HomeMy WebLinkAbout2004-25595 Reso
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RESOLUTION NO. 2004-25595
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF
MIAMI BEACH, FLORIDA, ACCEPTING THE CERTIFICATION OF DEFAULT BY
THE CITY ENGINEER, PURSUANT TO ARTICLE 8.8 (ENTITLED, "ANNULMENT
OF CONTRACT") OF THAT CERTAIN CONTRACT ENTERED INTO BETWEEN
THE CITY AND REGOSA ENGINEERING, INC. (CONTRACTOR), PURSUANT TO
REQUEST FOR PROPOSALS NO. 21-00/01, FOR CONSTRUCTION OF THE
NORMANDY PARK POOL FACILITY (PROJECT)(CONTRACT); FURTHER,
PURSUANT TO ARTICLE 8.8 OF THE CONTRACT: (1) TAKING THE
PROSECUTION OF THE WORK OUT OF THE HANDS OF THE CONTRACTOR;
(2) AUTHORIZING THE APPROPRIATION OR USE OF ANY OR ALL MATERIALS
AND EQUIPMENT ON THE (PROJECT) GROUND AS MAY BE SUITABLE AND
ACCEPTABLE; AND (3) AUTHORIZING AND DELEGATING TO THE CITY
MANAGER SUCH AUTHORITY AS SHALL BE NECESSARY FOR HIM TO ENTER
INTO AN AGREEMENT FOR THE COMPLETION OF SAID CONTRACT,
ACCORDING TO THE TERMS AND PROVISIONS THEREOF, OR USE SUCH
OTHER METHODS AS IN HIS OPINION SHALL DEEM ADVISABLE FOR THE
COMPLETION OF SAID CONTRACT IN AN ACCEPTABLE MANNER; FURTHER,
IN ORDER TO EFFECTUATE THE ACTIONS TO BE TAKEN IN ITEM (3) ABOVE,
WAIVING BY 5nTHS VOTE, THE COMPETITIVE BIDDING REQUIREMENT,
FINDING SUCH WAIVER TO BE IN THE BEST INTEREST OF THE CITY, AND
AUTHORIZING THE CITY MANAGER TO SELECT, NEGOTIATE, AND AWARD
ANY AND ALL CONTRACTS, PURCHASE ORDERS, CHANGE ORDERS AND
OTHER DOCUMENTS, INCLUDING BUT NOT LIMITED TO AN AMENDMENT TO
THE CITY'S EXISTING CONTRACT WITH THE CORRADINO GROUP, INC., THE
CITY'S ARCHITECT/ENGINEER FOR THE PROJECT (AlE CONSULTANT), TO
PROVIDE FOR SUCH ADDITIONAL SERVICES AS NECESSARY TO
COMPLETE/ADMINISTER THE REMAINING WORK ON THE PROJECT;
PROVIDED FURTHER THAT ALL OF THE AFORESTATED CONTRACTS,
PURCHASE ORDERS, CHANGE ORDERS, AMENDMENTS, AND OTHER
DOCUMENTS SHALL BE SUBSTANTIALLY IN ACCORDANCE WITH THE
PROJECT AND THE SCOPE OF THE WORK CONTEMPLATED WITHIN THE
CURRENT CONSTRUCTION CONTRACT WITH CONTRACTOR, AND SHALL
NOT EXCEED THE CURRENT AMOUNT APPROPRIATED FOR THE PROJECT
BY THE MAYOR AND CITY COMMISSION, AND ANY SUCH CONTRACTS,
PURCHASE ORDERS, CHANGE ORDERS, AMENDMENTS, AND OTHER
DOCUMENTS THAT EXCEED SAID APPROPRIATED AMOUNT SHALL REQUIRE
THE APPROVAL OF THE CITY COMMISSION; FURTHER AUTHORIZING THE
CITY MANAGER OR HIS DESIGNEE TO INVOKE THE PERFORMANCE BOND
ISSUED BY ST. PAUL GUARDIAN INSURANCE COMPANY, AS A RESULT OF
CONTRACTOR'S DEFAULT UNDER THE CONTRACT.
WHEREAS, pursuant to approval by the voters of the $15 Million General Obligation Bond
for the improvements to the City's parks on November 8, 1994, the City entered into an Agreement
with The Corradino Group, Inc. (the AlE Consultant) to provide architecture and engineering services
for the Normandy Park and Pool Facility Improvements (the Project); and
WHEREAS, the Project was extensively reviewed by the community during the programming
and design phases; and
WHEREAS, based on analysis of the projected demographic data of the region, and in order
to upgrade the quality of services being offered to the community, the Administration and the AlE
Consultant re-evaluated the scope highlighted in the Master Plan, approved on June 19, 1996, and
re-defined the Project to a more comprehensive aquatic facility consisting of a pool with an aquatic
play structure, and a four (4) lane lap pool with night-swimming-quality lighting; and
WHEREAS, the Project also included construction of new restrooms and shower facilities,
multi-purpose activity building, outdoor trellis shade areas, and a concession building; and
WHEREAS, also included are a new pedestrian promenade to traverse the length of the
park; new landscaping and irrigation, including a buffer between the park and the adjacent residential
neighborhood; a new multi-purpose court; a decorative perimeterfence with new entry gate features;
on-street parking; and sidewalk improvements; and
WHEREAS, on September 1, 2000, Invitation to Bid No. 136-99/00 was issued for
construction of the Project; and
WHEREAS, from the 1,128 vendors that were notified, the City's Procurement Department
received requests for plans and specifications, but the three lowest responsive bids had significantly
exceeded the available funding of $2,381,206, of which $2,175,000 was allocated for hard
construction costs and the remaining balance of $117,206 for fixtures, furnishing and equipment
(FF&E), signage, playground equipment, and special inspection fees; and
WHEREAS, on January 31,2001, the Mayor and City Commission rejected all bids and on
February 21, 2001, upon recommendation of the Administration, the City Commission adopted
Resolution No. 2001-24279, to issue Request for Proposal No. 21-00/01 for the construction of the
Project (the RFP); and
WHEREAS, on March 20, 2002, the Mayor and City Commission authorized the execution of
a construction contractforthe Project with Regosa Engineering, Inc. (Contractor), as the successful
proposer pursuant to the RFP; said contract in the amount of $2,264,000 (Contract); and
WHEREAS, additional funds were appropriated in the amount of $389,000, to complete the
construction: $89,000 for ADA improvements and on-street parking improvements, and $300,000 to
complete funding for the hard construction costs of the aquatic facility, the ramps and walkways, the
perimeter fence, and the pool night slNimming and security lighting; and
WHEREAS, the additional items such as the multi-purpose court, soccer field renovations,
and site landscaping and irrigation were not funded at the time; and
WHEREAS, since the commencement of construction, several delays related to coordination
and unforeseen conditions, omissions and deletions, have arisen; significantly, the Contractor
caused two (2) of the major events in the Project that have delayed its timely completion; and
WHEREAS, the overall delay caused by the Contractor's actions, considering that the events
could have been cured concurrently, affected the construction schedule by approximately sixty (60)
days, and do not warrant additional time to the Contractor; and
WHEREAS, Contractor submitted a recovery schedule that was approved by the AlE
Consultant and accepted by the City, and a small increase in staffing was noted overthe last couple
of months; and
WHEREAS, notwithstanding the aforestated, the Contractor has failed to demonstrate that
the current labor force has the ability to perform both the needed remedial work on rejected items
and keep up its own construction schedule; and
WHEREAS, as a result, progress continues to be slow on the Project, which is now
approaching fifty (50%) completion; and
WHEREAS, during the past several months, Contractor has continued to fall seriously behind
schedule, and does not appear to have a plan of action to correct this situation in a timely manner;
and
WHEREAS, as Contractor has failed to prosecute the work of the Project in accordance with
the terms of the Contract, on May 5, 2004, the Administration sent Contractor a Notice of Default,
attached hereto as Attachment "1 ", for (among other things) failure to prosecute the work on the
Project in a timely manner; and
WHEREAS, Contractor responded to the City's Notice of Default on May 7,2004, in a letter
attached hereto as Attachment "2", in which Contractor alleged that the City was in default, based on
an unforeseen sight condition that happened early in the Project; the City denies Contractor's
allegation as the purported unforeseen site condition was a situation for which Contractor negotiated
and accepted a Change Order for additional Contract time; and
