HomeMy WebLinkAbout2004-05-27city council minutesSPECIAL MEETING
MAY 27, 2004
6:00 PAL
The Special Meeting was called to order by Mayor Nancolas.
Mayor Nancolas asked that everyone stand for the Pledge of Allegiance to the Flag.
The Roll of the City Council was called with the following members present: Hopper, Ozuna, Dakan, Blacker, and
Oates. Absent: Wells.
ADDITIONS OR DELETIONS TO THE AGENDA
The Mayor indicated that he had a letter written by Gertrude Herda, which will be read into record.
MOVED by Hopper, SECONDED by Oates to add a letter, which will be read into record.
Roll call vote. Those voting yes: Hopper, Ozuna, Dakan, Blacker, and Oates. Those voting no: none. Absent and /or
not voting: Wells.
MOTION CARRIED
MOVED by Dakan, SECONDED by Hopper to approve that agenda as amended.
Roll call vote. Those voting yes: Dakan, Blacker, Oates, Hopper, and Ozuna. Those voting no: none. Absent and /or
not voting: Wells.
MOTION CARRIED
AUDIENCE PARTICIPATION
The Mayor read Gertrude Herda's letter into record. The letter asks that the community help the American Legion
Auxiliary by wearing a red poppy on Memorial Day to honor those brave men and women who are veterans or are
serving our Country today.
OLD BUSINESS
(APPROVE SUMMARY OF PUBLICATION OF BILL NO. 13 [ORDINANCE NO. 24991 FOR THE
VACATION OF HARRISON STREET)
The Mayor asked Mark Hilty if he had read and approved the summary for publication. Hilty stated that he had
drafted the summary and approved it.
MOVED by Hopper, SECONDED by Blacker to approve the summary of publication for Ordinance No. 2499 for the
vacation of a portion of Harrison Street.
Roll call vote. Those voting yes: Hopper, Ozuna, Dakan, Blacker, and Oates. Those voting no: none. Absent and /or
not voting: Wells.
MOTION CARRIED
(CONTINUATION TO CONSIDER RECOMMENDATION BY CITY ENGINEER TO REJECT ALL BIDS
FOR THE INDIANA RESERVOIR PROJECT)
The Mayor indicated that this item was continued from the Regular City Council Meeting held on May 17, 2004.
Council directed staff to continue this item for further discussion this evening at the request of Mr. Krueck.
Mark Hilty, Caldwell City Attorney, 1303 12 Avenue Road in Nampa, gave the staff report. This meeting was
continued in order for us to take a look at some of the factual and legal issues that were raised on May 17 when this
was originally heard. Additional documentation has been received from Mr. Krueck's office, I've done some
additional legal research, and we have looked at financial issues surrounding the City's ability to perform the contract
in its current scope. It remains the recommendation of staff that all bids be rejected and that the scope be reevaluated
with an eye toward reducing the overall cost of this venture, while still providing the City with a reservoir that meets
our needs.
Hilty outlined the concerns raised by staff. There seems to be some confusion among bidders and engineers on the
project as to whether plumbing was a part of this job or not. The plumbing is a very small component and it may have
missed the attention of some of the bidders in the process. There is legal uncertainty with regards to whether or not the
naming statute has been complied with, specifically the two low bidders. They did not identify a plumbing
subcontractor as required by the statute. They have indicated that they don't have to identify a plumbing subcontractor
because they don't have a plumbing subcontractor. Hilty's research indicates that this argument has been rejected by
at least one district court.
Hilty reported that the bid of Build, Inc. lacked the necessary financial information and this was a problem that was
common to some of the other bidders as well. No bid, when viewed independently, contained all of the things that
were necessary to comply with the bid requirements. All of the bids substantially exceed the estimates that we had and
relied upon when we put the project together.
