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Item 9BM E M O R A N D U M (April 6, 2010) To:Shana Yelverton, City Manager From:Robert H. Price, P.E., Director of Public Works Subject: Consider termination of the contract with Municipal Construction, Inc. for Highland Street Paving and Water System Improvements Action Requested: Consider termination of the contract with Municipal Construction, Inc. for Highland Street Paving and Water System Improvements. Background Information: The Highland Street Paving and Water System Improvements project was awarded to Municipal Construction, Inc. on March 3, 2009. Municipal Construction began the construction of the 12” water line and appurtenances in the May 2009.Municipal pulled off of the project in July 2009 because of conflicts with one of the franchised utility companies which had not been completely resolved prior to Municipal beginning work. The contractor was notified by the inspector in early September that the utility relocation work was complete as of August 31 and that the contractor was to return to work. was also notified at this time. The contractor failed to return to work. The Public Works staff contacted Municipal Construction and the bonding company, Western Surety, via letter on September 17, 2009 to notify them of the city’s dissatisfaction with the progress of the Highland Waterline and Paving project. After an unsatisfactory response was received from Municipal Construction, a follow up letter was sent to Municipal Construction on October 15, 2009 expressing the City’s intent to request the bonding company take action on the project if the contractor did not return to work. As you may recall, staff briefed Council on this matter on October 20, 2009 in Executive Session. Subsequently, the City Attorney in conjunction with Public Works staff sent a demand letter to Western Surety, Municipal Construction’s bonding company on October 30, 2009. Throughout the Fall of 2009, city staff had difficulty in getting the contractor to be responsive and to return to work. Subsequently, City staff and a representative of the City Attorney’s office met with representatives of the contractor and representatives of a major subcontractor on November 11, 2009. On December 10, 2009, a Connect CTY message was sent to the residents along Highland apprising them of the current status of the project. Through November and December, the City and Municipal Construction exchanged letters, but Municipal did not return to work. A second demand letter was sent to the bonding company on January 22, 2010 making legal demand for the bonding company to take action. On February 24, 2010, staff issued a follow-up letter to the bonding company dispatching additional project information and asking for a schedule of the remaining work. CNA Surety is representing Municipal Construction and Western Surety and is handling our claim against Municipal Construction for abandonment of the Highland Street waterline project. Staff met with representatives of Municipal Construction, CNA Surety and the City Attorney’s office on March 12, 2010 to discuss the steps necessary to complete the project. CNA Surety has taken the position that the contract has not been terminated and therefore, it cannot take action to hire a new contractor to complete the project. The result of the meeting is that the City will provide revised plan sheets and a notice to proceed to Municipal Construction and that Municipal would mobilize and return to work within seven (7) days of the date of the notice to proceed. The notice to proceed was issued on March 25, 2010 directing Municipal to return to work on April 5, 2010. They were also requested to provide contact information for the project manager/superintendent, a schedule, and a list of subcontractors. Financial Considerations: The contract amount is $922,253.73. If the Council chooses to terminate the contract with Municipal Construction, staff anticipates that the bonding company will complete the contract within the current contract amount. Strategic Link: The construction of the 12” water line along Highland Street from Shady Oaks to SH114 and the rehabilitation of the Highland Street pavement from Shady Oaks Drive to SH 114 and the pavement overlay in the Woodland Heights neighborhood links to the city’s strategy map relative to the focus areas of Mobility, Infrastructure, and Performance Management and Service Delivery. The specific corporate objectives that are met by this construction project include: Providing high quality customer service, Investing to provide and maintain high quality public assets, and Providing travel convenience within city and region. Citizen Input/ Board Review: None Legal Review: The City Attorney has been involved in all discussions with the contractor and the bonding company since the dispute began.. Alternatives: The Council may terminate the contract with Municipal Construction, Inc. or not. Supporting Documents: Location Map Staff Recommendation: Consider termination of the contract with Municipal Construction, Inc. for Highland Street Paving and Water System Improvements. Staff Contact: Robert H. Price, P.E., Director of Public Works Gordon J. Mayer, Jr., P.E. Deputy Director of Public Works Cheryl Taylor, P.E. Civil Engineer