PISMO BEACH COUNCIL AGENDA REPORT
Agenda Item #11.A
SUBJECT/TITLE:
DECLARATION OF NON-RESPONSIBLE BIDDER: V. LOPEZ JR. & SONS, INC.
RECOMMENDATION:
Adopt a Resolution declaring V. Lopez Jr. & Sons, Inc. a non-responsible bidder thereby disqualifying them from performing future work for the City of Pismo Beach for a period of five years.
BACKGROUND:
The Five Cities Lift Station and Lift Station Maintenance Project consisted of replacing the Five Cities Lift Station, performing maintenance on six lift stations, and various other repairs to the wastewater collection system. A full project description can be found in the December 19, 2017 staff report for the award of the project and is included as Attachment 2. The basis of award was the total price of the base bid for both the Five Cities Lift Station and Lift Station Maintenance portions of the project, plus Bid Alternates 1 through 6 for the Lift Station Maintenance portion of the project. The Project was put out to bid on August 24, 2017, and bids were opened on November 2, 2017. The City received five bids ranging from $3,046,203 to $4,793,117. The apparent low bidder was V. Lopez Jr. & Sons (V. Lopez) in the amount of $3,046,203. The contract was awarded for the base bid for both portions of the project, and Bid Alternates 1, 3, 4, and 6 for the Lift Station Maintenance portion of the project in the amount of $2,901,486.
Construction for the project commenced on February 2, 2018 and based on the 300-day contract time had a completion date of April 15, 2019. The extended date of completion for the project, including additional days because of change orders and other unforeseen circumstances, was March 17, 2020. Substantial completion for the project was reached on June 22, 2020, 69 days after the contract end date, and in accordance with the executed construction agreement, the City withheld liquidated damages in the amount of $69,000 ($1,000 per day).
Facts Supporting Declaration of a Non-responsible Bidder Issues encountered with V. Lopez over the course of the project included the following:
Issue Number 1: V. Lopez consistently initiated work items without proper planning prior to beginning the work. The lack of planning meant V. Lopez often started work items without the necessary materials, equipment, or tools required to complete the work. This lack of planning often required City intervention to help complete the work or to protect public health and safety. Other times, the City lost use of facilities while waiting for materials to complete the work. These incidents also extended the schedule unnecessarily and meant V. Lopez could not complete the project on schedule, preventing the City from taking beneficial use of the facilities and resulted in increased costs to the City in project management and inspection fees which are
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outlined in the fiscal impact section of this report. Some instances where V. Lopez demonstrated this lack of planning include:
Spyglass Park Excavation. V. Lopez excavated a large hole at Spyglass Park adjacent to the lift station, without the parts required to complete the work. This prevented the City from using portions of the park for at least 14 weeks. This park rents out for $25 per hour and average rental income is approximately $300 per month. Work at this site was not completed for 6 months. o On September 25, 2018 V. Lopez opened an excavation at Spyglass Park measuring approximately 20 feet by 40 feet to perform planned piping modifications. V. Lopez did not have the fittings on hand that were required to perform the piping modifications, and later City staff learned that some of the required fittings had not even been ordered at the time excavation was begun. The fittings were not unusual, and V. Lopez knew ahead of time what fittings were required to perform the work. To protect public health and safety, the City directed V. Lopez to provide temporary fencing around the excavation. It was anticipated that this area of the park would be closed for a short period of time, however the area was closed off for approximately 14 weeks, affecting park rentals and site safety. On January 2, 2019, the excavation was temporarily backfilled since the fittings had not arrived in a reasonable time. The site was re-excavated in late March 2019 to complete the piping modifications, 6 months after the work was begun.
Use of City Vactor Truck. V. Lopez initiated bypass pumping but did not have adequate back-up pumping to prevent a sanitary sewer system overflow. The City used City equipment and personnel to provide additional backup pumping to prevent a sewer overflow.
o On multiple occasions throughout the course of the project for both the Five Cities and Lift Station Maintenance portions of the project, the City wastewater division had to provide staff assistance and deploy the City’s vactor truck to assist V. Lopez to mitigate the threat of a potential spill, which resulted in staff overtime and prevented the wastewater operators from completing their normally assigned daily duties. Use of the vactor truck carries an hourly rate of $180, requires a minimum of two staff members with specific training to operate at an average hourly rate of $48, and is a piece of equipment included on regular rotational maintenance for all of the City’s lift stations. V. Lopez did not enact the approved backup plan to prevent a spill during construction operations.
