TRANSMITTAL LETTER FOR BOARD MEETING OF FEBRUARY 2, 2012
COMMITTEE ON PROCUREMENT
Mr. David St. Pierre, Executive Director
Title
Authority to increase the McCook Reservoir Excavation Agreement, to Vulcan Construction Materials, L.P., in an amount of $1,901,438.00, from an amount of $58,343,956.23, to an amount not to exceed $60,245,394.23, Account 401-50000-645620, Purchase Order 5000176
Body
Dear Sir:
On September 4, 2003, the Board of Commissioners authorized and approved the execution of an agreement with Vulcan Construction Materials, L.P. (Vulcan), for excavation of the McCook Reservoir. The terms of the agreement provide for reimbursement of “Hard Costs” associated with the mining operation over a period of approximately 14 years. The agreement recognized that additional hard cost items would be identified and provided for their reimbursement. The agreement also recognized that the costs included were initial estimates and that reimbursement would be based on costs actually incurred. Attachment 1 provides a summary of the estimate of total mining costs.
Attachment 2 is a list of change orders that have been approved as of January 20, 2012. The effect of these change orders resulted in an increase in an amount of $13,303,956.23 from the original amount awarded of $45,040,000.00. The current Purchase Order value is $58,343,956.23. The prior approved change orders reflect a 29.54% increase to the original Purchase Order value.
Item 1: An increase in the value of Item 8.3.G, Additional Administration, in an amount of $500,000.00 from an amount not to exceed $2,585,000.00 to an amount not to exceed $3,085,000.00. The increase is required to reimburse Vulcan for legal costs authorized by the seventh amendment to the agreement, executed September 17, 2009. Amendment 7 allows for reimbursement of 50% of Vulcan’s legal costs, beginning on April 28, 2008, in defense of allegations of a violation of the Prevailing Wage Act by Local 150 of the International Union of Operating Engineers.
Item 2: An increase in the value of Item 8.3.I, Incremental Insurance, in an amount of $2,000,000.00 from an amount not to exceed $1,000,000.00 to an amount not to exceed $3,000,000.00. The agreement did not have an estimated cost associated with Item 8.3.I since the cost for incremental insurance was unknown at the time. The purchase order was issued with a value of $1,000,000.00 as an initial estimate for the incremental insurance. With four years of mining activity completed, it has become apparent that $1,000,000.00 is not sufficient to fund the incremental insurance costs through completion of Stage 2 mining.
Item 3: A decrease in the value of Item 8.3-1, Conveyor Pad, in an amount of $28,620.00 from an amount not to exceed $700,000.00 to an amount not to exceed $671,380.00. The decrease is being applied to reflect the actual cost of construction of the conveyor pad, now that the work is complete.
Item 4: A decrease in the value of Item 8.3-2, Rock Trench and Site Preparation, in an amount of $437,389.00 from an amount not to exceed $6,300,000.00 to an amount not to exceed $5,862,611.00. The decrease is being applied to reflect the actual cost of construction of the rock trench and site preparation work, now that the work is complete.
Item 5: A decrease in the value of Item 8.3-8, Parking Lot Retaining Wall and Modification, in an amount of $511,553.00, from an amount not to exceed $900,000.00 to an amount not to exceed $388,447.00. The decrease is being applied to reflect the current estimated construction cost, since this work is nearly complete.
Item 6: An increase is now required to reimburse Vulcan for the cost of procuring and installing a groundwater pumping system. Per the Agreement, the groundwater pumping system is a capital cost item that the District is responsible for providing. The pumping system will be required in early 2012 as Vulcan progresses to the lowest level in Stage 1. In order to prevent an impact to the schedule, it is necessary to have Vulcan contract this work as a hard cost, rather than the District procuring as a capital cost item. Additionally, since Vulcan is solely responsible for the maintenance and is the sole user of the pumps, allowing Vulcan to contract the work as a hard cost will give them ultimate responsibility for the design and procurement of the pumps with the District maintaining ownership rights.
Vulcan estimates that the procurement and installation of the new groundwater pumping system will cost approximately $379,000.00. The addition of this work as Item 8.3-9 of the hard costs will allow for the removal of Item 9.3.D from the District’s capital cost responsibilities, resulting in no net change to the overall mining costs for this item.
All of these change orders are in compliance with the Illinois Criminal Code since the changes are due to circumstances not reasonably foreseeable at the time the contract was signed, and are in the best interest of the District.
It is hereby recommended that the Board of Commissioners authorize the Director of Procurement and Materials Management to execute six change orders that increase Purchase Order 5000176 in a total amount of $1,901,438.00 (3.26% of the current contract value) from an amount of $58,343,956.23 to an amount not to exceed $60,245,394.23.
Funds are available in Account 401-50000-645620.
Requested, Kenneth A. Kits, Director of Engineering, WSS:KMF
Recommended, Darlene A. LoCascio, Director of Procurement and Materials Management
Respectfully Submitted, Barbara J. McGowan, Chairman Committee on Procurement
Disposition of this agenda item will be documented in the official Regular Board Meeting Minutes of the Board of Commissioners for February 2, 2012
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