Checklist for Negotiating With Consultants

Here's a quick list of some items to be aware of and questions to ask when negotiating the terms of a contract or amendment with a consultant:

• Scope of Work: Does the scope of work accurately and completely reflect the work the public agency intends for the consultant to accomplish? Is it clear to someone who may not be familiar with the project? Would it be clear if there was a dispute that occurred during the contract about what the agency's expectations were for the services to be provided and the deliverables?
  
  
• Time of Performance: Does the contract reflect deadlines for performance for the consultant that are reasonable and meet the agency's requirements? To the extent that the public agency establishes a fast-track schedule, that may increase the price to the contract.
  
  
• Hourly Rates: If an amendment is being executed, are the hourly rates that are the basis of the amendment amount consistent with the hourly rates authorized in the original contract?
  
  
• Hours: Are the hours proposed by the consultant reasonable for the tasks to be performed? Are the hours proposed for some tasks too many? Has the consultant properly allocated proposed staff with different pay rates for various tasks. For example, will the public agency be paying for a principal's hours for simple tasks when that work could just as easily be done by a more junior level and lower paying position?
  
  
• Multiplier or Overhead Rate: When negotiating a contract, what is the consultant's billable hourly rate? A billable hourly rate, also known as an all inclusive rate, includes the actual hourly amount paid by the consultant to an employee, plus an amount or "multiplier" sufficient to cover the overhead and profit associated with the employee. Have you requested backup information from the consultant about how they calculated their multiplier or overhead and profit rate? Have you reviewed the overhead backup information to determine if any of the overhead costs should not be allowed to be calcuated into the billable hourly rate. Many agencies, including the federal government through the use of the Federal Acquisition Regulations (FAR), establish lists of what are considered allowable versus unallowable overhead expenses. Profit is generally a percentage and is based on the perceived risk for performing the work.
  
  
• Sub-consultant Markup: Have you negotiated and agreed upon a reasonable markup percentage for the consultant to administer various sub-consultant agreements? Have you requested and reviewed information from the consultant about how they calculated these rates?
  
  
• Accuracy: Have you reviewed the math on the consultant's proposal to make sure it is accurate?