Consultant and Managing General Contractor Standard Agreement Form Updates

Transcription

1 Exhibit 1 Consultant and Managing General Contractor Standard Agreement Form Updates March 24, 2015 Report No Office of the County Auditor Evan A. Lukic, CPA County Auditor

2 Table of Contents EXECUTIVE SUMMARY... 1 PURPOSE AND SCOPE.. 3 BACKGROUND. 3 SUMMARY OF STANDARD AGREEMENT FORM REVISIONS.. 4

3 Executive Summary This report presents the results of the joint efforts of our Office and the Office of the County Attorney, to clarify and simplify various terms and conditions contained in the following agreements in use by various County agencies: Standard Consultant Agreement Form (BCF 202), Standard Airport Design Consultant Agreement Form (BCF 404), Standard Non CCNA Consultant Agreement Form (BCF 101), Standard Airport Non-Design Consultant Agreement Form (BCF 403), Managing General Contractor Preconstruction Services Agreement Form, and Managing General Contractor Construction Services Agreement Form. The modified versions of the above agreements are attached to this report. The modifications to the form agreements are primarily clarifications of existing terms and conditions, strengthening of provisions designed to protect the County s interests, removal of duplicative or onerous language and formatting improvements. Specific details of the proposed changes to each of the standard form agreements are summarized in the body of this report. To protect the County s interests and ensure consistency in contracting, we recommend the Board: 1. Formally adopt the attached revised agreements as the County standard for Consultant and Construction Manager at Risk agreements. 2. Require disclosure of any substantive deviations from the approved standard terms and conditions for the Board s consideration when requesting approval of negotiated contracts. 3. Require: a. Submission of any future material changes made to these standard agreement forms to the Board for approval (not including minor clarifications or updates necessary to maintain compliance with changes in law or statute) b. Completion of a review and update of other standard County agreement forms in general use that are not addressed in this review, and presentation of appropriate updated versions to Board for approval c. Implementation of a process to ensure periodic review of standardized contract forms d. Implementation of a system to inform the various user agencies of the availability of new standard agreement versions when updates occur, to include explanation of the changes e. Inclusion of version dates for all approved agreements in the footer of the document to aid users in ensuring that the agreement is the latest approved 1

4 version and to allow readers to be aware of the standard terms within the final executed copy. 4. Require the latest versions of all Contract Agreement Forms be readily available for vendor/public review on Purchasing Division s webpage. a. Create a disclaimer to be posted on the webpage and/or solicitation documents providing notice that the County reserves the right to change these documents during the solicitation process. We would like to formally recognize our appreciation to Mike Kerr, Deputy County Attorney and Steve Hammond Assistant Director of Public Works, for their tireless efforts in completing this project, as well as the assistance of Glenn Miller, Rene Harrod, and Alexander Williams, Assistant County Attorneys. Without their collective commitment and knowledge this project could not have been completed. 2

5 Purpose and Scope The purpose of this proactive and collaborative review was to identify and remedy: Inconsistent or conflicting provisions within and across Agreements Duplicative or repetitive language Onerous, difficult to understand, or needlessly wordy articles Vague or weak language regarding performance expectations, billing or documentation requirements, deliverables, or other terms and conditions designed to protect the County s interests and/or ensure vendor compliance with policies, regulations and laws. Our scope included the following standard County agreement forms: Standard Consultant Agreement Form (BCF 202), Standard Airport Design Consultant Agreement Form (BCF 404), Standard Non CCNA Consultant Agreement Form (BCF 101), Standard Airport Non-Design Consultant Agreement Form (BCF 403), Managing General Contractor Preconstruction Services Agreement Form, and Managing General Contractor Construction Services Agreement Form. The role of our Office was the identification of weaknesses in contract language in areas which have, or appeared likely in the future, to result in findings of non-compliance, nonperformance and/or erroneous billings by vendors. Our Office worked closely with the Office of the County Attorney (CAO) to develop suggestions to strengthen the existing language. The CAO provided final review and approval of all modifications. Public Works Department provided technical assistance regarding the practical application of agreement terms in business operations. Background It is a common practice in governmental and private entities to employ the use of boilerplate or standardized language in their agreements. The boilerplate agreement is typically prepared by attorneys, and is then made available for use by individual agencies. Contract Administrators plug-in transaction specific information and business terms (e.g., vendor identifying information, length of agreement, time for completion, compensation amounts, and liquidated damages, etc.). When used properly, standardized contract forms can be a valuable tool and can help ensure: Efficient use of staff time through reduced negotiation effort, particularly for legal staff Consistency of contracting practices across vendors Appropriate use of public monies Fair and equal treatment of vendors 3

