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HomeMy WebLinkAboutPrelim - HA - 07-10-20140 1 PRELIMINARY MINUTES PALM DESERT HOUSING AUTHORITY MEETING THURSDAY, JULY 10, 2014 CIVIC CENTER COUNCIL CHAMBER 73510 FRED WARING DRIVE, PALM DESERT, CA 92260 I. CALL TO ORDER - 3:00 P.M. Chairman Tanner convened the meeting at 3:00 p.m. II. ROLL CALL Present: Absent: Member Jean M. Benson Member Robert A. Spiegel Member Jan C. Harnik Vice Chairman Susan Marie Weber Chairman Van G. Tanner Also Present: John M. Wohlmuth, Executive Director Robert W. Hargreaves, Assistant City Attorney Rudy P. Acosta, Assistant City Manager Rachelle D. Klassen, Secretary Russell Grance, Director of Building & Safety Lauri Aylaian, Director of Community Development Martin Alvarez, Director of Economic Development Janet M. Moore, Director of Housing Mark Greenwood, Director of Public Works Frankie Riddle, Director of Special Programs J. Luis Espinoza, Assistant Finance Director Bo Chen, City Engineer Stephen Y. Aryan, Risk Manager Casey Hartman, Battalion Chief, Palm Desert Fire/Riverside Co. Fire Dept./Cal Fire Bill Sullivan, Asst. Chief, Palm Desert Police/Riverside Co. Sheriff's Department Grace L. Mendoza, Deputy City Clerk III. ADJOURN TO CLOSED SESSION Reauest for Closed Session: A. Conference with Real Property Negotiator pursuant to Government Code Section 54956.8: PRELIMINARY MINUTES DRAFT PALM DESERT HOUSING AUTHORITY MEETING JULY 10, 2014 1) Property: 75326 Kelsey Circle North (APN 634-241-031), Palm Desert Negotiating Parties: Agency: John M. Wohlmuth/Janet M. Moore/City of Palm Desert/ Palm Desert Housing Authority Property Owner: Jacqueline Maglione Under Negotiation: x Price x Terms of Payment With Authority Board concurrence, Chairman Tanner adjourned the meeting to Closed Session at 3:01 p.m. He reconvened the meeting at 4:00 p.m. IV. RECONVENE REGULAR MEETING - 4:00 P.M. A. REPORT ON ACTION FROM CLOSED SESSION. None V. CONSENT CALENDAR A. MINUTES of the Housing Authority Meeting of June 26, 2014. Rec: By Minute Motion, continue to the meeting of August 28, 2014. B. CLAIMS AND DEMANDS AGAINST THE AUTHORITY TREASURY - Warrant Nos. 265HA, 270HA, 266HAF, and 271 HAF. Rec: Approve as presented. C. REPORT Pursuant to Section 33433(c) of the California Health and Safety Code. Rec: Receive and file. Upon a motion by Harnik, second by Weber, and 4-0 vote of the Authority Board, (AYES: Benson, Harnik, Weber, and Tanner; NOES: None; ABSENT: Spiegel), the Consent Calendar was approved as presented. VI. CONSENT ITEMS HELD OVER None VII. RESOLUTIONS None �: PRELIMINARY MINUTES DRAFT PALM DESERT HOUSING AUTHORITY MEETING JULY 10, 2014 VIII. NEW BUSINESS None IX. CONTINUED BUSINESS A. REQUEST FOR AWARD OF CONTRACT TO OPTIMUS CONSTRUCTION, INC., IN AN AMOUNT NOT TO EXCEED $15,423,351.39 FOR CONSTRUCTION OF THE CARLOS ORTEGA VILLAS PROJECT (CONTRACT NO. HA29410B, PROJECT NO. 825-11) (Continued from the meetings of June 12 and June 26, 2014). Project Coordinator Heather Buck stated this item was before the Council in June when staff requested a continuance in order to review correspondence received from the bidder with Legal Counsel. Specifically, it was Optimus' request for release from bid. Subsequent to the June meeting, staff reviewed additional correspondence with Legal Counsel and proceeded with the required procedures, hearings, notifications, etc., pursuant to the Public Contract Code. After further review with Legal Counsel, staff still recommends approval of the contractwith Optimus Construction, the original apparent low bidder. Yesterday, the Housing Commission unanimously voted to forward this item to the Housing Authority. She said Council was provided with a red -lined updated staff reportwith the details and procedures staff has gone through and the recommendations. MR. JEFF RISING, ProWest, Wildomar, California, stated the facts regarding this issue are clearly stated in ProWest's letter dated June 25, 2014. He hoped all Councilmembers had an opportunity to read it, if not, he urged them to do so before casting a vote. He said nothing about this issue has been alleged, stating the facts are that Optimus did not fill out the bid forms correctly. He said the basic rule of competitive bidding is that bids must conform to the specifications, if not, it may not be accepted. A bid that substantially conforms may only be accepted where the variance cannot have affected the amount of the bid or gives the bidder an advantage/benefit not allow to other bidders. In this case, Optimus admitted it deviated from the bid specifications in a way that materially affected the price giving them an advantage not allowed to other bidders. Additionally, Optimus admitted they did