minutes: February 1, 2022 Staff Report - SR-22-038 - Pdf
Recommendation:

Approve the Minutes as presented; or as corrected.

ACTION: Approved the Minutes as presented.

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City Council
February 15, 2022

PUBLIC COMMENTS
None.

ADJOURN
Mayor Pro Tem Gardner adjourned the meeting at 7:53 P.M.

Jerryl Soriano, CMC, City Clerk

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SR-22-039
City of Desert Hot Springs
City Council

AGENDA ITEM REPORT
To: City Council
Date: February 15, 2022
Department: City Clerk
Prepared by: Jerryl Soriano, City Clerk
Subject: Transition From At-Large to By-District Elections (Public Hearing No. 1) RECOMMENDATION:
1) Staff Report;
2) Entertain questions of Staff from the City Council;
3) Open the Public Hearing;
4) Take public testimony;
7) Close the Public Hearing;
8) City Council discussion and questions to Staff; and
9) Conclude the first Public Hearing receiving public testimony as part of the administrative record.

BACKGROUND:

The Desert Hot Springs Municipal Code provides that members of the City Council are currently elected by at-large elections, as each member is elected by the registered voters of the entire city. The California Voting Rights Act (the "CVRA") became law in 2003 and provides a means for prospective plaintiffs to allege racially polarized voting and to seek a change from a jurisdiction's at-large election system to a different system, typically a by-district or by-division election system where only registered voters within a specific district may vote for a candidate running from their specific district, and also allows for the recovery of a plaintiffs' attorneys' fees.

On November 1, 2021, the City received a certified letter (Exhibit 1) from attorney Kevin I. Shenkman of the law firm Shenkman & Hughes, on behalf of his client, the Southwest Voter Registration Project, asserting that the City's at-large election system may violate the CVRA and threatening litigation if the City does not voluntarily transition to a district-based election system for electing its City Council.

On December 8, 2021, the City Council adopted Resolution No. 2021-071 (Exhibit 2) declaring its intent to transition from at-large to by-district elections, establishing the City’s compliance with Elections Code Section 10010, and a step-by-step process for the transition, which requires significant public participation.

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SR-22-039
DISCUSSION:

Prior to the City's consideration and approval of an ordinance establishing boundaries for a by-district election system, Elections Code Section 10010 outlines procedural rules and requires all of the following steps:

A) Prior to drawing a draft map or maps of the proposed boundaries of the districts, the City shall hold at least two (2) public hearings over a period of no more than thirty (30) days, at which the public will be invited to provide input regarding the composition of the districts; B) After all maps are drawn, the City shall publish and make available for release at least one draft map, if members of the City Council will be elected in their districts at different times to provide for staggered terms of office, the potential sequence of elections shall also be published; C) The City Council shall also hold at least two (2) additional public hearings over a period of no more than forty-five (45) days, at which the public shall be invited to provide input regarding the content of the draft map(s) and the proposed sequence of elections, if applicable; and D) The first version of a draft map shall be published at least seven (7) days before consideration at a public hearing. If a draft map is revised at or following a public hearing, it shall be published and made available to the public for at least seven (7) days before being adopted.

The City shall take the following actions, within the time frames established by Elections Code Section 10010 following the effective date of this Resolution, taking into consideration time required for public outreach and input, agenda requirements under the Brown Act, and the City Council' meeting schedule:

A) Hiring of a qualified demographer to provide demographic services and assist in the preparation of proposed district maps;
B) Conduct public outreach, including to non-English speaking communities, to explain the districting process and to encourage public participation; C) Before drawing a draft map or maps of the proposed district boundaries, hold at least two (2) public hearings at which the public is invited to provide input regarding the composition of the districts and to consider district boundaries as provided in Elections Code Section 10010; D) After drawing a draft map or maps, publish the draft map(s) and the potential sequence of the district elections and hold at least two (2) public hearings at which the public is invited to provide input regarding the content of the draft map or maps and the proposed sequence of elections; and E) Adopt an ordinance establishing district elections, including the adoption of a district boundary map and the sequence of the district elections.

In accordance with the above, the timeline of events and implementation of a "district-based" election method is as follows:

Date Event
November 1, 2021 City received demand letter.

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SR-22-039
Date Event
December 8, 2021 Adoption of Resolution of Intention to Transition to By District Elections.

February 15, 2022
Public Hearing No. 1 (Pre-Draft Map)
Summary of District Formation/Redistricting Law, Criteria, Process, and 2020 Census
March 1, 2022 Public Hearing No. 2 (Pre-Draft Map)
March 8, 2022 Draft Map(s) Published on City Website
March 15, 2022 Public Hearing No. 3 (Pre-Final Map)
Presentation and Adoption of DRAFT District Boundaries Map April 5, 2022/TBD
Public Hearing No. 4
Presentation and Adoption of FINAL District Boundaries Map (First Reading of Ordinance)
April 19, 2022/TBD Adoption of FINAL District Boundaries Map (Second Reading of Ordinance)
FISCAL IMPACT:

None.

ATTACHMENTS:

Exhibit 1 - Council District Formation Process FAQ
Exhibit 2 - District Formation Presentation
Exhibit 3 - Resolution 2021-071 Declaring Intent to Transition to By-District Elections Exhibit 4 - Staff Report from December 8, 2021
Exhibit 5 - CVRA Demand Letter February 1, 2021

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City of Desert Hot Springs
City Council District Formation Process
Frequently Asked Questions
What are District-based elections?
Under a District-based election system, the City would be divided into equally populated election districts. A candidate must reside within an election district and is elected only by voters residing within that same election district.

What election system does the City currently use?
Currently, the City Council consists of four Council Members and a Mayor who are all elected at-large. This means any eligible voter who lives in the City can run for office, and every voter may vote for all four of the City Council Member seats and also vote for Mayor, regardless of where they live in the City. Once elected, the four City Council Members and the Mayor each serve four-year terms of office with a limit of two terms for Mayor.

Why does district formation matter to me?
District formation determines which neighborhoods and communities are grouped together into a district for purposes of electing a councilmember.

The Mayor and City Council will seek input in selecting the district map for our City Council. You have an opportunity to share with the Mayor and City Council how you think district boundaries should be drawn to best represent your community.

You can contact the City Clerk’s Office at 760-329-6411 or [email protected] to find out more about how the process works.

What criteria will our Mayor and City Council use when drawing district lines? To the extent practicable, district lines will be adopted using the following criteria: (1) geographically contiguous districts, (2) the geographic integrity of local neighborhoods or communities shall be respected in a manner that minimizes its division, (3) geographic integrity of a city shall be respected in a manner that minimizes its division, (4) easily identifiable boundaries that follow natural or artificial barriers (rivers, streets, highways, rail lines, etc.), and (5) lines shall be drawn to encourage geographic compactness. In addition, boundaries shall not be drawn for purposes of favoring or discriminating against a political party.

How will our Mayor and City Council notify the public about the District formation process?
The Mayor and City Council will reach out to local media to publicize the District formation process. Also, we will make a good faith effort to notify community groups of various kinds about the District formation process. Our public input hearings will be provided in applicable languages (e.g., Spanish) if residents submit a request in advance. The Mayor and City Council will notify the public about District formation public input hearings, post maps online before adoption, and create a dedicated web page for all relevant information about the District formation process.

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How can I get involved?
The Mayor and City Council will be holding public hearings to receive public input on where district lines should be drawn. Those public input hearings will be held on:

Date Event
February 15, 2022 Public Hearing No. 1 (Pre-Draft Map)
Summary of District Formation/Redistricting Law, Criteria, Process, and 2020 Census
March 1, 2022 Public Hearing No. 2 (Pre-Draft Map)
March 8, 2022 Draft Map(s) Published on City Website
March 15, 2022 Public Hearing No. 3 (Pre-Final Map)
Presentation and Adoption of DRAFT District Boundaries
Map
April 5, 2022/TBD Public Hearing No. 4
Presentation and Adoption of FINAL District Boundaries
Map (First Reading of Ordinance)
April 19, 2022/TBD Adoption of FINAL District Boundaries Map (Second Reading of Ordinance)
You can also submit public comments, including suggested draft maps, by emailing [email protected].

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Summary of Redistricting
Law, Criteria, and Process
2022 City Council District Formation Process
February 15, 2022
1

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Overview of
District Formation/Redistricting Laws
• California Voting Rights Act
• U.S. Constitution
• Federal Voting Rights Act
• California Elections Code
• California Constitution
• Case Law
2

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Equal Population Principle
• General Principle: City Council Districts must be substantially equal in population
• U.S. Constitution's Equal Protection Clause and “One-Person, One-Vote” Jurisprudence
• California Elections Code Section 21621 (“substantially equal” in “total population” as required by the U.S. Constitution)
3

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Equal Population Principle
• Make good faith effort to draw districts with equal population • Exact equality is not required for local districts if deviation is justified by legitimate state purposes
• Deviation of less that 10 percent is presumptively valid • Only if for legitimate reasons
• Deviations should be explained on traditional redistricting criteria of other lawful justifications
• Legal Authorities – City Charter; U.S. Constitution, Supreme Court Case Law including Reynolds v. Sims, Gaffney v. Cummings, Larios v. Cox, Harris v. Arizona Independent Redistricting Commission
4

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Equal Population Principle
• Deviations from equal population should be justified
• Show consistent reliance on traditional redistricting criteria (e.g., respecting neighborhoods and communities of interest, observing natural and other boundaries, maintaining compact districts) • Do not seek to disadvantage any particular group
• Show good faith effort
5

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Equal Population Principle
• Measuring Population Equality and Deviation
• Start with City’s total population
• 32,747
• Determine ideal equal population of the 4 Council Districts • 8,187
• Determine percent deviation from ideal of each district • Determine total percent deviation – difference between the districts with the greatest positive and negative percent deviations 6

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Equal Population Principle
District Total
Population
Ideal
Population
Percent
Deviation
1 9,500 10,000 -5
2 10,000 10,000 0
3 10,200 10,000 +2.0
4 10,300 10,000 +3.0
• Example of a City with a
population of 40,000 and
4 Council Districts
• Total Percent Deviation =

