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HomeMy WebLinkAboutMinutes City Council - 11/05/2002 - SpecialI HEREBY CERTIFY that the foregoing is a true and correct copy of the minutes of the Special Council Meeting of the City of Corpus Christi of November 5, 2002, which were approved by the City Council on November 12, 2002. WITNESSETH MY HAND AND SEAL, this 12th day of November 2002. Armando Chapa City Secretary SEAL MINUTES CITY OF CORPUS CHRISTI, TEXAS Special Council Meeting November 5, 2002 - 12:00 p.m. PRESENT Mayor Samuel L. Neal Jr. Mayor Pro Tem Javier D. Colmenero Council Members: Brent Chesney* Henry Garrett Bill Kelly Rex A. Kinnison* John Longoria* Jesse Noyola Mark Scott* City Staff: City Manager David R. Garcia Deputy City Manager George Noe City Attorney James R. Bray Jr. City Secretary Armando Chapa Recording Secretary Rachelle Parry Mayor Neal called the meeting to order in the Council Chambers of City Hall. City Secretary Chapa called the roll and verified that the necessary quorum of the Council and the required charter officers were present to conduct the meeting. City Manager Garcia said this special meeting was called so the Council can take action on the multi-purpose arena. He said there are time constraints involving the issuance of the debt to finance the project. In addition, all of the bids came in higher than the amount of funds available. Consequently, staff is requesting that the Council rank the contractors so that staff can negotiate with the preferred contractor to attempt to bring the price down to within the budget. *Council Members Kinnison, Longoria and Scott arrived at the meeting. Assistant City Manager Ron Massey reviewed the background of this project. He noted that on August 22, 2000, the Council directed the City Engineer to appoint an advisory committee to develop and recommend plans to allow maximum minority/small contractor and subcontractor participation in the various construction projects (motion number M2000-291). Mr. Massey said the Major Projects Committee is a citizens' committee representing the construction industry and other interested stakeholders. The committee's role is to advise the City Engineer and staff to ensure maximum opportunity for local and small businesses and contractors to participate in city construction projects. The members are also charged with reviewing the development of bidding packages to maximize opportunities for local and small contractors and to ensure the city's ability to execute projects effectively and efficiently. Mr. Massey said that on December 12, 2000, the Council passed a resolution (No. 024307) directing the City Manager, in implementing the bond program approved by the voters on November 7, 2000, to structure contract specifications and bids to assure maximum opportunities for participation by local and small contractors. In addition, the City Manager was directed to prepare a program to enhance local and small contractor participation as recommended by the City Major Minutes - Special Council Meeting November 5, 2002 - Page 2 Construction Projects Advisory Panel. *Council Member Chesney arrived at the meeting. On March 26, 2002, the Council passed a motion (M2002-088) authorizing staff to proceed with competitive sealed proposals to hire a general contractor for the multi-purpose arena project. Mr. Massey said competitive sealed proposals were recommended by the City Major Construction Projects Advisory Panel and concurred with by city staff. Mr. Massey then reviewed an organizational chart to further describe how the competitive sealed proposals process works. He said the city hires a general contractor and is assisted by the architect/engineer and the project manager (in this case, Gilbane Building Company, which is incorporating the services of Anderson Group Construction Management). Mr. Massey said the project manager has a separate contract with the city and acts as the city's advocate in its relationships with the contractor and architect. The general contractor hires his own subcontractors. The Assistant City Manager said that competitive sealed proposals are a new procurement procedure for cities, although they have been used for a long time by Texas colleges. He said the Texas Legislature authorized this alternative delivery method in September 2001. Under that process, project plans and specifications are advertised for general contractors to submit proposals rather than bids. He said selection is based on a combination of factors—including price and other criteria—deemed to be in the best interest of the city. Mr. Massey said those criteria include past performance, team personnel, project scope and price. He said this process allows the city to negotiate modifications before the contract is awarded. In this situation under the bid process, the city would have had to reject all the bids because they came in over budget, modified the plans and specifications, and re -advertised them for new bids. Mr. Massey described the process used for the competitive sealed proposals for the multi- purpose arena. He said that first the city's Technical Subcommittee intensively reviewed the proposals. The subcommittee was comprised of representatives of Gilbane, Anderson Group, and city staff members. The results of their review were then presented to the city's Selection Committee, which consisted of the following executive -level management employees of the city: Mr. Massey; Mr. Mark