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HomeMy WebLinkAboutStaff Report 2507-4924CITY OF PALO ALTO CITY COUNCIL Special Meeting Wednesday, October 22, 2025 Council Chambers & Hybrid 5:30 PM     Agenda Item     3.Reinforcing Best Practices in Managing Consultant Services Staff Presentation   City Council Staff Report From: City Manager Report Type: STUDY SESSION Lead Department: City Manager Meeting Date: October 22, 2025 Report #:2507-4924 TITLE Reinforcing Best Practices in Managing Consultant Services RECOMMENDATION City Council review and discussion of ongoing work to ensure high quality and valuable services developed through the engagement of professional consultants. EXECUTIVE SUMMARY This report provides a review of the current and planned work for the consultant engagement review project. At its meeting on May 28, 2025, the Policy & Services Committee received a report on this effort and provided feedback to staff. This report provides an updated status report based on the Committee’s feedback as well as subsequent progress by staff. BACKGROUND The City of Palo Alto regularly engages professional consultants for a wide variety of functions. These include, for example: Planning, architectural, engineering, and construction management for capital improvement projects; Specialized and supplemental staffing for land use planning, processing entitlement applications, building permitting and inspection, as well as other operations; Specialized recreation, arts, and enrichment programming for community classes, summer camps, and other public services; Development of studies and plans on a broad range of topics in areas such as economic development, transportation, and facilities planning. Attachment A provides a list of consultant contracts approved by the City Council in 2024, reflecting the broad range of consultant services used by the City. The majority of City Council priority objectives rely on consultant services for their timely completion. The use of consultants is critical to the City’s ability to produce the volume and range of services expected and required by the community. It is equally important that circumstances under which consultants are engaged be clearly identified and that the quality of work products provide the value expected. ANALYSIS Core Principles Project Timeline and Activities 1. Review of Current Practices: In December 2024, the City’s Management Fellow conducted initial interviews with staff across departments. A follow-up questionnaire with refined and expanded questions was distributed to gather additional insights. 2. Budget Review: As part of the FY 2026 budget development process, the City Manager and Budget Office led a department-by-department review of contractual services line items to assess their necessity and identify opportunities where in-house staffing may be more cost-effective or strategically beneficial. This is expected to be an ongoing part of the City’s annual budget development process. 3. Initial presentation to Policy and Services Committee and implementation of feedback, followed by full City Council study session. 4. Practice Improvements: Into the summer, feedback from departments and management identified priority areas for improvement in consultant engagement. This builds on currently ongoing efforts led by the Administrative Services Department (ASD) and the City Attorney’s Office with training sessions on contract management. 5. Defining the Consultant Management Lifecycle: To ensure all steps are covered in a standard format, city staff are reviewing all elements of the management lifecycle, from the first step of decision to outsource to the final closeout and work review of the project. 6. Interdepartmental Staff Engagement: Staff convened a half-day working session this summer with representatives from departments that regularly engage consultants. The workshop validated the overall approach to the workplan and furthered practical steps toward the goals of this project. Since the initial outline, staff has oriented the effort toward developing visible tools available citywide to project managers and departments. 7. Clarifying Local Knowledge Roles: City staff play a vital role in ensuring that consultants understand Palo Alto’s specific context. Through the Summer, expectations around sharing prior work, guiding community engagement processes, and providing historical knowledge have been explored in order to establish clear expectations for staff that can be communicated throughout the City. 8. Identifying Skill and Role Gaps: Into the Fall, this review will also examine where project managers may require additional training or role clarification to effectively manage consultant relationships and deliverables, as well as review the workload capacity required to fulfill these roles. 