######## APPENDIX B.9

**MEMORANDUM OF NEGOTIATIONS**

**Date Prepared:** July 28, 1994

**Consultant:** DEB Architects

**Contract No.:** A30678C

**Project Title:** Final Design Services for the Central Control
Facility

**Project Description:** Provide final architectural/engineering design
services and design support services during construction of the Central
Control Facility in accordance with METRO\'s Scope of Services.

**Contract Value:** Lump Sum (L.S.) Facility Design \$484,023

L.S. Furnishings \$ 22,452

Total L.S. Final Design \$506,475

Design Support Services (NTE) \$115,000

Total NTE \$621,475

**CAR Amount:** \$490,000 (Order of Magnitude)

**Source of Funds:** 50% Federal/50% METRO

**Contract Type:** Firm Fixed Lump Sum Price (FFLSP) for final
architectural/engineering design services, with Firm Fixed Unit Prices
(FFUP) for design support services during construction, for a total
Contract Not-to-exceed (NTE) Price.

**Performance Period:** The final architectural/engineering design
schedule is for a total of one hundred twenty (120) calendar days from
the Notice-to-proceed, not counting METRO review time. Design support
services during construction will begin upon receipt of another separate
Notice-to-proceed and continue throughout construction, as required by
the METRO Project Manager.

**Insurance:** See Proposed Contract Article 23, \"Consultant\'s
Insurance\".

**DBE Participation:** The Request for Proposal (RFP) specified 21% in
accordance with the Contract Acquisition Request (CAR). Consultant
currently intends to utilize D.E.F. Associates, Inc. (BF) for structural
design, at 9.63% of the total estimated not-to-exceed price; TAB
Engineering Company (AM) for civil engineering and survey, at 9.34%; and
CDE Associates, Inc. (CF) for landscaping, at 2.92%; for a total of
21.89% of the total estimated not-to-exceed price for DBE participation.

**Selection Process and Criteria:** A-E Qualifications. See Summary of
Procurement dated for information regarding Consultant selection.

**Authorization:** The authorization for this Contract is Contract
Acquisition Request (CAR) AG2141R93172 and METRO Board Authorization
92-90, dated June 25, 1993, which authorizes design of the Central
Control Facility. Preliminary architectural/engineering design for this
project was accomplished under Contract No. A30132C. The authorization
for that Contract was CAR AL0213P92101 and the METRO Board Authorization
referenced above.

**Cost/Price Analysis-Negotiation Results:**

Subsequent to the Board Action described above and receipt of a CAR and
Scope of Services for final architectural/engineering design of this
project on June 18, 1993, Request for Proposal (RFP) No. 93A390P for
these services was prepared and transmitted to the Consultant on June
29, 1993, with a due date of July 12, 1993. The Consultant\'s initial
proposal (attached) was received on July 15, 1993. The proposal was for
a firm lump sum of \$629,151 (10,299 man-hours) for facility design and
\$22,484 (438 man-hours) for furnishings design, for a total firm lump
sum of \$651,635 (10,737 man-hours) for final design, and apparently did
not address itself to design support services during construction (See
Attachment \"A\" for a Summary of this Proposal, as well as Attachment
\"A.1\" for a Detailed Summary of the Consultant\'s Proposal).

Prior to being furnished the Consultant\'s initial proposal for final
architectural/engineering design, the Project Manager furnished
Contracts a project management man-hour estimate. The Project Manager\'s
man-hour estimate (attached) was received on August 2, 1993. The Project
Manager\'s (and resident staff specialists\') estimate was for a firm
lump sum of \$683,514 (12,896 man-hours) for facility design and
\$22,640 (424 man-hours) for furnishings design, for a total firm lump
sum of \$706,154 (13,320 man-hours) for final design, with a
Not-to-Exceed (NTE) total of \$45,000 (800 man-hours) for design support
services during construction, for a total NTE of \$751,154 (14,120
man-hours) (See Attachment \"B\" for a Summary of this Project
Manager\'s Estimate, as well as Attachment \"B.1\" for a Detailed
Summary of the Project Manager\'s Estimate). Upon receipt of the
proposal, a METRO prenegotiation position of NTE \$635,000.00 was
developed (See Attachment B.2).