V. Lopez was back-charged for one of these events, but not all of them.
Staff estimates deployment of the City vactor truck at least five times throughout the course of the project, with an estimated total cost of $1,500 to $2,000.
Drilled a circular hole for a square grate and sump. During construction of the Five Cites Lift Station, V. Lopez drilled a circular hole in the bottom of the precast concrete valve vault to fit a square concrete sump and grate without
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prior consideration for how the installation would be completed or waterproofed.
Improper installation of the sump would lead to the valve vault being flooded with groundwater, increasing sewage pumping costs, and reducing pump station reliability and downstream sewer infrastructure capacity. The City was able to prepare a detail showing how to install and waterproof the sump considering that V. Lopez had already drilled a circular hole for the sump. o Plan details call for an 18-in square sump to be installed in the bottom of the concrete valve vault to direct incidental water (i.e. minor leaks in the roof, or from water used to clean the site) into the lift station for pumping back to the wastewater treatment plant. The sump is connected to the wet well through a 4-in diameter drain line. As is typical, the plans do not specify the means or methods to be used to create the sump or install the grate but do require the installed grate and sump to function properly. When such a detail is unclear to a contractor, the normal process is to submit a Request for Clarification (RFC) prior to initiating the work. Instead on March 19, 2019, V. Lopez drilled a hole in the bottom of the sump, then asked for a detail to allow for a functional waterproof installation. The City was able to prepare a design detail for installation of the square sump in the round hole, however this resulted in additional time and costs to the City. Proper planning would have identified the need for this sump and incorporated it into the precast vault or sought clarification for the intended installation prior to ordering materials or drilling a hole in the concrete vault.
Lack of equipment and labor to properly perform bypass pumping. V. Lopez and its subcontractor did not have adequate equipment or labor to safely bypass the Sunset Palisades Lift Station. The flow-through plug system leaked multiple times, allowed sewage to build up in the lift station, and required City personnel to monitor the lift station and assist with bypass using City resources, again resulting in overtime and preventing wastewater operators from completing their normally-assigned daily duties. Without City intervention, the lift station could have overflowed. City efforts to assist V. Lopez at this lift station resulted in City wastewater operators not being able to perform their required daily tasks. The difficulty with the bypass system also extended the project schedule, resulting in additional costs to the City in project management and inspection fees.
o In late May 2019, V. Lopez initiated rehabilitation of the Sunset Palisades Lift Station by installing the bypass pumping system.
However, the bypass system experienced leaks in the fittings and in the plugs. City staff assisted V. Lopez with pumping the wet well down, monitoring the system, and providing guidance to get the bypass system functioning. The problems with the bypass system meant that it took several days longer to coat the wet well than planned and required the City to keep a presence on the site in order to respond to issues, again resulting in a lack of productivity for City wastewater operators. These events took place in late May 2019 and required up to two sewer staff
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onsite off and on for up to a half day over the several days. with an estimated total cost of $1,500 to $2,000
Issue Number 2: V. Lopez demonstrated a general lack of understanding of municipal sewage pump station practice and materials. The lack of understanding meant that V.
Lopez often interpreted the plans or specifications unconventionally. V. Lopez’s interpretations resulted in additional cost to the City as the City strove to keep the project moving. V. Lopez’s interpretations also extended the project duration significantly resulting in additional costs to the City in project management and inspection fees. Some instances where V. Lopez demonstrated this lack of understanding include:
Misinterpretation of duplex pump station meaning. A cross section of one of the existing duplex lift stations (meaning a lift station with two pumps) which required replacement of valves, and other work, only showed one pump and one set of valves (which is typical of a cross section), and relied on the mandatory site visit, description of the lift station, and municipal pump station conventions to convey the count of the valves to be replaced. V. Lopez insisted that since only one pump and valve configuration was depicted, a contract change order was required to install two sets of valves. o V. Lopez interpreted the project plans for the improvements in the dry well at the Spyglass Lift Station to include replacement of only one set of the existing plug valves with the reasoning that “the picture” suggested that there was only one set of plug valves (one pump) in the drywell. The notes on the plans clearly show that there are two pumps in the drywell for a total of four plug valves to be replaced. It is rare for a municipal lift station to include only one pump, since there will not be a backup available in the event one pump fails. In an effort to keep the project moving forward, V. Lopez was compensated for the cost of replacing the other two additional plug valves through a contract change order. This occurred in September 2018.
