News Release News Release The City of Palo Alto
Communications Department
650-329-2607
250 Hamilton Ave
Palo Alto, CA 94301

2/27/2014

FOR IMMEDIATE RELEASE
PRESS RELEASE 02/27/2014
Subject :

Council to Consider Agreement For New Contractor on Mitchell Park Project
Surety Plans to Hire Contractor that Renovated Art Center
Contact : Brad Eggleston, Assistant Director of Public Works    650/329-2636
Claudia Keith, Chief Communications Officer    650/329-2607
Palo Alto, CA – At its meeting on Monday, March 3, the City Council is expected to consider a takeover agreement with the surety for Flintco Pacific to complete the Mitchell Park Library and Community Center at little or no cost to the City. 

The City terminated Flintco on January 10 for default on the construction of the project due to its historically poor performance.  The City and the surety have negotiated a takeover agreement for the surety to hire a replacement general contractor to complete the project.  The surety is expected to hire Big-D Pacific Builders to complete the job.  Big-D was the general contractor on the City's recent Arts Center renovation that was completed on time and under budget.

"Big- D has a good track record with the City, and we are hopeful they will be able to come in and finish this project," said City Manager James Keene. 

Big- D is familiar with the Mitchell Park project since it has been an "on call" contractor for the City on the project, according to Director of Public Works Mike Sartor.

"We had previously retained Big- D to perform work that Flintco was unable or unwilling to do and so they are already vetted to work on the project," said Sartor.

The structure of the takeover agreement prioritizes the immediate completion of the project and defers any legal claims.  In addition, the surety is expected to provide a new completion date within 15 days of receiving a scope of work.  Preliminarily, the surety has indicated to the City that the project could be completed within four months, depending on the amount of corrective work, time needed to order materials and the surety's ability to obtain  the contractually required LEED Platinum certification documentation that is needed.

The original construction contract with Flintco required them to post a performance bond to protect the City’s interests if they were terminated or unable to complete the contract.  The surety's total liability under the takeover agreement is capped at approximately $28 million, which is the amount of the bond.  In addition, the takeover agreement requires the City to contribute the balance of any remaining contract funds to the surety, following a set aside for accrued liquidated damages.  Due to the significant delays already occurred, it is anticipated that little if any contract balance funds will be paid to the surety. 

As part of its termination letter to Flintco on January 10, 2014, the City had requested the surety bring in its own contractor for the project or the City was prepared to hire its own replacement and back charge Flintco.  At the time of the original contract award in August 2010, Flintco was deemed the lowest responsible bidder, and the City’s Charter requires such an award if bonds are used in the financing of the project.  The surety is not required to engage in public bidding because it is taking over a project that has already been through the public bid process.

The City has continued to work on items outside the scope of the general contractor's work such as signage and library equipment.



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