Staff recommends that the City Council approve a "takeover" agreement with Frontier Pacific Insurance Company, and award a construction contract for the Hetch-Hetchy Open Space Improvements project to Watkin & Bortolussi, Inc., for $496,800.00. The takeover by the Surety has resulted because of material default by James R. Clark Company, to whom the contract was awarded previously. The Surety has agreed to fund all additional costs above the original contract amount to complete this project.

This project involves landscape improvements between Fair Oaks Avenue and Lakewood Shopping Center along the undeveloped portion of the Hetch-Hetchy right-of-way. On December 15, 1998, the City Council awarded a contract for $613,359.00 to the James R. Clark Company to make the landscape improvements. Due to material default, the City terminated the contract and made a claim on the Surety under the Performance Bond.

The James R. Clark Company commenced work on the site in late February, 1999, but abandoned the project in August, 1999. The contract was terminated on September 24, 1999, and the Surety was called upon to fulfill its performance bond obligation by completing the project. The Surety (Frontier Pacific Insurance Company) has obtained bids from a number of qualified licensed contractors to complete the project, and has proposed to tender to the City an agreement with a replacement contractor, Watkin & Bortolussi, Inc.

The original contract with the James R. Clark Company was awarded for $613,359.00. Three change orders have revised the contract price to $608,488.00. Based on the amount of work completed, the City made progress payments of $400,792.50 to the Contractor. Since the project was abandoned, the City incurred site maintenance costs of $34,136.53. In addition, the City is obtaining $34,000 in liquidated damages. Thus, the balance in the original contract is $139,558.97.

To complete the project, the proposed contract price with Watkin & Bortolussi, Inc. is $496,800.00. Watkin & Bortolussi, Inc. will provide new bonds after the award of contract. The Surety has agreed to pay the City $357,241.03 to complete the project (the contract price minus the original contract balance available). This agreement leaves the City with no further financial obligation other than paying the balance left in the original contract, in the amount of $139,558.97, which is the difference between the new contract price and the amount the Surety is paying.

Posting of the Council Agenda. This report is also available on the City’s Internet home page and at the City Library.

Prepared by:

Marvin A. Rose
Director of Public Works

Reviewed by:

Mary Bradley
Director of Finance

Approved by:

Robert S. LaSala
City Manager