TRANSMITTAL LETTER FOR BOARD MEETING OF MAY 2, 2024
COMMITTEE ON PROCUREMENT
Mr. Brian A. Perkovich, Executive Director
Title
Authority to increase Contract 73-161-EH McCook Reservoir Excavation Agreement to Vulcan Construction Materials, LLC in an amount of $4,340,000.00, from an amount of $111,030,234.25, to an amount not to exceed $115,370,234.25, Account 401-50000-645620, Purchase Order 5000176
Body
Dear Sir:
On October 1, 2003, the District executed an Agreement with Vulcan Construction Materials, LLC (Vulcan) to mine a portion of the Lawndale Avenue Solids Management Area for the McCook Reservoir, Contract 73-161-EH. On July 9, 2015, the Board of Commissioners authorized the execution of an amended McCook Reservoir Excavation Agreement (Agreement) that incorporated eight previous amendments, clarified and updated the original estimate, and expanded the mining area of Stage 2 so that the final reservoir capacity would be increased from seven billion gallons to ten billion gallons. The contract is estimated to be completed in 2028 at a cost of $93,710,394.23.
As of April 19, 2024, the attached list of change orders has been approved.
Original Contract Amount $93,710,394.23
Date of Board Approval 7/9/2015
Cumulative Change Orders (4/19/2024) $17,319,840.02
% Change of Original Contract Value 18.48%
Current Contract Value $111,030,234.25
Requested Increase $4,340,000.00
New Contract Value $115,370,234.25
% Change of Current Contract Value 3.91%
Total % Change of Original Contract Value 23.11%
Item 1: An increase in the value of Item 8.3.I: Incremental Insurance, in an amount of $540,000.00, from an amount of $4,350,000.00, to an amount not to exceed $4,890,000.00. The increase is due to a rise in insurance costs from the previous projections in 2019. Annual insurance costs have increased at the site from approximately $175,000.00 per year in 2019 to $235,000.00 per year in 2023. The requested increase is required to cover the increases through the remainder of Vulcan’s mining, which is now expected to be completed in 2029.
Item 2: An increase in the value of Item 8.3.11: Other - Prevailing Wage Rates, in an amount of $2,000,000.00, from an amount of $6,250,000.00, to an amount not to exceed $8,250,000.00. The increase is required to reimburse Vulcan for the cost of paying wages and applicable fringe benefits (collectively referred to as “wages”) at the McCook Reservoir site. According to the Agreement, the District is responsible for reimbursing Vulcan, as a hard cost, for the wage and fringe benefits difference between the normal mining rate and the prevailing rate. An increase to this item is now required because the previously approved value underestimated the annual increases to wages and fringe benefits for Local 150 members that occurred from the 2013 through 2023 billing cycles, and the likely higher costs through the remainder of the project in 2029.
Item 3: An increase in the value of Item8.3.13: Other - Highwall Inspection and Scaling, in an amount of $1,800,000.00, from an amount of $6,325,000.00, to an amount not to exceed $8,125,000.00 is requested. Item 8.3.13 was previously increased at the March 17, 2022, Board Meeting, a result of recent safety requirements imposed by the Mine Safety and Health Administration (MSHA) that were not formerly required during the mining of Stage 1. The work required Vulcan to conduct additional scaling of the Stage 2 vertical highwalls during pre-split and production efforts in order to keep the area safe for drilling and blasting personnel through the year 2028. Under Section 8.3.K. of the Agreement, the District is responsible for incremental costs incurred by Vulcan to meet MSHA highwall safety criteria.
An increase is required in order to utilize skilled subcontractors, other than Vulcan labor, to scale the highwalls more efficiently in order to meet annual production needs to comply with the latest mining plan schedule set for completion in 2029. The McCook Reservoir highwalls require multiple inspections and highwall scaling passes in order to safely mine and this work is currently completed by Vulcan labor. However, Vulcan has indicated there are areas along the highwall that are saturated and embedded with clay seams causing scaling efforts to move slower than estimated; and requiring multiple inspections and rescaling in certain areas. Vulcan proposes to use subcontractors with expertise in scaling to ensure this work does not delay their mining schedule. Section 8.4 of the Agreement requires Vulcan to obtain competitive bids from at least three (3) contractors when subcontracting work and awarding the work to the lowest responsible bidder. Currently, Vulcan has solicited and received three bids for 2024 scaling efforts with a low bid in the amount of $1,756,400.00. The proposal includes labor and equipment to scale 667 horizontal feet of highwall along the reservoir’s west side pre-split line, 2,559 horizontal feet of 140 vertical feet of Level 3 highwall, and 1,917 horizontal feet of 140 vertical feet of Level 4 highwall along the reservoir’s south and west sides. The District will receive subsequent bids in the years 2025 through 2029 for future consideration and evaluation to avoid delays to Vulcan’s mining schedule. The engineer reviewed the proposals, found them to be reasonable, and stated that the Engineering Department would recommend their approval.
The above three change orders are in compliance with the Illinois Criminal Code since the changes are germane to the contract.
It is hereby recommended that the Board of Commissioners authorize the Director of Procurement and Materials Management to execute three change orders to increase Contract 73-161-EH in an amount of $4,340,000.00 (3.91 percent of the current contract value), from an amount of $111,030,234.25, to an amount not to exceed $115,370,234.25.
Funds are available in Account 401-50000-645620.
Requested, Catherine A. O’Connor, Director of Engineering, KMF
Recommended, Darlene A. LoCascio, Director of Procurement and Materials Management
Respectfully Submitted, Marcelino Garcia, 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 May 2, 2024
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