WHEREAS, as required by the Contract, Contractor's response (Attachment "2") does not
appropriately address the default items that the City identified in its May 5, 2004 Notice, nor has
Contractor made any attempt to timely cure said issues; and
WHEREAS, the City responded to Contractor's May 7, 2004 letter, said response attached
as Attachment "3" hereto; and
WHEREAS, the City's CIP Director, acting within the authority vested in the "City Engineer",
as said term is defined in the Contract, has made the finding of Contractor's default under the
Contract, and, pursuant to this Resolution and Attachments hereto, as well as the Commission
Memorandum accompanying this Resolution and all exhibits thereto, all incorporated by reference
herein, hereby submits to the Mayor and City Commission written certification of Contractor's
default, as required by Article 8.8 of the Contract; and
WHEREAS, pursuant to Article 8.8 of the Contract, the Administration is also recommending
that the City Commission remove the prosecution of the work from Contractor and authorize the City
Manager, to enter into an Agreement for completion of said Contract, or use such other methods as
in his opinion shall deem advisable for the completion of said Contract in an acceptable manner;
and
WHEREAS, in order to properly invoke the Performance Bond on the Project, the
Administration is requesting that the City Commission also authorize the City Manager to make the
appropriate claim to the Surety, St. Paul Guardian Insurance Company, in accordance with
requirements of the Performance Bond and the Contract; and
WHEREAS, several alternatives have been examined to proceed with the completion ofthe
Project and due to the amount of time Contractor has been on the Project, it is important to act in an
expedient manner to complete the unfinished work; and
WHEREAS, not only is the extended construction time, and therefore continued construction
activity within the Project site, creating a hardship forthe adjacent residential and commercial areas,
but Contractor's defaults relative to delays and non-completion of the Project have the potential
effect of creating a potential public health & safety hazard in terms of the unfinished site and
structures thereon; and
WHEREAS, in order to address the aforestated issues/potential conditions, and expedite this
matter, the Administration recommend that the Mayor and City Commission waive the competitive
bidding requirement, finding such waiver to be in the best interest of the City; and
WHEREAS, at this time, the Administration contemplates completing the work with a
contractor from the City's Job Order Contractor (JOC) Program; and
WHEREAS, even with these changes, Substantial Completion of the Project is estimated for
November 2004; and
WHEREAS, as a result of the Contractor's default, it is likely that the AlE Consultant's
Agreement with the City will also have to be amended to provide for additional services to update
construction documents and for extended construction administration services; and
WHEREAS, it is the recommendation of the Administration, with the concurrence of the City's
Program Manager for the Project, URS Corporation, that the City exercise it rights, as contained
within the Contract with Regosa, and as set forth in this Resolution by omitting the balance of the
remaining work from the Contract, and removing the prosecution of the work from Contractor.
NOW, THEREFORE, BE IT DULY RESOLVED BYTHE MAYOR AND CITY COMMISSION
OF THE CITY OF MIAMI BEACH, FLORIDA, that the Mayor and City Commission hereby accept
the Certification of Default by the City Engineer, pursuant to Article 8.8 (entitled, "Annulment of
Contract") of that certain Contract entered into between the City and Regosa Engineering, Inc.
(Contractor), pursuant to Request for Proposals No. 21-00/01, for construction of the Normandy
Park Pool Facility (the Project)(the Contract); further, pursuant to Article 8.8 of the Contract: (1) take
the prosecution of the work out of the hands of the Contractor; (2) authorize the appropriation or
use of any or all materials and equipment on the (the Project) ground as may be suitable and
acceptable; and (3) authorize and delegating to the City Manager such authority as shall be
necessary for him to enter into an Agreement for the completion of said Contract, according to the
terms and provisions thereof, or use such other methods as in his opinion shall seem advisable for
the completion of said Contract in an acceptable manner; further, in order to effectuate the actions
to be taken in Item (3) above, waive by 5/7ths vote, the competitive bidding requirement, finding
such waiver to be in the best interest of the City, and authorize the City Managerto select, negotiate,
and award any and all contracts, purchase orders, change orders and other documents, including
but not limited to an amendment to the City's existing Contract with The Corradino Group, Inc., the
City's Architect/Engineerfor the Project (AlE Consultant), to provide for such additional services as
necessary to complete/administerthe remaining work on the Project; provided further that all of the
aforestated contracts, purchase orders, change orders, amendments, and other documents shall be
substantially in accordance with the Project and the scope of the work contemplated within the
f
current Construction Contract with Contractor, and shall not exceed the current amount appropriated
for the Project by the Mayor and City Commission, and any such contracts, purchase orders, change
orders, amendments, and other documents that exceed said appropriated amount shall require the
approval of the City Commission; further authorize the City Manager or his designee to invoke the
Performance Bond issued by St. Paul Guardian Insurance Company, as a result of Contractor's
default under the Contract.
PASSED and ADOPTED this gthday of June, 2004.
ATTEST:
<CG~
~ERK ~
T:\AGENDA\2004\Jun0904\Regular\Certification of Default - Regosa Reso.doc
APPROVED AS TO
FORM & LANGUAGE
& FOR EXECUTION
4f~ '-Y-vy
City Attorn~ Date
"Attachment 1"
CITY OF MIAMI BEACH
CITY HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH. FLORIDA 33139
www.miamibeachfl. av
CAPITAL IMPROVEMENT PROJECTS OFFICE
Telephone 305 673-7071
Facsimile 305 673-7073
May 5, 2004
Ms. Draguisa Gomero, President
Regosa Engineering, Inc.
46 NW 36th Street
Miami, FL 33127
Via Facsimile 305-578-7096 &
Certified Mall Receipt # 70001670 00122331 6007
Ms. Elizabeth Adams
St. Paul Travelers
5801 Smith Avenue
Baltimore, Maryland 21209
Via Facsimile 410- 205-0298 &
Certified Mall Receipt # 7000 167000122331 5994
Re: CMB RFP No. 21-00/01
Normandy Isle Park and Pool
NOTICE OF DEFAULT
Dear Ms. Gomero and Ms. Adams:
Pursuant to Article 8.8 (entitled, "Annulment of Contract") of the Division 1/General
Provisions of the above referenced RFP and associated Contract, this letter shall serve as
the formal notice of Regosa Engineering Inc.'s ("Regosa") default thereunder.
As is demonstrated by City records, including independent documentation provided by the
Architect for the project, The Corradino Group, and by the project's Program Manager, The
URS Corporation, Regosa has failed to perform the work with sufficient workmen and
equipment to ensure prompt completion of the work; has performed the work unsuitably;
has neglected to remove materials or perform anew such work as has been declared
defective and unsuitable by the Architect/Engineer of Record; has failed to properly call for
proper inspections required by the Contract and applicable codes; and, has failed to
provide proper product submittals and shop drawings required by the Contract and by
applicable law.