not include at least three contract requirements, the dry utilities, fire detection, and metal fabrication. He said Optimus also admitted the double listing of roofing and flooring subcontractors, which materially affected its bid. He said the project was priced so significantly that Optimus requested and sought release from its bid under Section 5103, making their bid non -responsive. He said if ProWest or any other bidder on that day known they didn't have to comply with the Public Contract Code or fill out the bid form correctly or entirely, perhaps their numbers would have been lower. If the Council votes in favor of Optimus, the Council was penalizing the 9 PRELIMINARY MINUTES DRAFT PALM DESERT HOUSING AUTHORITY MEETING JULY 10, 2014 contractors that submitted their bid correctly, which he didn't' think was fair or right. He said the Public Contracting Code is in place to protect everyone involved, the contractors and the City, and he asked the Council to honor its intent. MR. WILLIAM RIESTECK, Director of Pre -Construction at ProWest, stated he wished to address the protest of the award of contract to Optimus Construction for the Carlos Ortega Project, stating it didn't meet the spirit of the Public Contracting statues. Over the last few weeks, since the project was bid, ProWest didn't have all the information at hand with regard to the subcontractor listing and such. It was only two days ago at 5:00 p.m. that ProWest learned from the City that Optimus wouldn't be allowed to subcontract the dry utilities and metal fabrication portion of the contract, because they didn't submit the proper listing on bid day. This was confirmed in an email dated July 3 from Optimus legal counsel to the City's legal representative, which ProWest received Tuesday, July 8. He said compelling Optimus to self perform this work is problematic to the City for the following reasons: Metal fabrication of this type requires a C23 License and dry utility work requires a C10 and C7 License, yet Optimus carries a "B" License. By statue, a "B" License allows the contractor to perform two or more unrelated trades. He said "B" Licenses are intended to allow general contractorsto self -perform work on projects, mostly for framing and carpentry with their own employees, but it was never intended to include specialized trades. Allowing Optimus to self -perform under the circumstances based on its license status, didn't mean they were qualified or capable of completing this specialized work successfully. Even though the City is enforcing the self -performance requirement of the Code, it didn't mean Optimus submitted a responsive bid that will result in a successful project for the City. The specialized metal fabrication for this project includes several complicated welding techniques and skill sets that the average construction worker didn't possess. The ornamental fences alone required welders to meet the AWS-D1.1 (American Welding Society) Certification. Also, the contractor, Optimus, must shop -prime -paint an assembled railing to meet the SSPC-SP2 (Society for Protective Coatings - Surface Preparation) coating standards that are detailed in the ASTME985 (American Society for Testing and Materials). He said those things are not something that a general contractor has the specialized equipment to do on his own, and Optimus will have a hard time finding the trained staff to do that work without subcontracting. In conclusion, ProWest believes the protest is well founded on the grounds of non -responsiveness and lack of responsibility on the part of Optimus. ProWest believes the City would be on firm ground in rejecting Optimus bid. He said Optimus has admitted to at least five errors on its bid and who knows if there are other errors they didn't admit to. He said an award to Optimus would be problematic and it jeopardizes this project, because one mistake is understandable, but five mistakes are unfathomable. He said it was obvious Optimus didn't understand the contracting rules IT PRELIMINARY MINUTES DRAFT PALM DESERT HOUSING AUTHORITY MEETING JULY 10, 2014 based on their misplaced request for release and it's illegal request to add subcontractors after the bid day. He said the City can avoid any risk and make sure the law is followed by rejecting Optimus bid, stating it was only fair on behalf of all the contractors and subcontractors that properly filled their forms on bid day and followed the rules of procurement. He thanked the Council for its time and looked forward to working with the City on this project or any future project. Councilmember Harnik asked staff to cover the red -lined additions or any other relevant information. Ms. Buck explained bids were received and opened