HomeMy WebLinkAbout08.b. Agreement with Old Republic Surety Co to replace NCCI, Inc.Central Contra Costa Sanitary District
BOARD OF DIRECTORS
3.6.
POSITION PAPER
Board Meeting Date: May 19, 2011
Subject: AUTHORIZE THE GENERAL MANAGER TO EXECUTE AN AGREEMENT
BETWEEN OLD REPUBLIC SURETY COMPANY AND THE DISTRICT TO
COMPLETE THE TREATMENT PLANT PIPING RENOVATIONS, PHASE 5,
DISTRICT PROJECT NO. 7276 AND AUTHORIZE THE FILING OF A NOTICE OF
CESSATION OF WORK
Submitted By:
Ba Than, Senior Engineer
Initiating Dept. /Div.:
Engineering /Capital Projects
REVIEWED AND RECOMMENDED FOR BOARD ACTION:
STT A. 0 --
B. Than A. Antkowiak A. AF,,,,Il
Kent Alm
District Counsel
ames M. ily,
eneral Manager
ISSUE: NCCI, Inc. (NCCI) voluntarily terminated its work on Treatment Plant Piping
Renovations, Phase 5, District Project No. 7276. In accordance with the Contract, the
District made a demand to Old Republic Surety Company (NCCI's Surety) for
completion of the project, and settlement of all claims and stop notices in accordance
with the Contract's performance and payment bonds. The Surety commenced
completion of the project, and proposed a Takeover Agreement to memorialize the
Surety's obligations under the bonds. It is also appropriate to file a Notice of Cessation
of Work with regard to the NCCI Contract.
RECOMMENDATION: Authorize the General Manager to execute the Takeover
Agreement with Old Republic Surety Company, subject to District Counsel's review and
approval of the Takeover Agreement and authorize filing of a Notice of Cessation of
Work as to the NCCI Contract work.
FINANCIAL IMPACTS: No financial impact to the District is anticipated due to
substitution of a new construction contractor; however, some additional staff and legal
costs in proceeding under the Takeover Agreement are contemplated.
ALTERNATIVES /CONSIDERATIONS: The Board could not approve the Takeover
Agreement, which is not recommended.
BACKGROUND: On May 21, 2010, the District entered into contract with NCCI in the
amount of $2,077,440 for the construction of the Treatment Plant Piping Renovations,
Phase 5, District Project No. 7276. NCCI completed phase one of the project in the
summer of 2010. It was expected that NCCI would begin work on phase two on May 2,
2011. On April 25, 2011, the District Counsel's office received NCCI's Voluntary Notice
of Default from a law firm representing Old Republic Surety Company
(Old Republic). The Voluntary Notice of Default was executed by NCCI and was
effective April 29, 2011. Surety's counsel contacted District Counsel during the first
week of May to discuss coordination of the project's completion, which included the
N: \PESUP \Position Pape rs\ Than \7276_Approval_of_N CCI_Takeover Agreement_1.DOC Page 1 of 3
POSITION PAPER
Board Meeting Date: May 19, 2011
Subject. AUTHORIZE THE GENERAL MANAGER TO EXECUTE AN AGREEMENT
BETWEEN OLD REPUBLIC SURETY COMPANY AND THE DISTRICT TO
COMPLETE THE TREATMENT PLANT PIPING RENOVATIONS, PHASE 5,
DISTRICT PROJECT NO. 7276 AND AUTHORIZE THE FILING OF A NOTICE OF
CESSATION OF WORK
proposed Takeover Agreement, and a meeting between District staff and the Surety's
consultant regarding the status of the project. Staff met with the Surety's consultant,
Mr. Charles R. Stup, Jr., P.E. of Stup Consulting Services, LLC on May 10, 2011.
District Counsel received the proposed Takeover Agreement from Surety's counsel on
May 2, 2011. District Counsel has provided comments to the Takeover Agreement and
promptly received a response indicating the Takeover Agreement and language should
be agreed to within a few days. In summary, the Takeover Agreement Provides:
That the District contracts with Old Republic to complete the project, and that Old
Republic will hire a completion contractor. Pursuant to the performance bond,
the Surety and the completion contractor will assume all of NCCI's duties and
obligations under the original Contract, including but not limited to completing the
construction, providing all necessary warranties, and complying with all payment
obligations.
• All District payments will be made to Old Republic. The District will continue to
withhold 10% retention on all progress payments.
• The Surety will handle the administration of all current claims and stop notices
and seek payment therefore from retention. The District will continue to withhold
monies on those claims and stop notices until the dispute with NCCI's bank is
resolved or Surety indemnifies the District.
Staff provided the Surety's consultant input on the District's preferred list of completion
contractors. It is anticipated that those contractors will be sent the Surety's Request for
Proposal (RFP) for completion of the work. Upon execution of the Takeover
Agreement, the RFP will be issued with an expected construction start date in the
middle of June.
There are a few specific language edits that staff and District Counsel are reviewing
and exchanging with Surety's counsel, most notably related to the completion schedule.
District Counsel believes that none of the remaining issues are insurmountable or
should prevent the Board from authorizing entering into the Takeover Agreement,
subject to the General Manager's approval of the final documents.
NAPESUP\Position Pape rs \Than\7276_Approval_of NCCI_Takeover_Agreement_1.DOC Page 2 of 3
POSITION PAPER
Board Meeting Date: May 19, 2011
Subject: AUTHORIZE THE GENERAL MANAGER TO EXECUTE AN AGREEMENT
BETWEEN OLD REPUBLIC SURETY COMPANY AND THE DISTRICT TO
COMPLETE THE TREATMENT PLANT PIPING RENOVATIONS, PHASE 5,
DISTRICT PROJECT NO. 7276 AND AUTHORIZE THE FILING OF A NOTICE OF
CESSATION OF WORK
Separately, staff seeks authority to file a Notice of Cessation of Work with regard to the
NCCI Contract in order to insure formal legal notice is provided to all subcontractors
and materials suppliers that the NCCI Contract has been terminated. This action sets
the date for submission of all stop notice claims related to the NCCI work.
RECOMMENDED BOARD ACTION: Authorize the General Manager to execute the
Takeover Agreement with Old Republic Surety Company for completion of the
Treatment Plant Piping Renovations, Phase 5, District Project No. 7276, and authorize
the filing of the Notice of Cessation of Work on the NCCI, Inc. Contract.
NAPESUP \Position Papers \Than \7276_Approval_of NCCI_Takeover_Agreement_1.DOC Page 3 of 3