As noted above, the City is invoking Article 8.8 of the General Provisions of the Contract,
which states in part as follows:
8.8Annulment of Contract - If the Contractor fails to begin the Work under
Contract within the time specified, or fails to perform the Work with
sufficient workmen and equipment or with sufficient materials to ensure
the prompt completion of said Work, or shall perform the Work
unsuitably, or shall neglect or refuse to remove materials or perform
anew such work as shall be rejected as defective and unsuitable, or shall
discontinue the prosecution of the Work, or if the Contractor shall
become insolvent or be declared bankrupt, or commit any act of
N-NIPK& Pool-Ole - c S ()520l>4 - n-I
Ms. Gomero and Ms. Adams
May 5, 2004
Page 2
bankruptcy or insolvency, or allow any final judgment to stand against him
unsatisfied for a periocl of forty-eight (48 ) hours, or shall make an
assignment for the benefit of creditors, or from any other cause
whatsoever shall not carry on the Work in an acceptable manner, the
Engineer may give notice in writing to the Contractor and his Surety of
such delay, neglect, or default, specifying the same, and if the Contractor,
within a period often (10) days after such notice shall not proceed with
accordance therewith, then the Board shall upon written certificate from
the Engineer of the fact of such delay, neglect, or default and the
Contractor's failure to comply with such notice, have full power and
authority, without violating the Contract, to take the prosecution of the
Work out of the hands of said Contractor, to appropriate or use any or all
materials and equipment on the ground as may be suitable and
acceptable and may enter into an Agreement for the completion of said
Contract according to the terms and provisions thereof, or use such other
methods as in its opinion shall seem advisable for the completion of said
Contract in an acceptable manner. ...
Due to Regosa's continued failure to correct the aforestated defaults, as more specifically
illustrated in the attached letters from the Architect of Record for the project, The Corradino
Group, and the City's Program Manager, the URS Corporation, dated March 17,2004 and
March 25, 2004, respectively, and as attached and incorporated hereto, I, as the
Authorized Assistant to the City Engineer, and in accordance with Article 8.8 of the General
Provisions, as set forth in pertinent part above, herein notify Regosa of its default pursuant
to the above referenced RFP and Contract. Accordingly, I, as the Authorized Assistant to
the City Engineer, herein expect and demand that Regosa cure all issues raised in this
letter, and in the attached letters from the City's consultants for the project, within 10 days
from the date of this notice, as same is set forth above.
For purposes of cure, within ten (10) days of receipt of this Notice, Regosa must:
1. Provide an accurate, realistic schedule, including all appropriate documentation,
that Regosa has the proper sub-contractor, supplier agreements, and personnel
to meet the schedule. This schedule shall be consistent with the last complete
schedule provided by Regosa in that it shall indicate a Substantial Completion
date of August 30, 2004, or earlier. This does not mean that the City is granting
an extension of time or waiving Liquidated Damages.
2. Regosa must also provide all outstanding product submittals and shop drawings
to the Architect of Record.
3. Regosa must also have all required project documents physically present at the
job site, including but not limited to, the current, permitted set of construction
drawings, project specifications, and special provisions, approved and/or
submitted shop drawings, approved and/or submitted product approvals, up-to-
date approved samples, up-to-date test results, up-to-date as-built drawings, up-
Ms. Gomero and Ms. Adams
May 5, 2004
Page 3
to-date permit card. and up-to-date RFI and Change Order logs, and up-to-date
approved construction schedule and schedule of values.
4. Regosa must complete substantial progress, if not total completion, of all
remedial work, presently identified by The Corradino Group as non-
conforming/rejected.
5. Regosa must also correct all housekeeping and safety related issues identified
by the Architect of Record.
6. Regosa must also increase and maintain the staffing of the project to levels
consistent with that required to complete the work in accordance with Regosa's
contractually approved construction schedule.
Should Regosa cure the stated default within the ten (10) day time period, then any such
cure must be maintained through. the completion of the project. Any failure to maintain
strict compliance with the Contract shall constitute a material Default.
Should Regosa fail to cure said default within the specified time period, the City intends to
take the necessary steps to take the prosecution of the Work out of the hands of Regosa
and take any and all appropriate actions necessary to correct all defective Work and
complete the project in accordance with the Contract documents.
All costs and charges incurred by the City, together with the cost of completing the Work
under the RFP and the Contract, shall be deducted from any monies due or which may
become due to Regosa. By this letter, the Surety is being notified of Regosa's alleged
default. In case any expenses so incurred by the City in prosecuting the Work shall exceed
the sum which would have been payable to Regosa pursuant to the Contract, then Regosa
and its Surety, St. Paul Travelers, shall be liable and shall pay to the City the amount of
said excess.
Further, the City also requests that the Surety provide a response that identifies the steps
that it intends to take to assist Regosa in remedying the default identified in this notice.
PLEASE GOVERN YOURSELVES ACCORDINGLY.
~re~,
Tim Hemstreet
Director
Attachments
Ma~ 10 04 09:10a
REGOSA ENGINERING
"Attachment 2"
305 5767096
p.2
"Li
A
Regosa Engineering
Building. Plurrbing. & Mechanical Contractors
May 7, 2004
Mr. Tim Hemstreet
Direetor
Capital Improvement Projects Office
City of Miami Beaeh
City Hall
1700 Convention Center Drive
Miami, Beaeh, Florida 33139
Re: Normandy Isle Park and Pool
Notiee of Default
Dear Mr. Hemstreet:
We are in receipt of your letter dated May 5, 2004 with regard to the above referenced
subject, also addressed to our bonding company's representative, Ms. Elizabeth Adams, St. Paul
Travelers.
Your letter yet another example of the City attempting to create filctual issues that do not
exist. Again you are attempting to push the City Of Miami Beach's problems with its defective
plans for the above project onto Regosa Engineering.
The City bas been in default and in breach of its contract with Regosa sinee day one on
this project because of the following:
1. The Project was delayed from the beginning because the City bad not arranged to
disconnect the power for the electrical tr8Dllformers delaying the project substantially.
2. The plans have been defeetive from the beginning ofthis Project and continue to
be defeetive.
3. The plans are still being revised for conformance with cmrent, applieable building
codes and the City's ebanging needs and requirements.
4. The Project bas been stopped a number of times by various permitting agencies
because the City failed to have all necessary permitting.
5. The City still does not have all of the necessary permits for completing this
Project.
6. The City improperly demanded that Regosa tear out and replace the pool slab and
piling caps.
7. The City has failed time and again to timely pay Regosa.
46 Northwest 36th Street MiamI. Florida 33127. (305) 576-7450 . Fox: 576-7096
Ma~ 10 04 09:10a
REGOSA ENGINERING
305 5767096
p.3
Mr. TlDlHemstreet
Director
Capital Improvement Projects Office
May 7, 2004
Page 2
8. The City and its agents and representatives have continually interfered and
delayed Regosa's work and progress.
9. The City and its agents and representatives have failed and refused to cooperate
with Regosa in the performance of this Project.
10. The defective plans continue to delay Regosa's submittal process.
The above list of the City's dcfuults and. breaches is certainly not all inclusive.
Regosa continues to suffer damages because of the actions and inactions of the City and
its representatives and agents, including but not limited to:
1. Lost Revenue due to it Capital being tied up on this Project for longer than the
Contract rune Period..
2. Lost Bonding Capacity.
3. Lost Profits.
4. Delay Damages.
The City's responsibility for the ongoing delays and problem; on the Normandy Isle Park
and Pool Project are underscored by Regosa having previously, successfully completing the
Flamingo Park and Pool Project and other Projects for the City. The City's own consultants and
design professionals are the parties Jacking the appropriate construction and project management
experience on the Normandy Isle Park and Pool Project, not Regosa.
Turning specific:ally to your May 5, 2004 "Notice of Defimlt" letter, items 1-6, Regosa
responds as follows:
1. As to Item 1 of page 2 of your letter, on May 5, 2004, Regosaprovided an
updated Schedule to the City's consultants, URS. Because the City bas not cured its
defiwhs and breaches, Regosa's manpower and subcontractor force are appropriate for
the Project in its eum::nt slate.
2. As to Item 2 of page 2 of your letter, Regosa bas delivered its Submittals to the
Architect of Record on a timely basis. Although there may be some Submittals missing or
not having been approved. those Submittals do not affect the current Seheduled and
Completion Date.