Hilty provided a summary of events. The original master - planning project was done with a different engineer, it was
not MWH. The project engineer was CH2M HILL. The original estimate for the contract price was $1,820,000. The
total cost of the project, which would include the contract price plus anticipated change orders and consulting fees,
was $1,918,000. These were the figures the City had when this item went to bid and was to be published in the
newspaper. After it had gone to bid, the City got some estimates from MWH. Contract price estimate was $2,226,678
and total cost of the project, which would include the overhead of change orders and consulting fees, was $2,658,000.
The apparent low bid that was received from Build, Inc. was $2,774,000. When you add on to this, the total cost of the
project including change orders and consulting fees, the figure is $3,371,000.
Hilty continued: is it possible for the City to do this project? Maybe. It would require us to put off projects, to reduce
the scope of other projects, and it would put a pinch on us in future budgeting years. It would probably require us to
dip into contingency funds and to increase the borrowing that we have arranged to do, which may require additional
work with the court on amending the judicial confirmation proceeding that we went through to establish that this
project was reasonable and necessary.
Hilty continued: it was identified at the last meeting that there was some sort of publication that identified a range of
costs from $2.5 million to $3 million. Cathy Cooper is here from MWH and will testify that this figure did not come
from anybody at the City of Caldwell and, that as near as they can tell, it did not come from anybody at MWH. It
certainly did not come from anybody at MWH that has any familiarity with this project. We do not really know where
it comes from. With the disclosure of this information, staff has now got an additional concern that the advertising of
this range became, in essence, a self - fulfilling prophecy and that the reason all of our bids came in this range was
because that was what had been advertised.
Hilty stated that based upon all these reasons, the recommendation is still to reject all bids. Hilty presented three items
that he wanted entered as part of the record. First was a letter that Hilty received from David Krueck dated May 18,
2004. The Mayor labeled this document CC -1005. Second was an excerpt from the Notice Inviting Bids ( Hilty read
into record). The Mayor labeled this document CC -1006. Finally, a letter from Hilty dated May 21, 2004 directed to
Mr. Krueck, which contains some of the financial information that Hilty testified to concerning the estimates and
results ofthe bid opening. The Mayor labeled this document CC -1007.
Gordon Law, City Engineer at 621 Cleveland Blvd., stated that in an attempt to try to adapt to the higher number that
was bid, we looked and explored rather extensively trying to figure out what Inc would need to do to change the
budgeted situation so that it would match the demands of the apparent low bidder. Law briefly discussed some of the
things that would be affected by attempting to accommodate the higher bid number. He also presented projects that
during the course of this year became apparent and would need to be part of the coming budget year. These projects
would be put in jeopardy if the City attempts to accommodate this higher bid.
Cathy Cooper, 671 E. Riverpark Lane, Suite #200, Boise, testified that, to her knowledge, their office did not give any
information to Dodge on the $2.5 million to $3 million estimate for the project. The Mayor asked if it wouldn't be
highly unusual to include a price if you were going out for bids. Cooper answered that they did not include a price; it
wasn't written anywhere. It was a verbal thing that we gave if people called, which are what they normally do. The
Mayor clarified that there was nothing written that went out of their office. Cooper answered no, that the only place it
was written was on the bid opening checklist and this was not available until the bid opening. The Mayor asked how
Dodge came up with the information in their ad. Cooper answered that they sent a plan set and specifications to the
planner at Dodge.
Councilman Oates asked if it was the conclusion that Dodge derived their information from the documents that were
sent. Cooper replied that they are not sure where Dodge got its number.
Silas Gilbert, 671 E. Riverpark Lane, Suite #200, IDise, reaffirmed that in his position at the office (he sometimes
covers for Cathy Cooper when she is out) that neither him nor anyone in the office provided any financial information
directly to the plans center at Dodge, nothing in writing. However, they do provide information to different
contractors or subcontractors who did call and request information as to what the engineer's opinion of probable price
would be. The range has always been between $2 million to $2.5 million.
