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HomeMy WebLinkAboutC-2944(A) - Surety's Take-Over of Construct Performance Responsibility for the First Avenue Water Main Replacement ProjectCITY RF NEWPORT BEACH OFFICE OF THE CITY CLERK P.O. BOX 1768, NEWPORT BEACH, CA 92658 -8915 (714) 644 -3005 TO: FINANCE DIRECTOR FROM: CITY CLERK DATE: February 24, 1994 SUBJECT: Contract No, C- 2944(A) Description of Contract Agreement for the Surety's Take -Over of Contract Performance Responsibility for the First Avenue Water Main Replacement Project Effective date of Contract February 22, 1994 Authorized by Minute Action, approved on February 14. 1994 Contract with Great American Insurance Company Address P.O. Box 5440 Orange CA 92613 -5440 Amount of Contract (See Agreement) " s Wanda E. Raggio City Clerk WER:pm Attachment 3300 Newport Boulevard, Newport Beach • • • FAR G or APP1RCVEp___ • February 14th, 1994 CITY COUNCIL AGENDA ITEM NO. q TO: Mayor & Members of the City Council FROM: Utilities Department SUBJECT: CONTRACT FOR CONSTRUCTION OF WATER PIPELINE FIRST AVENUE WATER MAIN REPLACEMENT PROJECT CONTRACT SURETY ASSIGNMENT AGREEMENT (CONTRACT NO. 2944)(j ) RECOMMENDATIONS: Find that the contractor, A. & L. Construction Company, Inc., can not meet the requirements for completing the proposed contract work and declare him in "default ". 2. Approve an Agreement with the contract surety. Great American Insurance Company, to assign the contract and approve its completion by the surety. 3. Authorize the Mayor and the City Clerk to execute the Agreement on behalf of the City. DISCUSSION: The City awarded the contract to A. & L. Construction Company, Inc., for the subject project on June 28th, 1993. The contractor completed approximately 80% of the required work items before encountering financial difficulties and stopping work on November 24th, 1993. Since that time no work has been performed on the project. The City has contacted the contractor's representative and the • contractor's surety, Great American Insurance Company, (who issued the City a Performance Bond on behalf of the contractor in accord with the City's standard contracting practices.) The surety for the contractor has agreed to complete the project under its "Performance Bond" obligation to the City with another contractor. To facilitate the contract completion the contractor's surety has proposed to enter into an assignment and take -over agreement with the City. The proposed Agreement is attached as Exhibit "A" to this staff report. (ay) • Paa@2 - February 14, 1994 1st Avenue Water Main Project Contract Assignment Agreement Principal terms of the proposed Agreement are: • 1. Great American Insurance Company, as surety for the contractor, will act to complete the remaining work with another contractor. 2. The surety will insure that the take -over contractor completes all work in accord with the City's plans and specifications. 3. The surety will hold the City harmless and defend the City against any claims, liens or suits from the original contractor, A. & L. Construction Company. Inc., or any of their suppliers or creditors; and will do the same for the take -over contractor. 4. The surety will undertake responsibility on all warranty items related to the project. 5. The surety will obtain written releases from all "stop notices" and "material liens" related to the project construction. 6. The surety will expend its own funds to cause the take -over contractor to complete the remaining work and obtain any materials needed to do so. 7. The City will grant the surety an extension of time to complete the remaining work. The surety will be given 30 days to complete the project without accruing liquidated damages. • 8. The City agrees not to withhold payment to the surety for any claims or demands made by the original contractor, A. & L. Construction Company, Inc. 9. The City will pay the surety the un -paid balance of the original contract amount when the work is completed. 10. The City and surety both agree that the estimated value of the work remaining is approximately $20,000 and that the balance of funds retained (not paid) to the original contractor is $29,996.87. The project contract provides for installation of 8 -inch water pipeline in First Avenue in Corona Del Mar and replacement of three large water valves and vaults on the 18 -inch water pipeline in Goldenrod Avenue south of Coast Highway. The original contractor, A. & L. Construction Company, Inc. has already completed the items critical to provide water service to the area customers. However, a number of work items are incomplete. The work items remaining to be completed by the take -over contractor are listed on the following page. The value of the incomplete work is approximately $20,000. • The incomplete work items include: a. Installation of access hatch covers for the 18 -inch water valve vaults. b. Installation of the 18 -inch butterfly valve operating mechanisms. c. Installation of pipe supports in the valve vaults. d. Miscellaneous pavement patching related to installation of the access hatches. • Pa03 - February 14, 1994 1st Avenue Water Main Project Contract Assignment Agreement This project is part of the City's Water Main