3. As to Item 3 ofpage 2 of your letter, because the plans are currently being revised
by the Architect of Record, Regosa cannot have in its job trailer of a full set of
construction documents. However, Regosa will continue to make every effi>rt to have at
the job site all required construction documents, iffcasible and even ifthosc: documents
are not complete from the City.
4. As to Item 4 of page 3 of your letter, your request that "Regosa must complete
substantia) progress. ifnot total completion, ofall remedial work" is vague. Although on
Na~ 10 04 09:10a
REG OS A ENGINERING
305 5767096
p.4
~
Mr. Tim Hemstreet
Director
Capital Improvement Projects Office
May 7, 2004
Page 3
the: approved Schedule, Regosa showed November 2004 as the Completion Date, Regosa
bas updated the Schedule with its ongoing progress to show a Completion Date of August
2004.
5. A!; to Item 5 ofpage 3 ofyoW' letter, Regosa continues to provide eleanup on the
Project even though the City has failed to timely pay Regosa. Safety bas always been a
priority for Regosa and Regosa will; continue to enforce good safety practices on the
Project.
6. A!; to Item. 6 of page 3 of yaW' letter, the Project bas been properly manned from
the beginning as evidenced by the City's and RegoS&.'s daily job reports. Based upon the
continuing problems with the City and its representatives and agents, as outlined above,
RegaS&. has always had the proper manpower on the Project.
The above discussion again demonstrates that the City's bad :filith and commercially
unreasonable actions towards Regosa on this project and under their construction contract. It is
beeoming more and more clear to Regosa that the City is acting in a discriminatory manner
against Regosa, a woman owned minority enterprise.
Therefure, based upon Regoss's responses herein, Regosa Iespectfully requests that the
City immediately withdraw its unwarranted "Notice of Default", notifY Regosa's bonding
company tbat the "Notice of Default" has been withdrawn and immediately pay Regosa its long
outstanding monthly pay applications. Also, Regosa hereby demands that the City cure its
defiwlts and breaches as set forth above.
By writing this letter it is not our intent to waive any oftbe rights" elaims or defenses of
Regosa Engineering, Inc., and all such rights. elaims and defenses are expressly reserved.
Thank you.
Sincere:,yo~ _ .
~~
Regosa Engineering, Inc.
cc: Eli2abeth Adams
.
, "Attachment 3"
CITY OF MIAMI BEACH
CITY HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH, FLORIDA 33139
_.miamibeachfl.gav
Capltallmprovernent projects omce
Telephone 305 673-7071
Facsimile 305 673-7073
May 25, 2004
Ms. Draguisa Gomero, President
Regosa Engineering, Inc.
46 NW 36th Street
Miami, FL 3_3127
Ms. Elizabeth L. Adams
Associate Claim Attomey Surety
St. Paul Guardian Insurance Company
MC41
5801 Smith Avenue
Baltimore, MD 21209
VIA FACSIMILE 305-576-7096
& CERTIFIED MAIL 70001670001223315970
VIA FACSIMILE (410) 205-0605
& CERTIFIED MAil 7000 1670 0012 23315963
RE: CERTIFICATION OF DEFAULT - Contract No. 21-00/01
Dear Ms. Gomero and Ms. Adams:
The City is in receipt of Regosa Engineering, Inc.'s ("Regosa") letter dated May 7, 2004,
sent via facsimile on May 10, 2004 at 9:09AM, which appears to be a response to the
City's Notice of Default of May 5, 2004.
Please be advised that neither Regosa's letter of response, nor Regosa's actions
subsequent to receiving the City's Notice of Default, provide a cure to Regosa's Default as
specified in the City's formal notice. Therefore, pursuant to the authority granted in Article
8.8 of the Contract, I, as the Authorized Assistant to the City Engineer, hereby certify
Regosa Engineering, Inc. in default of its Contract.
Notwithstanding, the aforestated Certification of Default, the City takes issue with a number
of the statements offered by Regosa in its May 7, 2004 letter as they are either accusatory,
without any substantiation or blatantly false. The City's issues are identified below.
The City rejects any assertion that it "has been in breach of the contract with Regosa
Engineering since day one on this project". Ten points were listed in Regosa's May 7,
2004 correspondence that allegedly supports Regosa's assertions of a City default. The
City's response to each point is listed below in the order presented by Regosa:
1. "The Project was delayed from the beginning because the City had not arranged to
disconnect the power for the electrical transformers delaying the project
substantially. "
N-NIPK&PooI-Ole - 051.5 zo04- TH
lis. Dragulsa Gomero & Ms. Elizabeth Adams
Page 2 off
II11Y 25, 2004
The project was delayed due to an unforeseen site condition relative to electrical
service for traffic signals being routed through the existing pool's electrical vault.
This condition was unknown to the City and to the Architect of Record and was not
documented in any drawings or documents that the City either had access to or had
in its possession. The condition therefore could not have been foreseen by the
Architect or the City. The matter was resolved after involving FDOT, Miami-Dade
County, and FPL, none of whom are the City. It is one of these three parties that re-
routed the electrical service to the traffic signals.
Additionally, Regosa, as opposed to issuing to the City a "Notice of Default", instead
accepted and signed Change Order Number 2, which extended the contract time by
84 days, with respect to this matter. Considering that the City and Regosa agreed
to a time extension at the time, the City considers this matter closed and not a basis
for further consideration.
2. "The plans have been defective from the beginning of the Project and continue to be
defective."
The construction drawings for this project have undergone permit review by the
respective regulatory agencies and proper permits have been issued for this project.
Regosa provided a responsive bid to the City's Request for Proposals, as did other
qualified contractors. Additionally, prior to commencing this project Regosa
participated in a "value engineering" exercise wherein Regosa identified cost
savings proposals, conflicts between disciplines, and other comments that indicate
an exhaustive review of the construction drawings on the part of Regosa. Notably,
the City implemented several of Regosa's recommended changes to the Project.
Regosa even based its final price for the project following the "value engineering"
exercise and its exhaustive review of the Construction Documents. Also notably,
Regosa did not specify any concern regarding the quality ofthe documents despite
its complete and thorough review of them. .
However, in the interest of fairness, the City will consider specific examples of
defects if so provided by Regosa.
3. "The plans are still being revised for conformance with current, applicable building
codes and the City's changing needs and requirements."
As Requests for Information (RFls), Shop Drawings, Submittals, and requests by
the Contractor to the Architect to accept substitutions have come in; some
adjustments to the construction drawings have been required. This is normal in the
construction process and happens on every job. The plans were designed in
accordance with Building CocIes applicable at the time of submittal. The plans were
submitted, reviewed and approved as evidenced by the fact that the building permit
was issued. As time has passed and the City's needs changed, the City has
initiated some Change Orders, which have been accepted by Regosa. along with
Ms. Dragulsa Gomero & Ms. Elizabeth Adams
Page 3 of6
May 25, 2004
associated adjustments to the construction documents. These adjustments to the
construction documents, as noted above, have been done in accordance with the
appropriate provisions within the Contract, and as such, although unknown at the
time of execution were contemplated to the extent that a process was identified in
the Contract to address these issues. Regosa's assertion that this is somehow a
Default by the City is non-sensical and demonstrates a lack of knowledge of the not
only the Contract, but general construction practices as well.
4. ''The project has been stopped a number of times by various permitting agencies
because the City failed to have all necessary permitting."
Pursuant to the Contract, it is Regosa's responsibility to secure all necessary
permits to build the project. The City secured pre-bid permit approvals as
appropriate at the time. To the City's knowledge, the project has been stopped one
time by a permitting agency. This single Stop Work Order was issued on November
21,2003 by the Building Department. The Stop Work Order was issued due to
Regosa's decision to work in areas of the project where the construction drawings
were being adjusted by the Architect pursuant to an RFI issued by Regosa. The
specific issues were identified by Regosa as needing attention by the Architect, a
position with which the Architect agreed. The Architect subsequently issued
proposed adjustments to Regosa for pricing and evaluation in response to the RFI
and therefore Regosa knew that the area should not be worked in until the problems
identified were resolved.
