Companion Guide to Video August 2012

www.fhwa.dot.gov/federal-aidessentials

In many cases, as buyers in both our 

professional and private lives, we assume that 

most service providers are essentially the same 

and it is appropriate to choose the lowest-cost 

option. However, when we require the 

professional medical services of a surgeon, for 

example, the cheapest option may not be our 

first choice. In this case, qualifications and 

experience become more important than the 

lowest price. The same is true for selecting 

consultants to engineer and design your 

highway construction projects using Federal-aid 

funds.

As the local public agency, or LPA, when you 

need to hire a consultant for engineering and 

design-related services using Federal-aid funds, 

you must follow Federal requirements for 

competitive negotiation procurement 

procedures, unless your State department of 

transportation, or State DOT, allows alternate 

procedures for lower-cost contract amounts. 

The Federal Highway Administration, or FHWA, 

defines “engineering and design-related 

services” as program management, construction 

management, preliminary engineering, 

engineering, design, surveying and mapping, 

and architectural-related services. If your State 

provides a broader definition of engineering 

services in law or regulation for you to follow, 

these additional services are also subject to 

Federal requirements. 

The foundation for competitive 

negotiation procurement 

requirements is the Brooks Act.

The Brooks Act is a Federal law that establishes 

the qualifications-based selection requirements 

for procuring engineering and design-related 

services. The process for hiring a consultant 

under the Brooks Act and competitive 

negotiation procurement requirements can be 

broken down to three simple steps:

1. Issuing a request for proposal, or RFP, 

to publically solicit the need and 

requirements for services

2. Selecting a consultant based on 

qualifications to provide the needed 

engineering services

3. Negotiating a fair and reasonable cost 

and contract terms with the selected 

consultant

Federal-aid Program Overview

Consultant Services

Hiring a Consultant Using Competitive 

Negotiation Procedures

Consultants are selected based on qualifications and experience 

when competitive negotiation procedures are required
Federal-aid Essentials for Local Public Agencies

Before you hire a consultant, you must first 

detail how your agency will administer this 

process by establishing written procedures, 

unless your State prescribes the procedure for 

you to use. When you develop your own written 

procedures, your State DOT must approve them 

before they are permitted to be used on Federalaid projects. Let’s take a closer look at some of 

the required steps of the competitive negotiation 

procurement process.

The first step in hiring a consultant involves 

issuing an RFP. Just as hiring a contractor 

requires a set of plans, specifications, and 

construction documents for soliciting bids, hiring 

a consultant starts with developing an RFP. 

Your RFP must clearly detail the scope of work, 

qualifications, responsibilities, and deliverables 

that you seek from a consultant. The RFP must 

detail the estimated schedule for the 

performance and delivery of the services, and 

the method of contract payment. 

Your RFP must clearly define the evaluation 

criteria used to assess and rate the 

qualifications of responding consultant firms, 

along with the scoring weight for each of the

assigned criteria. The evaluation criteria must 

relate to the qualifications needed to provide the 

advertised scope of work and services. The 

qualifications-based evaluation criteria listed in 

your RFP may include, but are not necessarily 

limited to, the qualifications of staff, prior similar 

work experience, past performance, workload 

capacity, and technical project approach. 

Federal requirements prohibit the use of in-State 

or local-hiring preferences and do not allow you 

to consider price or any element of cost in the 

evaluation, ranking, and selection of the most 

highly qualified consultant.

Like other solicitations, the RFP to hire a 

consultant must be advertised for a sufficient 

amount of time in order to solicit proposals from 

as many qualified consultants as possible. You 

must allow fair and open competition by 

providing equal opportunity for in-State and outof-State consultants to compete. Check with 

your State DOT to make sure you meet all 

requirements for advertising the RFP in your 

State. 

The second step begins after the close of the 

advertisement period. All submitted proposals 

are evaluated and ranked according to the 

evaluation criteria and scoring basis outlined in 

the RFP. List in order of preference at least 

three consultants you determine to be the most 

qualified. 

As you prepare for negotiations, you must 

develop an independent cost estimate that 

reflects the advertised scope of work. This 

estimate is used as the basis for negotiation with 

the selected consultant.

Now you may begin the third step of negotiating 

cost and contract terms with the number-one 

ranked, most highly qualified consultant. Your 

negotiations should focus on the level of effort 

and experience of staff required to complete the 

scope of work and perform the needed tasks. 

Only tasks included within the scope of work 

advertised in the RFP may be incorporated into 

the selected consultant’s contract. 

