Phase: Applied learning · Worked scenarios · Calculations · Audit findings · Document drills
Apply what you've read — scenario by scenario, calculation by calculation
A&E procurement, QBS, ICR, Brooks Act. Each exercise has a hidden solution — work through your answer before revealing.
I
Scenario 01
QBS vs price competition — which applies?
Setup
An LPA needs three services for a federal-aid project:
(A) Project engineering design (PS&E development).
(B) Construction materials testing.
(C) Right of way appraisal services.
Question
For each service, identify whether QBS (Qualifications-Based Selection) applies and the controlling authority.
Solution
(A) Project engineering design — QBS required. Brooks Act (40 USC 1101 et seq.) and 23 CFR 172 govern. Engineering design is the prototypical A&E service requiring qualifications-based selection: shortlist by qualifications, then negotiate price with the top-ranked firm. Price cannot be the primary selection factor.
(B) Construction materials testing — Likely QBS. 23 CFR 172.3 defines "engineering and design related services" broadly to include testing, surveying, mapping, construction inspection, and similar professional services. Most materials testing for federal-aid projects requires QBS.
(C) R/W appraisal — NOT QBS. Appraisal is a specialized service governed by different rules. Per LAPM Ch 13 and 49 CFR Part 24 (URA), appraisers must be qualified and approved, but selection is typically by qualifications-and-availability, with negotiated fees. Some LPAs maintain a pre-qualified appraiser list.
Key distinction: QBS prohibits price as a selection criterion until after shortlisting. Independent Cost Estimate (ICE) is prepared by the LPA before negotiations begin (CMSR — Cost Negotiation/Independent Cost Estimate per Ch 10). The Independent Cost Review (ICR) — separate from the ICRP! — is the federal review of consultant indirect costs.
Authority: LAPM Ch 10; Brooks Act; 23 CFR 172; LAPM Ch 13
II
Calculation 01
Consultant indirect cost rate — when is ICR required?
Given
An LPA enters a $180,000 federal-aid PE consultant contract. The consultant proposes a 165% indirect cost rate.
Find
(a) Is an Independent Cost Review (ICR) required? (b) What governs the indirect cost rate review?
Worked solution
Workings
- LAPM Ch 10: ICR required for federal-aid A&E consultant contracts.
- 23 CFR 172.11: Cost principles per FAR 31.2 (Federal Acquisition Regulation Part 31) apply to A&E consultant indirect cost rates.
- The consultant must have an audited or accepted ICR before invoicing.
- For a $180K PE contract, this is mandatory federal compliance.
Answer: (a) Yes — ICR is required for all federal-aid A&E consultant contracts. (b) Federal cost principles per FAR Part 31.2. Caltrans typically requires the consultant to submit an audited financial statement and indirect cost rate calculation, or have a current ICR letter from another state DOT that Caltrans can accept. The 165% rate is plausible for a small engineering firm but requires substantiation.
Process: Before contract execution, the consultant submits ICR documentation. LPA reviews per Ch 10 (or uses a Caltrans-accepted ICR from another state). Approved rate is incorporated in the contract. Consultant invoices at the approved rate.
Note: ICR is different from ICRP/ICAP (LPA-level indirect cost rate, Ch 5 §5.3). Easy to confuse.
Authority: LAPM Ch 10; 23 CFR 172.11; FAR Part 31.2
III
Audit Finding 01
Read the fact pattern — what's the finding?
Facts
An LPA awarded a $250K federal-aid PE consultant contract through an RFP that scored cost as 30% of the evaluation. The qualifications portion was 70%. The contract was awarded to the firm with the second-highest qualifications score but lowest price.
Analysis
What is the finding?
Finding · Citation · Corrective action
Finding: Violation of QBS requirements under Brooks Act and 23 CFR 172.
Under QBS, price cannot be a selection factor until after the most qualified firm has been identified. The procurement must:
1. Score qualifications first, without regard to price.
2. Identify the most qualified firm (or rank firms by qualifications).
3. Negotiate price with the top-ranked firm.
4. If negotiations fail, move to the next-ranked firm.
Including cost as 30% of an aggregated evaluation score is a "Best Value" selection method, which is permitted for non-A&E services but NOT for engineering and design-related services under 23 CFR 172.