Yet, for some unknown reason, Regosa chose to work in these areas that Regosa
knew was not yet approved by the Building Department. During a December 1,
2003 meeting with the Building Official, Philip Azan, where the Stop Work Order
was lifted, the issuing inspector, Mr. Andy Villareal, stated that the Stop Work Order
was issued because "Regosa was working on revisions that had not yet been
approved, using documents stamped 'Not for Construction.'" Mr. Villareal further
stated that Regosa's Project Manager, Conrado Rocha, reported to him that "there
were no approved drawings on site for the work being performed" and showed him
several sheets stamped "Not for Construction" that were issued.by the Architect in
response to Regosa's RFI, which were undergoing permit review in the Building
Department.
Additionally, the statement made by Mr. Rocha regarding Regosa's failure to have a
set of permitted documents on the jobsite is not in any way the fault of the City.
Regosa was provided a permitable set of construction documents from which
Regosa acquired permits for the project. The fact that Regosa either did not have
them at the jobsite, or alternatively was not building from them, is an issue that is
entirely within Regosa's control. As it relates to the work that was the subject of
Regosa's RFls, Regosa knew that these were areas where work should not proceed
and knew that these were issues that were in the process of being resolved by the
Architect. It was clearly Regosa's choice to proceed as it did.
Ms. Draguisa Gomero & Ms. Elizabeth Adams
Page 4 0'6
May 25, 2004
If there are other Stop Work Orders which we have overlooked, please provide
evidence of such so that we may properly address the issue.
5. "The City still does not have all ofthe necessary permits for completing this Project."
As noted above, pursuant to the Contract, it is Regosa's responsibility to secure the
proper permits for the project. The construction drawings provided to Regosa by
the City were submitted, reviewed, and approved by the respective permitting
agencies as evidenced by the fact that Regosa secured the permits necessary to
construct the job. Notwithstanding, if Regosa believes that there is some_type of
"permit" that is the responsibility of the City to obtain, please identify the "permit"
and the associated Contract article that identifies such as the City's responsibility.
6. "The City improperly demanded that Regosa tear out and replace the pool slab and
piling caps."
The lap pool was not installed monolithically and with either shotcrete or gunnite as
required by the Construction Drawings and Technical Specifications. As a result,
work was rejected by the Architect and by the City as non-conforming and
unsuitable. It should be noted that the City advised Regosa that the work was non-
conforming prior to Regosa proceeding with the concrete installation. For an
unknown reason, Regosa proceeded with its concrete installation knowingly in
violation of the construction documents. The City acted properly and in accordance
with the Contract in rejecting the non-conforming and unsuitable installation.
7. "The City has failed time and again to timely pay Regosa."
The City has consistently paid Regosa within the Contract mandated timeframe
following the submittal of a Contract compliant pay application. In many, if not most
cases, pay applications have been retumed to Regosa due to the pay application
being incomplete and not in compliance with the Contract. Typically, Regosa's pay
applications are missing required supporting documents, such as updated progress
schedules, releases of liens, consent of surety, etc., which are Regosa-generated
delays to the payment process. Obviously, these required attachments to the pay
applications are the responsibility of the Contractor. As a public entity, the City is
required to ensure that pay applications comply with the Contract before payment
can be released.
8. "The City and its agents and representatives have continually interfered and
delayed Regosa's work and progress."
The City categorically rejects any assertion that it has interfered with and/or delayed
Regosa's work. If Regosa continues to make this assertion, then please provide
Ms. Dragulsa Gomero & Ms. Elizabeth Adams
Page 5 of6
May 25, 2004
specific examples of alleged interference and/or delay so that the City may respond
more directly.
9. "The City and its agents and representatives have failed and refused to cooperate
with Regosa in the performance of this Project."
The City is unaware of any instances of failure or refusal to cooperate. Please
provide specific references to alleged instances of the City's failure or refusal to
cooperate in the performance of this project along with the applicable Contract
article of which Regosa asserts the City is in violation.
10. "The defective plans continue to delay Regosa's submittal process."
It is the responsibility of Regosa to make submittals in a timely manner, typically in
the first ninety (90) days of the project. If Regosa believes that inconsistencies in
the documents are impeding the submittal process, then Regosa's responsibility is
to submit an RFI to gain clarification and make the appropriate submittal. This is
the first time that Regosa has advised the City that Regosa believes itself unable to
process its submittals due to alleged "defective plans" despite being on the job for
over six-hundred (600) days.
As such, pursuant to the Architect -of-Record's "Request and Answer Log",
reviewed for the last time at the Construction progress meeting of May 24, 2004,
there are no RFl's open or pending response. The Log shows that Regosa's last
RFI was No. 106, dated March 26, 2004 and responded by The Corradino Group on
April 2, 2004.
In response to Regosa's discussion of the City's requirements for Regosa to cure
Regosa's default, the following is offered:
1. The City rejects any assertion that it is in default of the Contract with Regosa. The
City and its Agents do not agree with Regosa that the staffing and subcontractor
force on the project are appropriate based on the fact that Regosa is not meeting
milestones in its construction schedule. Staffing remains deficient.
2. Regosa has failed to provide all outstanding product submittals and shop drawings
to the Architect of Record.
3. Regosa has not maintained the required project documents physically present at the
job site as specified in the Contract and outlined in the Notice of Default.
4. Regosa has failed to make any progress on any of the remedial work items
previously identified in writing by the Architect of Record.
Ms. Draguisa Gomero & Ms. Elizabeth Adams
Page 6 of 6
May 25, 2004
5. Regosa has continually failed to properly address basic housekeeping and safety
related issues identified in writing by the Architect-of-Record. This includes all
workers properly wearing and/or using approved safety equipment such as steel
toed boots, hardhats, safety harnesses when working overhead, etc. As recently as
Monday, May 10, 2004 workers were observed on site absent such gear.
6. Regosa continues to fail to maintain staffing of the project at levels consistent with
that required to complete the work in accordance with Regosa's contractually
approved construction schedule. As of this date, Regosa continues to miss
milestone dates in the most recently updated schedule; therefore, we must
conciude that the staffing levels are insufficient to complete the work in accordance
with the contractually approved construction schedule.
The City rejects any assertion that it, or its agents, have acted in bad faith and categorically
rejects any allegation of discrimination. The Notice of Default was issued as a result of
Regosa's continued documented failure to perform on the project.
As noted above, Regosa stands Certified in Default. Please be advised that the City
intends to exercise its rights in Article 8.8 ofthe Contract as noted in it previous Notice of
Default.
If you have additional questions or concerns, feel free to contact me directly at 305-673-
7071.
:J;~';Jk-
Tim Hemstreet
Director
Attachment: Regosa Engineering, Inc. letter dated May 7, 2004.