on June 2. On June 4, the City received a letter from Optimus indicating they had made clerical errors in their bid. On June 9, the City received a letter requesting relief from bid, basically, opting out. On June 13, a letter was received requesting withdrawal of that relief from bid. In other words, Optimus wished to be back in the running and considered as a contractor, stating they wished to proceed per the Public Contract Code with a Subcontractor Substitution Hearing (SSH). The SSH covered a couple of items. Optimus in their letter indicated they had listed two trades for roofing and two trades for flooring, and when two subcontractors are listed for a specific trade, it meant the contractor will self -perform unless it went through this hearing process. The City went through the hearing process for those two items, and it received an objection from the subcontractor for the roofing; however, the hearing officer's decision was that both entries were inadvertent clerical errors after reviewing all the information presented. In Optimus' letter they also indicated they had failed to list three subcontractors, which they have since provided updated information. One of those subcontractors was for fire protection, and the amount of that bid is actually less than the amount required for a contractor to list them on the subcontractor designation form; therefore, this point was null. The other two subcontractors, as indicated by ProWest, Optimus has confirmed they are willing and able to self -perform the metal work and dry utilities. She noted Council received the bid protest from ProWest and a supplemental bid protest from ProWest. The Council has received two responses to those bid protest from Optimus. The primary changes to the red -lined staff report are to reject all bid protest including the supplemental bid protest received, which includes an elaborated or updated discussion from Legal Counsel as to why the City would reject the bid protest. Mayor Tanner said he understood there is a subcontractor for the fire suppression, and Optimus will be self -performing the work for the metal fabrication and dry utilities within the $15,423.351.39 amount. Ms. Buck replied that was correct. 5 PRELIMINARY MINUTES DRAFT PALM DESERT HOUSING AUTHORITY MEETING JULY 10, 2014 Mayor Tanner shared everyone was concerned about what it was getting, and Council was informed that staff went to look at one of Optimus' private projects in La Quinta, and staff felt the type of work they did was complete and on time. Ms. Buck clarified she only visited the exterior of the site only. Further responding, she confirmed Optimus did good work on past projects. Mayor Pro Tern Weber stated she wasn't comfortable voting in favor this evening, because she didn't particularly care for a company bowing out of a bid or cared for all the messiness of this. She also didn't care that staff looked at a building on the outside, when that building had nothing to do with what Palm Desert will be doing. She asked what was the cost to the City to delay this matter in order for Council to review further, because she believed ProWest had valid comments to protest, stating it was very inappropriate for a contractor to pull his bid, cancel the withdrawal, and continued to make changes to the bid. She asked what was the City's next step. Assistant City Attorney Bob Hargreaves explained the protest was examined in depth and at length, and staff is satisfied that Optimus can and will perform the contract per the specifications. He said Optimus has a track record that's reliable in that regard. He said Legal Counsel has gone through the process and has been dealing with this matter for a month. He said nothing would be gained at this point from any further delay, because there was nothing else to do to add new information. He said Legal Counsel is comfortable that the Public Contract Code and the Palm Desert Municipal Code are complied with, stating the contracting codes are complied with for the major intent there is to get. The City went with the lowest price from a qualified bidder and that's what is being recommended. He said the process has been fair; there have been hearings, a protest, exchange of opinions, letters, and facts. He said the City has gone through the whole process that is required by the Code and fairness; therefore, he didn't' believe anything would be gained by delaying the action. Council's options at this point are to award it to the low bidder or, on the other hand, allow Optimus to withdraw their bid and award to the second lowest bidder. Mayor Pro Tern Weber asked for clarification where the Code allows for bidders to bow out and then come back and say I made a mistake