HomeMy WebLinkAboutItem No. 33CITY OF LAKE ELSINORE
REPORT TO THE CITY COUNCIL
TO: Mayor and City Council
FROM: Ron Molendyk, City Manager
DATE: March 23, 1993
SUBJECT: 'CHANGE ORDER NO. 6 FOR THE ROBB ROAD BOOSTER PUMP
STATION IMPROVEMENT ON ORANGE GROVE WAYr CFD 88 -3.
BACKGROUND
The West End Community Facilities District 88 -3 was formed to
finance construction of public improvements in support of area
developments. Some of the improvements include storm drains, water
and sewer lines, street improvements, fire station, parks; water
reservoirs and sewer and water pump stations.
Funds for the CFD are provided by the sale of bonds based upon the
value of the property to be improved. These bonds are paid off
over a number of years by the property owners within the boundary
of this CFD 88 -3.
The contract for the Robb Road Booster Pump Station Improvements
being constructed by the CFD was awarded to S.C. Engineering, Inc.,
on September 24, 1991 by the City Council. Construction of the
improvements began in October, 1991. Change Orders Nos. 1, 2, 3,
4, and 5 were approved by the City Council for $57,996.32.
ANALYSIS
This Change Order•No. 6 provides for additional facilities, upgrade
of facilities, and time delay reimbursements for the Robb Road
Booster Pump Station that were made after the bids had been
received by the City of Lake Elsinore.
Item IPA$#: Sun Shade Roof Panels. The documents specifying the
roof panels were not correct. At a meeting with the Contractor and
the Civil Engineer, it was agreed that a heavier panel would be
required. The increase in contract amount for this item is
$4,490.00.
Item INS": Electrical Re- Wiring and Troubleshooting. After
removing the old existing pumps, portions of• the existing
electrical system.that operate the pump were found inadequate for
the two new, more powerful pumps. This item is to troubleshoot and
re -wire the existing system for the new pumps. This type of work
is always completed on a time and materials basis, as the full
extent of the work is not known until all electrical components.
have been inspected and tested during the actual construction phase
of the project. The increase in the contract amount for this item
is $2,275.00.
Item 11c": Painting. This item..is for additional painting of the
pump area and the electrical panels that was not included on the
original plans, yet had to be done. The increase in the contract
amount for this item is $1,848.00.
Item I'DIR: Replace Conduit. During construction, some of the
existing underground conduit had to be replaced with new conduit to
service the updated pump station. This was done by a different
contractor. The increase in the contract amount for this item is
$475.00.
AGENDA ITEM NO. J�
PAGE .1 OF
Mayor and City Council
March 23, 1993
Page two
Item „E": Time Extension Reimbursement. This item is to cover
"extended overhead" costs to the Contractor due to the many delays
in the project time schedule that were not the contractor's
responsibility. This cost was calculated in accordance with the
Eichleay Formula• and was agreed to by the Contractor, the CFD
Consortium and Paul A. Moote & Associates, Inc. This project
experienced three major delays that were not the responsibility of
the Contractor. The first delay was in the installation of a 12"
water line in Lincoln Street.. The second delay was caused by
excess pressure by the'new pumps to the homes in the area. - This
caused -a delay while pressure reducing valves were installed in 320
existing homes. The. third delay was caused by replacement of the
existing pump cans. This work was not anticipated. The original
contract was for 125 days. This project has been extended an
additional 352 days by events and circumstances beyond the
Contractor's control The increase in the contract amount for this
item is $18,750.00.
FISCAL IMPACT
This Change order will increase the contract amount by $27,838.00
Below is a breakdown of the. current project costs for this
contract'.
Contract Amount (9/24/91) $157,000.00
Sum of previous Change Orders 1,2,3,4,5 57,996.32
Amount this Change Order No. 6 27,838.00
Revised Contract Amount 242,834.32.:
RECOMMENDATION
1. Authorize the amendments to the contract for $27,838.00 for
the additional facilities on the Robb Road Booster, Pump
Station Improvements for CFD 88 -3.
2. Authorize the City Engineer to process and execute the
appropriate change order documents.
PREPARED BY: k 1'141 "C �
David Kircher, Associate Civil Enq neer
APPROVED BY:
APPROVED FOR
AGENDA LISTING
AGENDA ITEM N0. 33
PAGE Z. OF
WEST LAKE ELSINORE
CFD 88.3 Distribution to:
CITY OF LwE ELSINORE CITY OF LAKE ELSPIORE X
CONSTRUCTON CHANGE ORDER
PAM A.MOOTEaASSOC. X
S.C. ENGINEERING, INC. z
CHANGE ORDER A 6 MICKEY CAPUANO X
PROJECT: Robb Road Pump Station Improvements
CONTRACTOR: S.C. ENGINEERING, M.