C (with attachment): Murray Dubbin, City Attomey
Rhonda Montoya Hasan, Senior Assistant City Attomey
Jorge Chartrand, Assistant Director - CIP
Alexandra Rolandelli Senior Capital Projects Coordinator
Jose Vega, The Corradino Group
Todd Osborn, URS Corporation
Nestor Fernandez, URS Corporation
Steve Siegfried, Seigfred. Rivera, Lemer, De La Torre, & Sobel, PA
F:\CAPI\$aII\TIMHEMSncertification of Default - Regosa.doc
CITY OF MIAMI BEACH
COMMISSION ITEM SUMMARY
m
Condensed Title:
A Resolution accepting the certification of default by the Engineer and pursuant to Article 8.8 of the Contract
with Regosa Engineering, Inc. (Contractor), hereby removing the prosecution of work from the hands of the
Contractor; finding and declaring that an emergency situation exists with respect to the Normandy Park and
Pool (Project), and waving, by 5/7ths vote, the formal competitive bidding requirements with respect to
prosecuting the remaining work to diligently complete the Project; finding such waiver to be in the best
interest of the City; authorizing the City Manager to select, negotiate, and award any and all contracts,
purchase orders and change orders, as necessary, relative to the purchase of all necessary goods and
services necessary for the completion of the remaining work on the Project; provided that such contracts,
purchase orders and change orders, Consultant additional services, and any other documents, shall be
substantially in accordance with the scope of work of the current construction contract with Regosa
Engineering, Inc. (Contractor), or the current Professional Services Agreement with The Corradino Group
(Consultant), and shall not exceed the eurrent amount appropriated by the City Commission for the
aforestated Project, without further approval of, and ratification by the Mayor and City Commission; further
authorizing the appropriate City Official to invoke the Performance Bond issued by St. Paul Guardian
Insurance Com an ursuant to Re osa's default on behalf of the Ci .
Issue:
To authorize the City Manager to select, negotiate, and award a contract to the qualified replacement
contractor to complete the Normandy Park and Pool Project Construction; and also authorize the City
Manager to execute additional services to the Consultant and to execute other contracts as deemed
necessary to continue construction of the Proiect.
Item Summary/Recommendation:
The Administration recommends that the Mayor and City Commission accept the certification of default by
the Engineer and pursuant to Article 8.8 of the Contract with Regosa Engineering, Inc. (Contractor), hereby
remove the prosecution of work from the hands of the Contractor; finding and declaring that an emergency
situation exists with respect to the Normandy Park and Pool (Project), and waiving, by 5/7ths vote, the
formal competitive bidding requirements with respect to prosecuting the remaining work to diligently
complete the Project; finding such waiver to be in the best interest of the City; authorizing the City Manager
to select, negotiate, and award any and all contracts, purchase orders and change orders, as necessary,
relative to the purchase of all necessary goods and services necessary for the completion of the remaining
work on the Project.
Advisory Board Recommendation:
I NA
Financial Information:
Source of
Funds:
Approved
I I
Finance Dept.
Ci Clerk's Office Le
M. Alexandra Rolandelli
\2004\Jun0904\Regular\Certification of Def ult- Regosa Summary.doc
AGENDA ITEM
DATE
IX 7'8
~-7-(Jr
CITY OF MIAMI BEACH
CITY HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH, FLORIDA 33139
www.miamibeachfl.gov
To:
From:
Subjeet:
COMMISSION MEMORANDUM
Mayor David Dermer and
Members of the City Commission
Jorge M. Gonzalez ..d.4
City Manager
Date: June 9,2004
P'j '-
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI
BEACH, FLORIDA, ACCEPTING THE CERTIFICATION OF DEFAULT BY THE CITY
ENGINEER, PURSUANT TO ARTICLE 8.8 (ENTITLED, "ANNULMENT OF CONTRACT")
OF THAT CERTAIN CONTRACT ENTERED INTO BETWEEN THE CITY AND REGOSA
ENGINEERING, INC. (CONTRACTOR), PURSUANT TO REQUEST FOR PROPOSALS
NO. 21-00/01, FOR CONSTRUCTION OF THE NORMANDY PARK POOL FACILITY
(PROJECT)(CONTRACT); FURTHER, PURSUANT TO ARTICLE 8.8 OF THE
CONTRACT: (1) TAKING THE PROSECUTION OF THE WORK OUT OF THE HANDS OF
THE CONTRACTOR; (2) AUTHORIZING THE APPROPRIATION OR USE OF ANY OR
ALL MATERIALS AND EQUIPMENT ON THE (PROJECT) GROUND AS MAY BE
SUITABLE AND ACCEPTABLE; AND (3) AUTHORIZING AND DELEGATING TO THE
CITY MANAGER SUCH AUTHORITY AS SHALL BE NECESSARY FOR HIM TO ENTER
INTO AN AGREEMENT FOR THE COMPLETION OF SAID CONTRACT, ACCORDING TO
THE TERMS AND PROVISIONS THEREOF, OR USE SUCH OTHER METHODS AS IN HIS
OPINION SHALL DEEM ADVISABLE FOR THE COMPLETION OF SAID CONTRACT IN
AN ACCEPTABLE MANNER; FURTHER, IN ORDER TO EFFECTUATE THE ACTIONS TO
BE TAKEN IN ITEM (3) ABOVE, WAIVING BY 5/7THS VOTE, THE COMPETITIVE
BIDDING REQUIREMENT, FINDING SUCH WAIVER TO BE IN THE BEST INTEREST OF
THE CITY, AND AUTHORIZING THE CITY MANAGER TO SELECT, NEGOTIATE, AND
AWARD ANY AND ALL CONTRACTS, PURCHASE ORDERS, CHANGE ORDERS AND
OTHER DOCUMENTS, INCLUDING BUT NOT LIMITED TO AN AMENDMENT TO THE
CITY'S EXISTING CONTRACT WITH THE CORRADINO GROUP, INC., THE CITY'S
ARCHITECT/ENGINEER FOR THE PROJECT, TO PROVIDE FOR SUCH ADDITIONAL
SERVICES AS NECESSARY TO COMPLETE/ADMINISTER THE REMAINING WORK ON
THE PROJECT; PROVIDED FURTHER THAT ALL OF THE AFORESTATED
CONTRACTS, PURCHASE ORDERS, CHANGE ORDERS, AMENDMENTS, AND OTHER
DOCUMENTS SHALL BE SUBSTANTIALLY IN ACCORDANCE WITH THE PROJECT
AND THE SCOPE OF THE WORK CONTEMPLATED WITHIN THE CURRENT
CONSTRUCTION CONTRACT WITH CONTRACTOR, AND SHALL NOT EXCEED THE
CURRENT AMOUNT APPROPRIATED FOR THE PROJECT BY THE MAYOR AND CITY
COMMISSION, AND ANY SUCH CONTRACTS, PURCHASE ORDERS, CHANGE
ORDERS, AMENDMENTS, AND OTHER DOCUMENTS THAT EXCEED SAID
APPROPRIATED AMOUNT SHALL REQUIRE THE APPROVAL OF THE CITY
COMMISSION; FURTHER AUTHORIZING THE CITY MANAGER OR HIS DESIGNEE TO
INVOKE THE PERFORMANCE BOND ISSUED BY ST. PAUL GUARDIAN INSURANCE
COMPANY, AS A RESULT OF CONTRACTOR'S DEFAULT UNDER THE CONTRACT.
ADMINISTRATION RECOMMENDATION:
Adopt the Resolution.
Commission Memorandum
Regosa Engineering, Inc. - Certification of Default
June 9, 2004
Page 2 of B
ANALYSIS:
Pursuant to approval by the citizens of the $15 Million General Obligation Bond for the
improvements to the City's parks on November 8, 1994, the City contracted with The
Corradino Group, Inc. (the Consultant) to develop the plans and specifications for the
Normandy Park and Pool Facility Improvements (the Project). The Project was extensively
reviewed by the community during the programming and design phases. Based on
analysis of the projected demographic data of the region, and in order to upgrade the
quality of services being offered to the community, the Administration and the City's
Consultant re-evaluated the scope highlighted in the Master Plan, approved on June 19,
1996, and re-defined the program to a more comprehensive aquatic facility consisting of a
pool with an aquatic play structure, and a four (4) lane lap pool with night-swimming-quality
lighting. The Project included construction of new restrooms and shower facilities, multi-
purpose activity building, outdoor trellis shade areas, and a concession building. Also
included are a new pedestrian promenade to traverse the length of the park; new
landscaping and irrigation, including a buffer between the park and the adjacent residential
neighborhood; a new multi-purpose court; a decorative perimeter fence with new entry gate
features; on-street parking; and sidewalk improvements.
