The original bid for construction services to rehabilitate and replace Lift Stations 10 & 50 was awarded to Close Construction, LLC (“Close”), in the amount of $3,799,022 by action of the Board in Resolution 08-15UD. The amount to date paid to Close is $1,534,359, leaving a balance of $2,264,663. Upon terminating Close’s contract due to poor performance, the Utility District called on Close’s surety company, Hartford Fire Insurance Company (“Hartford”), to complete the work. Hartford refused to complete the work contending that its only duty under its surety bond is to indemnify the Utility District. Yet, Hartford invited bids for the completion of the work and recommended to the Utility District Wharton Smith, Inc. (“WS”), to complete all work required in the rehabilitation and replacement of Lift Stations 10 & 50. By action of the Board in Resolution 02-17UD, the Utility District accepted Hartford’s suggestion and awarded a completion contract to WS in the amount of $1,857,730.00, which included a $200,000, allowance for purchase or correction of any missing and/or damaged materials/equipment and for reworking of work improperly performed by Close Construction.
The process leading up to the Board awarding Wharton Smith the completion contract rested with Hartford. All instructions to bidders including all assumptions and constraints were provided by Hartford. Hartford also managed the bid process and reviewed of the Contractor’s bids. Neither the City of Riviera Beach’s Special Utility District (RBUD) nor RBUD’s consulting engineer provided any bidding services. The award amount was based on information provided to WS by the surety, not the Utility District. It’s important to note that the Utility District had no knowledge of the negotiations and/or pre-bid information provided to bidders prior to Hartford making its recommendation to the Utility District.
Two Contractor’s, Wharton-Smith and Florida Design, submitted bids to complete the work remaining after termination of Close’s contract. The bids submitted varied widely from approximate total amounts of $1.8 to $3.2 million.
Wharton-Smith is now nearing completion and it has become clear that the $200,000 construction allowance set arbitrarily by Hartford was not sufficient. It is estimated that an additional $400,000 should cover the remaining cost to complete the completion contract. This estimate includes materials that are missing from the construction site but required for the completion of construction, additional materials that have been purchased and used by WS in the performance of work, items of work that were not covered under the remaining sub-consultant’s fees as provided by Hartford to the bidders, unforeseen conditions, and a contingency for additional out-of-contract items discovered until completion.
With this additional amount request makes the overall construction cost to approximately $6,933.00 under the original bid of $3,799,022.
The RBUD, through its attorneys, has made demand on Hartford under its indemnity bond for the payment of damages resulting from Close’s breach of contract. The damages include liquidated damages, extra engineering fees, amounts in excess of WS’s allowance and attorney’s fees.