P.O. Box 10194
Torrance, CA 90505
You are directed to make the following changes in this Contract:
item 09, Sunshade Roof Panels
hem 'B', Electrical Re-wring
hem 'C', Painting
INITIATION DATE: January 1, 1993
CONSTRUCTION MANAGERS
PROJECT NO: 100.392.16
CONTRACT DATE: September 24, 1991
Increase: $4,490.00
Increase:
Increase:
$2.275.00
$1.848.00
hem 'D', Replace Conduit Increase: $475.00
hem -E-. Time Extension Increase: $18,750.00
Add all of the above hems to contract as hem No. 20, Change Order No. 6, Total item Amount: $27.838.00
Not valid until signed by the Gty of Lake Elsinore. the Construction Manager and the Contractor.
Signature of the Contractor Indicates agreemerd herewith including any adjustment In the Contract Sum or the Contract Time
The original Contract Sum was $ 157,000.00
Net Change by previously authorized Change Orders (No. 1.43.4 b 5) ..... »___ »..»..- »».... »- .»..__ »..... $ 57,996.32
The Contract Sum prior to this Change Order was »— .------- _-- -_^ — -- ^ -•^- °- $ 214,996.32
The Contract Sum win be increased by this Change Order (No. 6) $ 27.838.00
The new Gorman Sum including this Change Order will be »...__..._._.. -_-..» - »......... $ 242,834.32
The Date of Substantial Completion as of the date of this Change Order Is - »» - -•- --- -••• July 15, 1992
Recommended:
PAULA. MOOTS 8 ASSOCIATES, INC.
�Zmq' w Drive, Any,, CA 92705
f,414 % elA 3
Peter a*I o . - DATE
Project Manager
Agreed To:
S.C. ENGINEERING. INC.
P.O. Box 10194 -
Torrance, CA 90505
DATE
Authorized:
CRY OF LAKE ELSINORE. CFD 88.3
130 South Main Street
Lake Elsinore, CA 92530
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AGENDA ITEM NO.
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ETCHTrAY FORMULA
The decision of the Armed Services Board of Contract Appeals
in rich le Coroor on, ASBCA No. 5183, 60 -2 BCA 2688 (1960),
$rr•d on recon., affirmed on reconsideration, 61 -1 SCA 26940
established a formula for the calculation of unabsorbed home
office overhead, often referred to as "extended overhead." The
formula provided the following:
I, contract Billings Total °Overhead overhead
Total Billings For X for PContr et ° Allocable contraeo
Contract Period
ZI.
Allocable Overhead
Days of Performance
III. Daily Contract X
overhead
Daily Contract
overhead
Number of Amount
Days Of Delay Claimed
The "Ziehleay formula" was subsequently applied by the
boards of contract appeals as a reliable method of calculating
the delay damages resulting from extended performance.
Unfortunataly, the decision of the Armed Services Board of
Contract Appeals in I=v Construe';^^• C= any- Tne., ASBCA Nos.
21218 at al., 80 -1 BCA 14,392 (1980), and the decision of ie
General Services Soard'of Contract Appeals in r�ia -
S,rMoanv. GSBCA Nos. 5316 at al., 83 -2 BCA 16,548 (1983), threw
.the.applieability o! the formula into question- Although the
Savoy and ectrie decisions were subsequently reversed
by the United States court of Appeals for the Federal Circuit,
the law has continued to evolva as new rulings are isssied.
The Government has - argued that a delay in parformanca
ordinarily does not increase the total amount of home office
overhead a contractor incurs in connection with a particular
of time 'Mahe overhead, theretora, overhead over a r a period
extended period of time, is absorbed by other contract work. 33
�o�g to the Government, the Only situation. )AGE which NO.
r.
A.
O
PAGE
3
contractor can recover for such extended overhead is where the
delay in performance (1) requires the contractor to hire
additional home office personnel or incur additional overhead
expenses, or (2) prevents the contractor from taking on other
work it would have been able to assume had there not been a
delay. The united States Court of Appeals for the Federal
circuit rejected this argument in capital Electr *_c, and stated,
in the concurring opinion, that:
Although superficially plausible, the
government's argument does not withstand more
penetrating analysis based upon the theory on,
which extended overhead is allowed as an
element of delay damages. By definition,
this type of overhead cannot be directly
attributed to the performance of a particular
contract, yet it is an essential part of the
contractor's total cost of doing business.
Some basis, therefore, must.be found for
allocating this total overhead among the
various contracts in connection with which it
is incurred.
Although there has been .considerable .inconsistency among
various federal agencies as to the applicability of Eichleav, it
appears that the boards will continue to apply the formula to
delays compansable under one of the operative clauses in the
. :.contract (i.e. Differing Site Conditions, Changes, Suspension of
'Work). The contractor must prove, however, that there has been
a delay caused by the Government, that he has suffered some
damages as a result of the delay. and that there is not a more
precise method of calculating the extended home office overhead
.costs.
Subsequent to the reversal of capital Electric and-Savoy by
the united States Court of Appeals for the Federal Circuit,. it
appeared that the agencies which accepted the Eichleay formula
ware applying a two- part'test to determine whether the
contractor was entitled to recover under the formula. The test
required that the contractor show:
(i) That the bonding capacity Of the.company,
bad been limited and toally y
absorbed by
contract work; or
(2) That there had been
obtain other work which
extended overhead.