On September 1, 2000, Invitation to Bid No. 136-99/00 was issued. From the 1,128
vendors that were notified, the City's Procurement Department received 37requests for
plans and specifications, but the three lowest responsive bids had significantly exceeded
the available funding of $2,381,206, of which $2,175,000 was allocated for hard
construction costs and the remaining balance of $117,206 for fixtures, furnishing and
equipment (FF&E), signage, playground equipment, and special inspection fees.
On January 31, 2001, the Mayor and City Commission rejected all bids and on February
21, 2001, upon recommendation of the Administration, the City Commission adopted
Resolution 2001-24279 to issue a Request for Proposal (RFP) for the construction of the
Project. This method of procurement allowed the Administration to do two things: negotiate
with the prospective proposers if the new proposals were above the City's available funding
and prioritize the construction of the Project per component, in the event the value
engineering process alone was unsuccessful addressing costs, without the drastic
elimination of essential architectural features and programs.
On March 20, 2002, the City Commission adopted Resolution 2002-24800, awarding the
construction of the Project to Regosa Engineering, Inc., pursuant to the Request for
Proposal No. 21-00/01, in the amount of $2,264,000; and appropriated additional funds in
the amount of $389,000 to complete the construction: $89,000 for ADA improvements and
on-street parking improvements and $300,000 to complete funding for the hard
construction costs of the aquatic facility, the ramps and walkways, the perimeter fence, and
the pool night swimming and security lighting. The additional items such as the multi-
purpose court, soccer field renovations, and site landscaping and irrigation were not funded
at the time. Notice to Proceed, essentially the commencement of construction activities,
was issued to Regosa Engineering, Inc. (URegosa") on June 9, 2002.
Commission Memorandum
Regosa Engineering, Inc. - Certification of Default
June 9, 2004
Page 3 of 8
Since the commencement of construction, several delays related to coordination,
unforeseen conditions, and deletions have arisen. Significantly, Regosa caused two (2) of
the major events in the Project that delayed its completion, as described below:
On July 16, 2003, PSI, the Speciallnspectorforthe Project, who is required by the Building
code, rejected the deck slab due to the contractor's failure to follow the contract
documents, i.e. the approved structural drawings. The documents call for the installation of
one layer of lean concrete between the compacted soil and the specified pool deck
reinforcing steel. The lean concrete has a minimum thickness of 1-1/2". The contractor did
not follow the contract document directives for the installation of the specified lean concrete
prior to the placement of the pool deck reinforcing steel and the placement of the pool
concrete deck itself. The contractor was directed to correct the deficiencies in accordance
with the contract documents. The lean concrete slab was poured and the reinforcing steel
reinstalled. Concrete has already been placed for most of the pool deck, thus resolving
this issue. The delay associated with this item is approximately forty-five (45) days.
On July 24, 2003, PSI notified the City that Regosa poured the pool bottom slab on grade
without the required reinforcing steel inspection from the Special Inspector. In addition, the
contractor did not notify the Special Inspector until the concrete placement had already
started. As a result, PSI was unable to perform adequate testing of the concrete, since
only the last of eight concrete trucks was sampled. Finally, the contractor did not use the
specified special concrete mix nor the monolithic method of construction called for in the
contract documents. Regosa removed the slab and re-formed the pool bottom and walls
and placed the reinforcement in preparation for the new monolithic, shotcrete pour as
specified. This concrete placement has been completed. The delay associated with this
item is approximately sixty (60) days.
The overall delay, considering that the events could have been cured concurrently, affected
the construction schedule by approximately sixty (60) days, which are "inexcusable"
according to the contract and do not warrant additional time to the Contractor.
Although estimates of the initial delay due to the above actions are stated, it should be
recognized that the full extent of the impact of these delays to the construction schedule is
still under consideration, until all documentation is provided by the Contractor.
Regosa submitted a recovery schedule that was approved by the Architect and accepted
by the City and a small increase in staffing was noted over the last couple of months.
However, the Contractor has failed to demonstrate that the current labor force has the
ability to perform both the needed remedial work on rejected items and keep up its own
construction schedule. As a result progress continues to be slow with the Project now
approaching fifty (50%) completion.
Adding to the problems is the fact that the contractor is still lagging behind on submittals,
already exceeding the dates proposed in its last progress schedule. The lack of approved
shop drawings and product approvals will only further delay construction. The Contractor's
Commission Memorandum
Regosa Engineering, Inc. - Certification of Default
June 9, 2004
Page 4 of 8
failure to comply has and will continue to cause delays to construction. Typically, eighty
(80%) percent of the submittals are provided within the first ninety (90) days of a project.
As an example:
1. The plumbing for the pump room was delayed because the Contractor did not
submit the appropriate Shop Drawings.
2. Reinforcing steel for the Activity Pool was delayed because the Contractor did not
submit the appropriate Shop Drawings.
3. Doors and Windows have not yet been ordered because the Contractor has not
submitted an appropriate Product Approval Package.
The contractor continues to work in a manner that is inconsistent with the sequence/logic
reported in the construction schedule. Based on the fact that Regosa is not meeting the
milestones reflected in the submitted schedule and on the available manpower being
reported in the daily Observation Reports, it is clear that Project staffing is inadequate to
complete the work in the time frame reported.
As a result, the City has issued two documents to Regosa Engineering, Inc.:
1. A deductive change order, Change Order No. 11, effectively removing from Regosa's
contract all scope East and West of the pool facility. This work will then be completed
using a contractor from the Job Order Contractor (JOC) Program, who can immediately
step in and complete the scope in question.
2. A Notice of Default, pursuant to Article 8.8 - Annulment of the Contract - of the
Agreement between the City and Regosa, on May 5,2004 (attached as "Attachment
1"). The Notice of Default requested that 6 listed items be cured within ten (10) days of
receipt of the Notice and that those conditions be maintained through the completion of
the Project. The Notice states; "Should Regosa fail to cure said default within the
specified time period, the City intends to take the necessary steps to take the
prosecution of the Work out of the hands of Regosa and take any and all appropriate
actions necessary to correct all defective Work and complete the Project in accordance
with the contract documents."
Due to continuing delays on the Project related to continuing defective and non-conforming
work, an apparent inability to maintain the Project schedule, continued insufficient staffing
to complete the work, continued missing of required inspections, and outstanding shop
drawings and submittals, the City issued the above noted Notice of Default. Generally, the
intent of the Notice of Default was to alert Regosa of its contractual requirement to
maintain its approved recovery schedule, including the provision of skilled labor and
equipment to prosecute the work in a timely manner, while correcting the rejected scope.
The following are the major issues Regosa was directed to comply with:
Commission Memorandum
Regosa Engineering, Inc. - Certification of Default
June 9, 2004
Page 5 of 8
1. Provide an accurate, realistic schedule, including all appropriate documentation, that
Regosa has the proper sub-contractor, supplier agreements, and personnel to meet the
schedule. This schedule shall be consistent with the last complete schedule provided
by Regosa in that it shall indicate a Substantial Completion date of August 30,2004, or
earlier. This does not mean that the City is granting an extension of time or waiving
Liquidated Damages.
2. Provide all outstanding product submittals and shop drawings to the Architect of
Record.
3. Maintain all required Project documents physically present at the job site, including but
not limited to, the current, permitted set of construction drawings, Project specifications,
approved and/or submitted shop drawings, approved and/or submitted product
approvals, up-to-date permit card, and up-to-date RFI and Change Order logs.
4. Complete substantial progress, if not total completion, of all remedial work, presently
identified by The Corradino Group as non-conforming/rejected.
5. Correct all housekeeping and safety related issues identified by the Architect of Record.
6. Increase and maintain the staffing of the Project to levels consistent with that required
to complete the work in accordance with Regosa's contractually approved construction
schedule.
