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Sunday, November 25, 2007

An Open Letter to The City Council

by Butch Neylon

Dear Councilors;

At the special called meeting scheduled for this coming Monday November 26th you are being asked to award a contract for the Master Lift Station briefly outlined in agenda item 2A. There are several issues with this award of contract that I would like to bring to your attention as they affect the residents of Marco adversely.

This lift station will not be needed until the Mackle Park District is constructed and ready to go online. Mackle Park is not scheduled for construction until Year-4, 2009. This lift station will receive no sewage until 2010. Why are we scheduling it for construction at least a full year ahead of schedule?

The start of construction is scheduled for January 2008 and the contract proposes it will take 11-months to build. You promised our residents construction would not occur during peak season. You must respect that promise even if that means straddling two off season construction periods. This location is a major intersection and construction will adversely affect traffic and the Tennis Club. Compounding the problem will be the major increases in traffic as part of the detour necessary due to the closure of the East Winterberry Bridge.

There is no rush to accept these bids. They are good until Wednesday March 19, 2008. Part B – Instructions To Bidders, Section 3.1 clearly states that no bid can be withdrawn within 120 days after the bid opening. The City can accept any bid up to the 120 day limit with no additional cost.

Rony Joel and Bill Moss modified the standard terms and conditions for this and the next set of contracts to provide for increased fees to contractors if these contracts are cancelled. This action is very adverse to the best interests of Marco Islanders. It is clearly designed to benefit the contractors at the expense of the citizens.

This stealth change to the boilerplate that has been standard cancellation clause language for both the industry and Marco Island contracts for the past several years raises serious questions and doubts about the loyally of Mr. Moss or Mr. Joel. This totally inappropriate and anti-city action suggest a very serious violation of their fiduciary obligations to the city. These city employees have consistently favored the contractors over the residents of this City, and it is time for that to stop!

The following details the contract changes made by Joel and Moss to make it far more profitable to the contractors and more onerous for the citizens to cancel this and subsequent contracts. This change should be reversed, the original language should be reinserted into the contracts, and these employees should be censured for this attempt to degrade the residents protection under these contracts.

This is the original language that has been in our contracts for years.

TERMINATION FOR CONVENIENCE AND RIGHT OF SUSPENSION.

Owner shall have the right to terminate this Agreement without cause upon seven (7) calendar days written notice to Contractor. In the event of such termination for convenience, Contractor's recovery against Owner shall be limited to that portion of the Contract Amount earned through the date of termination, together with any retainage withheld and reasonable termination expenses incurred, but Contractor shall not be entitled to any other or further recovery against Owner, including, but not limited to, damages or any anticipated profit on portions of the Work not performed.

This language is straightforward and unambiguous. All of our present contracts have this clause and there is no reason to change it.

Here is the language that Moss and Joel have quietly substituted which will ensure a major windfall profit to the contractor if the contracts are cancelled.

TERMINATION FOR CONVENIENCE AND RIGHT OF SUSPENSION.

Owner shall have the right to terminate this Agreement without cause upon seven (7) calendar days written notice to Contractor. In the event of such termination for convenience, Contractor's recovery against Owner shall be limited to:

1. For Owner supplied material- A payment of five (5) percent of the invoice value for all material supplied by Owner that has not yet been installed by the Contractor, where the Contractor was responsible for vendor selection, shop drawing preparation, receiving and securing the material at a location designated by the Owner, and the Contractor assisted the Owner in the purchase order process.

2. For Contractor supplied material- A payment of seven and one half (7.5) percent of the invoice value for all material purchased by the Contractor and delivered to the project site and not used or installed by the contractor.

3. For Construction Bonds- Actual bond cost (based on vendor invoice) for the payment and performance bonds.

4. Mobilization and Demobilization-

A. Mobilization/ Demobilization included as a bid item- A payment of ten (10) percent of the mobilization cost balance not already paid. A payment of one hundred (100) percent of the demobilization shall be paid only after the project has surpassed the fifty (50) percent mark based on the CPM schedule. Prior to the fifty percent marked based on the CPM schedule, the Contractor shall be paid twenty (20) percent of the demobilization item.

B. Mobilization/ Demobilization not included as a bid item- The Owner shall pay the contractor for the actual documented (labor, material and equipment) cost incurred by the Contractor.

5. That portion of the contract Amount earned through the date of termination including, but not limited to, documented costs for labor, materials, equipment, supplies and storage of same through the date of termination, together with any retainage withheld.

Contractor shall not be entitled to any other or further recover against Owner, including, but not limited to, damages or any anticipated profit on portion of the Work not performed.

This language conveys major financial benefits to the contractors. Not only do they get paid a percentage of all the material ordered for the project even if they never install a single foot of pipe, but they also get their full bond cost, a portion of an arbitrary amount called Mobilization, and 100% of another arbitrary amount called Demobilization.

By awarding a contract with this language you will expose the residents of Marco Island to cancellation fees that are not earned, not appropriate, and not in the best interests of the residents of this city. I respectfully request that you, at the very least, withhold awarding these contracts as you have 120 days in which to act. It would, however, also be prudent to replace this new cancellation for convenience clause with the original one which worked for years.