McDaniel, Director of Management and Budget; Mr. Angel Escobar, Director of Engineering Services; Mr. Art Sosa, Acting Director of Development Services; and Mr. Kevin Stowers, Assistant Director of Engineering Services. He said proposals were submitted by these companies: Fulton/Coastcon, Joint Venture; Lyda/Arana/Durden, Joint Venture; Satterfield & Pontikes Construction Mc.; Zachry Construction; and Spaw Glass/Braselton, Joint Venture. He said that Spaw Glass/Braselton did not submit the required evaluation information by the deadline so their proposal is not being considered. Mr. Massey then discussed each contractor's plan for local participation, which was listed in the agenda material as follows (out of a total of 100%): Fulton/Coastcon- 74.81% local, 25.20% out-of-town; Centex/Zachry/EGI- 42.09% local, 40.93% out-of-town, and 16.99% unknown; Lyda/Arana/Durden- 43.31% local, 35.38% out-of-town, and 21.31% unknown; and Satterfield & Pontikes- 33.44% local, 49.10% out-of-town, and 17.46% unknown. Minutes - Special Council Meeting November 5, 2002 - Page 3 With regard to local participation, Council Member Noyola asked how much of those amounts constitute minority participation. Mr. Massey replied that staff's chart combines both minority and non -minority companies under the heading of "local participation." Mr. Bob Shackelford, with Anderson Group Construction Management, said that one of the requirements of the proposal was to identify local subcontractors. There was another category called "local minority" simply for statistical purposes. Mr. Noyola referred to information that staff faxed to the Council that had been submitted by the four companies. He said Lyda/Arana/Durden listed 9.89% total local minority firms and 33.42% total local firms for a grand total of 43.31%. Mr. Noyola said that Zachry listed 45.001% minority business enterprises (MBEs) and 42.087% local. Mr. Massey pointed out that Zachry's listing of MBEs includes all minority contractors and, of that, only 19% are local minority contractors. Mr. Massey then discussed a chart illustrating the relative ranking according to the following criteria: bid price (750 points); organization, administrative ability, claims/lawsuits history and financial resources (25 points); qualifications and experience of the project team (35 points); experience in projects of similar size and complexity (40 points); past performance for the city and other institutions in this area (25 points); ability to suitably schedule this project/history of meeting schedules on other projects (25 points); safety record (20 points); quality assurance program (20 points); ability to start construction (20 points); and local/minority participation (40 points), for a total of 1,000 points. Based on those scores, the companies were ultimately ranked as follows: Pt- Fulton/Coastcon; 2"d- Zachry Construction; 3`d- Lyda/Arana/Durden; and 4'h- Satterfield & Pontikes. Mr. Massey said staff is recommending that the Council approve the ranking of the contractors as stated and authorize the City Manager or his designee to enter into negotiations with the contractor ranked first; if that is unsuccessful, then with the contractor ranked second; and if appropriate, with the contractor ranked third. Council Member Scott pointed out that the city has a budgeted amount with which to work. Deputy City Manager Noe said the assumption was that the construction cost (whether that is the base bid alone or with additive alternates) would be about $33.1 million and the balance of the construction figure of $35.6 million was for seating, signage, and the arena's share of street work, which would be a separate bid to realign Shoreline Boulevard in front of the building. Council Member Chesney requested the point totals for each of the companies. City Attorney Bray said that state law on these kinds of contracts says that the governmental entity shall make the evaluations public not later than the seventh day after the date the contract is awarded. He said the details are kept within the process in order to obtain the best deal for the public and then they are released after the award is made. He said that law protects the government's interest and it is not to protect proprietary information. Mr. Garcia said that if the Council takes staffs recommendation, they are going to enter into an intensive period of negotiations with the successful proposer with an attempt to cut many millions of dollars out of it. He said the contractor, in turn, will be talking with their subcontractors and suppliers. He said a lot of those negotiations are protected until they are concluded; when the price Minutes - Special Council Meeting November 5, 2002 - Page 4 is concluded, the information will be released. Mr. Chesney said he is only asking for the point totals and he does not understand why that information would be confidential. Mr. Garcia said if the Council would like, staff can release that information; however, they feel it is a question of how much liability the city wants to take on in terms of defending those scores. A brief discussion ensued. Mr. Noyola asked about the fourth criterion—experience in projects of similar size and complexity. Mr. Stowers said that criterion involved a reference check and staff found that all the firms were well-qualified and could successfully complete the project. He said the variances occurred in the level of validation staff received. He said