David Krueck, 12400 W. Overland Road, Boise, thanked Mayor and Council for allowing them this additional
opportunity to present their position and explain why they believe it is in the best interest of the City to award the
contract to Build, Inc. Krueck presented the follow documents: contract documents which the Mayor labeled as CC-
1008; a memorandum from Gordon Law, City Engineer dated May 12, 2004 which was labeled as CC -1009; a letter
dated May 12, 2004 from Cathy Cooper of MWH which was labeled as CC -1010; a letter from Contractors Northwest
Inc. which was labeled as CC -1011; and a financial statement from Build, Inc. which was labeled as CC -1012.
Krueck addressed the issues that have been raised. The first was the failure to include a financial statement by Build,
Inc. in the contract documents that were submitted to the City for this project. The failure to submit the financial
statement does not make the bid void. Under the terms of the bid instructions, this is not an item that "the failure to
include will make the bid void." He requested that Mayor and Council accept the financial statement from Build, Inc.
that was presented tonight as the contract has not been awarded as of yet. Krueck used a hypothetical scenario to
support his believe that the City does not have grounds to review the financial statement of a low bidder and to make a
determination that it chooses to not award the contract based solely on what it perceives as being the financial ability
of the low bidder to perform. This, in and of itself, makes the requirement immaterial; it does not provide independent
ground for the City under Idaho law to reject a bid that is otherwise fully responsive under a competitive bid for a
public works contract. In conclusion with respect to the financial statement, Krueck does not believe it provides
grounds for the City to reject.
Krueck addressed the issue of the naming statute. The purpose is to avoid bid shopping by general contractors and to
ensure that specialty work for electrical, heating and air conditioning, and plumbing is done by entities or individuals
who hold the proper licenses. Neither of these purposes is defeated by awarding this contract to Build, Inc. In regards
to the specialty work, there are two items in this project that have been raised as issues. One is plumbing and second is
HVAC. With respect to the plumbing, that is not being subcontracted out. This work will be performed by Jamie
McClure, who is an employee of Build, Inc. and Mr. McClure holds the specialty plumbing license required by the
Department of Building Safety. So, with respect to the plumbing, I submit to you that the statute does not apply; this is
an employee not a subcontractor. With respect to the HVAC work, the bid submitted by Build, Inc. identifies Custom
Electric. Custom Electric mill be performing a substantial amount of the work on this project (20% or more). As
indicated in the affidavit of Mr. Vickery, which has been submitted as part of the evidence labeled CC -1004, he
indicated that there is an agreement, and was an agreement at the time of bid, with Capital City Plumbing, Inc. This
entity holds the specialty license for HVAC work and I submit to you, that per the agreement between Custom
Electric and Capital City Plumbing for the purposes of application of 67 -2310, Custom Electric possesses the license
for the purpose of bidding this project.
Krueck continued: with respect to the naming statute, if you look at the bid form it only requests that bidders submit
the identity of subcontractors performing 5% or more of the total bid. By the bid breakdown sheet that was submitted,
and is attached as part of the evidence labeled CC -1004, the HVAC work is only approximately $9800 in this project
(well under 5% of the total overall bid submitted). Thus, Build, Inc. did nothing wrong when it listed its first tier
subcontractor, Custom Electric, to perform the electrical and HVAC work on this. Idaho Code does not distinguish
between first and second tier subcontractors. I submit to you that in this instance the only thing that's required by the
naming statute is naming your first tier subcontractors. This was done by Build, Inc.
Krueck continued: in the bid form there is a request only for public works license numbers, not specialty license
numbers. Had an additional column been there, you would have seen the specialty license numbers identified for each
of these entities that would be performing the work on this project. This ambiguity or deficiency in the bid form
should not be interpreted against my client. Build, Inc. did everything in its ability to fully comply with what it was
requested in the document submitted by the City.