8.0%
7

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Traditional Redistricting Criteria
• Focus on traditional redistricting criteria
• Contiguity
• Compactness
• Natural Boundaries and Streets
• Neighborhood and Communities of Interest
• Legal Authorities – Case Law, California Constitution Article XXI, Section 2; California Elections Code Section 21621
8

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Traditional Redistricting Criteria
• Contiguity – all parts of district should connect
• Compactness – district should be geographically compact • Many ways to measure compactness
• Be aware of appearance, shape, and border lines
• Existing boundaries – observe existing boundaries
• Geographic, topographic boundaries
• Streets, Freeways
• Other Boundaries
9

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Traditional Redistricting Criteria
• Neighborhoods and Communities of Interest – preserve
communities sharing common interests
• Neighborhoods
• Example of Common Interests
• Land Use patterns (suburban, industrial, commercial)
• Cultural and Language characteristics
• Income Level
• Educational Background; Employment and Economic patterns • Crime, schools, other common issues
• Obtain public testimony and consider census data, City neighborhood information, planning information, etc.
10

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Equal Protection Clause
• 14th Amendment’s Equal Protection Clause prohibits the use of race as the predominant factor in redistricting except in narrow cases
• race generally cannot be “predominant” factor
• i.e., no racial gerrymandering
• Legal Authorities – U.S. Constitution; Supreme Court Case law including Shaw v. Reno, Miller v. Johnson, Bush v. Vera, Cromartie I & II, Alabama Legislative Black Caucus, Cooper v. Harris, Bethune-Hill 11

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Equal Protection Clause
• 14th Amendment’s Equal Protection Clause does not, however, prohibit all consideration of race
• May consider race as a factor along with traditional race-neutral redistricting criteria
• Consideration of traditional criteria should not be subordinated to consideration of race and should be contemporaneous
12

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Equal Protection Clause
• Evidence of race as a predominant factor:
• Direct testimony
• Circumstantial evidence (demographics, shape, changes, process, public record)
• If race determined to be predominant factor, strict scrutiny applies to redistricting plan
• Need compelling state interest
• Plan must be narrowly tailored
• High burden
13

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Federal Voting Rights Act
• Section 2 of the Voting Rights Act of 1965
• Prohibits any voting practice or procedure that “results in a denial or abridgement” of the right to vote based on race, color, or language minority status
• Applies to prohibit redistricting plans that result in “vote dilution” by depriving minority voters of an equal opportunity to elect a candidate of their choice
• i.e., must not unlawfully minimize or cancel minority voting strength • Discriminatory effect sufficient, discriminatory intent not required 14

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• Examples of “Vote Dilution”
• Fracturing – dispersing minority voters into several different districts such that a bloc-voting majority can routinely outvote them • Packing – concentrating minority voters into a small number of districts and thereby minimizing their influence in other districts Federal Voting Rights Act
15

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Federal Voting Rights Act
• The Supreme Court has set three preconditions to Section 2 liability under the federal VRA (the “Gingles” criteria) • The minority group must be sufficiently large and geographically compact to constitute a majority in a district
• The minority group must be politically cohesive; and
• The majority votes sufficiently as a bloc to enable it usually to defeat the minority’s preferred candidate
• Legal Authorities – Section 2 of the Voting Rights Act; Thornburg v. Gingles 16

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Summary of Law and Criteria
• Key Principles to Keep in Mind
• Strive for Population Equality
• Make a good faith effort to draw districts equal in population • Justify any deviations with use of traditional redistricting criteria • Focus on Traditional Redistricting Criteria
• Draw contiguous and compact districts
• Respect boundaries, neighborhoods, and communities of interest • Obtain public testimony, neighborhood/community information, and make a good record
• Do not Use Race as the Predominant Factor
• Focus on traditional race-neutral criteria
• Comply with the Voting Rights Act
• Avoid fracturing or packing minority voters
• Establish and Follow a Good Process
17

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2022 District Formation Timeline
• Summary of District Formation/Redistricting Law, Criteria, 2020 Census, and Process Tues. February 15, 2022 – 6pm
• Pre-Draft Map Public Hearing Tues. March 1, 2022 – 6pm • Draft Map(s) Published on City Website Tues. March 8, 2022 • Presentation and Adoption of Draft City Council Member District Boundaries Map Pre-Final Map Public Hearing Tues. March 15, 2022 – 6pm • Presentation and Adoption of Final City Council Member District Boundaries Map Pre-Final Map Public Hearing (First Reading) Tues. April 5, 2022/TBD • Final Adoption of Final City Council Member District Boundaries Map (Second Reading) Tues. April 5, 2022/TBD
18

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RESOLUTION NO. 2021-071

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DESERT OF

HOT SPRINGS DECLARING ITS INTENTIONTO TRANSITIONFROM

AT-LARGE TO BY-DISTRICT ELECTIONS AND SETTING FORTH THE

PROCESS FOR TRANSITIONINGTO BY-DISTRICT ELECTIONS
WHEREAS, under the MunicipalCode ofthe City of Desert Hot Springs (the “City”) members of the City Council are currently elected by at-large elections, as each member is elected by the registered voters of the entire city; and WHEREAS, the California Voting Rights Act (the "CVRA") became law in 2003 and provides a means for prospective plaintiffsto allege racially polarized voting and to seek a change from a jurisdiction's at large election system to a different system, typically a by-district or by-division election system where only registered voters within a speci?c district may vote for a candidate running from their speci?c district, and also allows for the recovery of a plaintiffs’ attorneys‘ fees; and
WHEREAS, a violation of the CVRA may be established ifit is shown that racially polarized voting has combined with an at-large voting system to impair the ability of a protected class of voters to elect candidates of its choice or to in?uence the outcome of an election; and
WHEREAS, "racially polarized voting" under the CVRA means voting in which there is a difference between the choice of candidates or other electoral choices that are preferred by voters in a protected class and in the choice of candidates and electoral choices preferred by voters in the rest of the electorate; and WHEREAS, on or around November 1, 2021, the City received a certi?ed letter from attorney Kevin I. Shenkman of the law ?rm Shenkman & Hughes, on behalf of his client, the Southwest Voter Registration Education Project, asserting that the City's atlarge election system may violate the CVRAand threatening litigation ifthe City does not voluntarily transition to a district-based election system for electing its City Council; and WHEREAS, the City denies that its election system violates the CVRAor any other similar law whatsoever in connection with the manner in which it has conducted its City Council elections; and
WHEREAS, the City Council has nevertheless determined that the public interest would be served by transitioning to a district-based electoral system because of (1) the high cost to defend against a CVRA lawsuit, (2) the risk of losing such a lawsuit, which would require the City to pay the prevailing plaintiffs’ attorneys’ fees and costs, and (3) the availability of changing to district elections under the safe harbor provisions; and WHEREAS, the City Council expresses its desire and intent that the district-based election system be implemented in a way that willminimize divisiveness inthe community; and

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WHEREAS, the California Legislature has provided in California Elections Code Section 10010 a method whereby a jurisdictionmay expeditiously transition to a districtbased election system and avoid the high cost of litigation under the CVRA; and WHEREAS, Elections Code Section 10010 will delay the initiation of CVRA litigationand limitattorneys‘ fees associated with a CVRA claim to $30,000 if,withinforty- ?ve (45) days of receipt of a demand letter under the CVRA, the City adopts a resolution stating its intent to transition to district-based elections and within ninety (90) days thereafter, or up to 180 days as othenlvise stipulated by the parties, the City takes action to transition to a district-based election system consistent with the intent and purpose of the CVRA; and
WHEREAS, prior to the City's consideration and approval of an ordinance establishing boundaries for a by-district election system, Elections Code Section 10010 outlines procedural rules and requires all of the followingsteps:
(a) Priorto drawing a draft map or maps ofthe proposed boundaries ofthe districts, the City shall hold at least two (2) public hearings over a period of no more than thirty (30) days, at which the publicwillbe invited to provide input regarding the composition of the districts;
(b) After all draft maps are drawn, the City shall publish and make available for release at least one draft map and, if members of the City Council will be elected in their districts at different times to provide for staggered terms of of?ce, the potential sequence of elections shall also be published; (c) The City Council shall also hold at least two (2) additional public hearings over a period of no more than forty-?ve (45) days, at which the public shall be invited to provide input regarding the content of the draft map or maps and the proposed sequence of elections, ifapplicable;
(d) The ?rst version of a draft map shall be published at least seven (7) days before consideration at a public hearing. If a draft map is revised at or following a public hearing, itshall be published and made available to the public for at least seven (7) days before being adopted; and
WHEREAS, the City Council now desires to declare its intention to adopt an ordinance transitioning from an at-large to district-based elections for its next election, establish speci?c steps it will undertake to facilitate this transition, and establish an estimated timeframe for doing so.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF DESERT HOT SPRINGS, CALIFORNIA, DOES HEREBY RESOLVE AS FOLLOWS:

Section 1. RECITALS
The above recitals are hereby incorporated herein.

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Section 2. INTENTTO TRANSITIONT0 DISTRICT-BASED ELECTIONS The City Council intends to consider adoption of an ordinance, consistent with and Elections Code Section 10010, to transition to a district-based election system for use in the City's next general election for its City Council and directs its legal counsel to inform Mr. Shenkman of the City's adoption of this Resolution and its intent to transition from an at-large election system to a by-district system.

Section 3. UPCOMINGACTIONS
The City Council shall take, or shall cause City staff to take, the following actions, within the time frames established by Elections Code Section 10010 following the effective date of this Resolution, taking into consideration time required for public outreach and input, agenda requirements under the Brown Act, and the City Council‘ meeting schedule:
(a) Hiring of a quali?ed demographer to provide demographic services and assist in the preparation of proposed district maps;
(b) Conduct public outreach, including to non-English speaking communities, to explain the districting process and to encourage public participation; (c) Before drawing a draft map or maps of the proposed district boundaries, hold at least two (2) public hearings at which the public is invited to provide input regarding the composition of the districtsand to consider district boundaries as provided in Elections Code Section 10010;
(d) After drawing a draft map or maps, publish the draft map(s) and the potential sequence of the district elections and hold at least two (2) public hearings at which the public is invited to provide input regarding the content of the draft map or maps and the proposed sequence of elections; and (e) Adopt an ordinance establishing district elections, including the adoption of a district boundary map and the sequence of the district elections.