Fulton/Coastcon received universally positive comments, even from out-of-town architects, which is why they were ranked first in that category. He said Zachry was ranked second for that criterion and, although they received superior comments, on one project the reference provided negative comments. Responding to other questions from Mr. Noyola, Mr. Stowers said the grading was in response to the materials that were submitted. He said with regard to the company's ability to start construction, staff has observed that out-of-town contractors frequently require a little more time to mobilize and to get their critical team members on site. He said Zachry-Centex did not have local involvement for their team management. Mr. Noyola said that Fulton/Coastcon proposed $38.9 million on the base bid and $39.6 million with the additive alternates. However, he reiterated that the budget is $33.1 million, which is a large variance from Fulton's proposal. Mr. Massey said the first priority is to do value engineering, which means that there are many alternative ways to complete the project. Mr. Noyola asked why staff does not start the negotiations with the lowest bidder. Mr. Massey said staff's recommendation in determining which contractor potentially offers the best value for the city is not the lowest bidder. He added that the Council made very specific decisions about what procurement procedure to use. Normally, the city's procurement procedure is the lowest responsible sealed bid; however, this project used competitive sealed proposals. Mr. Noe said that a 7% contingency (about $2.5 million) has been set aside for any contract change orders. Mr. Noyola asked about the time table for the arena project. Mr. Stowers said staff is already implementing value engineering methods and they expect to bring a contract to the Council in December 2002. He said their objective was to meet the 2004 basketball season and staff believes they can make that one of the conditions of the contract award. Council Member Garrett asked if all of the contractors were aware of the ranking criteria. Mr. Massey replied that the actual bid package laid out the various categories, specified the points that would be assigned to each, and required them to submit information that was used to evaluate each company in each category. Mr. Garrett asked if there is anything unusual about this ranking procedure. Mr. Massey said there is not; he added that normally these factors are looked at under the typical bid process but from a "Yes" or "No" standpoint to determine if each company qualifies. Mr. Garrett asked Mr. Massey if he communicated with any of the contractors other than Minutes - Special Council Meeting November 5, 2002 - Page 5 what they submitted to the committee. Mr. Massey said he did not. Mr. Stowers said that in one case there was confusion with some of the materials submitted and Mr. Escobar requested a clarification. Referring to the contractor's plan for participation, Mr. Massey said if the contractor did not allocate everything, there was the potential for losing credit. Mr. Stowers said there was some doubt in the minds of the Technical Committee members about the impact of that element. The decision was to take the local and local minority participation that the companies reported and use that as the basis for the ranking. He said there was a minor adjustment made because of the uncertainty that it was not fully allocated but it was not enough to make any difference in the rankings in the end. Responding to Mr. Scott, Mr. Bob Farmer, Gilbane Building Company project executive, said they are very familiar with this process because Gilbane acts as project manager on many projects across the country. He said they have reviewed hundreds of proposals of this nature. He said they typically do not see a disclosure of the numbers, especially in the higher education arena. Council Member Colmenero asked what the city will be attempting to accomplish through the negotiations. Mr. Massey said there are certain areas in which staff knows there is a potential for savings to be achieved. He said they will ask the contractor to suggest construction techniques other than those in the city's specifications. He said they will also work with Gilbane and the architects to ensure that the best possible structure is built. He added that it is their objective to stay within the construction budget. He said the contingency funds are intended to pay for any changes after the contract is awarded. Mr. Stowers said Zachry, Lyda/Arana/Durden, and Satterfield & Pontikes were not contacted regarding the non -allocation of the total contract value. Mr. Chesney asked Mr. Farmer to further explain the process used. Mr. Farmer said they were hired as project managers and they partnered with Anderson Group (a local firm). They have been involved in this process from the very beginning of the design phase and they participated in the meetings with the City Major Construction Projects Advisory Panel. In addition, they provided technical expertise to city staff whenever asked as far as developing the request for proposals, scoring and other aspects. In this case, their team was also part of the Technical Committee. Mr. Chesney asked if Gilbane or Anderson Group have any financial ties to any of the four proposers and Mr. Farmer said they do not. He also further described their actions on the Technical Committee and said their rankings match up with