Krueck responded to the third item, which was the financial ability of the City to perform. He acknowledged the
testimony of staff regarding the ability of the City to perform. He requested that the City consider this: you will not
save money by redesigning and re- bidding this project. He argued about the self - fulfilling prophecy that Mark Hilty
had mentioned. He emphasized that awarding this contract to Build, Inc. offers virtually no risk of any litigation from
any of the low bidders. He referenced a recent Supreme Court decision that was published last month, SEZ
Construction vs. Idaho State, which clearly held that anyone but the low bidder has no standing to challenge the
decision of the public entity in awarding a public works contract.
Krueck prepared and submitted a proposed Finding of Facts and Conclusions of Law. The Mayor entered as evidence
and labeled as CC -1013.
Councilman Hopper addressed Mark Hilty about the financial statement not being required and the lack of one would
not make the bid non - responsive. He asked Hilty if this requirement was contradicted anywhere else in the bid or do
you take that statement as it stood. Hilty replied that he was unaware of this and is unaware of anywhere else that it is
contradicted in the other bidding instructions. He suggested that this might be a question for Cathy Cooper.
Cathy Cooper stated that Gordon Law had this in the recommendation letter to Council. It is at the City's option to
require a financial statement or waive it.
Councilman Hopper asked Hilty about the naming statute as it relates to item three (3) of the bid contract form. Hilty
replied that compliance with item three (3) would clearly be required on pain of submitting a non - responsive bid
regardless of the naming statute requirements or not. Whether this goes beyond the naming statute is subject to
different interpretations.
Councilman Hopper asked the Mayor if a short recess could be called to review the documents that Mr. Krueck
submitted this evening. The Mayor called a 10- minute recess for Council to review documents.
The Mayor called the meeting back in session. He presented some of the actions that Council could consider.
Councilman Oates asked Silas Gilbert if he would concur with Mr. Krueck's comments about the consequences, cost
wise, if this project was re -bid. Gilbert answered that he would concur with Mr. Krueck's comments if very minimal
changes were made to the contract documents. He is not meaning significant redesign; but there are things on some
projects that can be changed that are seemingly minor engineering changes that can have a very significant affect on
price on contractor's cost. Also, there may be more contractors wanting to bid the project or there may be less. This is
a function of the bidding environment.
MOVED by Hopper, SECONDED by Blacker to close the public testimony portion of this proceeding
Roll call vote. Those voting yes: Hopper, Ozuna, Dakan, Blacker, and Oates. Those voting no: none. Absent and /or
not voting: Wells.
MOTION CARRIED
The Mayor presented the Evidence List: sign -up sheet; staff report; CC -1000: a packet from the law offices of Trout,
Weeks & Nemec, PLLC; CC -1001: an email from Cathy Cooper dated May 5, 2004 to Gordon Law; CC -1002: a letter
from Build, Inc. dated May 4, 2004 to Cathy Cooper; CC -1003: a letter from Hamilton, Michaelson & Hilty addressed
to Mr. Kim Trout dated May 14, 2004; CC -1004: a faxed packet of information received from Mr. Hilty's office (this
packet was requested to be distributed to City Council and Mayor from Trout, Weeks & Nemec, PLLC and signed by
David Krueck); CC -1005: a letter from Trout, Weeks & Nemec, PLLC dated May 18, 2004 addressed to Mark Hilty
at Hamilton, Michaelson & Hilty, LLP; CC -1006: a photographed copy of Section 00030 — Notice Inviting Bids; CC-
1007: a letter from Hamilton, Michaelson & Hilty, LLP dated May 21, 2004 to Mr. David Krueck; CC -1008: a copy
of Section 00030 — Notice Inviting Bids in is entirety; CC -1009: a memorandum to Mayor Nancolas and member of
City Council from Gordon Law, City Engineer advising City Council to reject all bids dated May 12, 2004; CC -1010:
a letter from MWH dated May 12, 2004 to Mr. Gordon Law, City Engineer; CC -1011: a copy of a letter from
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