9. Training and Tools: Through the Fall and into 2026, potential outcomes of this work include the development of workflow templates, dashboards for progress tracking, and structured training for project managers in collaboration with Human Resources and relevant departments. The development of a best practices guide is under way, and will serve as a training and reference point for all materials related to carrying out effective consultant engagements. 10. Consultant Engagement: Input from consultants will be solicited throughout the process to gather insights from their perspective into what makes engagements successful. Overview of the Consultant Engagement Process and Areas for Reinforcement The following paragraphs provide an overview of the typical consultant engagement process in the City and provide an initial sampling of specific areas that have been identified for evaluation and reinforcement of best practices. Precursors to Outsourcing As part of the annual budget development process, each department’s proposed consultant funding levels is reviewed to assess whether those funds might be more effectively allocated to hiring in-house staff. In some cases, the City outsources as a first step before adding permanent staff due to concerns around long-term financial commitments and the need to sustain consistent workloads. The budget cycle provides a regular opportunity to review this practice in the context of department-specific work forecasts. When consultants perform tasks that are similar in some respects to those of City employees, the annual budget review provides an appropriate point at which to consider whether in-house capacity could better serve the City over time. This informs staffing changes proposed in the City Manager’s Proposed Budget released every April. In addition, the City Manager recently directed additional internal review and approvals of task orders issued under master agreements. Master agreements are consultant contracts established for “as needed” or “on-call” services, where a contract is established without a specific scope of services. Task orders are subsequently issued to the consultant with a specific scope of services and budget. In order to ensure that best practices are being applied to task orders, task orders at specified thresholds now require City Manager approval. The Decision to Outsource The decision to outsource to meet specific project needs is based on the expertise required as well as in-house capacity. Scopes of service are developed in consultation with the Administrative Services Department’s Purchasing Division and the City Attorney’s Office. Determining a Scope of Services Departments develop scopes of services that are then used to solicit consultant proposals through issuance of Requests for Proposals (RFPs). Major projects may also involve City Council review of scopes of services. Practices are being reviewed to determine when further refinements in the development of scopes of services would be beneficial. This includes prompts such as: How to best complement consultant’s specialized skills with in-house staff local knowledge and other roles throughout a project How artificial intelligence and other technologies might best assist in delivering cost- effective outcomes How to ensure outsourcing aligns with City long-term goals for building internal expertise Scoping the Approach to Community Engagement Community engagement is a central element of virtually all studies and planning efforts in Palo Alto. It is therefore important to ensure the consultant is aware of the nature and extent of community engagement expected. Department staff consult with the City Manager’s Office communications staff to develop community engagement plans for RFPs and updated as projects proceed. Roles between the consultant and staff requires specific attention; in general, staff take primary responsibility for identifying key stakeholders and arranging for meeting venues and logistics. Online engagement tools are also coordinated with the City Manager’s Office. Selecting the Service Provider In selecting consultants, departments consider not only cost but also expertise, alignment with project needs, and prior performance. The process emphasizes open and fair opportunities to submit proposals that are objectively evaluated and a selection based on the best interests of the City. Practices are being reviewed to determine whether any enhancements to the procurement process would be beneficial. Managing Contingencies At various points, circumstances can arise that cause consideration