staffs rankings. Responding to another question from Mr. Chesney, Mr. Farmer said this process allows the city to choose a contractor that will provide the best value to the city, which takes in all the rest of the criteria than just the cost. He said he thinks that all four companies would be able to build the arena within the $33.1 million budget. Mayor Neal reviewed the actions the Council took to establish this process. He then asked Mr. Massey, Mr. Stowers, Mr. Escobar and Mr. McDaniel if at any time they had any influence or contact by any member of the Council or the Mayor to influence this process. The four men replied negatively to the Mayor's question. The Mayor then called for public comment. Mr. Abel Alonzo, 1701 Thames, said he feels this process was political. He said as a member of the Airport Board, he strongly recommended that Mr. Joe Fulton's company receive the contract Minutes - Special Council Meeting November 5, 2002 - Page 6 for the new terminal construction. He said that is an indication that he has nothing against Mr. Fulton personally. Mr. Alonzo said he wants to know if any of the committee members involved in this process ever worked for Mr. Fulton. He said he'd like to know the amount of the lowest bid for this project. Mr. Alonzo added that while Hispanics are the minority when it comes to equal participation in contracts and other opportunities, they are the majority in population. Mr. Noyola said there is about a $1.4 million difference in the bids. Mr. Scott reiterated that all the proposals were over the $33.1 million budget and they need to stay within that budget. Mr. Chesney said it is not fair to come to the Council and make accusations about this being a political process without evidence to support that claim. Mr. Ernest Garza said he is part of the outreach program for the EGI/Zachry/Centex team. He said they are concerned about the $1.4 million variance in the proposals. He said he understands that local participation is critical in Corpus Christi but 75% of the scoring was price. He said if the $1.4 million is taken out, it skews the points that were awarded. He said it leads to subjective results. Mayor Neal asked Mr. Garza if he was saying that if they negotiate the cost down, it will come out of the minority or local contractor part. Mr. Garza said it could affect the total participation amount. Mr. Ralph Durden said that based on the city's figures of $35,325,160 as the base bid plus alternate No. 1, Lyda/Arana/Durden is the low bidder by $4,000. He said they beat Zachry, who is second and they beat Fulton/Coastcon by $1,478,000. He said they think those are significant numbers and since all are over budget, cuts would have to be made as follows: Fulton—cut $4,246,000; Lyda/Arana/Durden—cut $2,771,000; and Zachry—cut $2,767,000. He said they thought price was the most important consideration because it was worth 750 points. He said if they took less than $500,000 of the $1,478,000, they could increase their local participation by over $7 million. He said they could also increase their minority participation in this project. Mr. Durden referred to the participation breakdown and he said he does not know of any general contractor that subs 100% of a job. His company is subbing close to 80% and 20% of it is self -performed. He said the percentages they submitted are based on the amount of subcontracts they will issue. He added that the city required the proposers to submit an enormous amount of detail and he said the City Manager faxed to the Council copies of all their subcontractors and prices. Mr. Durden said they would like to know where they got beat on this contract. Ms. Lupe Arana said that Arana/Durden is the only Hispanic -owned and female -owned small business. She said they would like to know if there is additional scoring allowed for that fact. Mr. Stowers said if it is a local or local minority, their percent of the contract as reported by their submittal was the percent that was given in order to arrive at the ranking. It is not a double or triple count based upon multiple characteristics. Mr. Chesney referred to Mr. Durden's comment about the release of documents to the Council. Mr. Bray replied that the City Council is part of the city organization itself and that is not releasing it to the outside. Mr. Chesney said he would like to see the point breakdown. Mr. Rene Garcia said he represents the team of EGIIZachry/Centex and he said he understands the process. He said Zachry is an international company and has been involved in many Minutes - Special Council Meeting November 5, 2002 - Page 7 of these processes, although he does not think they have ever been involved in one that has created such controversy. He said it depends on how the process is executed and he believes the intent of the people involved was very positive. He said he believes there were items in their submission that were not taken into account on the grading. He said Zachry has over 1,500 employees in Corpus Christi, including management personnel, and he questioned their ranking on the mobilization criterion. He said there was a published target of 45% for local and minority participation and they exceeded it while also giving the city a very competitive price. He said they are ready to sit at the table with the city to discuss value engineering recommendations and to get the project into budget. Mr. J.E. O'Brien, 4130 Pompano, asked if the Anderson Group