SR-850-005-01 (35)
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Council Meeting: August 12, 1986
(P-'R
AU6 1 2 1986
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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.
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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
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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
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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
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