Poor pump control panel assumptions. The contract, consistent with public contracting protocol and general construction practice, includes a method for the Contractor to seek clarification on issues or perceived conflicts in the Contract Documents. The Contractor can submit Requests for Information or Requests for Clarifications (RFI or RFC) to ask questions about aspects of the design that are not clear. Instead of submitting an RFC for the pump station control panel, V. Lopez fabricated the control panel and installed it using faulty assumptions about pump control. The assumptions used by V. Lopez were not consistent with general lift station practice, or with the other work being performed as part of this contract.
o Section 33 32 19 2.4.E of the technical specifications for the Five Cities Lift Station project addresses general pump station controls operations.
Within 2.4.E, there are two paragraphs that appear to be in conflict regarding how the floats are to operate if the PLC (programmable logic controller) is down. The PLC is intended to operate the pumps based on
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input from the submersible level sensing transducer with backup operation from the mechanical float switches. Rather than submitting an RFI or RFC, V. Lopez, its subcontractors, and suppliers moved forward with fabrication and installation of the control panel based on a loose interpretation of one section of the specifications, without consideration of other paragraphs in the same section. Furthermore, the interpretation—that there would be no independent float back up—is an unconventional way of controlling the pumps for a critical asset like a sewage lift station. V. Lopez’s abnormal assumption and failure to submit an RFC meant the project experienced additional delays and inefficiencies, again resulting in additional project management and inspection costs to the City. The City executed a change order with V.
Lopez on April 20, 2020 for costs ($50,214.75) and 47 additional working days to modify the incorrect installation that V. Lopez had already completed, and complete the configuration in accordance with the project specifications and the wastewater division’s standard practices.
Lack of Understanding of PG&E Standards. PG&E standards for new services have a series of details for residential or commercial services based on the size of the service (for instance, this project was directed to use a detail for a commercial service rated at 201–400 amps). The main breaker for this project is sized at 225 amps. V. Lopez ordered parts and materials to install a 225-amp residential service and attempted to negotiate acceptance of that service through correspondence with the PG&E representative. The City eventually issued V. Lopez a change order to install the correct panel. It took significant effort by the City to negotiate the correct requirements with V. Lopez and clarify the project needs with PG&E.
o V. Lopez interpreted the electrical portion of the project plans and specifications to call for a new 225-amp residential electrical panel to replace the existing 200-amp electrical panel at the Five Cities Lift Station, when the handout package issued directly from PG&E for the service relocation called for a 201–400 amp commercial service. In addition, the plans and specifications placed all responsibility of the electrical service relocation on the Contractor as well as communicating/confirming PG&E requirements for the service relocation. The City executed a change order on July 22, 2019 for costs ($2,283) and 20 additional working days to maintain progress on the project since the electrical work was on the critical path and V. Lopez was refusing to work. This extension resulted in additional project management and inspection fees to the City.
Demonstrated unfamiliarity with pump elbow flange installation. V. Lopez failed to understand that the provided pump elbow flange was designed to mate different pipe materials and stated that mating the pump elbow flange to the stainless-steel riser pipe flange would lead to cracking and failure. The pump vendor and the engineer stated that it should be installed as designed. V. Lopez
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discussed not meeting warranty for that work, requiring the pump manufacturer to issue a statement (in addition to the statement in the O&M manual) that the installation was acceptable. When comparing this concern with prior decisions which resulted in delays and extra costs for the project, the Contractor’s lack of understanding of municipal pump stations became more apparent. o V. Lopez issued RFI #18 on March 12, 2019 for the Five Cities Lift Station project, noting that the pump discharge elbow was a raised face class 150 ANSI flange that would not mate to a class 125 ductile iron flange. The pump elbow flange is not a raised face class 150 ANSI pattern but is compatible with ductile iron flange patterns and faces as well as the provided stainless steel flange. The O&M manual and installation instructions from the pump manufacturer are clear on this fact. While V. Lopez is right to be concerned about flange mating, it continued to express doubt as to the suitability of the configuration, which is not consistent with the lack of pursuing additional information (RFI or RFC) on other aspects of the project as discussed above and below. This demonstrated V. Lopez’s limited knowledge of building pump stations with control panels as a pipeline contractor. If the engineer and pump manufacturer hadn’t been able to address this concern, V. Lopez may have installed a different type of flange on the elbow, which could have caused cracking, leaking or corrosion.
Issue Number 3: V. Lopez demonstrated a lack of understanding of public works process. This lack of understanding is reflected in the numerous instances where V.