6 Increased compliance with laws Safeguarding of County interests, and reduced liability when instances of poor performance or non-compliance occur Protection to the County should legal remedies be required In Broward County, the Office of the County Attorney has several standard form agreements available for use by county agencies. Fourteen such agreements are currently posted on the Purchasing Division webpage, Broward County Standard Agreement Terms & Conditions, which states, The following are standard requirements of Broward County for its Procurement Contracts. Persons and Companies that receive an award from Broward County through Broward County s competitive procurement process must anticipate the inclusion of these requirements in the Contract. These requirements are considered non-negotiable subject to the County s approval. The electronic link to the applicable standardized agreement is typically included in solicitation documents, and respondents are required to identify any exceptions to these standard terms, which may then be considered in the evaluation and selection process. According to the CAO, these forms are periodically updated to reflect new laws, or changes in statutory requirements. However, until recent efforts, a comprehensive review and update of the terms in these documents had not been completed in several years. It is noted that CAO independently completed updates to its standard form for various software, hardware and information technology service agreements Summary of Standard Agreement Form Revisions Consultant Services Agreement Form (BCF 202) The first contract reviewed as part of this process was the BCF 202, Consultant Agreement Form, the contract form used by County agencies engaging the services of architects or engineers. The review of this form was initiated based upon a combination of factors, including observations during negotiation meetings, project management focus group feedback, initial audit findings, and an increasing number of queries from Contract Administrators regarding the billing practices of consultants. Over time, it was realized that clarifications to the standard consultant contract language could help improve vendor compliance and contract administration. As our Office frequently consults with the CAO regarding the interpretation of contract language, it seemed prudent for us to jointly initiate a review. To address the observed needs, we focused on clarifying and strengthening consultant salary cost requirements and simplifying various contract terms and conditions. The Public Works Department (PW) was also engaged to provide insight regarding practical application of the agreement and technical assistance. In summary, modifications to the BCF 202 form include, but are not limited to: Improved definitions for Contract Administrator, Notice to Proceed, Project, and Subconsultant within Article 1. Modification to Article 3.4, requiring payments to all subconsultants be made within 15 days. Removal of confusing checkboxes denoting sections to be used or not used. 4

7 Creation of a Pre-Design Services category within the description of phased services. Clarification of descriptions of payment type including not-to-exceed, lump sum and reimbursables, and limitations of County obligations. Clarification and strengthening of Article 5.2, Salary Costs, to include a simplified definition of overhead and fringe costs; allowing consultants an additional 90 days to complete FAR audits (total of 180 days); creation of a Safe Harbor rate in lieu of audited financial statements; clarification of maximum billing rates; and, new language detailing County expectations for overtime and field rates/multipliers. Simplification of language regarding allowable reimbursable expenses. Updates to insurance requirements, based upon project needs; removal of insurance submission and review requirements for subconsultants. 1 Strengthening of Truth In Negotiations and Audit Right language. Simplified Exhibit B format. Miscellaneous language clarifications and document clean-up. Flexibility in use of the form, through availability of optional paragraphs based upon individual contract needs and negotiations, such as creation of a specific process to request salary cost escalation due to increases to consumer price index, and allowing use of fixed rates when in the County s best interests. Airport Design Consultant Agreement Form (BCF 404) Similar to the BCF 202 is the BCF 404, Airport Design Consultant Agreement Form, which is used by the Aviation Department (BCAD) when engaging the services of consultants. In addition to the standard conditions of the BCF 202, the BCF 404 contains provisions specific to the airport. Following the update to the BCF 202, CAO staff completed an update to this form, so that terms and conditions remain consistent for consultants, whether contracting with the Aviation or other County Departments. Standard Agreement Form (BCF 101) The BCF 101 form is typically used by County agencies seeking the services of nondesign professionals, i.e. consultants whose services do not fall under the guidance of the Consultants Competitive Negotiation Act (CCNA) 2. This contract form is also used for engaging various other types of services, such as paratransit providers, parking management, or employee benefit programs. Based upon observations made during contract reviews and attendance at contract negotiation sessions, it was observed that while this form contained many necessary standard contract provisions, it was lacking in language governing invoicing requirements, payment terms, or deliverable expectations. The joint review of the contract focused on the addition of language in these areas, as well condensing and simplifying standardized terms and conditions when applicable. In summary, the modifications to the BCF 101 include, but are not limited to: Consistency of definitions with BCF These modifications were made by Risk Management, in response to, and coordination with COA. 2 Section , Florida Statutes 5