Section 4. ESTIMATED TIMELINE
The City Council hereby approves the tentative timelineas set forth in ExhibitA, attached to and made a part of this resolution, for conducting public process to solicit public input and testimony on proposed district-based maps before adopting any such map. The timeline contained in ExhibitA may be adjusted by the City Manager as deemed necessary.

Section 5. SEVERABILITY
The City Council declares that, should any provision, section, paragraph, sentence, or word of this Resolution be rendered or declared invalid by any ?nal court action in a court of competent jurisdiction or by reason of any preemptive legislation, the

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remaining provisions, sections, paragraphs, sentences, or words of this Resolution as hereby adopted shall remain in fullforce and effect.

Section 6. REPEAL OF CONFLICTINGPROVISIONS
Allof the provisions heretofore adopted by the City or the City Council that are in con?ict with the provisions of this Resolution are hereby repealed.

Section 7. EFFECTIVE DATE
This Resolution shall take effect upon its adoption.

Section 8. CEQA
The transition from at-large to district-based elections is exempt from environmental review under the California Environmental Quality Act ("CEQA") (Public Resources Code §§ 21000 et seq.) pursuant to State CEQA Guidelines (Cal. Code Regs., tit. 14 § 15000 et seq.) sections 15061(b)(3), 15320, and 15378(b)(3). Adoption of this Resolution is an organizational and administrative activity of the City, does not have the potential to result in either a direct or reasonably foreseeable indirect physical change in the environment, and is therefore not a project for purposes of CEQA. In the event adoption of this Resolution does constitute a project, it is categorically exempt under Class 20 (Changes in the Organization of Local Governments) categorical exemption.

Section 9. CITY MANAGER AUTHORIZATION
The City Manager is hereby authorized to enter into a professional services contract as necessary and in amount exceeding the City Manager's ordinary limit,with a consultant quali?ed to provide demographic services to the City.

Section 10. CERTIFICATION
That the Clerk shall certify to the passage and adoption of this Resolution.

PASSED AND ADOPTED by the City Council of the City of Desert Hot Springs at a regular meeting duly held on the 8th of December, 2021, by the following vote:

AYES: 5 — Betts; Gardner; Nunez; Pye; and Mayor Matas.

NAYS: None.

ABSENT: None.

ABSTAIN: None.

Page 35 of 167 ends

ATTEST:

Jlrryl oriano,Clty erk
APPROVED AS TO FORM:

I‘.

Jennifer A.‘Mz7}V’vk.Gity Attorney
APPROVED:

Scott Mafas,Mayor

Page 36 of 167 ends

Exhibit A
TENTATIVETIMELINE:CONSIDERATIONAND IMPLEMENTATIONOF “DISTRICTBASED” ELECTION METHOD

DATE EVENT
November 1, 2021 City received demand letter.

December 8, 2021 Adoption of Resolution of Intention to Transition to By District Elections.

February 1, 2022 Public hearing to give background on CVRA, introduce mapping tools and information on process.

February 15, 2022 Public hearing to give background on CVRA, introduce mapping tools and information on process.
""~'="°“ 1»2°22
AW"5» 2°22
~'°"e 7-2°22
June 21» 2°22

Page 37 of 167 ends

SR-21-295
City of Desert Hot Springs
City Council

AGENDA ITEM REPORT
To: City Council
Date: December 8, 2021
Department: City Clerk
Prepared by: Jennifer Mizrahi, City Attorney
Subject: Resolution Declaring Intention to Transition From At-Large to By-District Elections and Setting Forth the Process for Transitioning to By-District Elections
RECOMMENDATION:

Adopt a Resolution of the City Council of the City of Desert Hot Springs declaring its intent to transition from at-large to by-district elections and setting forth the process for transitioning to by-district elections.

BACKGROUND:

A violation of the CVRA may be established if it is shown that racially polarized voting has combined with an at-large voting system to impair the ability of a protected class of voters to elect candidates of its choice or to influence the outcome of an election. "Racially polarized voting" under the CVRA means voting in which there is a difference between the choice of candidates or other electoral choices that are preferred by voters in a protected class and in the choice of candidates and electoral choices preferred by voters in the rest of the electorate.

On November 1, 2021, the City received a certified letter from attorney Kevin I. Shenkman of the law firm Shenkman & Hughes, on behalf of his client, the Southwest Voter Registration Project, asserting that the City's at-large election system may violate the CVRA and threatening litigation if the City does not voluntarily transition to a district-based election system for electing its City Council. The City denies that its election system violates the CVRA or any other similar law whatsoever in connection with the manner in which it has conducted its City Council elections.

The City Council has nevertheless determined that the public interest would be served by transitioning to a district-based electoral system because of (1) the high cost to defend against a CVRA lawsuit, (2) the risk of losing such a lawsuit, which would require the City to pay the prevailing plaintiffs’ attorneys’ fees and costs, and (3) the availability of changing to district elections under the safe harbor provisions.

Page 38 of 167 ends

SR-21-295
The City Council expresses its desire and intent that the district-based election system be implemented in a way that will minimize divisiveness in the community. The Resolution (Exhibit 1) establishes the City’s compliance with Elections Code Section 10010, and a step-by-step process for the transition, which requires significant public participation.

Procedure
Prior to the City's consideration and approval of an ordinance establishing boundaries for a by-district election system, Elections Code Section 10010 outlines procedural rules and requires all of the following steps:

Page 39 of 167 ends

SR-21-295
The following is a tentative timeline for consideration and implementation of a "district-based" election method.

Date Event
November 1, 2021 City received demand letter.

December 8, 2021 Adoption of Resolution of Intention to Transition to By District Elections.

February 1, 2022 Public hearing to give background on CVRA, introduce mapping tools and information on process.

February 15, 2022 Public hearing to give background on CVRA, introduce mapping tools and information on process.

March 1, 2022 First public hearing where maps can be drawn.

April 5, 2022 Second public hearing to confirm maps and sequencing.

June 7, 2022 Introduction and first reading of Ordinance.

June 21, 2022 Second reading and adoption of Ordinance.

FISCAL IMPACT:

The estimated cost for demographer and public outreach services is between $50-100k. The City Clerk's Office is in the process of obtaining quotes for said services.

The annual budget will be adjusted to accommodate this additional expenditure and will be included in the Mid-Year Budget Adjustments.

ATTACHMENTS:

Exhibit 1 - CVRA Resolution Establishing Intent to Transition to Districts Exhibit 2 - CVRA Demand Letter February 1, 2021

Page 40 of 167 ends

28905 Wight Road
Malibu. California 90265
(_310)457—O970
.eU‘«,[email protected])'1‘:

RECEIVED4
VIA CERTIFIED MAIL lit)"n I , tau: .3
QFTHEL'.iTYCLERK
Ettrtttaegesthetspmts October 26, 2021 ...;t.’l«.

Jerryl Soriano — City Clerk
Citv ofDese1t HotSnrings
ll-999 Palm Drive
Desert Hot Springs, CA 92240
Re: Vialarian ofCaliforniaVoting Rights‘/Icr
I write on behalf of our client. Southwest Voter Registration Education Project and its members residing within the City of Desert Hot Springs (“Desert Hot Springs” or “City”).

Desert Hot Springs relies upon an at-large election system for electing candidates to its governing board. Moreover, voting within the City is racially polarized, resulting in minority vote dilution, and, therefore, the City’s at-largc elections violate the California Voting Rights Act of 2001 (“CVRA”).

The CVRA disfavors the use of so—called“at-large” voting — an election method that permits voters of an entire jurisdiction to elect candidates to each open seat. See generally Sanchez v. City ofM0desto(2006) 145 Cal.App.4-h660, 667 (“Sanchez”). For example, if the U.S.

Congress were elected through a nationwide at-large election, rather than through typical single-member districts, each voter could cast up to 435 votes and vote for any candidate in the country, not just the bare candidates in the voter's district, and the 435 candidates receiving the most nationwide votes would be elected. At—largeelections thus allow a majority of voters to control every seat, not just the seats in a particular district or a proportional majority of seats.

Voting rights advocates have targeted “at—large”election schemes for decades, because they often result in “vote dilution,” or the impairment of minority groups‘ ability to elect their preferred candidates or in?uence the outcome ofelections, which occurs when the electorate votes in a racially polarized manner. See Thornburg v. Gingles, 478 U.S. 30, 46 (1986) (“Gingles"). The U.S. Supreme Court “has long recognized that multi—memberdistricts and at-large voting schemes may operate to minimize or cancel out the voting strength” of minorities. Id. at 47; see also id. at 48, fn. l4 (at-large elections may also cause elected of?cials to “ignore [minority] interests without fear of political consequences”), citing

Page 41 of 167 ends

«.a—~.‘.,/?-_—._—;_/‘ _—_- ».<.-~; . --
October 26, 2021

Page 2 of 3 ends

Rogers v. Lodge, 458 US. 613, 623 (1982); White v. Register, 412 U.S. 755, 769 (1973). “[T]he majority, by virtue of its numerical superiority, will regularly defeat the choices of minority voters.” Gingles, at 47. When racially polarized voting occurs, dividing the political unit into single-member districts, or some other appropriate remedy, may facilitate a minority group's ability to elect its preferred representatives. Rogers, at 616.

