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Residents to Pay for Water Treatment Plant Cost Overruns

Water treatment plant about six months behind schedule.

The city will need an additional $750,000 for renovations to the Water Pollution Control Plant because the project will not be completed as scheduled, according to a Public Works Department report.

Originally, West Bay Builders, the contractor, expected to finish the work in November of 2011, but after it was clear the builder would not meet the deadline, the city granted West Bay an additional 56 days. The contractor then asked for even more time last summer, and it now anticipates a completion date of sometime in May – about six months behind schedule.

The overall project budget was set at about $28.6 million in 2009, for which the city secured a 1 percent interest loan from federal and state funds.

As a result of the delay, the two management companies that are overseeing the project, URS Corporation and Kennedy Jenks Consultants, requested an additional $630,000 and $645,000, respectively, to extend their contracts. But, on Feb. 14, city council approved only half that amount.

“This is ridiculous. We have the highest paid babysitters in the world,” said Vice Mayor Gina Papan.

Millbrae ratepayers will be paying directly for the additional $750,000, as the city will likely not be able to amend the low-interest loan it received from federal and state dollars.

Before signing a contract, the city knew West Bay had no experience working on water treatment projects and that it was litigious company, often resulting in costly legal battles, according to Millbrae City Attorney Joan Cassman.

However, West Bay had the lowest bid on the project, and a city must award a public works project to the lowest bidder as it is presumed to be the fairest price to the public, according to California Public Contracts law.

And although West Bay was inexperienced, the Millbrae Public Works Department hired two knowledgable and reputable consultants for engineering and management support, URS and Kennedy Jenks.

“At the time, we asked West Bay to withdraw their bid, but they didn’t,” said Public Works Director Ron Popp. And recently, “they’ve told us they’re not responsible for the delay.”

West Bay did not return a phone call seeking comment.

“What we decided was take this low bid, recognize that we’re going to have claims from this contractor, and team up with the best consultants to work with us to watch [West Bay] like a hawk,” Cassman said.

The delay is partly due to subpar paint that URS and Kennedy Jenks noticed a West Bay subcontractor using to coat a 1.2 million gallon underground storage tank.

“At the groundbreaking, they guaranteed they would be on time and under budget,” said Mayor Marge Colapietro. “This is immensely appalling to me, and someone has to be responsible. 

Popp said that contractually, West Bay should owe the city about $134,000 in liquidated damages for a couple of breeched agreements, but “West Bay will do anything to avoid paying the city anything over and above their contract.”

And, West Bay could potentially file a legal claim against the city to recover expenses. 

“Even if they were frivolous claims, they would still cost us money to fight,” Popp said. “Our strategy now is on completing the project and ensuring that the city gets a quality treatment plant which will serve the city in the next 50-70 years.”

About 90 percent of the project work is complete, according to Popp.

“We saved a substantial amount by taking the risk of going with the lowest bidder,” Robert Gottschalk said. “I think when all is said and done, we probably will find that even with these travails and extra costs for URS and Kennedy Jenks, we probably still ended up paying less than we would have with picking the medium bid.”

The city received seven bids for the project, the median bid was by S. J. Amoroso Construction, about $1.8 million higher than West Bay’s.

City staff will continue to work with West Bay and the management companies hoping to complete the project as soon as possible.

Lou Sandrini February 18, 2012 at 11:24 PM
There is no basis for Robert Gottschalk's comment and he even said he did not know this to be a fact. So, why did he even make such a comment?
Richard Lingensjo February 19, 2012 at 02:25 AM
google: "Construction Budget Management" for answers.
John Keefer February 19, 2012 at 08:23 AM
No experience (isn't experience a requirement cited in most RFPs) $750,000 because the firm used "subpar" paint, a City Attorney afraid of litigation, $1.3M to project management and a City Council claiming "someone must be held accountable" Okay, anyone else think something isn't adding up with this scenario?
Sara February 21, 2012 at 07:26 PM
Sounds like the PW Director does not have the experience.
David Carini February 21, 2012 at 11:49 PM
The PW director said the full costs of the project are unknown at this time, but no water rate increases are planned.

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