Consequences:
• The federal participation in the consultant contract may be at risk.
• Audit finding on Pre-Award standing.
• Potential bid protest exposure (other firms that scored higher on qualifications but lost on combined score may have a claim).
Corrective action: Restart the procurement using proper QBS. The current contract may need to be terminated for federal participation purposes. Document the violation and the corrective steps. For future procurements, ensure RFPs follow QBS — qualifications first, price only with top firm.
Authority: LAPM Ch 10; Brooks Act; 23 CFR 172
Audit Finding 02
Read the fact pattern — what's the finding?
Facts
An LPA executed a federal-aid A&E consultant contract without an approved Cost Management Subcontract Review (CMSR). The consultant included $45,000 in subcontractor costs without LPA review of subcontractor qualifications and pricing.
Analysis
What is the finding?
Finding · Citation · Corrective action
Finding: Failure to perform required CMSR (Cost Management Subcontract Review) for A&E consultant subcontracts under 23 CFR 172 and LAPM Ch 10.
Under federal rules, the LPA (as the federal-aid recipient) is responsible for ensuring that subcontracted A&E services are also procured per QBS and that costs are reasonable. The prime cannot simply pass through unreviewed subcontracts.
CMSR requirements:
1. Subcontractor qualifications review by LPA.
2. Subcontractor pricing review (Independent Cost Estimate vs proposed).
3. Subcontractor indirect cost rate review (ICR or sub-ICR).
4. Documentation in the project file.
Consequences:
• The $45K subcontract may be ineligible for federal reimbursement.
• Pre-Award audit finding affecting future LPA-administered federal-aid projects.
Corrective action: Retroactively complete the CMSR if possible. If subcontractor work was acceptable and pricing reasonable in retrospect, the LPA may be able to retain federal participation. Going forward, integrate CMSR into the consultant contract execution workflow — no subcontract approval without CMSR completion.
Key reminder: The person in responsible charge (Ch 2 §2.12.2) has explicit duties under 23 CFR 172.9 to evaluate consultant and subcontractor performance and cost.
Authority: LAPM Ch 10; 23 CFR 172; 23 CFR 172.9
IV
Document Drill 01
A&E RFP — QBS-compliant evaluation criteria
Drill
Draft the evaluation criteria for a federal-aid A&E PS&E development RFP that complies with QBS.
Model answer
QBS-compliant evaluation criteria (LAPM Ch 10):
Phase 1: Qualifications Review (Statement of Qualifications, SOQ)
Scored 100 points. Price is NOT mentioned.
1. Firm experience and qualifications (25 points). Years of A&E practice, similar project experience, financial stability, professional licensing.
2. Project team qualifications (25 points). Resumes of key personnel, project manager experience, subconsultant qualifications, named project responsible charge.
3. Project understanding and approach (25 points). Written narrative of the project, identification of key challenges, technical approach, schedule realism.
4. Past performance (15 points). References on similar projects, completion within schedule and budget, quality of deliverables.
5. Local knowledge and capacity (10 points). Office location, local subcontractor relationships, DBE participation strategy.
Shortlist: Top 3 firms invited for interviews.
Phase 2: Interviews (optional, included in qualifications score)
Firms present their approach. Selection committee re-scores qualifications based on interview.
Phase 3: Price Negotiation
Only with the top-ranked firm. LPA prepares Independent Cost Estimate (ICE) before negotiations. If negotiations fail, move to the second-ranked firm.
NOT permitted in evaluation:
• Aggregate scoring that includes price.
• Lowest-priced consideration before qualifications shortlist.
• "Best Value" combined score.
Compare: Construction contracts use lowest responsive bidder. A&E services use QBS. Different worlds, different procurement laws.
Authority: LAPM Ch 10; Brooks Act; 23 CFR 172
Applied learning · Companion chapter
These exercises apply the procedural framework presented in LAPM Chapter 10: Consultant Selection. For the full chapter reference, glossary, and recall quiz, see the deep chapter file.