Section 2 of the federal Voting Rights Act (“FVRA”), 42 U.S.C. § 1973, which Congress enacted in 1965 and amended in 1982, targets, among other things, at-large election schemes. Gingles at 37; see also Boyd & Markman, The 1982 Amendments to the Voting Rights Act: A Legislative History (1983) 40 Wash. & Lee L. Rev. 1347, 1402. Although enforcement of the FVRA was successful in many states, California was an exception. By enacting the CVRA, “[t]he Legislature intended to expand protections against vote dilution over those provided by the federal Voting Rights Act of 1965.” Jauregui v. City of ‘"f3‘ain1’tlZiie‘/f“2f)‘i‘4‘}"226‘€ai:?pp."tim"i~£%i, 808. Thus, while the CVRA is similar to the FVRA in several respects, it is also different in several key respects, as the Legislature sought to remedy what it considered “restrictive interpretations given to the federal act.” Assem. Com. on Judiciary, Analysis of Sen. Bill No. 976 (2001-2002 Reg. Sess.) as amended Apr. 9, 2002, p. 2.

The California Legislature dispensedwith the requirement in Gingles that a minority group demonstrate that it is suf?ciently large and geographically compact to constitute a “majority-minority district.” Sanchez. at 669. Rather, the CVRA requires only that a - plaintiff show the existence of racially polarized voting to establish that an at-large method of election violates the CVRA, not the desirability of any particularremedy. See Cal. Elec.

Code § 14028 (“A violation of Section 14027 is established if it is shown that racially. polarized voting occurs ...”) (emphasis added); also see Assem. Corn. on Judiciary, (Analysis of Sen. Bill No. 976 (2001-2002 Reg. Sess.) as amended Apr. 9, 2002, p. 3 ’(“Thus, this bill puts the voting rights horse (the discrimination issue) back where it sensibly belongs in front of the cart (what type of remedy is appropriate once racially polarized voting has been shown).”)
To establish a violation of the CVRA, a plaintiff must generally show that “racially , polarizedvoting occurs in elections for members of the governing body of the political subdivisionor in elections incorporating other electoral choices by the voters of the political subdivision.”Elec. Code § l4028(a). The CVRA specifies the elections that are most probative: “elections in which at least one candidateis a member of a protected class or electionsinvolving ballot measures, or other electoral choices that affect the rights and privileges of members of a protected class.” Elec.Code§ l4028(a). The CVRA also makesclear that “[e]lections conductedprior to the ?ling of an action are more probative to establish the existence of racially polarized voting than elections conducted after the ?ling of the action.” Ia’.

Page 42 of 167 ends

October 26, 2021

Page 3 of 3 ends

Factors other than “racially polarized voting” that are required to make out a claim under the FVRA — under the “totality of the circumstances” test - “are probative, but not necessary factors to establish a violation of” the CVRA. Elec. Code § 14028(e). These “other factors” include “the history of discrimination, the use of electoral devices or other voting practices or procedures that may enhance the dilutive effects of at-large elections, denial of access to those processes determining which groups of candidates will receive ?nancial or other support in a given election, the extent to which members of a protected class bear the effects of past discrimination in areas such as education, employment, and health, which hinder their ability to participate effectively in the political process, and the use of overt or subtle racial appealsin political campaigns.” Id.

As of the most recent data released by the United States Census Department, Latinos comprise 61.2% of the City’s population of 32,512. The current and historical ”"""“ ” ‘i1iTCi’eri’e"préséntafiUn‘of’I:atirIUs'orrthe‘City’s governing board is revealing.

The City’s at-large system dilutes the ability of Latinos (a “protected class”) — to elect candidates of their choice or otherwise in?uence the outcome of the City’s elections. The City’s election history is illustrative. For example, in the City’s most recent 2020 election, Adam Sanchez lost in his bid for Mayor of Desert Hot Springs, despite signi?cant support from Latino voters. Similarly, in both 2018 and 2015, Mr. Sanchez ran and lost his campaigns for both Mayor and the City Council despite substantial support ?om the City’s Latino community. In each of those elections, Mr. Sanchez raised the lack of representation of the southside of Desert Hot Springs. These elections evidence vote dilution which is directly attributable to the City’s unlawful at-large election system.

As you may be aware, in 2012, we sued the City of Palmdale for violating the CVRA. After an eight-day trial, we prevailed. After spending millions of dollars, a district-based remedy was ultimately imposed upon the Palmdale city council, with districts that combine all incumbents into one of the four districts.

Given the racially polarized elections for Desert Hot Springs’ city council and exogenous « elections, we urge the City to voluntarily change its at-large system of electing its City Council. Otherwise, on behalf of residents within the jurisdiction, we will be forced to seek judicial relief. Please advise us no later than December 1, 2021 as to whether you would like to discuss a voluntary change to your current at-large system.

We look forward to your response.

Very truly yours,
2”
Kevin I. Shenkman

Page 43 of 167 ends

Page 44 of 167 ends

SR-22-037
City of Desert Hot Springs
City Council

AGENDA ITEM REPORT
To: City Council
Date: February 15, 2022
Department: City Clerk
Prepared by: Jerryl Soriano, City Clerk
Subject: Appointment to the Planning Commission to Fill One (1) Vacancy for Unexpired Term
RECOMMENDATION:

Ratify Mayor Pro Tem Gardner's appointment of Chris Wagstaff to the Planning Commission to fill one (1) vacancy consisting of an unexpired term through January 2023.

DISCUSSION:

Robert Griffith resigned from the Planning Commission effective February 9, 2022, resulting in one (1) vacancy.

Appointment Process:

Pursuant to Desert Hot Springs Municipal Code (“DHSMC”) Section 2.24.030, if vacancies in any commission occur other than by expiration of term, such vacancy shall be filled by appointment of the Council Member who appointed the Commissioner being replaced, with ratification by a majority of the City Council. Accordingly, Mayor Pro Tem Gardner is designated by the Municipal Code to appoint his replacement.

Additionally, pursuant to DHSMC Section 2.24.020, the term of the replacement appointment for an interim vacancy is for the “unexpired” term of the member replaced.

Lastly, Resolution 2020-029 adopted on June 2, 2020, provides that:

6.3 Commissions.

In furtherance of DHSMC Sections 2.24.020(a) dealing with Commission appointments, and

2.24.030(a) dealing with Commission vacancies, all members of the City Council shall have an opportunity to review the applications of the Commission applicant(s) as follows:

Page 45 of 167 ends

SR-22-037
a) The Councilmember who is responsible for the appointment of a Commissioner shall notify the City Clerk prior to time the agenda is posted for the meeting at which the proposed Commissioner appointment is to be made of the name of the proposed Commissioner. The City Clerk shall include the names and applications of all persons who submitted an application for the Commission in the agenda packet, including that of the proposed Commissioner. b) The proposed Commissioner, but not all applicants, shall appear at the council meeting when the appointment is being made and shall be available to answer questions from the councilmembers.

Pursuant to The Maddy Act (set forth in Government Code Section 54970 et. seq.), a special vacancy notice shall be posted not earlier than 20 days before, or not earlier than 20 days after the vacancy occurs. Final appointment shall not be made for at least 10 days after the posting of the notice. The City Clerk posted the notice on January 20, 2022 (Exhibit 1).

Applicants:

Four (4) applications were received for this vacancy:

The following applicants previously applied during the January 2021 commission appointments for this current term:

FISCAL IMPACT:

Pursuant to Municipal Code Section 2.32.050, Planning Commissioners receive a salary in the amount of $50 per any officially convened Commission meeting that they attend.

ATTACHMENTS:

Exhibit 1 - Vacancy Notice
Exhibit 2 - Commission Application - Noella Barb
Exhibit 3 - Commission Application - George Kleist
Exhibit 4 - Commission Application - Robert Raaf
Exhibit 5 - Commission Application - Chris Wagstaff

Page 46 of 167 ends

SR-22-037

Page 47 of 167 ends

NOTICE OF UNSCHEDULED VACANCY

PLANNING COMMISSION
Pursuant to Section 2.24.030 of the City of Desert Hot Springs Municipal Code (“DHSMC”), notice is hereby given that one (1) vacancy exists on the Planning Commission.

ABOUT THE PLANNING COMMISSION:

Pursuant to DHSMC Chapter 2.24.020, the Planning Commission shall consist of five (5) members each appointed by one (1) member City Council, and ratified by a majority vote of the City Council. Members are appointed for two-year terms (current term expires January 2023).

Position Incumbent Appointed On Term Expires Appointed By Chair Robert Griffith VACANT January 19, 2021 January 2023 Gary Gardner Vice-Chair Richard Duffle January 19, 2021 January 2023 Jan Pye Commissioner Requita Grant January 19, 2021 January 2023 Roger Nuñez Commissioner Ted Mayrhofen January 19, 2021 January 2023 Russell Betts Commissioner James Nindel January 19, 2021 January 2023 Scott Matas Meetings:

Regularly scheduled meetings of the Planning Commission are held on the 2nd Tuesday of each month at 6:00 p.m. at City Hall/Council Chamber, located at 11999 Palm Drive in Desert Hot Springs.

Purpose:

The City's success is linked to its ability to plan for the future. As such, the Planning Commission plays a vital role. The commission’s responsibilities include:
• Ongoing evaluation of the City's building codes and ordinances; • Continual update of the City’s General Plan;
• General oversight of zoning review and variances.

Compensation:

Each member of the Planning Commission shall receive a salary in the amount of $50.00 per meeting (DHSMC 2.32.050).

APPOINTMENT PROCEDURE:

Applications can be submitted online at www.cityofdhs.org or at City Hall. Completed Applications may be submitted to the Office of the City Clerk at 11-999 Palm Drive, Desert Hot Springs, CA 92240 or via email to [email protected].

Application Deadline
The deadline to submit completed application is 6:00 P.M. on February 9, 2022. The City Council is scheduled to consider the appointment at the February 15, 2022 City Council Meeting.