Replacement Program. • Funds for the project are available from account numbers 7503 - 9850018 and 7503 - 9850223. A summary of key project accounting detail is: Original contract amount $ 106,091.00 Total of Authorized Change Orders $ 24.943.29 Revised Total Contract Amount $ 131,034.29 Progress Payments Made by City $- 104,037.42 Total of "Stop Notices" & "Mechanics Liens" $ 46,293.05 Contract Funds Retained by City (not yet paid) $ 26.996.87 Liability of Contractor's Surety $ 73,289.92 The surety is obligated to complete the project for the City under the contractor's performance bond. The proposed agreement will serve to clarify the surety's and the City's responsibilities and will facilitate completion. • The estimated time of completion for the remaining work is 30 calendar days. If the Agreement is approved, the expected completion date is March 15th, 1994. Staff recommends approval of the assignment agreement. Respectfully Submitted, JEFF STANEAR'T" Jeff Staneart, P.E. Utilities Director Attachments: Exhibit "A": Contract Assignment Agreement J5: sdi HGREEMENT FOR THE SURETY'S TAKE -OVER OF CONTRACT PERFORMANCE RESPONSIBILITY FOR THE FIRST AVENUE WATER MAIN REPLACEMENT PROJECT THIS AGREEMENT is made and entered into this ZZ N day of February, 1994, by and between the City of Newport Beach, a municipal Corporation, hereinafter referred to as "City", and Great American Insurance Company, an Ohio Corporation, hereinafter referred to as "Great American'. WITHESSETH: WHEREAS, "CITY" entered into a construction contract (Contract No. C -2944) on June 281h, 1993, with A & L Construction Company, Inc., for construction of the First Avenue Water Main Replacement Project; and WHEREAS, "Great American ", as surety and A & L Construction Company, Inc., as principal, executed unto "City", as obligee, its Performance Bond No. 758 5170, hereinafter, 'Bond ", dated July 215f,1993, in connection with Contract C -2944; and WHEREAS, A & L Construction Company, Inc., has defaulted under the terms of said contract and its Indemnity Agreement with "Great American', and "City" has sought performance of the remaining work required under the contract from surety; and WHEREAS, "Great American" has proceeded to solicit bids or otherwise arrange for completion of the contract work in accord with the conditions of the 'Bond" without prejudice to any of its rights and without waiver of its defenses under the 'Bond "; and WHEREAS, this agreement made by authority of the applicable statutes of the State of California and applicable ordinances and regulations of the "City" to facilitate completion of the work required by Contract No. C -2944 upon the express conditions of this Agreement, the "City" will immediately pay to "Great American" all contract funds being held by "City" and that "City" will pay "Great American" unconditionally, in the manner provided in said construction as provided hereinafter, NOW, THEREFORE, in consideration of the mutual covenants and agreements, the parties hereto do contract and agree as follows: 1 of 4 "Great American" will arrange for completion of the work required by construction Contract No. C -2944 in accord with its terms and conditions, except as may have been previously modified by change order and as hereinafter modified and in accordance with its Performance Bond, and "City" agrees and promises to pay "Great American" in the manner provided in the construction contract; 2. It is agreed and understood that the completion of the work under said contract shall be performed by a mutually acceptable contractor, hereinafter referred to as "Take -over Contractor" 3. It is understood and agreed that "Great American's" Take -over Contractor" will proceed as soon as practicably possible to complete the work under the aforementioned construction contract, subject to any appropriate extensions of time and other bases for increased performance time resulting from weather conditions, or otherwise as set forth in the contract. At the present, "City" agrees to extend the time for completion of said work to and including 28 days after the date of approval of this Agreement by the City Council for "City", without penalty with respect to any period prior thereto; 4. It is agreed and understood that "City" waives all liquidated damages through the extension period set forth in paragraph no. 3, herein above, which is estimated to be $20,000. 5. It is understood and agreed that "Great American" will be paid all retained funds being held by "City ", upon satisfactory completion of the remaining work items. 