Purpose
The following procedure provides guidelines for creating a Memorandum of Understanding (MOU) and determining when one is necessary.
References
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Responsibilities
Project Manager (PM): The PM is responsible for the development, negotiation and approval of the MOU with the Client Department if such is deemed necessary.
City Engineer: The City Engineer is responsible for the execution of an MOU with other City Departments or Bureaus and non-City agencies.
Board of Public Works (BPW): The BPW is responsible for approving MOUs with other City Departments or Bureaus and non-City entities by assigning signature authority to the City Engineer to execute.
City Attorney: The City Attorney’s Office is responsible for reviewing and approving MOUs with non-City agencies.
PROCEDURE
Types of MOUs
An MOU is a formal written agreement used to memorialize the work between the Bureau of Engineering and one or more User Departments or agencies. It defines the terms and conditions to be followed by both the Client agency and the BOE regarding the services to be rendered. An MOU is an agreement committing all parties to certain actions and responsibilities. The Project and Program Managers will be actively involved with the Client Department in the development and approval process of all MOUs.
There are three types of MOUs:
Bureau to Bureau: MOUs between two or more Bureaus are reviewed and signed by the General Managers (GM) of the Bureaus. The City Engineer is responsible for signing and executing the MOUs between the BOE and another Bureau.
Department to Department: To execute an MOU between the BOE and another City Department, the BPW shall first delegate signature authority to the City Engineer. The document is considered executed when signed by the City Engineer and a GM or authorized Executive Officer of the other Department.
Department to Non-City entity: MOUs between the Department of Public Works (DPW) and a non-City entity shall first be reviewed and approved by the City Attorney’s Office. Board approval of the agreement shall be inferred when signature authority is assigned to the City Engineer. The document is considered executed when signed by all the participating entities.
Special Order No. 05-0706 was issued as a sample of boilerplate language to be used when an MOU is to be established between the Bureau and a Client Department. MOUs are created when the BOE and an independent Department, Bureau, or non-City agency wish to formally document their understanding of the terms and conditions of their participation on a project. If the MOU involves reimbursement of BOE services by another Department, an Interdepartmental Order (IDO) should accompany the MOU. Without the IDO, the Bureau has no way of ensuring that the other Department will reimburse us for our services.
Typical items to be listed for discussion include:
Purpose: To establish the responsibilities of each party and to memorialize how BOE will be reimbursed for their services.
Term of the MOU: The period of time the agreement will be in effect.
Parties to the MOU: The authorized agents for each party to handle the regular communications.
Services provided by the Client Department: Such as obtaining City Council approvals, building permits, or providing advance appropriations.
Services to be provided by BOE: Such as providing pre-design, design, and bid and award services for a certain project or geotechnical or environmental documentation. A detailed description of the Scope of Work along with the services and deliverables (including construction drawings) should be provided.
Services to be provided by other Departments: Such as construction or procurement of resources.
Record Drawings: Assigns the responsibility of producing the As-Builts.
Time Periods: Defining the milestone dates when certain deliverables are due to the Client Department and the turn around times for when the Client Department’s reviews are due.
Payment: Total compensation authorized including how and when the payments will be made. Include a project cost breakdown showing total estimated BOE Design costs (including plan check fees and contingencies), total estimated BOE Construction Management Costs (including contingencies), total estimated BOE costs, total estimated construction cost, and total estimated project cost.
Modifications: Contains the procedure to modify the MOU.
Signature Page
Attachments: Attachments might include a Bar Chart Schedule for the project.
The process usually starts with a Request for Services from a Client Department. At that time, the PM will prepare a Scope of Work, a Project Schedule, a Project Estimate and a draft Memorandum of Understanding. These items are circulated for an in-house review to the Program Manager and the appropriate Group Managers. The Administration Division should always be included in the review process as they are responsible for the recovery of any costs agreed to by the other agency. Before sending the draft MOU to the Client Department, the draft MOU must be reviewed with the Deputy City Engineer (DCE) of the respective program to determine further course of action. Comments are then incorporated and the MOU is sent to the Client Department for their review. Negotiations between the Departments generally ensue until a tentative agreement is reached. Once all parties agree to the MOU, it is signed by the Client Department and the City Engineer or BPW Commissioner depending on the type of MOU. An original signed copy should be sent to the Client Department with other copies of the signed MOU sent to the appropriate Group Managers, the Administration Division, and the Office of Accounting.
When to Use an MOU
In general, an MOU is appropriate when (1) a working relationship between the participating parties has not been established, (2) the project or program presents new challenges which may exceed or stress the routine procedures already established between the parties, (3) the project is unique, high value, high profile, or one-of-a-kind such that the parties feel that roles and responsibilities should be codified, (4) one party will be reimbursing another and this is not a normal relationship between the parties; or (5) the normal services provided by the parties will change because of the nature of the project. Obviously, judgment and common sense are important to the decision regarding the need for an MOU. Considerable time and effort are expended in development of an MOU and this effort must be weighed against the benefits gained.
Not all programs or projects that involve different parties require MOUs. The Wastewater Program is one example. Three Public Works Bureaus are involved in the delivery of the capital program: the Bureau of Engineering as the project manager, designer, and construction manager; the Bureau of Contract Administration as the inspector and contract compliance officer; and the Bureau of Sanitation as the owner and operator. The roles and responsibilities of each Bureau are well understood and refined by many years of experience and many projects. This long-term relationship obviates the need for an MOU for a specific project.
Even within the Wastewater Program, however, situations can arise where an MOU is appropriate. For example, a recent and rather large Wastewater project involved funding from another Department, for which there was not a long-standing relationship. In this case, an MOU was deemed appropriate to define the roles and responsibilities of the Public Works Bureaus with their counterparts in the funding Department.
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