Ultimately, you are required to 

determine and agree to contract 

terms for “fair and reasonable”

compensation, considering the 

scope and complexity of the 

needed work. 

The cost principles of the Federal Acquisition 

Regulation, or FAR, are the set of rules that 

govern the costs of goods and services using 

Federal funds. You are required to ensure 

compliance with the FAR cost principles for 

determining allowable costs on consultant 

services contracts when Federal funds are used. 

These costs include those directly associated 

with a specific contract, as well as a consultant’s 
Federal-aid Essentials for Local Public Agencies

overhead costs, which are formally referred to 

as their indirect cost rate.

Each consultant is required to annually establish 

its indirect cost rate in compliance with the FAR 

cost principles. A consultant’s indirect cost rate 

can only be approved for use by either a Federal 

agency or State DOT. Once approved, the 

consultant’s indirect cost rate must be used for 

purposes of estimating, negotiating, and making 

payment on the contract. As the LPA, you are 

not permitted to negotiate or arbitrarily cap a 

FAR compliant-indirect cost rate. Contact your 

State DOT to verify that any proposed indirect 

cost rate is in compliance with the FAR cost 

principles.

In some situations, negotiations may break 

down if a satisfactory contract cannot be 

negotiated. If this happens, you must first

formally terminate negotiations before you begin 

negotiations with the next highest ranked 

consultant. It is important to understand you can 

only negotiate with one consultant at a time.

Negotiations with another 

consultant should only occur after 

officially terminating negotiations 

with the prior firm.

Once you have successfully negotiated a fair 

and reasonable compensation for the needed 

services, a contract can be executed in 

accordance with your State’s required 

procedures. As with any contract, your role is to 

monitor the consultant’s work throughout the life 

of the contract for quality and completeness. 

Additionally, consultant invoices must be 

reviewed to ensure the costs are consistent with 

the FAR cost principles, contract terms, and 

progress of the consultant’s work. 

When the contract is completed, you are 

required to evaluate the consultant’s 

performance of the scope of work items listed in 

the contract. You will use this information to 

assess a consultant’s past performance if they 

compete for future Federal-aid work. All records 

pertaining to the consultant procurement and 

executed contract for services are required to be 

kept on file a minimum of three years following 

submittal of your final voucher to FHWA by your 

State DOT. You will find these helpful if asked to 

demonstrate compliance with all the 

requirements just covered.

Under most circumstances, you must follow 

competitive negotiation procurement procedures 

for hiring a consultant to provide engineering 

and design related services funded by Federalaid. As defined within the Brooks Act, 

competitive negotiation requires you to select 

consultants based on qualifications and 

experience.

Contract award occurs only after 

the negotiation of a fair and 

reasonable cost with the selected 

consultant.

Your State DOT has the oversight responsibility 

for procuring and administering consultant 

services. Prior to contracting with a consultant 

when using Federal-aid funds, contact your 

State DOT for assistance to ensure you meet all 

Federal and State laws and regulations that 

apply.
Federal-aid Essentials for Local Public Agencies

The content of this 

document is not a 

substitute for 

information obtained 

from State departments 

of transportation, 

appropriate FHWA 

Division Offices, and 

applicable laws. 

Scenarios have been 

simplified for emphasis 

and do not necessarily 

reflect the actual range of 

requirements applicable 

to the scenario or this 

topic. This document

was created under 

contract number

DTFH63-12-F-00025 by 

the Federal Highway 

Administration, U.S. 

Department of 

Transportation, and is 

offered to the public to 

heighten and focus 

awareness of Federal-aid 

requirements within the 

local public agencies 

community and 

reinforces the 

importance of these 

necessary policies, 

procedures, and 

practices.

This companion resource 

is the script content for 

the video production of 

the same name. 

Web Resources

• Information on consultant services policy and guidance

http://www.fhwa.dot.gov/programadmin/consultant.cfm

• Information on consultant services in Q & A format

http://www.fhwa.dot.gov/programadmin/172qa.cfm

• Federal regulations on administration of engineering and design-related 

service contracts

http://www.ecfr.gov/cgi/t/text/textidx?c=ecfr&sid=88df046e4fbccfb189a147f0e13d2e15&rgn=div5&view=t

ext&node=23:1.0.1.2.3&idno=23

• Federal regulations on administration of engineering and design-related 

service contracts

http://www.ecfr.gov/cgi/t/text/textidx?c=ecfr&sid=2d0307d68fc3ad4e117788370d178f2e&rgn=div5&view

=text&node=48:1.0.1.5.30&idno=48