6. It is further understood and agreed that "Great American', by entering into this Agreement, is not acting as a contractor, but merely in its capacity as performance bond surety; and that no rights under this contract, or otherwise, shall inure to the benefit of any third party, except as otherwise expressly provided by law. It is understood that this agreement is for the sole benefit of and shall inure only to the benefit of "City' 7. "Great American" hereby designates the "Take -over Contractor" as its agent for purposes of completion of the work on Contract No. C -2944, the processing of change orders or extra work orders and other negotiations in connection with the completion of the work and presentation of actual quantities for purposes of payment to "Great American" on the various bid items set forth in the construction contract; 2of4 0 0 8. "City" estimates that the un -paid balance of construction Contract No. C -2944, including all retainage, is in the present amount of $26,996.87, which includes retainage on work previously performed by A & L Construction Company, Inc., and its subcontractors with respect to construction Contract No. C -2944. In addition, "City" estimates that the remaining quantities of uncompleted work, based upon estimated quantities, are set forth on Exhibit "A" to this Agreement, which represents the Engineer's most recent estimate of progress in accord with the contract documents. "City' will pay "Great American' in accord with the terms of the contract, except as modified herein. "City' agrees not to withhold payment for any of the following reasons: a. Claims, suits, liens, or demands by A & L Construction Company, Inc., or its legal representatives, creditors, successors, or assigns; and b. Claims, suits, liens, or demands by any person or entity furnishing labor, equipment, or material to A & L Construction Company, Inc., or any of its subcontractors on the project; 9. "Great American" will defend, indemnify, and hold harmless "City' from all claims for which "City' agrees not to withhold payment, as described in paragraph no. 7, herein above; 10. "Great American" will be responsible for any valid warranty items which may appear in connection with construction work in accordance with the terms and conditions of the construction Contract No. C -2944; 11. "Great American" will expend such of its own funds as may from time to time be necessary to pay valid labor and material claims, the completion of Contract No. C -2944, and any warranty items; provided, however, that "Great American's" obligations shall in no event exceed, and is expressly hereby limited to, the penal sum of its performance bond. In the event that "Great American" expends an amount equal to (or greater than) the penal sum of its bond in the performance of the contract and payment of all just claims under the contract on its bond, "City" agrees that "Great American" shall have no further liability or obligation under the contract or its bond, nor with respect to any performance obligation assumed under this Agreement; 12. This document may be executed in counterparts. 3 of 0 0 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the day, month and year first above written. APPROVED AS TO FORM: City of Newport Beach, a municipal corporation City Attorney ATTEST: S Wanda Raggio City Clerk -- 't�ZZZA� Clarence Turn Mayor GREAT AMERICAN INSURANCE COMPANY, an Ohio corporation 4 of CALIFORNIA ALL - PURPOSE ACKNOWLEDGMENT No. 5193 State of 4 Q nM, OPTIONAL SECTION CAPACITY CLAIMED BY SIGNER County of oAl1 w 4 tai Though statute does not require the Notary to ' IM in the data below, doing so may prove invaluable to persons relying on the docume0 Ori, before me, DATE E, TITLE OF OFFICER - E.G..'JANE DOE, NOTA V PUBLIC" DOE, NOTA INDIVIDUAL ❑ CORPORATE OFFICER(S) , personally appeared NAME(S) OF SIGNER(S) TITLE(S) ❑ personally known to me - OR - roved to me on the basis of satisfactory evi ce be ❑ PARTNER(S) ❑ LIMITED ❑ GENERAL to the persor)4�rivhose nam re subscribed to the withipp_�ttnstrument andlac- ❑ATTORNEY -IN -FACT knowledged to me that(.heisbeAthey-executed ❑ TRUSTEE(S) the same In (�D42i4}hegff ythorized ❑ GUARDIAN /CONSERVATOR capacit4 es , and that b hi Pq OTHER: signature{a)"on the instrument the pers or the entity upon behalf of which the w. ! persop(sfacted, executed the instrument. SIGNER IS REPRESENTING: MOtNN .�/Ippl► � WITNESS my hand and official seal. N EOFPERSON(5)/O�RENTITV(IES) qr a SIGNATURE OF NOTARY THIS CERTIFICATE MUST BE ATTACHED TO THE DOCUMENT DESCRIBED AT RIGHT: Though the data requested here is not required by law, it could prevent fraudulent reattachment of this form. OPTIONAL SECTION TITLE OR TYPE OF DOCUMENT NUMBER OF PAGES DATE OF DOCUMENT SIGNER(S) OTHER THAN NAMED ABOVE ©1993 NATIONAL NOTARY ASSOCIATION • 8236 Remmet Ave., P.O. Box 7184 • Canoga Park, CA 91309 -7184 i OWAAWAMW � A UP M a� 0 a EXHIBIT "A" TO CONTRACT ASSIGNMENT AGREEMENT FOR CONTRACT NO. C -2944 FIRST AVENUE WATER MAIN REPLACEMENT PROJECT List of Contract Items to be Completed: 1. Install six each, City furnished pipe supports per City Standard Drawing No. STD -522 -L in the valve vaults. 2. Remove the temporary hatches, return them to the City. Provide and install the specified rectangular, stainless steel access hatches on each of the valve vaults in Goldenrod Avenue. 3. Provide and install the two each, specified LimitorqueTm manual hand -wheel control, worm -gear operator for each of the 18 -inch diameter butterfly valves. 4. Replace the two each, temporary butterfly valves in each valve vault. Provide and install the specified, flanged -end, thermal fusion bonded epoxy -lined butterfly valves with the worm -gear operators. (item no. 3) 5. Provide permanent pavement patching in accord with contract specifications for areas disturbed while installing the permanent access hatches. (item no. 2) Exhibit "A"