Upon review, the Consultant\'s proposal for furnishings design was
accepted as submitted, subject to audit disallowances, inasmuch as it
conformed so closely to the Project Manager\'s Estimate. However, there
was some concern that some of the Consultant\'s subconsultants had not
included all required services in their respective proposals for
facility design (See Attachment \"C\" for a Summary Comparison of the
Consultant\'s initial proposal for facility design with the Project
Manager\'s estimate for facility design) and there was also the question
of design support services during construction, which had not been
specifically addressed in the Consultant\'s proposal, but which appeared
to be included in certain subconsultant proposals. It was decided that a
Scoping meeting should be held to discuss the Consultant\'s proposal for
facility design. The Scoping meeting was held in the AGM for Capital and
Long Range Planning\'s Conference Room on the 21st floor at 1201
Louisiana on Thursday, August 5, 1993, at 10:00 a.m., with the following
participants in attendance:

+-------------------------------------+--------------------------------+
| **(Full Time)**                     |                                |
+-------------------------------------+--------------------------------+
| [ABC]{.underline}                   | [METRO]{.underline}            |
|                                     |                                |
| R. Case                             | Ed Fanning                     |
|                                     |                                |
|                                     | Jim Schmid                     |
+-------------------------------------+--------------------------------+
| **(Part Time)**                     |                                |
+-------------------------------------+--------------------------------+
| [TVC]{.underline}                   | Michael Williams               |
|                                     |                                |
| Petula Clark                        |                                |
|                                     |                                |
| S. Caminski                         |                                |
+-------------------------------------+--------------------------------+
| [D.I.Y.]{.underline}                | David Lentz                    |
|                                     |                                |
| D. Morry                            |                                |
+-------------------------------------+--------------------------------+
| [TSC]{.underline}                   | Hameed Merchant                |
|                                     |                                |
| Tony Change                         |                                |
|                                     |                                |
| Roy Canoe                           |                                |
+-------------------------------------+--------------------------------+
| [TSY]{.underline}                   | Joe Misrahi                    |
|                                     |                                |
| Swimming Pool                       | Sol Abdulla                    |
+-------------------------------------+--------------------------------+

At this meeting, all of the participants were advised that METRO
intended to alter the Scope of Services to provide for drawings at 20th
scale in lieu of 40th scale, so that the half sized drawings required
for the project would be readable. All of the participants agreed that
this would not be a problem, inasmuch as all drawings were being
produced on CADD. At this meeting, Project Management satisfied itself
that all major participants in the project, with the possible exception
of the Civil/Traffic subconsultant, had properly estimated their work
scopes (It was suggested that the Civil/Traffic subconsultant reduce
their survey time and increase their traffic design time slightly and
the need for some additional geotechnical borings were suggested to the
Prime Architect and Civil/Traffic subconsultant). However, it was also
determined that the Prime Architect, Structural subconsultant, and
Landscaping subconsultant (as per their proposal), had included design
support services during construction into their proposals for design of
the facility. They were advised that the RFP had requested a separate
NTE proposal for such services to be performed on an \"as required\"
time and material basis, and were requested to submit such an NTE
Proposal and reduce their design proposals accordingly. While ABC and
XYZ had not included any such Design Support Services monies or time in
their original proposals, ABC was asked to review and revise their
proposal to reflect the revisions referenced above, and XYZ was advised
that, because of the risks associated with a lump sum proposal, they
were entitled to a profit factor of 10%, in lieu of the 5% factor they
initially proposed. ABC and XYZ had been limited to a 5% profit factor
in the original Cost Plus Fixed Fee (CPFF) Contract for Preliminary
Engineering, in light of their limited risk in the project, and XYZ had
assumed that METRO simply would not accept a higher factor under any
circumstances. DEB was also advised that their method of applying a 10%
profit factor to their subconsultants, as well as themselves,
constituted fee on top of fee, and as such was unacceptable to METRO.
They were advised that METRO would, however, consider the addition of a
reasonable number of appropriate man-hours for contract administration
as an acceptable substitution for computation of fee in this fashion,
and Morris agreed to restructure their Proposal accordingly. DEB
ultimately agreed to revise and resubmit their entire proposal in
accordance with the understandings reached at this meeting.

Their revised proposal for facility design and design support services
during construction (attached) was received on August 11, 1993. This
revised proposal was for a firm lump sum of \$500,129 (8,736 man-hours)
for facility design, with an NTE total of \$150,304 (2,944 man-hours)
for design support services during construction (See Attachment \"D\"
for a Summary of the Consultant\'s revised proposal for facility design
as well as Attachment \"E\" for a Summary Comparison of their initial
proposal for facility design with their revised proposal for facility
design; and Attachment \"F\" for a Summary of their NTE proposal for
design support services during construction as well as Attachment \"G\"
for a Summary Comparison of their NTE proposal for design support
services during construction with the Project Manager\'s NTE estimate,
as alluded to above).

Upon review, the Consultant\'s revised proposal for facility design was
accepted as submitted, subject to audit disallowances, but the design
support services NTE and man-hours were still significantly more than
that originally estimated by the Project Manager. The Project Manager
reevaluated design support service requirements for the project, and
came up with a revised estimate (attached) NTE \$113,043 (1,708
man-hours); this figure was adopted as a negotiation position for such
services; and DEB was advised of this position.