has any connection with the Arthur Anderson audit firm. Mayor Neal said it does not. Mr. O'Brien read some headlines regarding trust and credibility at City Hall, employee health insurance low bids, and the "padrone" system. He suggested that it would be good public policy for the city to release all of the dollar amounts of the various proposals. Mr. Marty Garza said he is Vice President for Centex Construction Company, which is part of the Zachry/EGI team. He said he is very familiar with the competitive sealed proposal/ construction manager at risk processes. He said the city's request for proposals listed only 40 points out of 1,000 for local minority and local participation. He said the discussion has indicated that the issue of local participation tended to gravitate into some of the other criteria. He said it appears that they were not ranked number one because of local participation but it does not make much sense. Mr. Kinnison said he understood that the awarding of points on the bid price segment, which counted for 750 points, was nothing more than a mathematical calculation. Mr. Massey said that is correct. Using hypothetical figures, Mr. Kinnison gave an example of his contention. Mr. Stowers noted that the so-called low bid became the basis for 750 points and that bid was divided by each of the succeeding bids in order to arrive at a percentage, which was then multiplied by the 750 points. He said that question was asked and answered during the pre -proposal submittal. Mr Kinnison said they are not going to spend more money regardless of which contractor is selected but all of it will be spent. Other important factors are the time table and local participation. He also asked how cities are able to use the competitive sealed proposal process. Mr. Stowers said it became available for cities' use last year but other entities have used it for years. Mr. Kinnison asked if builders support it. Mr. Massey said that generally road contractors have not been very supportive of different procurement techniques whereas vertical construction companies do support them. Mr. Derwood Anderson of Anderson Group said that competitive sealed proposals have been used in K-12 construction for many years throughout Texas and about three years ago it began to be used in university systems; now it is being utilized by municipalities. He said they have been very active in all of the different procurement methods as well as in the ranking system. He said it basically unties the hands of entities to make decisions that the commercial marketplace has been making for many years; i.e., that past performance now counts. Responding to another question from Mr. Kinnison, Mr. Garcia said that some contractors are very good at being the low bidder but they provide inferior products. He said the city has Minutes - Special Council Meeting November 5, 2002 - Page 8 encountered that several times where they have had to terminate construction contracts because of the poor quality of the work. He said this process allows the city to avoid those problems by being able to take the track record of a contractor into consideration in addition to the bid they submit. In reply to Mr. Kinnison, Mr. Stowers said they feel the local contractors and local minority subcontractors are effective and are good business people and they can hold their own with out-of- town firms. Mr. Massey said that in order to change the list of subcontractors, the city, the general contractor and the subcontractor would have to agree. Mr. Kinnison said he wants to see the same emphasis on quality in the arena project that is apparent in the new airport terminal. He said this was a close call and any of these companies would do a good job. Mr. Longoria said the Council purposefully chose not to use low bid as the only criterion in choosing a contractor for the arena project. Rather, they chose to explore other alternatives. He said the minority community was very vocal about wanting to be involved in projects like this so the Council structured the contract specifications and bids to ensure maximum opportunity for both local and small contractors. He said they received a tremendous response from the proposers and this contract could have gone either way. He said this was a difficult decision and he feels comfortable with the recommendation city staff is making. Mr. Colmenero said the city has been working very closely with contractors to provide quality projects and the participating companies put forth a great effort. Mayor Neal thanked all those who worked on behalf of the city and those who submitted proposals. He said they will now try to move this project forward. City Secretary Chapa polled the Council for their votes as follows: 1. M2002-364 Motion approving the recommended ranking of contractors for the multi-purpose arena and authorizing the City Manager or his designee to enter negotiations in accordance with the Local Government Code. The foregoing motion passed by the following vote: Neal, Chesney, Colmenero, Garrett, Kinnison, Longoria, and Scott voting "Aye"; Noyola voting "No"; Kelly abstaining. Mr. Garcia said the point totals provided to the Council are confidential until after the contract is awarded. The Council members returned the information to the City Manager. There being no further business to come before the Council, Mayor Neal adjoumed the special Council meeting at 1:43 p.m. on November 5, 2002. * * * * * * * * * * * * *