This notice was duly posted as required by law. Final appointment will not be made by the City Council for at least ten working days after the posting of this notice. 11-999 PALM DRIVE • DESERT HOT SPRINGS • CA • 92240(760) 329-6411 www.cityofdhs.org

CITY OF DESERT HOT SPRINGS

OFFICE OF THE CITY CLERK

Page 48 of 167 ends

Commission/Board Application
Y0iirAppIim[ian mu be mnndered by the Desen Hot Springs r, i mncil pmi'ide'd mma mrsancy edsrs an a Canmi .sian Beard myivhicli you have applied. Ifam '5 no mmnry. your applicatian will be kept on filemy1 year [0 be considere'd when an opening does 0 Residency Lengm at Residency in meCity nf Desert Hot springs 10 years
(Example: 2 Years)
Registered Voter Are yen in negisiered vmer in the City nf Desert Hol Springs? Yes
N0

GENERAL INFORMATION
Last Narne* Barb
First Name * Noella
Address * Street Address
Address Line 2
City Slale / Province / Region
Desert Hot Springs Ca
Pnslal I zip Code Cnunlry
92240 USA
en....eNumber * -
Emiedi-es T

WHICH COMMISSION/BOARD ARE YOU INTERESTED IN SERVING
Number in order nf preference.
* PLANNING CDMIVJISSION
1:: Choice 2nd Choice Nat Interested
Meeis me2nd Tuesday nf earnllmnlh at 6:00 p.m.

Page 49 of 167 ends

PUBLIC SAFETY COMMISSION
1st Choice 2nd cnolee Nat Interested
Meets the 2nd 'I'lIIIrsday oi eaclt mouth at 6:00 11.11].

QUESTIONS
The following infnrlnation consists nf some nf tite iactncs used by usecity Council, andlor subcommittee tneienr to select ?nal applicants: 1) Background, education, expeiieuce to demonstrate souud judgement; 2) Diversity in commission membership; and 3) attendance at commission meetings print to cousidecatioiu Background / Work Experience I Civic involvement
My ethnic background is I am a 63 yr old African American woman with a family of 4 who has lived in in the Desert Hot Springs since 2010. Currently, I volunteer my time to work at the Food Bank.

Occupation and Elnplnyer (If retired, indicate last occupalionlelnployer) Currently. my profession as a Licensed Marriage Family Therapist for 7 years and I currently work in private practice and I am the Head of Service at the Fathers Heart Ranch Group Home for Abused Boys here in Desen Hot Springs.

My previous work experience was Lead Clinician at the now closed Family Services of the Desert a Mental Health Organization that help the community for over 50 years. I worked with most of the residence in Desert Hot Springs through Riverside County and Child Protective Services Dept. Alcohol and Drug, Domestic \/iolence and Child Abuse cases. I would still be working there ifthe place had not closed its doors.

Education I 'IYai||i|Ig
Bachelor's of Ans in English Literature
Master's of Arts—Counseling Psycho|ogy—10 yrs working as a Licensed Vocational Nurse—25 yrs
Have you served on a city Cnlnlnissionl?oard in the city of Desert Hot Springs or any other City?
No yes (Ifyes, please describe below)
Have ylm ever attended a city council meeting?
N17 Yes
Have ylm ever attended a city cnmnussiou meeting?
No yes (Ifyes, list which Commissions below)
oesctine your knowledge of useiunctious, reglllalinlls and pmceduies of the commission/noard (your 1st choice) on which yon would like to serve.

The planning commission I am interested in since I am a business owner and home owner in DHS. I am up to date on the regulations and codes in DHS as far as building materials to use and not to use when putting up structures such as fences. I admit that I have little knowledge of the functions. regulations and procedures that the city council or commission does but I am eager to get involved.

Page 50 of 167 ends

wlrat spetirrc skills, attitudes, and experience do you tlnnk you have tbat will enbanee tlie work oi the Colnlnissioll/Board
I am very skillful at working within a group, planning organizing and he|ping.N0 wlrat spetirrc issues or problems racetlre Colnlnissiolllllnard? no you have suggestions to address tliese issues or problems?
No problems or issues I know abom.

File U111-lad(ulnionall Indeed Resume LMFF 2021.hIm| 618.45KB Please feel free In include a resume, leller(s) of recommendation, etc.

Appointed commissioners may be required to submit a Fair political Practices commission (FPPC), statement orEconnmic Interests Fnrln (Form 790) pursuant to CA Gnvernment cnde § B7200 and/or Desert Hot springs Mtnticipal code § 2.20.059.

As an appointed conmnssinner nr boardrneniber, state law requires twn linurs nf training in general etlncal principles and etbies laws every two years. More iltforma?on will be provided upon appninnnent. some or all oi the cnntent contained in tlns application and its attaelinients may be subject to disclosure pursuant tn tlre California Public Records Act (CA Government code § 6250, El seq.)
Signature *
I certify tliat tbe above statements are true and correct tn tlre best oi my knowledge mumalso

Page 51 of 167 ends

Commission/Board Application
Y0iirAppIim[ian mu be I:m15ie1£'r'edb_\'t}ie Desen Hot Springs r, i mnrii pmi'ide'd that a mrsancy edsrs an a Camm .sian Beard mywhich you have applied. Ifam '5 no mmnry. your applicatian will be kept on filemy1 year [0 be rnnszde.-ed when an opening does 0 Residency Lengm at Residenry in meCity nf Desert Hot springs 9 years
(Example: 2 Years)
Registered Voter Are yen in negisiered vmer in the City nf Desert Hol Springs? Yes
N0

GENERAL INFORMATION
Last Name* Kleisl
First Narne* George
Address * Street Address
Address Line 2
City Slale / Province / Region
Desert Hot Springs CA
Postal / zip Code cnuniry
92240 United States
en....eNumber * 2
Em-iiedims T

WHICH COMMISSION/BOARD ARE YOU INTERESTED IN SERVING
Number in order nf preference.
* PLANNING CDMIVJISSION
1:: Choice 2nd Choice Nat Interested
Meeis dre 2nd Tuesday nf earnllmnlh at 6:00 p.rn.

Page 52 of 167 ends

* PUBLIC SAFETY COMMISSION
15: Choice 2nd Choice Nat lmereszed
Meets die 2nd 'I'hI|rsday oreach mouurat 6:00 11.11].

QUESTIONS
The rollowmg infnrlnation consists nf some nf die Iactnrs used by the City Council, and/or subcomminee thereof to select ?nal applicants: 1) Background, education, experience to demonstrate sound judgement; 2) niversiry in commission membership; and 3) attendance at commission meetings prior to consideration Background / Work Experience I civic Involvement
I'm a Hispanic father of a 10—year—o|dboyl Worked in Real estate and mortgage from 1994, and then become a Realtor from 2000—2012l mongage underwriter from 2004— 2013, I worked as an El llityTechn an for the County of Riverside for just over 6 years 2015—2022 helping fam lies in our communities with Cash Aid, homeless assistance, food stamps, medical.and child care sub
Occupation and Employer (If retired, indicate last occtlpationlelnployer) Student — Southwestern College, San Diego, CA (Jan 2022 —present) Presidentlfounder. Americas Community Outreach Programs Inc (Dec 2021— present)
County of Riverside Depanment of Pubilc Social Services (may 2015—Jan 2022) Education I 'IYai||i|Ig
Los Angeles Valley College 30 units in general ed (19954996) Southwestern College (Jan 2022 — seeking an A.S. Community. Economic.and Urban Development anticipated graduation Spring 2023)
Have you served on a City Cnlnlnissiolt/Board in the City orDesert Hot springs or any other City?
ND yes (If yes, please describe below)
Have ylm ever mended a City council meeting?
N17 Yes
Have ylm ever mended a City cnmnussiou meeting?
ND yes (Ifyes, list which Commissions below)
nescribe your knowledge of usefunctions, regulations and procedures of the commission/nonrd (your 1st clioice) on which yon would like to serve.

The planning commission helps interpret and spark the development of business and residential areas in our community. Based on a prior session I've reviewed online the city planning department and city attorney help outline the legalities of planned developments and any entitlements that need to be made and discussion with board members about voting the application or adopting variances to the applicant's request as needed while taking into consideration what's best for the city and its citizens.

Page 53 of 167 ends

File Uplnad (optional)
wlrat specific skills, attitudes, and experience do you t.l|i||k you bave tbat will enbance tbe work ormeColnlnissioll/Board
My experience as a former mortgage underwriting and County welfare worker has provided me with eh ability to interpret the law, ask questions when in doubt of procedure or law, or request for variances to law using common industry examples or when dialoguing with fellow team members and bringing their wisdom to the forefront or asking expens in the field when needed. I'llbring a since of teamwork, and I'm always open to hearing any party and their concerns and take great enjoyment in seeing things through and ?nding ways to achieve the most equitable solotion to any problem. I have a positive personality. with strong ethical and moral values, and believe the Board, its team members, and community partners when working together by applying best practices can bring an environment of growth for our community. I look fonlvard to the opportunity to serve. wlrat specific issues or problems raceareColnlnissionlllnard? no you bave suggestions to address tbese issues or problems?
Diversified retail growth and community involvement are issues that I see the planning commission can work on. Over the past few years sparking Cannibus business—re|ated growth has been at the forefront, but we also need to engage other industries for our city to sustain a level of growth and create an environment where people feel safe walking at night and enjoying a day at the park with an event to gather our community together. I think we have a lot of work to do. but ifwe plan early in a decade the city can be better than downtown palm springs. and really be the gem it's meant to be for tourists and our core blue color families that live and work here. I think meeting with community leaders. business owners and pitching our town to companies to spark growth by involving church leaders and nonprofits, and other government agencies in a round table meeting to see what we can do to help foster growth is key. At his time we don't have a Community Development Company like other major cities to help link all the players together this is where we the city have to do some of the heavy lifting and put this key player in the same room to discuss problems and offer solutions in my opinion.

Please feel free In include a resume, letter(s) of recommendation, etc.

Appointed commissioners may be required to subnrit a Fair political l>ractices commission (FPPC), statement of Econnmic Interests Fnrln (Form 790) pursuant to CA Gnvernment cnde § B7200 and/or Desert Hot Springs Mmticipal code § 2.20.059.

