TO:
Honorable Mayor and Members of the City Council
THROUGH:
Mark Danaj, City Manager
FROM:
Tony Olmos, Public Works Director
Prem Kumar, City Engineer
SUBJECT:Title
Report on As-Needed Engineering Services Program (Continued from the May 3, 2016 City Council Regular Meeting) (Public Works Director Olmos).
RECEIVE REPORT
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Recommended Action
RECOMMENDATION:
Staff recommends that City Council receive the report on the As-Needed Engineering Services Program.
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EXECUTIVE SUMMARY:
In mid-2015, City Council approved contracts with nine professional firms to provide as-needed engineering services with the goal of expediting the delivery of Capital Improvement Projects. For accountability, City Council directed that any individual task orders exceeding $100,000 should be approved by City Council and also directed that staff provide a status report when the individual contracts reach the mid-point and obtain City Council to move forward with the final half of the contract.
Since then, staff has issued a total of twenty-seven task orders to these engineering firms. In recent months, City Council has inquired about the volume of task orders being generated along with the costs and asked if staff would provide a detailed summary of the entire program. This report summarizes the concepts and reasons for using as-needed engineering services; compares between “project-specific” and “as-needed” procurement timelines; and summarizes the task orders issued to date.
FISCAL IMPLICATIONS:
There are no fiscal implications with this action.
BACKGROUND:
From fiscal years 2006-07 to 2011-12, City Council approved an average of
$6 Million per year in CIP funding. From fiscal years 2012-13 to 2014-15, City Council approved a total of $59 million in new CIP funding, averaging approximately $19.7 million per year. The major reason for this increase was the addition of significant water, wastewater, and street projects including Sepulveda Widening at $19 million. There are currently 80 active CIP projects valued at approximately $45 million and the proposed FY16-17 CIP could potentially add another $9.8 million in additional appropriations. The scale of this CIP rivals those of much larger cities with much larger staff.
The Engineering Division is currently comprised of seven full-time employees: City Engineer, Principal Civil Engineer, 2 - Senior Civil Engineers, Engineering Technician, Public Works Inspector, and an Office Manager. In past years, this staff would typically design a number of projects in-house and utilize project-specific professional service agreements for the balance of the work. This model worked fine to address the traditional CIP workload, but has put a strain on project delivery as the project workload has grown. Although the use of professional services has helped, the procurement process involved in soliciting proposals, executing professional service agreements, and processing the required insurance has proven to be time-consuming and has only marginally improved project delivery.
In assessing workload and available resources, staff has determined that in order to make significant progress towards expediting completion of the backlogged CIP projects, it was necessary to move into a full Project Management Model whereby staff is charged with managing and directing a team of design and construction management professional services, who would be on-call and ready to provide design and inspection services.
As a result, in early 2015, staff solicited proposals from qualified firms for three categories of work: General Civil Engineering Design, Utility Design, and Construction Management & Inspection. On May 19, 2015, City Council approved three (3) contracts for General Civil Engineering with Penco Engineering, Transtech, and Harris & Associates in the amount of $300,000 each. At the same meeting, City Council also approved three (3) contracts for Utility Design with Quantum, SA Associates, and AKM in the amount of $250,000 each. Finally, on June 16, 2015, City Council approved three (3) contracts for Construction Management & Inspection with AndersonPenna, Psomas, and CivilSource in the amount of $400,000 each. All contracts were for a three-year term.
For all of these contracts, City Council also directed staff to obtain City Council approval for individual task orders exceeding $100,000 and to report back to City Council at the mid-point of each contract for approval to use of the second half of each contract.
The City’s current Public Works Director and City Engineer have both extensively used these types of contracts at their prior places of employment, including County of Orange, Huntington Beach, Brea, Santa Ana, Moreno Valley, and Beverly Hills. All of these cities continue to utilize these contracts as a matter of normal business practice and have had much success with them.
This report presents a status of the As-Needed Engineering Service Program along with an analysis and comparison to the Project-Specific procurement process.
DISCUSSION:
Professional service procurement must comply with the Brooks Act of 1972. The Brooks Act, also known as the Selection of Architects and Engineers statute, is a United States federal law that requires that government agencies select engineering and architectural firms based upon their competency, qualifications, and experience rather than by price. This is why we request for proposals and not bids. All the As-Needed Engineering contracts are considered professional services and fall under the provisions of this law.
Bids, on the other hand, are required when a project is advertised for construction contracts. Being a General Law city, Manhattan Beach must comply with bidding procedures outlined in the California Public Contract Code that requires award to the lowest-responsible bidder. A bidder is considered the “lowest-responsive” when the contractor has the lowest bid and has met all of the bid package requirements, such as completeness of bid package, license requirements, proper listing of sub-contractors, and experience working on similar projects.
