ADMINISTRATIVE REPORT
MEETING DATE: March 12, 2025 AGENDA CATEGORY: Consent - Agreements TO: Honorable Mayor and City Council
FROM: Virginia Gennaro, City Attorney
DATE: March 7, 2025
SUBJECT: Contract Change Order No. 8 to Agreement No. 18-211 (Manor Street Bridge) .
1. Final Contract Change Order No. 8 with Security Paving Company (increasing compensation by $5,900,000; revised not-to-exceed $17,258,846.53) for completion and close-out of the Manor Street Bridge Project
2. Appropriate $5,900,000 from the Transportation Development Fund (TDF) balance into the Public Works Department’s Capital Improvement Program
RECOMMENDATION:
Staff recommends approval of the change order and appropriation of funds.
BACKGROUND:
Item No. 1. On or about December 12, 2018, the City and Security Paving Company (“Security”) entered into Agreement No. 18 -211 for the construction the “Manor Street Bridge over Kern River” project (“Project”) which involved retrofitting and widening a public roadway and bridge. The original project scope and contract price was $9,344,533.70. Work on the Project was originally scheduled to commence on March 18, 2019.
Shortly after contract execution, City, through its Project Manager AECOM, and Security agreed t o suspend the commencement of work on the Project until approximately September 9, 2019 due to the presence of unanticipated and elevated water flow in the Kern River. The Project experienced a second delay between January - June 4, 2020 due to the discovery of a colony of nesting bats which required the construction of additional exclusionary measures. A total of 7 Contract Change Orders (CCOs) were executed and approved by the City Council between February 2020 and February 2023, which addressed various additional costs due to the project delays and work changes. However, CCOs 1 -5 expressly deferred consideration of additional time adjustments and impacts until completion of the work.
The Project was completed in April 2023. At that time, Security subm itted a cost estimate to resolve remaining cost of work changes and requested issuance of a final Change Order for additional compensation in the amount of $8,157,555.40. City and AECOM disputed Security’s claim(s) for additional time and compensation and began reviewing and negotiating the cost workups with Security to reach an agreement on sums due. Those efforts were unsuccessful and Security ultimately filed a lawsuit against the City in March 2024 (Kern County Superior Court Case No. BCV -24-101097). The City responded with a cross-complaint seeking liquidated damages for unauthorized project delays and breach of contract.
The City and Security participated in mediation February 10-11, 2025 and ultimately reached agreement on certain extra work to be paid as a lump sum price, including equipment and labor escalation and impacts not accounted for in prior CCOs, in the amount of $5.9 million. This proposed final CCO No. 8 is
a negotiated sum which will fully and finally close out all outstanding disputes, items and claims on the Project, and upon execution and payment will also result in both parties dismissing the pending lawsuits concerning the Project.
Item No. 2. An additional appropriation of $5.9 million will be needed to fully fund the project (which includes the final CCO No. 8).
FISCAL IMPACT:
Staff recommends the transfer of appropriation in the amount of $5.9 million from the TDF fund to the Public Works Department’s Capital Improvement Program to fund the change order. The ultimate funding that will cover the cost of the change order will be from Caltrans reimbursement, thus the TDF funds will be replenished after the Caltrans process is completed.
COUNCIL GOAL:
Reliable Infrastructure
ATTACHMENTS:
Final CCO No. 8