of a change in direction. This could include issues such as cost proposals that exceed budget, and a lack of strong proposals. In such cases, staff must balance the tension between proceeding and changing direction. Project managers must then engage department management and the City Manager’s Office in order to evaluate options and determine appropriate steps forward. Establishing Points of Contact, Communication Expectations, and Handling Professional Differences At project kick-off, an important first step in the successful completion of a consultant engagement is establishing primary points of contact on both the City’s and consultant’s teams, and reviewing the scope and key understandings needed for the project. Topics to be covered include: reviewing scope of services, schedule, and deliverables; establishing recurring meetings or other means of progress coordination; project documentation responsibilities; and, lead time and turnaround expectations for follow-up and review of deliverables. This is also the point at which to establish escalation paths, secondary points of contact when needed due to disagreements or performance concerns from either the City or consultant. Escalation paths may also be reinforced contractually, including implications for delays in the case of time-sensitive projects. One of the most difficult dimensions of the consultant-client relationship is handling professional differences. Consultants are typically engaged for subject matter expertise, which can conflict with organizational sensitivities and staff perspectives on how issues should be addressed. Escalation paths can be a critical tool for resolving such disagreements. Contract Management FISCAL/RESOURCE IMPACT STAKEHOLDER ENGAGEMENT ENVIRONMENTAL REVIEW ATTACHMENTS APPROVED BY: Ed Shikada, City Manager Service Provider Description  Contract or  Amendment Value  Safebuilt, Integrated Design 360, CSG Consultants,  4LEAF, True North Compliance Services, TRB and  Associates, West Coast Code Consultants Development Services On Call Services ‐ Staffing and Subject  Matter Experts: Inspection, Plan Review, Green Building 4,000,000$               Carollo Engineers Regional Water Quality Control Plant Long Range Facilities Plan 2,742,774$               Watry Design Downtown Parking Garage Design 2,403,592$               WaterTalent, LLC Temporary Licensed Water Operator Staffing Services ( 3 years) 1,896,000$               AgreeYa Solutions, Elegant Enterprise‐Wide Solutions,  Forsys, Object Technology Solutions, Techlink Systems,  Zion Cloud Solutions, Inspyr Solutions IT Consulting 1,540,000$               Wallace Roberts & Todd Downtown Housing Plan 1,508,254$               Carollo Engineers Construction management and inspection for RWQCP 12kV  Electrical Power Distribution Loop (Amend 5)1,314,192$               MuniServices, LLC Tax and Fee Consulting (5 years) 1,161,550$               Park Engineering Electric Construction Inspection (5 years) 925,000$                  Cumming Management Group (formerly Nova Partners) Construction Management for PSB & Other Infrastructure Plan 827,418$                  Nova Partners, Inc. Construction Management for PSB & Other Infrastructure Plan 766,919$                  Lexington, Metropolitan Planning Group, Arnold  Mammarella Architecture and Consulting, Page  Sotherland Page AE, Placeworks, Urban Planning  Partners, Michael Baker International  Planning On Call Services ‐ Staffing and Subject Matter Experts:  Long Range Planning Projects, Application Processing,  Environmental Review 750,000$                  Concordia Development of a Revised Master Plan for the Cubberley Site 631,966$                  GDS Associates, Inc. Electric and Gas Cost of Service Analysis (5 years) 505,723$                  Lexington, Metropolitan Planning Group, Arnold  Mammarella Architecture and Consulting, Page  Sotherland Page AE, Placeworks, Urban Planning  Partners, Michael Baker International  Planning On Call Services ‐ Staffing and Subject Matter Experts:  Long Range Planning Projects, Application Processing,  Environmental Review 500,000$                  Kittelson and Associates South Palo Alto Bike/Pedestrian Connectivity Project (2 years) 499,490$                  Woodard & Curran Sewer Master Plan Study (2 years) 498,866$                  3Di Systems Rental Registry Program 443,256$                  BKF Engineers Charleston/Alma Railroad Crossing Plans (5 years) 397,705$                  Urban Field Studio Car‐free Streets Study 384,990$                  Good City Company Downtown Housing Plan Project Manager 375,522$                  Kittelson & Associates Bike and Pedestrian Plan Update 333,945$                  A3 