As an appointed conmussinner nr boardrnember, state law requires two bnurs nf training in general etlrical principles and etbies laws every two years. More illforlnation will be provided upon appninnnent. some or all ormecontent contained in tlris application and its attacbments may be subject to disclosure pursuant to arecalirornia Public Records Act (CA Government code § 6250, El seq.)
signature *
l certify tbat tbe above statements are true and correct In arebest ormy knowledge Gm/L9»: g;i%;4c

Page 54 of 167 ends

Commission/Board Application
Y0urAppIim[imi win he I:m15ie1£'redl7_\'t}ie Desen Hot Springs r, i mnrii pm\'ide'd mma mrsancy e'\'isr5 an a cmnni .sznnBaard for\vhz'cIiyou have applied. Ifam '5 no mmncy. your app[1L‘ati0nwill be kept on filefor1 year [0 be rnnszde.-ed when an opening does 0 Residency Lengm at Residency in meCity nf Desert Hot springs 1 Year
(Example: 2 Years)
Registered Voter Are yen in negisiered vmer in the City nf Desert Hol Springs? Yes
N0

GENERAL INFORMATION
Last Nnrne* Raaf
First Narne* Robert
Address* Street Address
Address Line 2
City Slale / Province / Region
Desert Hot Springs CALIFORNIA
Postal / zip Code cnuniry
92240 United States of America
en....eNumber * 2
E-mi1Adims R

WHICH COMMISSION/BOARD ARE YOU INTERESTED IN SERVING
Number in order nf preference.
* PLANNING CDMIVJISSION
1:: Choice 2nd Choice Nat Interested
Meeis me2nd Tuesday nf earnllmnlh at 6:00 p.rn.

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* PUBLIC SAFETY COMMISSION
15: Choice 2nd Choice Nat Interested
Meets the 2nd 'I'hI|rsday oreach moiiui at 6:00 11.11].

QUESTIONS
The following infnrlnation consists nf some nf the Iactnrs used by the City Council, and/or simeomminee meieor to select ?nal applieams: 1) Background, education, expeiience to demonstrate sommjudgement; 2) Diversity in commission membership; and 3) anemiaiice at commission meetings prim‘ to coiisidesmiom Background / Work Experience I Civic mvolvemem
I believe I'm uniquely qualified to serve as a Planning Commissioner for the City of Desert Hot Springs. As a REALTOR I have a good understanding of the language necessary to perform the required due diligence of a Planning Commissioner. As a former Sun Valley Area Neighborhood Council member I have first hand experience with developers. We were required to be familiar with various laws and ordinances of the area penaining to land use and building. In council we reviewed developer plans, heard presentations, asked and que tons and voted to make a recommendation to the Planning Commission for the City of Los Angeles as well as City Council. I've served on two Home Owners Associations and taken classes to be able to perform my respons Ities.

I've been a licensed REALTOR for 8 years. I have earned nationally recognized designations in Senior Real Estate (55+), Staging and Emergency Preparedness. I am currently in the process of renewing my license.

Born and raised in the San Fernando Valley. I've lived in different cities throughout California. West Hollywood 1988 to 1995, San Francisco 1995 to 1997. Sacramento 1997 to 2011. San Fernenado Valley 2011 to 2019. Long Beach 2019 to 2022.

Desert Hot Springs March 2022 on. In each city I interacted with various non profits. city of?ces. businesses and organizations giving me strong experience working with people from all walks of life.

Own and operate Cloud 9, a LGBTQet al Pride products company.

Opened in 1989 and took a 6 year hiatus in 2015 to focus on my Real Estate career.

Cloud 9 is a wholesale and retail pride company offering many various items including jewelry. mugs, license frames. stickers, flags, coasters, etc. At one point sales exceeded 515250.000I year several years in a row. Because the demand for these items declined now a pan time business. I was responsible for every aspect of this compan ncluding hiring. trar g, graphic design. vendor negotiations. accounting, marketing, sales, manufacturing. etc.

Istarted the company when I was 21.

Served on two Home Owners Associations over 3 years as Secretary. During that time I took courses through Community Association Institute. This experience gives me a more intimate understanding of HOA's and management compani s. 2021 Joined ROTARY Desert Hot Springs.
2012 to 2019 I was a Battalion Coordinator for Community Emergency Response Team under the Los Angeles Fire Depanment. I coordinated neighborhood educational meetings. outreach. planned several lame scale disaster drills which

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had to coordinate with the LAPD, LAFD, several City of Los Angeles depanments. neighborhood associations. neighborhood councils, schools and volunteers from several organizations.
2013 to 2017 I was on the board of the Valley Disaster Preparedness Fair, the largest of it's kind in California. I worked with the board to help secure donations, plan the event, coordinate with CERT and neighborhood councils, logistics. vendor relations, marketing. etc.
2016 I was elected to the Sun Valley Area Neighborhood Council. I did neighborhood outreach. attended council meetings, heard presentations from various developers who had projects pending review by NC's. The Neighborhood Councils voted and made recommendations to the City of Los Angeles Planning Commission and City Council. I had to resign my position due to respiratory issues.

My cough was getting worse and the meetings were held at a Senior Living Facility.

In short. due to my hypersensitivity to air quality Sun Valley did not agree with me.

In 1991 to 1995 I was appointed to the Disaster Preparedness Committee. a subdivision of the Public Safety Commission by John Heilman and served until I moved to San Francisco. During that time I produced several public information forums with noted speakers. I educated the public and helped rewrite the cities public Disaster Preparedness manual.
1985 to 1987 I volunteered for SHANTI LA.pro ng emotional suppon for people with AIDS and safer sex education. I was the youngest volunteer at 17 years old. 1989 to current I've volunteered for many non profits including NAMES Project Bay Area Chapter. Sacramento LGBTQcenter, Sacramento LGBTQfilm festival. Delta Lambda Phi the gay fraternity. Community Emergency Response Team under the Los Angeles Fire Department. Valley Disaster Preparedness Fair. and many more.

Occupation and Elnplnyer (If retired, indicate last occtlpalionlelnployer) REALTOR REMAX Area Experts Palm Springs — I'm currently on a brief leave of absence to allow myself time to restart Cloud 9 and ?nish unpacking and organizing and renew my RE License. I plan to return by the end of February.

Self employed Cloud 9 Pride

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Edneanon I 'IYai||i|Ig

EDUCATION
California Real Estate License Salesperson — currentiy renewing license Associations
Member National Association of REALTORS
California Association of REALTORS
Palm Springs Regional Association of REALTORS
Nationally recognized designation
Senior Real Estate Specialist speci
Staging
Emergency Preparedness
Former Licensed Accident and Health Insurance Salesperson Completed numerous classes at
Sacramento City College
Los Angeles Pierce College
Los Angeles Valley College
Community Association Institute — HOA officer training.

Gemological Institute of America
Certifications in Gemology. Jewelry Design, Jewelry Repair. Pearls. etc Have ynn served nn a City Cnlnlnissiolll?oard in the City of Desert 1-rm Springs or any other City?
No yes (If yes, please describe below)
2016 elected to and served on Sun Valley Area Neighborhood Council. The Neighborhood Council system is a system in place in Los Angeles to help the city meet the needs of residents and businesses by providing neighborhood level representation. SVANC represented approximately 40,000 residents. 1991 to 1995 Served on the Disaster Preparedness Committee, a subcommittee for the Public Safety Commission for the City of West Hollywood.

Have ynn ever mended a City cnnneit ineeiingz
N17 Yes
Have ynn ever mended a City Cnlnn|issiol| meeting?
ND yes (Ifyes, list which Commissions below)

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nesmize your knowledge of the iunmmis, reglllatinlls and pmceiims of the commission/imni (your 1st choice) on which you would like to serve.

While I have not attended Planning Commission or City Council meetings I have watched some recorded sessions.

The Planning Commission helps to keep the city general plan updated based on new information and past experience to help guide sustainable growth and prosperity. They continually review city building codes and ordinances and make recommendations to City Council. They review builders plans and make sure builders and developers adhere to current codes and ordinances and help provide variances when necessary.

I believe a lot of helpful information can be found by identifying problems or potential problems and researching how other cities corrected similar issues. wim specific skills, animiies, and experience do you think you have that will enhance the work orthe Colnlnissioli/Board
My experience in Real Estate and civic involvement give me a lot of helpful knowledge that most people don't possess. I have a willingness to learn and understand and I have a knack for finding creative solutions to problems.

I believe in a win I win or win I win I win scenario. Ifwe spend a little time exploring creative solutions no one has to lose.

I believe we have a responsibility to act in the best interest of the city and it's residents. I take that responsibility seriously setting ego aside to understand opinions that my be contrary to my own. The only way to effectively argue or discuss an issue is to understand other opinions. With that knowledge. using logic. solutions or compromises can be found. It's important to understand the past in order to guide ourselves to a better future.

Desert Hot Springs is a very unique city with a rich history. We've come a very long way in the last 10 years. We need to draw more retail and small businesses and being in a Positive Energy Vonex we can grow the local artists and the city can bene?t from them. Having a significant portion of the San Andreas Fault (Mission Creek Fault) cut through the city. I believe we must also address this in planning for the future. It is not a question of "if"but. rather "when" willthe fault break. We can use planning to help us prepare for this event.

I am a REALTOR but. Istrongly believe home ownership is key to building wealth and I would much rather work with people who will live in their home than to work with investors. I understand the need for investors but, given the housing shortage, I have a passion for individual home ownership. I also understand the need for affordable housing. I think it's important to explore various options we didn't have 10 years ago. Options like tiny house communiti s, use of shipping containers and SD printed homes and buildings.

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File Uplnad (Optional)
wlrat speci?c issues or problems raceareColnlnissionlllnard? no you have suggestions to address tltese issues or problems?
I think the biggest problem facing most appointed Commissions is one of personalities. We need to set ego and personal agenda aside and focus on what is best for the community. In order to do that we need to take the time to understand current policies, laws, ordinances. objectives and local history. Many people aren‘t interested enough to take the time to do this.

I think a big problem for Desen Hot Springs is sustainable growth, affordable housing and attracting businesses. With proper planning and due diligence we can continue in our incredible growth and we can build a city that can provide opportunities for all of it's residents and businesses to grow and ?ourish. We can build a city that can hold it's own in times of economic downturn and we can nunure our future while preserving the past.

