AGENDA #5g
MEMORANDUM
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
Ralph D. Karpinos, Town Attorney
SUBJECT: Report on Airport Gardens Public Housing Rehabilitation Contract Bid Award
DATE: March 22, 2004
On February 23, 2004, the Council directed that a report be provided to the Council regarding the awarding of the contract for rehabilitation of the Airport Gardens Public Housing. This memorandum is provided in response to the Council’s directive.
BACKGROUND
On January 28, 2004, the Council accepted a bid and awarded a contract in the amount of $757,000 to Carl Garris & Son, Inc. for comprehensive rehabilitation work for 18 apartments at the Airport Gardens public housing neighborhood. The 18 apartments were included in the Base Bid for eight apartments and an additional 10 apartments in Alternate 2. The decision to award a bid for the Base Bid plus Alternate 2 was determined from the prices submitted and the funds currently available to the Department of Housing for this rehabilitation work. Carl Garris & Son, Inc. was the low bidder for the Base Bid and Alternate 2. Attachment 1 consists of the January 28, 2004, agenda memorandum and resolution adopted by the Council. (This meeting had been scheduled for January 26 but was delayed until January 28 due to a snow event.)
Following the Council’s action on January 28, 2004, questions were raised by one of the bidders on this project who was not the successful bidder. On February 6, 2004, we received a letter from Walter E. Ricks, III, Attorney, on behalf of Hairston Enterprises, raising concerns regarding how this bidding process was conducted and the language included in the Council’s adopted resolution (Attachment 2).
Based on the questions that were raised and Mr. Rick’s letter, we reviewed the proceedings related to the bidding of this project and the Council’s action on January 28, 2004. We concluded that Attorney Ricks raised valid concerns with respect to the further language in the resolution pertaining to negotiating for the completion of other Alternate portions of the project without re-bidding.
We recommended, and Council approved, on February 23, 2004, a resolution that rescinded the previous language that provided apparent authority to the Manager to negotiate further contracts without conducting a separate bidding procedures. We further stated that the Council’s action on January 28, 2004, awarding of the contract for the Base Bid and Alternate 1 to the low bidder, Carl Garris and Son, Inc., was proper. That report is Attachment 3. We advised Mr. Ricks of what our recommendation to the Council was by letter dated February 18, 2004 (Attachment 4).
Mr. Ricks and his client, an unsuccessful bidder on the project, attended the Council’s February 23, 2004, meeting and elaborated on their concerns with respect to the Town’s consideration of the bids for the Airport Gardens rehabilitation project. After hearing their concerns, the Council directed the Manager and Attorney to provide this further report prior to the execution of the contract approved by the Council January 28.
DISCUSSION
As we previously reported to the Council, the award of the bid for this project was based on a determination of what the Town was able to fund based on available revenues: the Base Bid plus Alternate 2, for a total of 18 units to be renovated. The low bidder for the project was Carl Garris & Son, Inc.
The original resolution approved by the Council in January included authorization for change orders. We believe, and stated to the Council in our February 23 report, that this authorization was included in the resolution presented by staff in error. We asked the Council to rescind that authority and the Council did so, making it clear that further phases of this project would be subject to applicable bid laws and would not be handled by change orders.
We have been in correspondence with officials at the U.S. Department of Housing and Urban Development and with Mr. Ricks regarding this matter:
We have not received any further information from Mr. Ricks. The February 27 letter from Amoes Sheppard at HUD raised some concerns regarding the procedures initially taken by the Town. We provided the documentation to Mr. Sheppard that he requested. We included in those materials the actions taken by the Council on February 23 to modify the language regarding further change orders. We are waiting to hear from HUD officials regarding their evaluation of that documentation. Unless HUD determines that some step taken by the Town regarding this proposed contract was in error and directs the Town to follow a different procedure, we believe that the State statutes and federal regulations require that we proceed with the contract awarded by the Council to Carl Garris & Son, Inc.
Question Raised by the Council on February 23:
During the Council’s discussion of this matter on February 23, concerns were raised regarding the procedures used by the Town in awarding this contract. A request was made to provide additional information pertaining to the consideration given historically to local companies in awarding contracts.
In response to that request, we have conducted a review of the bids awarded by the Council for formal and informal construction and equipment contracts over the past five years. Since the beginning of Fiscal Year 1998-99, our research shows thirty-five construction contracts and thirty-three equipment contracts have been awarded in the formal and informal bid categories. During that period of time, our review shows that in two specific instances, a bid was awarded to a party that was not the apparent low bidder:
1. On November 27, 2000, the plumbing contract for Fire Station Number 5 was awarded to the second lowest bidder after it was determined and reported to the Town Council that the apparent low bid was “unresponsive due to omissions and oversights.”
2. On June 30, 1998, a contract was awarded for a diesel-powered, tandem-axle truck that was not the low bidder after an evaluation of the proposals from lower bidders, reported to the Town Council, found that the components, or the delivery schedule, or both were not acceptable.
Our review of the Town’s records does not indicate any instances in the past five years in which formal or informal bids for construction or equipment were awarded to a party that was not the lowest responsible bidder.
In response to Council’s questions we reported that the award of the contract to the low bidder was in conformance with State bid laws.
Next Steps:
It is our intent to await a response or further direction regarding this matter from officials at the U.S. Department of Housing and Urban Development and to defer execution of the contract approved by the Council in January until receipt of a response from the federal agency confirming that the Town can proceed with this project.
In the event the Department of Housing and Urban Development directs the Town to take some alternative course of action we will report back to the Council and request further instruction. Assuming that the U.S Department of Housing and Urban Development finds no problems with the actions previously taken, we will execute the contract as authorized by the Council and proceed with this rehabilitation project.
Manager’s Recommendation: That the Council take no further action regarding this matter at this time.
ATTACHMENTS
1. January 26, 2004 Agenda item #4e (p. 5).
2. February 6, 2004 letter from Walter Ricks (p. 11).
3. February 23, 2004 Agenda item #4c (p. 14).
4. February 18, 2004 letter to Walter Ricks (p. 17).
5. February 20, 2004 letter to Sandra James (p. 18).
6. February 24, 2004 letter to Walter Ricks (p. 19).
7. February 26, 2004 letter to Sandra James (p. 20).
8. February 27, 2004 letter form Amoes Sheppard (p. 22).
9. March 2, 2004 letter to Amoes Sheppard (p. 24).