and make more changes. She asked if the other bidders were notified that Optimus withdrew their bid and were allowed to make changes, and are other bidders allowed to make changes as well. Mr. Hargreaves replied the amount of the bid is the same. There were certain changes in the bid list, which is permitted by Public Contract Code and the Palm Desert Municipal Code. He said there is a process for when mistakes are made, and the City's Hearing Officer Lauri Aylaian was N PRELIMINARY MINUTES DRAFT PALM DESERT HOUSING AUTHORITY MEETING JULY 10, 2014 convinced by the evidence presented that the mistakes were in fact inadvertent. He agreed it was troubling, but they were inadvertent. He said someone got in a rush at the last minute and included stuff in the bid that shouldn't have been included. Therefore, under the law and those circumstances, they are allowed to go through a process, show they were inadvertent mistakes, and allowed to correct them. He pointed out the process is intended to get the best deal for the City both in terms of quality and price. He said the City has gone through the process and Optimus represented the best low bidder. Mayor Tanner had asked the question on whether there were any concerns with the bonding company and apparently there are none. He said there is a reasonable amount of difference between the low bid and the second and third bid. In the event Optimus is not able to perform in the way they say they can and will, the City has the right to go back to the bonding company to get the project finished. He said he's been in the insurance industry in the construction part for 41 years, and he knew if a bonding company is going to bond with indemnity from the company doing it, there is reason for him to believe this can be done, because it wasn't Optimus first project. Councilmember Benson stated she listened to all of this information at the Housing Commission Meeting yesterday, stating she too had concern about this matter. However, when you look at everything that's happened with the research done by staff and legal counsel, she has to believe they know what they are doing, and City's attorneys wouldn't put Palm Desert in a difficult position. She said the Council has to trust staff and Legal Counsel that they have done all they can to do ensure this project will be built as said, because no one wants Carlos Ortega's name to be harmed by a bad project. She said this was a very special project to those who have been with the City for a long time and everyone wants to see this project done right and according to what has been promised. She said she was placing her faith on staff and Legal Counsel in that they are making the right decisions. Councilmember Benson moved to, by Minute Motion: 1) Approve Optimus Construction's request to withdraw its Relief From Bid Letter; 2) approve the substitution of subcontractor Floor Technology Group with Residential Design Services; 3) approve the substitution of subcontractor Builder's Choice Roofing Company with DBR Premium, Inc.; 4) reject all Bid Protests, including the supplemental Bid Protest received from ProWest PCM, Inc.; 5) authorize award of the subject contract to Optimus Construction, Inc., Glendale, California, for Construction of the Carlos Ortega Villas Project in an amount not to exceed $15,423,351.39; 6) authorize the Finance Director to set aside the amount of $1,542,335.13 as 10% contingency for the project; 7) authorize the Executive Director to approve Change Orders up to the amount of $100,000 per occurrence in the aggregate amount not to exceed 100% of the contingency ($1,542,335.13); 8) authorize the Executive Directorto make payments, in cases of exigencies and in amounts notto exceed $100,000 to agencies and utilities for costs related to construction of the project that may be in 7 PRELIMINARY MINUTES DRAFT PALM DESERT HOUSING AUTHORITY MEETING JULY 10, 2014 excess of his current authorization; 9) Chairman to execute said Construction Contract — funds are available in Housing Authority Capital Improvements Account No. 871-8691-466-4001. Motion was seconded by Tanner and carried by a 3-1 vote (AYES: Benson, Harnik, and Tanner; NOES: Weber; ABSENT: Spiegel). X. OLD BUSINESS None X1. PUBLIC HEARINGS None XII . REPORTS, REMARKS, AND AUTHORITY BOARD ITEMS REQUIRING ACTION A. EXECUTIVE DIRECTOR None B. AUTHORITY COUNSEL None C. CHAIRMAN AND MEMBERS OF THE AUTHORITY None XIII. ORAL COMMUNICATIONS - C None XIV. ADJOURNMENT On a motion by Weber, second by Harnik, and unanimous consent of the Authority Board (Spiegel ABSENT), Chairman Tanner adjourned the meeting at 5:33 p.m. ATTEST: RACHELLE D. KLASSEN SECRETARY PALM DESERT HOUSING AUTHORITY VAN G. TANNER, CHAIRMAN n