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SR-850-005-01 (35) GS:SES:JAS Council Meeting: August 12, 1986 (P-'R AU6 1 2 1986 t fit J-( 77 i. Santa Monica, California TO: Mayor and City Council FROM: City Staff SUBJECT: Recommendation to Re-award Contract to Baker Insulation Inc. for the Abatement of Asbestos in the Main Library Introduction This report recommends that the City Council re-award a contract to Baker Insulation Inc. for the abatement of asbestos in the Main Library in the amount of $688,850. Background On July 29, 1986, the City Council awarded a contract to Baker Insulation, Inc. ("Baker") in the amount of $599,000 for the abatement of asbestos at the Main Library. In making this award, the City Council considered the following three bids: Without Asbestos Insurance With Asbestos Insurance Barsotti's Inc. $599,000 N/A $688,850 Baker Insulation Inc. Quality Home Insulation Inc.' '749,800 '700,000 880,000 On July 30, 1986, Baker was notified by City staff of the award of the contract. Pursuant to its bid, Baker was required to enter into a contract to perform the work on or before August 11, 1986. Baker notified the City of its inability to execute a contract as awarded by the City. /- -1< 'Iii't 2 INe - 1 - Baker asserts that it misunderstood the City's bid documents. It asserts that at no time did it intend to go forward with this project without insurance and that it believed that it was required to identify a base bid without insurance for comparison purposes only. Baker indicates that it is not possible for it to proceed with the contract because it cannot satisfy its insurance requirements without asbestos-related liability insurance and because it cannot get the necessary performance bond without meeting its insurance requirements. When Baker informed the City of its inability to execute the contract, the City informed Baker that its mistakes did not excuse its performance. Baker disputes the City's assertion. City staff, in conjunction with the City Attorney, have attempted to resolve this dispute with the objective of ensuring that the project commence as quickly as possible. (The Main Library is currently in the process of closing.) Accordingly, the following resolution is being recommended to City Council: 1. Baker's bid with insurance remains the lowest bid for the completion of the project. Accordingly, it is recommended that the City Council re-award the contract to Baker in the amount of $688,850.00 which includes asbestos-related liability insurance. 2. City and Baker will settle and compromise the dispute over whether Baker was required to execute the initial contract by Baker agreeing to pay to the City an amount equal to 50% of its bid bond. The bid bond was $69,000. Thus, Baker will - 2 - pay to the City $34,500, which will be recovered by deductions from the City's first two payments to Baker under the contract. Budget/Financial Impact Funds Required Contract Contingencies $688,850 103,325 $792,175 Appropriation authority is available in the following accounts: 01-710-613-000-909 01-710-613-000-922 01-710-613-000-926 407,011.55 1,230.746.88 400,000.00 $2,037,758.43 Funds will also be needed for construction management, architectural services, library remodel, construction costs and moving costs. Recommendation It is recommended that the City Council: 1. Re-award a contract for the abatement of the asbestos in the Main Library to Baker Insulation Inc., the lowest responsible bidder, in the amount of $688,850; and 2. Authorize the City Manager to execute an agreement with Baker settling and compromising the dispute over the initial contract award in the manner set forth in this staff report; and - 3 - 3. Authorize the City Engineer to issue any change orders necessary to complete additional work to the extent of funds available in the accordance with the Administrative Instruction on Change Orders. Prepared by: Stan Scholl, Director of General Services Desi Alvarez, City Engineer - 4 -