8 Additional language addressing issuance of work authorizations, compensation amounts, and invoicing requirements. Miscellaneous language clarifications and reductions in several areas. o County Business Enterprise, Public Entity Crime Act language now includes a reference to applicable Ordinances and Statutes, where applicable. Strengthening of Truth In Negotiation and Audit Right language. Various formatting improvements. Creation of additional language to be included within Scope of Services addressing managerial approach to the project and staffing requirements. Creation of tables to be used within Exhibits to clearly delineate phased services, required deliverables and acceptance criteria. As applicable, tables may reflect hourly rates for services, or phased payments and retainage amounts, as well as listings of eligible reimbursable expenses. Airport Non-Design Consultant Agreement Form (BCF 403) The BCF 403 form serves as the Aviation Department s version of the BCF 101, and is used by BCAD when engaging the services of non-design professionals. The BCF 403 was updated for compatibility with the BCF 101. Managing General Contractor Preconstruction Services and Construction Services Agreements The Managing General Contractor Preconstruction agreement and Managing General Construction Services agreement are also commonly referred to as the CM@Risk agreements. These documents were selected for review based upon their typically large contract value and the complexity of the subcontractor bidding process culminating in establishment of the Guaranteed Maximum Price (GMP). Typically these services are solicited and awarded using the Preconstruction Services Agreement form. Later, after all bids are received, negotiations are re-initiated, a final contract price is established, and the Construction Services Agreement is executed. A comparative review of these agreement forms indicated that several provisions were duplicated across both forms, and that some of these same provisions were not stated in consistent terms in each document. Further, it was realized that certain terms relative to the subcontractor bidding process were absent from the Preconstruction Services Agreement, and were erroneously included in the Construction Agreement- which is executed after the bidding process occurred. Upon consideration of these factors, the review team determined that a single, all inclusive contract form would better suit the County s needs. This would ensure that the prospective Contractor was aware from the beginning of the solicitation process of all of the County s expectations, from preconstruction through warranty services. The updated contract form also only requires a single presentation to the Board when all contract terms and the Guaranteed Maximum Price (GMP) are established. In summary, the significant changes to the Managing General Contractor Preconstruction and Construction Services Agreements are: 6

9 Combining two contract forms to a single all-inclusive document, consequently reordering provisions and removing duplications and inconsistencies. Creation a Summary of Terms and Conditions table at the beginning of the document for easy reference to key items, such a time for performance, liquidated damages, CBE goals, and LEED Category. Improved definitions consistent with modifications to other BCF documents. Clarification of responsibilities between County, Consultant and Contractor. Comprehensive descriptions of pre-construction and construction services to be provided during entire term of the agreement. Contract Price Elements (CPE) are restructured, removing duplicative categories, and combining all owner-controlled price elements such as Contractor s Construction Contingency, Document Completion Allowance and Owner s Allowance Account into the single Owner s Allowance Account. Due to the combining of two contracts into one, Pre-Construction services is now a recognized element in the GMP. The GMP and Fixed Fee (i.e. Contractor s profit percentage) will now be established in the solicitation document. Negotiations will focus upon Pre- Construction Services, General Conditions, and Direct Construction Cost only. Initial negotiations will establish estimated elements of the GMP such as General Conditions and Direct Construction Cost; following the bidding process, these amounts will all be reconciled, up to the GMP previously established by the Board. Clarification of issuance and time for performance for Notice(s) to Proceed. Clarification of language regarding changes in contract time or GMP, as well as compensable and non-compensable delays. Clarification of Change Order language, including applicable adjustments to Fixed Fee, and other profit and overhead mark-ups. Updating CBE requirements specific to CM@Risk projects. Strengthened Project Records and Right to Audit Right language, providing additional details regarding various types of records that may be reviewed and record retention requirements. Language has also been added notifying Contractors that based on the extent of audit findings, they may be responsible for the cost of the audit. Updating and improving various miscellaneous contract provisions including, but not limited to: priority of provisions, cost of work, progress payments, insurance, personnel, and truth in negotiations. 7