Lopez did not issue proactive RFIs or RFCs (see Issues 1 and 2 for examples) and it also shows in V. Lopez’s approach to managing potential change orders and the project schedule. This lack of understanding has increased the projects schedule, added cost to the project, and has resulted in assessment of liquidated damages.
Some examples of this issue are shown below:
Failure to request compensatory days when submitting change order requests.
V. Lopez consistently submitted change order requests without a request for additional days, and the City consistently returned the change order request with the inclusion of days based on discussions with V. Lopez. The City has been generous with V. Lopez when it comes to adding contract days when they are requested and reasonable. The City has sought to help V. Lopez succeed on this project. By not including an identified amount of working days in its request, V. Lopez has caused the City to have to spend additional time reviewing each change order request and discussing addition of days with V.
Lopez. The City could have allowed the days requested to remain at 0, which would have increased the liquidated damages that V. Lopez is exposed to. o On multiple occasions throughout the project, V. Lopez has provided change order proposals with a proposed cost increase but no request for additional working days. V. Lopez was informed multiple times by City staff that its change order proposal should include a proposed cost and additional working days to complete the additional work. During the beginning of the project, City staff, although not obligated to do so,
11.A-6Council Agenda 3-7-2023
totaled the labor hours included on the change order proposal and provided an equivalent amount of additional working days in an effort to maintain progress on the project. The change order form includes the following disclaimer:
“The amount and time provided in this contract change order are a full and final accord and satisfaction of all costs and time directly and indirectly related and all other claims related hereto are hereby waived. The Contractor has reviewed the plans and specifications related to this change order and all changes thereto are accounted for…”
Submitted a claim for extra working days after finalizing change orders. V.
Lopez submitted a request for 120 working days in January 2020 citing that it did not receive adequate compensation for submitted change orders. V. Lopez submitted this claim despite the disclaimer on each change order stating that, "The amount and time provided in this contract change order are a full and final accord and satisfaction of all costs and time…” The tactic of going back and seeking additional compensation for fully executed change orders is also inconsistent with the Contract Documents and California Public Contracting Code. This claim required City effort to refute, and distracted the Contractor from pursuing strategies to accelerate the schedule.
o V. Lopez submitted a letter on January 7, 2020 seeking 120 working days based on needing additional days for each executed change order.
V. Lopez also made claims that limiting sections of the Contract Documents did not apply because its delay claim “declares void any arguably exculpatory contract clauses…” The City Attorney responded to this claim, although V. Lopez has insisted on this and since submitting this letter, V. Lopez has refused to sign working day statements or contract change orders with the stated contract days.
Failed to accelerate work effort to recover the project schedule. V. Lopez made limited efforts to accelerate the project schedule even when notified that its scheduled completion date would expose it to liquidated damages. The Contract Documents include provisions for assessing liquidated damages of $1,000 per day. V. Lopez was asked to provide a recovery schedule at routine progress meetings. V. Lopez did not supply a recovery schedule until October 31, 2019 despite being noticed in June 2019 that its current schedule would result in the City assessing liquidated damages. The “recovery schedule” showed no acceleration of work effort and just updated the dates of the work.
V. Lopez was encouraged to add an additional crew, or work on multiple fronts, or otherwise accelerate the pace of work regularly. By not accelerating work or otherwise attempting to recover time lost from poor planning, lack of equipment, or insufficient materials, V. Lopez extended the project schedule costing the City additional money to manage the contract, project management and inspection fees, keep the old lift stations in operation using our own parts, equipment and personnel, and observe the work being performed.
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The project experienced significant delays and resulted in the City extending the Contract time 159 days past the 300-day contract time, to a total of 459 days. The extra days were awarded to V. Lopez for a variety of reasons including change order requests, weather delays, issues with SCADA integration, etc. V. Lopez provided 2-week look-ahead schedules at each progress meeting, but was inconsistent with updating the overall project schedule, and went several months between updates. V. Lopez also built the schedule linearly creating a single-track critical path. When it became apparent V. Lopez was not going to complete the project on-time, V. Lopez made no effort to perform multiple tasks or otherwise recover the project schedule. This resulted in the City assessing V.
Lopez 69 days of liquidated damages for a total of $69,000.
Conclusion and Recommendation
Given the number and severity of the issues outlined in this report staff recommends that the City Council adopt a Resolution (Attachment 1) declaring V. Lopez and Sons as a non-responsible bidder thereby disqualifying them from performing future work for the City of Pismo Beach for a period of five years.