-2-
an inability to
could absorb the
AGENDA ITEM NO_� F •,
PAGE % OF
Ot
(i) That the bonding capacity Of the.company,
bad been limited and toally y
absorbed by
contract work; or
(2) That there had been
obtain other work which
extended overhead.
-2-
an inability to
could absorb the
AGENDA ITEM NO_� F •,
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$ •:IP.
K
While a showing that the contractor meets either one of these
two tests will still be helpful, it is not yet clear that these
are mandatory requirements to entitlement under the Eichleay
formula. In fact, the Armed Services Board of Contract Appeals
in George E Jensen Contractor. inc., ASBCA No. 297720 85 -1 BCA
179833 (1984), recently stated that:
Home office expenses are indirect costs
usually allocated to all of the contractor's
contracts based upon each contract's incurred
direct costs. When a goverment caused delay
causes a contractor's direct costs to decline
greatly, that contract does not receive its
fair share of the fixed hose office
expenses. The Eichleay formula is one method
approved by boards and courts over a long
period of time which corrects this distortion
in the allocation of these indirect expenses.
In a decision involving the remard:of the Savoy case, the
Armed Services Board awarded the contractor $151,135.20 in
extended overhead costs. The Board rejected the Government's
argument that the application of the formula was unfair in that
it did not give proper credit for amounts already paid through
the application of overhead percentage rates to direct costs.
The Board concluded that a contractor's receipt of a percentage
markup on direct costs did not mean that it had been adequately
compensated for all of the extended overhead costs incurred.
The Board also found that because the delays had occurred
sporadically throughout contract performance, the contractor was
unable to shift his efforts to other projects.
r
In recent cases, the various boards have held that before
the Eichleay Formula will be applied, the contractor must show
only that he suffered damages as a result of .the delay. These
damages include loss of bonding capacity with the concurrent
inability to obtain new work, a drop in revenues due to delays,
or stand -by costs incurred during the delay. Ricway. ire.,
ASBCA No. 29983, 86 -2 BCA 18,841 (1986); P3t2+.i+an Construction
GSBCA NO. 7343, 85 -2 BCA 18,897 (1985): Stenhenson
Associates, GSBCA NO. 6573, 6815, 86 -3 BCA 19,071 (1986); R.G.
;%er Co o-a" on, Xng BCA No. 4885, 85 -3 SCA 19,012 (1985).
In view of the decisions outlined above, the government
cannot successfully argue that the Eichleay formula has been
rejected and does not apply to delay situations. Although the
application of the formula.may have been narrowed somewhat by
recent decisions, the Eichleay formula should continua to be
71 '..
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i
considered a reliable method of calculating extended home office
overhead delay damages.
We have attached copies of the most important decisions
regarding the Eichleay formula, together with several articles
of interest. This information is arranged chronologically and
will provide the reader with a history, of the arguments and the
most recent interpretations of the law. The applicability of
the after a
n uevaluation delay can
case.
In applying the formula, it is important to be consistent in
your figures and the time periods used. You must use the
contract billings► total billings, and overhead for the same
time period, generally the originally specified contract
period. If you use an extended contract period (extended by
contract modification, not delays) you must use the billings for
that period. In the formula, the "days of performance" element
must be the same as the time period used for contract /total,
billings. By applying the formula properly, you will increase
your chances,of avoiding rejection df your claim by a government
auditor or negotiator.
Please feel free to contact us if you should have any
questions?
ecisions which affect the p f
current statusofrthe Important
law.
W /cmc
August 11 1987
Rssp�ect��f��ul��ly �/ subm4-c- iitted*
, �/y" t"r� �V •
Michael R. Payne 90
.jam,
3
�;— AGENDA ITEM NO.
.lF41
PAGE-2—'OF
�.:'..•SFRM �yry
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considered a reliable method of calculating extended home office
overhead delay damages.
We have attached copies of the most important decisions
regarding the Eichleay formula, together with several articles
of interest. This information is arranged chronologically and
will provide the reader with a history, of the arguments and the
most recent interpretations of the law. The applicability of
the after a
n uevaluation delay can
case.
In applying the formula, it is important to be consistent in
your figures and the time periods used. You must use the
contract billings► total billings, and overhead for the same
time period, generally the originally specified contract
period. If you use an extended contract period (extended by
contract modification, not delays) you must use the billings for
that period. In the formula, the "days of performance" element
must be the same as the time period used for contract /total,
billings. By applying the formula properly, you will increase
your chances,of avoiding rejection df your claim by a government
auditor or negotiator.
Please feel free to contact us if you should have any
questions?
ecisions which affect the p f
current statusofrthe Important
law.
W /cmc
August 11 1987
Rssp�ect��f��ul��ly �/ subm4-c- iitted*
, �/y" t"r� �V •
Michael R. Payne 90
.jam,
3
�;— AGENDA ITEM NO.
.lF41
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- -M .
x