Procurement of Project-Specific Professional Service Agreements
To procure a project-specific professional service agreement, the entire process from issuance of the RFP to Council approval and execution of the contract typically takes between 12 to 16 weeks as noted as follows:
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1. Preparation of Scope of Work/RFP: 2 weeks |
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2. RFP Advertisement Period: 3-4 weeks |
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3. Proposal Evaluation and Review Process: 3 weeks |
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4. Negotiation/Finalization of Agreement: 1-2 weeks |
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5. Preparation of Staff Report /Council Award: 3-5 weeks |
Aside from the time it takes to develop an RFP, execution of all the contract agreement requirements including insurance also takes considerable time. This process is typically used for each project phase, such as design, construction management & inspection.
Procurement of As Needed Engineering Services
To procure for As-Needed Engineering services, the entire process from issuance of the initial RFP to City Council approval and execution of the contract is the same as a project-specific procurement for the initial selection of the professional service agreement. Once the professional service is under contract, the entire process from issuance of the task order scope-of-work to approval of the task order is between 7 to 9 weeks as noted as follows:
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1. Preparation of Task Order Scope-of-Work: 2 weeks |
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2. Professional Services Review & Preparation of Task Order Fee Proposal: 2-3 weeks |
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3. Task Order Proposal Evaluation and Review Process: 2 weeks |
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4. Task Order Negotiation/Finalization of Fee Amount: 1-2 weeks |
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5. Preparation of Staff Report /Council Award: 0 weeks (Not Needed) |
This process remains competitive since firms from each category are asked to submit task order fee proposals. The firm that demonstrates that they can immediately meet the project needs and has all of the necessary resources available will be assigned the project. Prior to approval of each task order, staff would ensure that the project fee schedule is within project budget and meets the industry’s best practices. The best practice recommends a Design or Construction Management & Inspection fee in the range of approximately 10-15% of project budget. These percentages will vary based on range of project cost, i.e. larger projects result will typically result in lower percentages and smaller projects will typically result in higher percentages.
The preliminary fee analysis is performed by our highly qualified Engineering staff that has designed and managed many projects in many years of professional experience. The final proposed fee is then reviewed and approved by our City Engineer if it’s under $100,000. Any fee over $100,000 is reviewed by the City Engineer and Public Works Director and presented for City Council approval. In staff’s experience, there are minor differences between project-specific and task order fee proposals.
Status of As-Needed Engineering Contracts
It should be noted that although the cumulative amount of funds spent on these contracts is high, it should be noted that the City would spend a comparable amount on project-specific design and inspection services as a matter of regular past-practice. Having as-needed engineering services simply expedites initiation and completion of the projects.
Since City Council approval of the nine (9) As-Needed Engineering contracts, 27 task orders have been issued. The following is a breakdown of the number of task orders along with the average task order amount by category:
• Design (3 Contracts):
o 14 task orders issued in total amount of $450,364
o Average task order = $32,168
• Utility Design (3 Contracts):
o 3 task orders issued in total amount of $198,100
o Average task order = $66,033
• Construction Management & Inspection (3 Contracts):
o 10 task orders issued in total amount of $859,230
o Average task order = $85,923.
These 27 tasks represent projects with total budgeted funds of approximately $11,317,000. The total approved design and construction management & inspection fees represent approximately 11.9% of total budgeted funds (Attachment 1).
Aside from demanding competitive fee proposals for the individual task orders, staff will discontinue utilizing services from any firm that has not performed to City staff expectations on prior assignments. The as-needed professional service agreements do not require the City to utilize the full amount of the contracts, so subsequent project assignments will be tied to past performance. All of the firms working on pending task orders have performed very well.
ALTERNATIVES CONSIDERED:
ALTERNATIVE #1:
Discontinue use of as-needed engineering service contracts.
PROS:
Increased competition for each project-specific RFP that is issued.
CONS:
Loss of efficiency in procurement of engineering services and delays in delivery of CIP projects.
ALTERNATIVE #2:
Add additional City staff to issue project-specific RFP’s for project phase.
PROS:
Once all of the professional service agreements are under contract, these staff can assist in managing CIP projects.
CONS:
The cost of additional staff along with additional pension costs may not result in the expected overall savings since procurement issuing project-specific RFPs takes considerable amount of time to process.
ENVINRONMENTAL REVIEW:
There is no environmental review required as a result of this action.
LEGAL REVIEW:
There is no legal review required as a result of this action.
Attachments:
1. Task Order Summary
2. PowerPoint Presentation