Attached as "Attachment 2", is Regosa's May 7, 2004 response to the City's Notice of
Default. Regosa's first position in their response is to declare the City in Default based on
an unforeseen sight condition that happened early in the Project, a situation for which
Regosa negotiated and accepted a Change Order for additional Contract time. Regosa
goes on to assert that it is not in Default of the Contract and that all of the delays and/or
problems on the Project are either the sole fault of the City and/or the Architect of Record.
Regosa further asserts that their work product has been acceptable and that it has also
been timely even though the City has not paid them timely. Among the many accusations
offered by Regosa is an accusation of discrimination based on the fact that Regosa is a
woman owned minority contractor. Regosa's letter does not appropriately address the
items that the City directed for a cure of Regosa'a Default. Further, Regosa did not actively
address the City's issues in its actions at the Project site.
The City's May 25, 2004 response to Regosa's May 7, 2004 letter is attached as
"Attachment 3". The City disputes Regosa's allegations and believes that the Project
records will demonstrate the City's position as being factually and contractually supported.
Some of the required documentation needed to demonstrate the City's position was
attached to the City's Notice of Default letter of May 5,2004 for illustrative purposes. The
entire record contains numerous documents and notices to the Contractor regarding the
City's final position on these matters. The City's response, however, points out
contradictory statements made by the Contractor that are not substantiated, and in some
Commission Memorandum
Regosa Engineering, Inc. - Certification of Default
June 9, 2004
Page 6 of 8
cases, such as the Contractor's assertion that it has been hampered in providing submittals
by defective documents, raise totally new issues on the Contractor's part that have never
been provided previously to the City. The City further rejects any assertion that it is acting
in bad faith, arbitrarily, or in a discriminatory fashion.
Unfortunately the efforts noted above to get the Contractor to improve its performance
have not produced positive results. Regosa has failed to perform the work with sufficient
workmen and equipment to ensure prompt completion of the work; has failed to perform
the work with sufficient materials to ensure prompt completion ofthe work; has performed
the work unsuitably; has neglected to remove materials or perform anew such work as has
been declared defective and unsuitable by the Engineer of Record; has failed to properly
call for proper inspections required by the Contract and applicable codes; and, has failed to
provide proper product submittals and shop drawings required by the Contract and by
applicable law. At the present manpower level, extensive additional delays are anticipated
which will contribute to the contract time due to inexcusable delays.
Certificate of Default:
The Engineer has certified Regosa Engineering, Inc. to be in default of its contract with the
City ("Attachment 3"). Pursuant to Article 8.8 (entitled, "Annulment of Contract") of the
Division 1/General Provisions of RFP No. 21-00/01 and associated Contract, the
Administration is recommending that the City Commission remove the prosecution of the
work from the hands of Regosa and authorize the City Manager, or designee, to prosecute
the remainder of work. Pursuant to Article 8.8, any remaining funds in the Contract will be
returned to the Contractor, or if the remaining funds are insufficient, the Contractor, after
completion of the work will be required to pay the City the cost overrun. It is important to
understand that the Contract is not terminated, but remains in effect. This action is
consistent with the Contract requirements.
Further, in order to properly invoke the Performance Bond on the Project, the
Administration is requesting that the City Commission specifically authorize the appropriate
City official to make the appropriate claim to the Surety, St. Paul Guardian Insurance
Company, in accordance with language of the Performance Bond and the Contract.
It should be noted that the requested action does not request the Commission to determine
or make a finding of Default. By Contract, that action is assigned to the "City Engineer or
his authorized assistant." The City's CIP Director, acting as an Authorized Assistant to the
City Engineer, and therefore acting as the "Engineer" under the Contract's definitions has
already made the finding of Default. The action before the Commission regards how to
proceed with the Project now that the Contractor has been Certified in Default.
Several alternatives have been examined to proceed with the completion of the Project.
Due to the amount of time Regosa has been on the Project, it is important to act in a quick
and flexible manner to complete the unfinished work.
Commission Memorandum
Regosa Engineering, Inc. - Cerlification of Default
June 9, 2004
Page 7 of 8
The requirement to follow the formai bidding process is estimated to take 90 to 120 days,
during which no work would be able to proceed in the Project area. As a result of these
unusual circumstances, the normal formal bidding process would result in further undue
delays to complete the unfinished work, which would result in a hardship situation for the
residents within the work area.
Although the Administration is recommending a waiver of competitive bid requirements, the
Administration does follow a competitive process in choosing a replacement contractor and
may not require the waiver for the Contractor portion, but is including it here in an
abundance of caution. The Administration recommends completing the work with a
contractor from the Job Order Contractor (JOC) Program. Even with these changes
Substantial Completion is estimated for November 2004.
However, with the default, it is likely that the Consultant will need additional services to
update documents and for extended Construction Administration services. The waiver
would apply in this situation to specifically authorize the City Manager to extend and
authorize additional services pursuant to the Consultant's agreement in order to finish the
work. The waiver is recommended in order to avoid further delays to the Project. Any
additional services, construction costs, and other related Project costs cannot exceed the
overall appropriation by the Commission without further Commission action.
As of the writing of this memo, the Contractor has verbally requested that this item be
deferred to the next City Commission meeting. It is important to note that if the item is
opened and continued to July 7, 2004, 28 additional days will be added to the existing
project timeline at the Contractor's current rate of progress. The monetary implications
related to the extension in resolving this issue include:
1. Proliferation of work that is not in compliance with the City standards as specified in the
Contract Documents - Le.: The five sets of concrete stairs accessing the pool area have
been rejected by the Architect-of-Record. One of those sets has been removed and
concrete has been re-poured. The results are less in compliance than the initial
defective set. The replacement of the other four sets will follow at some unknown
future time.
2. Rough Plumbing is not installed accordingly to Code - Le.: The plumbing being
installed has been positioned inside the concrete block walls without strapping, and
insulated with roofing paper. The Architect-of-Record will determine the acceptability of
this scope of work.
3. Utilization of hand mixed concrete that does not comply with the specification on the
Contract Documents. - ie.: The Contractor has started pouring the Window Sills and
Concession Stand counter tops, which are being formed and poured with a hand made
mixture prepared in the site without controlled methods, for which no known compaction
test cylinders have been submitted for approval. The Architect-of-Record will determine
the acceptability of this scope of work.
Commission Memorandum
Regosa Engineering, Inc. - Cerlification of Default
June 9, 2004
Page 8 of 8
4. Extended, unprotected exposure of surfaces that are the final finishes through out the
Project - i.e.: the Access Pool Deck is exposed to the elements, machinery, and
materials, including the preparation of the hand mixed concrete. These surfaces are
the final finishes of the Project and cannot show stains, discolorations, indentations
and/or cracks. The Architect-of-Record will determine the acceptability of this scope of
work.
5. Continued rejection of Work will create a cash flow problem for the Contractor, due to
the fact that for the past couple months no significant amounts could be approved
because the Contractor's primary activities have been addressing remedial work. This
issue alone will create an unmanageable situation within the Project's team that will
make very difficult to set realistic goals and time tables.
CONCLUSION:
Therefore, the Administration recommends that the Mayor and City Commission ofthe City
of Miami Beach, Florida, adopt the resolution, and waive, by 5/7ths vote, the competitive
bidding requirement, finding such waiver to be in the best interest of the City for the
completion of construction of the Normandy Park and Pool Project.
* Attachment Nos. 1 throuah 3 Note: The Attachments to the City Commission Agenda Item
consist of the noted letters only. The attachments to the letters themselves have been
omitted due to their length. A full packet containing the letters and all attachments were
provided to the full Commission under separate cover and in relation to the Finance and
Citywide Projects Committee Meeting of June 1, 2004.
~~G~~~~~~~~\;e?u{~ of Default - Ragoss Memo.doc