The City Council voted to pause approval of a well improvement project at a recent council meeting. Increased costs and issues with bid protests apparently influenced the council’s decision.
District Three Councilwoman/Mayor Lisa Landau moved to have staff bring the project back to council on Sept. 22, after asking a Covenant Technical Solutions, Inc., to hold their bid on the project until the second council meeting of the month. Her motion passed 4-1, with District Four Councilwoman Patty Senecal casting the dissenting vote. Senecal had originally proposed rebidding the entire project.
Overall costs for the project, which involved more than one company, increased from $4.45 million to $7 million, according to the city’s deputy director of Public Works.
Two council members specifically expressed concern that they had a short period of time, from Friday to Monday, to review the proposal. (There were 603 pages related to this item alone, most of the overall agenda package for Sept. 8.)
Due to space limits, the following is not a transcript of the meeting but highlights from the discussion.
Staff presentation
Deputy Director of Public Works/City Engineer Kathryne Cho gave the staff report. Cho said these actions were necessary to move forward with the Lampson Well Treatment System Project.
Cho said the project would install a full water treatment system at the Lampson well site to remove hydrogen sulfide. The sulfide creates a nuisance odor and taste. According to Cho, there is not a health concern. Cho said the hydrogen sulfide prevents the city from operating the well at full capacity.
According to Cho, it was staff’s opinion that rebidding the project was unlikely to yield more competitive pricing or more qualified bidders.
The city received a bid protest from Metro Builders & Engineer’s Group, Ltd. Based on that protest, staff recommended rejecting RE Chaffee’s bid, which appeared to be the lowest bid.
However, staff recommended overruling Metro Builder’s protest against Covenant Technical Solutions, which was yet another company involved in the project. Staff advised awarding Covenant Technical Solutions with a Public Works Contract for a maximum amount of $6,649,257.
Staff also recommended authorizing the city manager to approve additional work requests up to $565,000 for the project (about 10%).
According to Cho, the new winning bid was $1.3 million higher than the original engineer’s estimate of $4.35 million. She attributed the cost increase to volatile pricing in construction, especially in water projects.
Staff also sked the council to amend an existing contract with Pacific Advanced Civil Engineering Inc., also known as PACE, and a new contract with Bustier Engineering, Inc.
The compensation for that agreement was increasing by about $145,000, according to Cho.
The new contract would be for construction management and inspection services.
The project required a budget amendment and an additional loan with the Orange County Water District, according to Cho’s verbal report. The city budget amendment was more than $2.5 million.
Council discussion
Senecal , who participated in the meeting remotely due to a health issue, said the council received the package on the Friday night prior to the Monday, Sept. 8 meeting. She was concerned that staff was only available to the council that Monday. “You’re giving about a one-day opportunity for us to even talk to staff about our questions,” Senecal said.
“This is not a trust building process where we put out information late on Friday, with a weekend, and we expect the public and City Council to be able to read every single document along with the entire agenda package,” Senecal said.
Senecal said the contract did not have a zero warranty. She said there was no testing performance criteria. She asked why the city was spending a half million dollars to have a firm manage the project. (Later in the meeting, the city attorney said the warranties for contracts in California are in a document called the green book, which he called the standard specifications for Public Works contracts.)
Senecal moved to reject all bids and have the project be rebid.
District Three Councilwoman/Mayor Lisa Landau seconded the motion and opened the matter up for council discussion.
According to Cho, Bustier Engineering would be working with the contractor, the engineers, and the city. She confirmed that the company would help with project updates on the city website.
District Two Councilman Ben Wong wanted to know about the higher than expected cost for the project.
Public Works Director Iris Lee said the low bid did not include the four tanks for the project. She said they were substantial in cost. “If we were to add a rough ballpark estimate of how much a tank would cost, in addition to their base bid amount, that would be substantially higher than the second low bid that we are recommending tonight,” Lee said.
According to District One Council Member Joe Kalmick, if the council rejected the project and sent it back for rebidding, it was likely to come back higher because of another two or three months delay.
District Five Councilman Nathan Steele asked when the original study for the project was done that estimated the project would cost $4.45 million.
Lee said staff got that number about a year earlier.
According to Lee, PACE provided the estimate.
According to Lee, there have been a lot of fluctuations in costs of water projects, especially the steel tanks for the project.
“I don’t like the jump,” Steele said, referring to the increased cost from $4.45 million to $7 million.
According to Lee, the water district loan was a 20-year loan at 3.36%. The interest would begin one year after completion of the project.
Steele wanted more time to consider the project.
Steele was concerned that the same company said that the proposal would solve the problem was the company that said the project would cost $4.45 million.
Landau asked if the omission of the steel tanks was intentional or an error.
Cho said it was the bidder’s misunderstanding of a question in the addendum to the project.
Landau asked what would be the repercussions for the water district loan if the council did not vote that night.
According to Cho, since money had not been expended to date, the water district’s recommendations would just start a new contract at the new updated amount, however keeping the existing rate.
Landau asked if the city could ask for an extension.
Ghirelli said the city could tell the low bidder that the city is going to propose to award the contract to them if they would be willing to extend their proposal.
In response to a question from Landau, Cho said personally that she did not see the low bidder holding their pricing.
She also said Chaffee—the company whose bid staff recommended rejecting—was hoping Seal Beach would rebid the contract so they can fix their mistake.
Steele expressed disquiet that the council hearing about the cost increase at that time.
“If we’ve been aware for a few weeks, it would have been nice to give us a heads up and prepare us for whatever is coming at us tonight,” Steele said.
He said he agreed with Senekal’s concern about having since the previous Friday to look at the packet.
Landau invited public comments.
Teresa Miller said: “My question is in the CIP charts it was deemed construction was the 4.35. The contingency was not included. The pilot program design was not included. The inspection with the new company that’s going to do basically PM was not included. Neither was the engineering. So on the sheet that was presented uh for the water rates, the utility rates, it only said construction. So that’s a misrepresentation in my opinion based on how it was presented initially to the public.”
Lee said the figure was actually presented as part of the rate study is the balance of the effort that was needed to carry the project across the finish line. “So it did not account for funds that were already expended,” Lee said.
Senecal said the tear sheets from the open house from the water and sewer rate meetings listed $4.5 million. “Right now we’re looking at a $3 million increase because now we’re looking at a half million for Butier [Engineering],” Senecal said.
“I just feel like the bids were rushed. Your analysis is rushed,” she said.
“I found a lot of errors in the contracts,” Senecal said.
“I advocate we start over,” she said.
Addressing the issue of in-house inspections and construction management, Lee said the city’s in-house engineer division in Public Works is made up of four engineers.
She said the city has one contract inspector. “We do not have the bandwidth to do this in-house,” Lee said. Later, Landau wanted to ask Covenant Technical Solutions for an extension rather than rebid the project. She made a motion to that effect.