Many of our citizens believe there are hidden agendas in the very pro contractor manner in which our staff deals with our contractors. Other citizens believe the council’s actions, including this language and the unwarranted acceleration of unneeded construction is nothing more than one more attempt by City Staff to increase the cost to cancel the STRP in order to provide a political platform for pro-sewer candidates for city council to stand on. City Hall has no place entering into the political arena to the determent of the residents of Marco Island and either motivation is reprehensible.

The proposed Sheffield and Lamplighter contracts also have this new cancellation clause inserted. If you do not revert to our standard language or postpone award of those contracts you will likely obligate the residents for several millions in cancellation charges. Please review this information and act in the best interests of Marco Island. Given the shelf life of these bids there is nothing to be lost by postponing any action until the fate of the sewer program is clear.

Respectfully;

Butch Neylon

1 Comments:

  • November 25, 2007





    Dear Councilors;

    It would appear that there is some concern raised by my letter of yesterday, and although none of us enjoy finishing off a holiday weekend with controversy, I must believe we all would rather we deal with this situation up front rather than just pass it by as it does have far reaching consequences for the residents of Marco.



    Personally, I find it troubling that none of you were informed of this serious contract change by staff. If they were truly trying to protect the residents from cancellation charges, why would they keep such a laudable effort secret?



    In Mr. Joel’s email sent to all earlier today, (copy below), he leads you to believe that the City Attorney arbitrarily reviewed our contracts and decided to make changes to the Termination for Convenience clause, and staff simply included those changes in the most recent contracts. That is not the case. By reviewing all of the emails and communications, surrounding these contract changes quite another set of events emerges.



    Mr. Joel initiated the request by sending an email to the City Attorney asking him to review two clauses in our current contracts, (Liquidated Damages & Termination for Convenience), with the stated intention of clarifying the language to head off possible legal conflicts if these contracts were to be cancelled.



    The City Attorney responded by recommending the addition of one sentence to the Termination for Convenience clause to protect the City from cancellation problems. This however, did not satisfy Mr. Joel, so he contacted his former employer CDM and asked them to come up with a list of areas where the contractor could be compensated if the contracts were to be cancelled.



    Mr. Joel and Mr. Moss took the list produced by CDM, and essentially produced the five items you see in the final clause. It was then forwarded it to our contracts officer Bob Creighton for his review and comment. Mr. Creighton trimmed some of the items thereby saving the residents some money, but certainly not as much as if the clause had not been changed in the first place.



    This is a purely political move by Mr. Moss and Mr. Joel to add to the cancellation costs of the Master Lift Station and the Lamplighter and Sheffield sewer district contracts in order to perpetuate the STRP. It diminishes the protection of the original clause by granting specific payouts to the contractors for items they will never install if the contracts are cancelled.



    Cancellation is a fact of life in the contracting industry, and it is typically a negotiated settlement between the City and the Contractor. How would you negotiate if the contractor told you he wanted to be paid for work he did not perform? That essentially is what our new Cancelation for Convenience clause does; it pays the contractor for work not done.



    Staff made these changes to the contract, not the City Attorney, as Mr. Joel would have you believe. If these changes were good for the city, why would Mr. Joel try to mislead you into thinking the attorney, rather than he, recommended them?



    Staff kept this information from the council. Doesn’t it occur to you that decisions like this that could potentially cost Marco Islanders hundreds of thousands or possibly millions should come before the council?



    If the real reason for these changes was to protect the residents of Marco, why does the new language so blatantly favor the contractor? Staff has traditionally refused to exercise the city’s rights under these contracts and always acts to favor of the contractor’s. It’s time to ask why?



    In order to find some middle ground on this issue, I respectfully request that you postpone awarding any contracts containing this new Cancellation for Convenience clause until the fate of the STRP is clear.



    Nothing is lost by waiting. There is a 120 Day window in which to award these contracts with no additional cost. Please consider waiting sixty days, you have the opportunity to save residents from onerous cancelation payments that you never approved, that you shouldn’t take responsibility for, and should never have been allowed in the first place.





    Respectfully;





    Butch Neylon



    ____________________________________________________________________

    Mr. Joel’s Email:



    Sunday, November 25, 2007 9:11:31 AM
    Message
    From: Rony Joel
    Subject: Re: Fw:
    To: "Dr. William D. Trotter"
    Cc: bmoss@cityofmarcoisland.com
    "Alan L. Gabriel"
    Dr Trotter

    The master lift station is needed for the Sheffild sewer district which is to be constructed next year.

    The City standard construction contract was reviewed by our new attorney and they made various recommendations for change and these were implemented.
    The change that was made to cancellation of contract is to avoid legal challenge by a contractor should Council chose to cancel a construction contract. This contra ct clearly spells out the terms of cancellation.

    Rony

    By Blogger Dr. Mario, at Sunday, November 25, 2007 8:40:00 PM  

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