The bottom line is. we all want the same th' g. We all want sustainable growth and to build a better.safer. tomorrow for the city and it's residents. A large problem in getting there is communication and understanding.

I can provide letters of recommendation upon request.
2o22o123_162518.jpg 2.88MB
Please feel free In include a resume, letter(s) of recommendation, etc.

Appointetl commissioners may be required to suburit a Fair political Practices Commission (FPPC), statement orEconnmic Interests Fnrln (Form 700) pursuant to cA Government cnde § 07200 and/or Desen Hot Springs Mtuticipal code § 2.20.050.

As an appointed conmussinner or boardmember, state law requires two lmurs ortraining in general etlucal principles and ethics laws every two years. More illfornlatioll will be provided upon appniunuent. some or all orusecontent contained in tlus application and its attacltmeuts may be subject to disclosure pursuant tn tlre California Public Records Act (CA Government code § 6250, El seq.)
signature *
l certify that the above statements are true and correct tn arebest ormy knowledge ?7t‘«4&%df

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Commission/Board Application
Y0urAppIim[imi win he mnndered by the Desen Hot Springs r, i 7unL‘i1pmi'ide'drhata mrsancy edsrs an a Canmi .5i0n Beard mywhich you have applied. Ifam '5 no mmnry. your nppnrmian will be kept on filemy1 year [0 be rnnszde.-ed when an opening does 0 Residency Lengm at Residency in meCity nf Desert Hot springs 36 (Example: 2 years)
Registered Voter Are yen in negisiered vmer in the City nf Desert Hol Springs? Yes
N0

GENERAL INFORMATION
Last Name * Wagstaff
First Name * Chris
Address * Street Address
Address Line 2
City Slale / Province / Region
Desert Hot Springs California
Postal / zip Code cnuniry
92240 United States
en....eNumber * 2
Emaiiedi-es T

WHICH COMMISSION/BOARD ARE YOU INTERESTED IN SERVING
Number in order nf preference.
* PLANNING CDIVIIVIISSICIN
1:: Choice 2nd Choice Nat Interested
Meeis dre 2nd Tuesday nf earnllmnlh at 6:00 p.rn.

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PUBLIC SAFETY COMMISSION
Isl‘ Choice 2nd Choice Nat Interested
Meets the 2nd Thursday oreach month at 6:00 p.m.

QUESTIONS
The rollowmg intormation consists nf some nf the iactors used by the city Council, and/or suhcommittee thereor to select iinal applicants: 1) Background, education, experience to demonstrate sound judgement; 2) niversity in commission membership; and 3) attendance at commission meetings prior to consideration.

Background / work Experience / civic involvement
I have decades in the building industry. I'm a licensed state contractor. I've managed multiple master planned residential projects in multiple states. Worked with many municipalities on the private sector end of the working relationship. occupation and Employer (If retired, ntdicate last occupation/employer) Currently director of builder operations for Arcadia Cabinetry.

Education / "training
High school/CSLB license
Have you served on a city Cnlnlnissitln/Board in the city orDesert Hot Springs or any other City?
No yes (Ifyes, please describe below)
Have you ever attended a City council meeting?
No Yes
Have you ever attended a City commission meeting?
No yes (Ifyes, list which Commissions below)
Describe your knowledge orthe iunctions, regulations and procedures of the commission/laoard (your 1st choice) on which you would like to serve.

The planning commission is made up of appointed members that review matters related to planning. development and land use matters.
what speciiic skins, attitudes, and experience do you think you have that will enhance the work orthe Cnlnlnissinn/Board
I have extensive knowledge on residential tract projects. Time frames allocated for work. I have a positive attitude that focusus on solutions not problems. I love the city and only want what's best for it.

I can get teams lined up on the same goal and actively engaged in progress. what speciiic issues or problems racethe Commissionlllnarrl? Do you have suggestions to address these issues or problems?
I would need to sit in on a few meetings to make an educated dec n on what I felt was a hold up or where there is room for growth.

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File U111-rad(Optional) please feel tree in inclnde a resnme, leller(s) of reeommendaiion, eie.

Appointed commissioners may he required to submit a Fair Political Practices Commission (FPPC), Statement orEconnmic Inieresis Flinn (Form 790) plnsllam to CA Gnvernlnenl Cnde § B7200 and/or nesen Hot Springs Municipal code § 2.20.059.

As an appointed eonmiissinner nr lmardmemlmr, Slate law requires twn lmnrs nf iraining in general euiieal prineiples and euiies laws every two years. More illforlnmion will be provided Ilpnn appnilmnenl. some or all oi uie cnnlenl contained in diis application and its attachments may be snbjeci to diselosnre pursuant In die California Public neeords Act (CA Government code § 6250, El seq.)
signature *
I certify that meabove slalemelns are me and correct In arebest oi my knowledge 1

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SR-22-023
City of Desert Hot Springs
City Council

AGENDA ITEM REPORT
To: City Council
Date: February 15, 2022
Department: City Clerk
Prepared by: Jerryl Soriano, City Clerk
Subject: Ordinance Increasing the Salary for Planning Commissioners and Public Safety Commissioners
RECOMMENDATION:

Introduce for First Reading, read by title only, "An Ordinance of the City Council of the City of Desert Hot Springs amending Section 2.32.050 (Salaries of Planning Commissioners) of Chapter 2.32 (Planning Commission) and Section 2.40.050 (Salaries of Police Commissioners) of Chapter 2.40 (Police Commission) of the Desert Hot Springs Municipal Code increasing the salary of City Commissioners."
BACKGROUND:

Currently, the City of Desert Hot Springs Municipal Code (“DHSMC”) provides that members of the City’s Planning Commission and Public Safety Commission receive a salary of $50 per meeting attended.

The proposed Ordinance (Exhibit 1) provides for $100 to be paid as a salary to Planning Commissioners and Public Safety Commissioners per each meeting attended.

FISCAL IMPACT:
• $100 per Planning Commissioner per meeting; and
• $100 per Public Safety Commissioner per meeting.

The fiscal impact for each Commission is $500 per month (assuming one meeting per month and all commissioners attend). It will be an estimated $6,000 annual increase in costs. The increase for the remainder of FY2021-2022 will be covered from savings due to vacant positions. The increase for FY2022-2023 will be included in the budget adjustments that will be brought before Council in the spring.

ATTACHMENTS:

Exhibit 1 - Draft Ordinance - Commissioner Salaries

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ORDINANCE NO. _______

AN ORDINANCE OF THE CITY COUNCIL OF

THE CITY OF DESERT HOT SPRINGS
AMENDING SECTION 2.32.050 (SALARIES

OF PLANNING COMMISSIONERS) OF
CHAPTER 2.32 (PLANNING COMMISSION)
AND SECTION 2.40.050 (SALARIES OF

POLICE COMMISSIONERS) OF CHAPTER

2.40 (POLICE COMMISSION) OF THE

DESERT HOT SPRINGS MUNICIPAL CODE

INCREASING THE SALARY OF CITY

COMMISSIONERS
WHEREAS, the City of Desert Hot Springs (“City”) is
a charter city organized pursuant to Article XI of the
California Constitution; and
WHEREAS, currently the City’s Planning
Commissioners receive a salary of $50 per meeting they
attend; and
WHEREAS, currently the City’s Public Safety
Commissioners receive a salary of $50 per meeting they
attend; and
WHEREAS, the commissioners’ service and
dedication to the community should be recognized; and
WHEREAS, the City Council determines that
amending the Planning Commissioners’ and Public Safety
Commissioners’ salary to better reflect the actual work performed by all commissioners and committee members
promotes the health, safety and public welfare of the
community; and

NOW, THEREFORE, THE CITY COUNCIL OF THE

CITY OF DESERT HOT SPRINGS DOES ORDAIN AS
FOLLOWS:

Section 1. RECITALS.

That the Recitals are hereby incorporated by this
reference.

Section 2. AMENDMENT OF SECTION 2.32.050
“SALARIES OF PLANNING COMMISSIONERS” OF
CHAPTER 2.32 OF THE DESERT HOT SPRINGS

MUNICIPAL CODE

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That Section 2.32.050 of Chapter 2.32 of the Desert
Hot Springs Municipal Code shall be amended to read as
follows:

2.32.050 Salaries of Planning Commissioners.

Each member of the Planning Commission shall
receive a salary in the amount of $50 $100 per any
officially convened Planning Commission meeting that
they attend. (Ord. 606 3-21-17; prior code § 32.35)
Section 3. AMENDMENT OF SECTION 2.40.050
“SALARIES OF POLICE COMMISSIONERS” TO THE

DESERT HOT SPRINGS MUNICIPAL CODE
That Section 2.40.050 of Chapter 2.40 of the Desert
Hot Springs Municipal Code, and shall be amended to read as follows:

2.40.050 Salaries of Police Commissioners.

Each member of the Police Commission shall receive
a salary in the amount of $50 $100 per any officially
convened Commission meeting that they attend.

Section 4. SEVERABILITY
That the City Council declares that, should any
provision, section, paragraph, sentence or word of this ordinance be rendered or declared invalid by any final court action in a court of competent jurisdiction or by reason of any preemptive legislation, the remaining provisions, sections, paragraphs, sentences or words of this ordinance as hereby adopted shall remain in full force and effect.

Section 5. CEQA EXEMPTION
That this ordinance is exempt from environmental
review pursuant to Section 15061(b)(3) of the Guidelines for California Environmental Quality Act (California Code of Regulations, Title 14, Chapter 3), because approval of this ordinance does not have the potential for causing a
significant effect on the environment, and it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment.

Section 6. AMENDING OF BAIL SCHEDULE
That the City Attorney's Office is hereby directed to
determine whether this ordinance necessitates amendment

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of the City's Bail Schedule and to cause such necessary amendments to be made and filed with the local branches of the Superior Court of the County of Riverside.

Section 7. EXECUTION AND CERTIFICATION
That the City Clerk is directed to do all things
necessary to cause the execution of this ordinance
immediately upon its adoption and shall thereafter certify to the passage of this ordinance and cause the same to be
published according to law.