Immersive Projection Mapping Production Services for the 2025 Code:ART  Interactive Media Public Art Festival 275,692$                  4Leaf, Inc. WGW Construction Inspection (5 years) 264,247$                  Michael Baker International, Inc. CDBG Program Administration (2 years) 211,310$                  Rincon Consultants California Environmental Quality Act (CEQA) Review of a Revised  Master Plan for the Cubberley Site 202,322$                  Townsend Public Affairs, Inc. Legislative Advocacy & Grant Consulting 186,000$                  Urban Planning Partners, Inc. Car‐free Ramona Street Design 165,573$                  Kimley‐Horn Quiet Zone Study (Churchill, Meadow, Charleston) 162,359$                  Rankin Stock Heaberlin Oneal Legal Services 150,000$                  Integrated Design 360 Reach Code Development 132,200$                  Anne Rosenthal Fine Art Conservation Services 118,624$                  HdL Coren & Cone Property Tax Consulting (5 years) 111,800$                  BKF Engineers Foothills Nature Preserve Design 109,583$                  OIR Group Policing Auditing Services 105,000$                  Salas O'Brien RWQCP 12kV Electrical Power Distribution Loop Design (Amend 4) 99,200$                    DNV GL USA, Inc Gas Modeling 85,000$                    Schaaf & Wheeler Design for 3 stormwater ballot measure projects 77,360$                    Sandis Civil Engineers Construction Admin. for Churchill Enhanced Bikeway 59,975$                    Matrix Consulting Group Department Fee Study 56,500$                    Raftelis Financial Consulting, Inc. Water and Wastewater Collection  Cost of Service Analysis (5 years) 48,905$                    CSW/Stuber‐Stoeh Engineering University Ave. Streetscape Conceptual Design 25,000$                    Hexagon Transportation Consultants Development Review Support 10,000$                    Schaaf & Wheeler PSB Stormwater Construction Observation & Certification 9,600$                       27,073,412$             ATTACHMENT A CONSULTING SERVICES APPROVED BY CITY COUNCIL IN 2024 October 2025 www.paloalto.gov Reinforcing Best Practices in Managing Consultant Services TITLE 40 FONT BOLD Subtitle 32 font October 2025 www.paloalto.gov PURPOSE Discussion of ongoing work to ensure high quality and valuable services developed through the engagement of professional consultants. •Review status of ongoing work •Reflect on current example(s) TITLE 40 FONT BOLD Subtitle 32 font October 2025 www.paloalto.gov OVERVIEW •Ongoing project reviewing how decisions are made and staff responsibilities for financial, contracting, relationship, and project management, as well as community engagement. •Identify strengths and challenges in current processes, recognizing effective practices already in place. •Improve consistency, oversight, and collaboration with consultants. •Position the City to lead on innovative, accountable consultant management. TITLE 40 FONT BOLD Subtitle 32 font October 2025 www.paloalto.gov Initial Assessment: Interviews and surveys completed across city departments Budget Development Integration: Consultant expenditures now systematically reviewed during FY 2026 budget cycle and going forward Practice Improvements: Best-practices being reviewed and tools being developed; City Auditor’s Office also reviewing best practices Working Group: Cross-departmental staff engaged in developing practice guide PROGRESS TO DATE TITLE 40 FONT BOLD Subtitle 32 font October 2025 www.paloalto.gov •Precursors to Outsourcing •The Decision to Outsource •Determining a Scope of Services •Scoping the Approach to Community Engagement •Selecting the Service Provider •Managing Contingencies •Establishing Points of Contact, Communication Expectations, and Handling Professional Differences •Contract Management •Performance Management and Quality Control •Risk Management •Closeout and Evaluation CONSULTANT ENGAGEMENT OVERVIEW TITLE 40 FONT BOLD Subtitle 32 font CONSULTING SERVICES APPROVED IN 2024 (Attachment A) October 2025 www.paloalto.gov TITLE 40 FONT BOLD Subtitle 32 font October 2025 www.paloalto.gov Ongoing Turf Study demonstrates the need to prepare for and manage contentious issues •Consultant qualifications and selection •Planning stakeholder/community engagement •Quality control on draft products •Responding to feedback •Managing through criticisms, public records requests, personal attacks CURRENT EXAMPLE(S) TITLE 40 FONT BOLD Subtitle 32 font October 2025 www.paloalto.gov •Discussion and review of ongoing work from City Council and public through this study session, to ensure perspectives are reflected in the work underway. •Solicit feedback from consultants on practice guide NEXT STEPS