DEB\'s acceptable revised man-hour proposal for facility design was then
subjected to METRO Audit and Contract Administrator disallowances. While
no audits were requested for this particular procurement, the major
participants, DEB, XYZ & Associates and ABC Engineering had already
recently been audited by METRO in conjunction with the preliminary
engineering contract referenced above, and those audit reports
(attached) were utilized for computation of these disallowances. DEB\'s
initial proposal had contained a 145% overhead factor, in lieu of their
METRO audited overhead of 140.89%, and this had been questioned by Mr.
Schmid during the Scoping Meeting referenced above. Mr. Case had replied
that he had essentially employed it as a salary escalator, and inasmuch
as its employment here rather than at the direct salary level would
certainly net much less of an actual increase, this matter was not
pursued further. However, other disallowances netted reductions in
DEB\'s proposal and that of their Civil/Traffic subconsultant, XYZ, as
well their Accessibility Consultant\'s computation of profit, for a
total reduction of \$20,141, or 4.03%, from the Consultant\'s revised
proposal of \$500,129, for a negotiation position of \$479,988 for
facility design (See Attachment \"H\" for a Summary of the Consultant\'s
revised proposal for facility design, less Audit and Contract
Administrator disallowances as well as Attachment \"I\" for a Summary
Comparison of their revised proposal for facility design with their
revised proposal with Audit and Contract Administrator disallowance
applied.

DEB\'s original man-hour proposal for furnishings design was also
subjected to METRO Audit and Contract Administrator disallowances, for a
reduction of \$108, or 8.08%, from the Consultant\'s initial proposal of
\$22,484, for a negotiation position of \$22,276 for furnishings design
(See Attachment \"I.1\").

A negotiation meeting was held with DEB in the Real Estate Conference
Room on the 19th floor at 1201 Louisiana on Monday, August 23, 1993, at
11:00 a.m., with the following participants in attendance:

**[DEB]{.underline} [METRO]{.underline}**

Ed Fanning

Jim Schmid

At that meeting, DEB furnished a revised proposal NTE \$115,000 for
design support services during construction, and this was accepted as
submitted, inasmuch as it conformed closely to the Project Manager\'s
revised estimate of \$113,043, as alluded to above.

DEB accepted the majority of METRO\'s Audit disallowances with regard to
their revised proposal for facility design and furnishings design, with
the exception of METRO\'s actual direct rate computation for DEB\'s
principals. Mr. advised that DEB\'s principals had had their pay rates
restored to their 1992 rates (the principals had taken a voluntary pay
cut effective January 1, 1993) subsequent to the audits referenced
above, and therefore METRO\'s computations in that regard were
incorrect. Mr. Schmid recomputed disallowances using the principals\'
original direct rates, and METRO and DEB ultimately agreed to the
resultant reductions in their proposal, as well as that applied to the
two (2) subconsultants under facility design. The resultant firm lump
sum for facility design was \$484,023, a reduction of \$16,106, or
3.22%, from the Consultant\'s revised proposal of \$500,129 (See
Attachment \"K\" , for a Summary of the Consultant\'s final proposal for
facility design, as ultimately negotiated, as well as Attachment \"K\"
for a Summary Comparison of their revised proposal for facility design
with their final proposal, as ultimately negotiated). The resultant firm
lump sum for furnishings design was \$22,452, a reduction of \$32, or
.14%, from the Consultant\'s original furnishings design proposal (See
Attachment \"K.1\").

The only items that remained to be negotiated were the rates for design
support services during construction, inasmuch as Morris had not
included any such proposed rates in their proposal(s). Mr. Schmid
furnished Mr. a \"Proposed Contract Attachment \"B\", based upon DEB\'s
and ABC\'s audited rates, as well as existing design support service
rates for the remaining participants, and Mr. accepted these, with the
exception of the rate for DEB\'s Principals, which were revised to take
the aforementioned salary reinstatements into consideration.

**Contract Articles (Terms and Conditions)**: The Consultant took no
exception to the Contract Articles, and therefore the Proposed Contract
Terms contained in the RFP have been incorporated into the Contract
verbatim.

**Summary and Recommendations**: Based on cost/price analysis and
negotiations, as called out in the Memorandum of Negotiations, the firm
lump sum prices of \$484,023 for facility design and \$22,452 for
furnishings design, for a total firm lump sum of \$506,475 for all final
architectural-engineering design services; and an NTE of \$115,000 for
design support services during Construction, for an overall
Not-to-exceed price of \$621,475 for this proposed Contract are
considered fair and reasonable.

Approval of this Contract with DEB Architects for the total lump sum
price of \$506,475 for final design and an overall amount Not-to-exceed
\$621,475 is therefore recommended.

Contracts Administrator Project Manager

Division Director Affirmative Action

Manager of Contracts