Section 8. EFFECTIVE DATE
That this ordinance shall take effect thirty (30) days
after its second reading by the City Council.

PASSED AND ADOPTED by the City Council at a
regular meeting held on the _____ day of
________________, 2022, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

ATTEST: APPROVED:
______________________________
________________________
_____
Jerryl Soriano, City Clerk Scott Matas, Mayor
APPROVED AS TO FORM:
______________________________
Jennifer A. Mizrahi, City Attorney

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SR-22-036
City of Desert Hot Springs
City Council

AGENDA ITEM REPORT
To: City Council
Date: February 15, 2022
Department: City Manager
Prepared by: Daniel Porras, Assistant City Manager
Subject: Resolution adopting Caltrans Local Assistance Procedures Manual Chapter 10: Consultant Selection
RECOMMENDATION:

Adopt a Resolution of the City Council of the City of Desert Hot Springs, California adopting Caltrans Local Assistance Procedures Manual Chapter 10: Consultant Selection.

BACKGROUND:

Federal funding for local public agencies such as cities and counties is administered through the State of California Department of Transportation (Caltrans). In order to received federal funding all local agencies must be in compliance with all federal and state requirements. One of those requirements is that participating local public agencies must follow Caltrans administrative procedures as detailed in the Caltrans Local Assistance Procedures Manual (LAPM).

The Caltrans LAPM describes the various procedures for advertising, selecting, and awarding contracts, and procedures for procurement, payment, and invoicing to consultants and contractors. The Caltrans LAPM also describes procedures for reimbursement of funds to local public agencies, and overall project management and records management requirements. If a local public agency is utilizing federal funds for a specific phase of a project, the local public agency must follow the procedures from the Caltrans LAPM that applies to that phase.

For example; if the City of Desert Hot Springs receives a federal grant for the design of Palm Drive Project, the City must follow the Caltrans LAPM procedures for advertising, selecting, and awarding the consultant for the design of Palm Drive Project. The same will apply if the City receives a grant for the construction of Palm Drive Project, or for acquiring Right of Way of Palm Drive Project, etc.

DISCUSSION:

Title 23 Code of Federal Regulations Part 172 (23 CFR 172) allows Caltrans Division of Local Assistance to prescribe the policies and procedures for selecting Architectural and Engineering consultants. These procedures are explained in detail in Chapter 10 of the Caltrans LAMP. The Federal Highway Administration is expecting to achieve a 100% compliance from all local public agencies in adopting Chapter 10 of the Caltrans LAPM in following procedures for selecting Architectural and Engineering consultants.

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SR-22-036
Chapter 10 of the Caltrans LAPM identifies the following key points in selecting Architectural and Engineering consultants (Chapter 10 in full is attached);

1. Definition of architectural and engineering consultants

2. Identifying and defining the need for consultants

3. Consultant audit and review process

4. Consultant selection methods

5. Consultant selection using one-step RFP method

6. Consultant selection using one-step RFQ method

7. Consultant selection using two-step RFP/RFQ method

8. Completing the project

9. State funded procedures
The City of Desert Hot Springs has been utilizing the Caltrans LAMP procedures for all Federal and State funded projects for over 10 years. This procedure is not something new and will not change any procedures that are already utilized as standard practice. The attached Resolution will formalize that the City is and will continue to use the procedures from Chapter 10 of the Caltrans LAPM for all federally funded engineering design related services for Architectural and Engineering.

If the Resolution is approved by City Council, the resolution will be sent to Caltrans and the Federal Highway Administration for their records.

FISCAL IMPACT:

No impact.

ATTACHMENTS:

Exhibit 1 - Resolution Adopting CalTrans LAPM Chapter 10 Exhibit 2 - Caltrans LAPM Chapter 10

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RESOLUTION NO. 2022-XX

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DESERT HOT

SPRINGS, CALIFORNIA ADOPTING CALTRANS LOCAL ASSISTANCE
PROCEDURES MANUAL CHAPTER 10: CONSULTANT SELECTION
WHEREAS, the City of Desert Hot Springs (“City”) is a charter city organized pursuant to Article XI of the California Constitution; and WHEREAS, the City of Desert Hot Springs is responsible for constructing transportation projects that are state and federally funded; and WHEREAS, in order to comply with the Federal regulations and due to limited staffing and expertise, certain services including Architectural and Engineering (A&E) are contracted out to qualified firms; and
WHEREAS, the Federal regulations set forth standards for procuring and administering A&E contracts; and
WHEREAS, the provisions of the Brooks Act (40 United States Code, Section 1104) requires local agencies to award federally funded engineering and design-related contracts, otherwise known as A&E contracts, on the basis of fair and open competitive negotiations, demonstrated competence, and professional qualifications (23 CFR

31.201-3); and
WHEREAS, pursuant to 23 CFR 172.5 (b), local agencies shall develop and sustain organizational capacity and provide the resources necessary for the procurement, management, and administration of engineering and design related consultant services, reimbursed in whole or in part with Federal-Aid Highway Program funding as specified in 23 U.S.C. 106(g)(4)(A);and
WHEREAS, the provision 23 CFR 172.5 (b)(1) requires local agencies to adopt written policies and procedures for the procurement, management, and administration of engineering and design related consultant services in accordance with applicable Federal and State laws and regulations; and
WHEREAS, the State of California Department of Transportation (Caltrans) has developed the Local Assistance Procedures Manual (LAPM), Chapter 10, Consultant Selection which sets forth policies and procedures to be utilized by local agencies in the procurement and management of A&E contracts on state and federal funded transportation projects to ensure compliance with applicable Federal and State laws and regulations and to maintain eligibility for Federal-Aid reimbursement; and WHEREAS, the City of Desert Hot Springs adopted conflict of interest policies, dated October 6th, 2020, to ensure avoidance of any conflict of interests; and

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WHEREAS, the City of Desert Hot Springs desires to adopt Caltrans's LAPM Chapter 10 and the City's conflict of interest policies for compliance with Federal regulations on the procurement and administration of A&E contracts.

NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Desert Hot Springs as follows:

Section 1. RECITALS
That the foregoing recitals are true and correct and are herein adopted by this reference.

Section 2. ADOPTION OF THE CALTRANS LOCAL ASSISTANCE
PROCEDURES MANUAL CHAPTER 10: CONSULTANT

SELECTION
The City Council hereby takes the following actions:

1. Adopt the Local Assistance Procedures Manual, Chapter 10, Consultant Selection dated January 1, 2022 or as amended in future updates Section 3. SEVERABILITY
That, should any provision, section, paragraph, sentence or word of this resolution be rendered or declared invalid by any final court action in a court of competent jurisdiction or by reason of any preemptive legislation, the remaining provisions, sections, paragraphs, sentences or words of this Resolution as hereby adopted shall remain in full force and effect.

Section 4. REPEAL OF CONFLICTING PROVISIONS
That all the provisions of the Municipal Code as heretofore adopted by the City of Desert Hot Springs that are in conflict with the provisions of this Resolution are hereby repealed.

Section 5. AMENDING OF BAIL SCHEDULE

That the City Attorney’s Office is hereby directed to determine whether this Resolution necessitates amendment of the City’s Bail Schedule and to cause such necessary amendments to be made and filed with the local branches of the Superior Court of the County of Riverside.

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Section 6. CERTIFICATION
That the City Clerk shall certify to the passage of this Resolution and shall cause the same to be published according to law.

PASSED AND ADOPTED by the City Council of the City of Desert Hot Springs at a regular meeting held on the 15th day of February, 2022 by the following vote:

AYES:

NOES:

ABSTAIN:

ABSENT:

ATTEST: APPROVED:
_________________________________ ________________________________ Jerryl Soriano, City Clerk Scott Matas, Mayor
APPROVED AS TO FORM:
_________________________________
Jennifer Mizrahi, City Attorney

Page 73 of 167 ends

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 Page i of ix
January 2022 Page 74 of 167
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

10.1.7Consultant Selection Using the Two-Step RFQ/RFP Method ................................................36 Combined RFQ and RFP.....................................................................................................36 Categorize work...................................................................................................................37 Page ii of ix
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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 Page iii of ix
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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 Page iv of ix
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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
Consultant Selection

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- FixedFee; 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
January 2022 Page 79 of 167

( )<===> ( )<===> ( )<===>
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 Page vii of ix
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f ] <====> ]<====> l J<===>
( ) -
-
-
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
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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 Page ix of ix
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Local Assistance Procedures Manual Chapter 10
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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 federalaid 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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Local Assistance Procedures Manual Chapter 10
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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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strnctul'ecl Well- trncturecl ~fore Vel'y
Pl'ojerts Pl'ojerts Difficult Complex
With Simple With Complex Pl'ojerts Pl'ojects
Right of Way Right of Way
Requil'ements Requirements
P1·eliminal'y Engineering
I
I
Environmental Analy is I
I
Plans, Specifications
I I &Estimates
Right of Way Activities I I I I
tility Relocation

I I I I I I
Construction Engineel'ing
Local Assistance Procedures Manual Chapter 10
Consultant Selection
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 miniRFP 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 NonCompetitive 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, oncall 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/guidanceand-oversight/consultant-selection-procurement. To request information regarding the SHR methodology, email the DLA A&E branch at [email protected]. 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: [email protected].

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:
[email protected].

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/PrevailingWage.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 twostep 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

+ t
y· ,1r +
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Figure 10-4: Consultant Selection Flowchart

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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 nontechnical 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 readvertisement 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/consultantselection-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.

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-selectionprocurement), and receive Caltrans IOAI’s Financial Review acceptance letter, if applicable.

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 ComputerAided 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 prequalification 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.

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.

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.

10.1.8Completing 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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Consultant Selection
• 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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Consultant Selection
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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Consultant Selection
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: CostEffectiveness/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 (DLAHQ) at [email protected], 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 [email protected]. LPA will receive FHWA’s approved Exhibit 10-U via email.

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Desert Hot Springs City CouncilFebruary 15, 2022

Desert Hot Springs City Council
February 15, 2022