FISCAL IMPACT:
There is no direct fiscal impact from this action, however this action will result in the City being able to disqualify V. Lopez from future projects. The total approximate financial loss to the City as a direct result of V. Lopez is $323,437.75 comprised of the following:
Construction Management Amendment #1 $69,900.00
Construction Management Amendment #2 $49,000.00
Construction Management Amendment #3 $69,645.00
Additional Engineering Services During Construction Amendment #7 $15,395.00 CCO #211 - 20 working days plus $2,283 additional costs $22,283.00 CCO #262 - 47 working days plus $50,214.75 additional costs $97,214.75 Total loss $323,437.75
The total loss outlined above does not include City staff time or equipment costs. The City is also withholding $69,000 in liquidated damages from the contractor’s retention. 1CCO #21 - $22,283 (20 working days @$1,000 per day ($20,000) and $2,283 additional cost): See discussion in the section labeled “Lack of Understanding of PG&E Standards” within the staff report. This change order was issued for the change to a 400-amp panel and the City was not ultimately obligated to issue this change order, but it was issued to maintain progress on the project and the electrical item was on the critical path. 2CCO #26 - $97,214.75 (47 working days @$1,000 per day ($47,000) and $50,214.75 additional cost): See discussion in the section labeled “Poor Pump Control Panel Assumptions” within the staff report. This change order was another that the City was not obligated to issue but did so, to maintain progress and the work was critical to getting the project completed.
ALTERNATIVES:
1. Do not declare V. Lopez and Sons as a non-responsible bidder.
11.A-8Council Agenda 3-7-2023
ATTACHMENTS:
1. Resolution
2. December 19, 2017 staff report
Prepared by: Meeting Date: March 7, 2023
Chad Stoehr, P.E., Engineer
Submitted by: Benjamin A. Fine, P.E., Director of Public Works/City Engineer City Manager Approval:
11.A-9Council Agenda 3-7-2023
RESOLUTION NO. R-2023-XXX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PISMO BEACH, CALIFORNIA DECLARING V. LOPEZ JR. & SONS, INC. A NON-RESPONSIBLE
BIDDER THEREBY DISQUALIFYING THEM FROM PERFORMING FUTURE WORK
FOR THE CITY OF PISMO BEACH FOR A PERIOD OF FIVE YEARS
WHEREAS, on December 19, 2017 V. Lopez Jr. & Sons (V. Lopez) was awarded a contract in the amount of $2,901,486 for the Five Cities Lift Station and Lift Station Maintenance Projects; and
WHEREAS, several significant issues were encountered with V. Lopez’s project understanding and public works competence over the course of the project; and
WHEREAS, the project experienced significant delays and resulted in the City extending the contract time 159 days past the 300-day contract time to a total of 459 days; and
WHEREAS, V. Lopez completed the work 69 days past the contract time, for which the City withheld 69 days of liquidated damages for a total of $69,000; and
WHEREAS, the total approximate financial loss to the City as a direct result of V. Lopez is $322,500.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Pismo Beach hereby declares V. Lopez Jr. and Sons as a non-responsible bidder, thereby disqualifying them from performing future work for the City of Pismo Beach for a period of five years from the date of this action.
UPON MOTION OF Council Member , seconded by Council Member , the foregoing resolution was adopted by the City Council of the City of Pismo Beach this 7th day of March 2023, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
RECUSED:
Approved: Attest:
________________________ ________________________
Ed Waage, Mayor Erica Inderlied, City Clerk
11.A-10Council Agenda 3-7-2023
Attachment 1
PISMO BEACH COUNCIL AGENDA REPORT
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8.G-1Council Agenda 12-19-2017
Attachment 2
December 19, 2017 Staff Report
11.A-11Council Agenda 3-7-2023
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December 19, 2017 Staff Report
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December 19, 2017 Staff Report
11.A-13Council Agenda 3-7-2023
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December 19, 2017 Staff Report
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December 19, 2017 Staff Report
11.A-15Council Agenda 3-7-2023
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December 19, 2017 Staff Report
11.A-16Council Agenda 3-7-2023
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Attachment 1
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December 19, 2017 Staff Report
11.A-17Council Agenda 3-7-2023
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December 19, 2017 Staff Report
11.A-18Council Agenda 3-7-2023
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December 19, 2017 Staff Report
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Q
V
W
U
X
F
W
L
R
Q
3 0
:K
L
W
D
N
H
U
&R
Q
V
W
U
X
F
W
L
R
Q
3 0
8.G-10Council Agenda 12-19-2017
Attachment 3
Attachment 2
December 19, 2017 Staff Report
11.A-20Council Agenda 3-7-2023