Larned’s board rejects price increase for CDBG project


LARNED – Larned City Council refused to grant a request to increase the price of materials on the community’s Community Development Block Grant water pipe project at its regular meeting on Monday.

Cobalt Construction teams had participated in the exploratory work of the early stages of the multi-year project in phases, totaling 4.5 million last summer, when work was suspended at the request of contractors due to difficulties in obtaining project materials. At a meeting to approve the order to stop work, board members learned that the supplier entrepreneurs, Ferguson Waterworks Hutchinson, had told them that they could not commit to a delivery date after rejecting their schedule several times.

Last month, Keithen Meyer, a representative from Schwab-Eaton, the engineering firm assisting the project, informed the board that True Solutions, the general contractor in charge of the project, and Cobalt would request an additional $ 49,107.23 in as a change order. to the initial offer. The agenda item was postponed until Monday’s meeting.

On Monday evening, Meyer, along with John Elam of True Solutions and Clayton Gregg of Cobalt, appeared before the board via Zoom to reiterate their request.

“True Solutions is requesting a material price adjustment of just over $ 49,000 due to the material price increases they have suffered,” said Meyer. “They don’t have what I think is ideal documentation, but based on the documentation we looked at, we at Schwab-Eaton believe it’s appropriate and it’s a real cost.”

Elam explained that Ferguson, their supplier, delivered materials at a significantly higher cost than initially proposed.

“We had significant costs that were higher that were beyond our control,” Elam said. “We received a force majeure letter from our supplier and other suppliers are going to be even more expensive than what we experienced with the originally selected supplier than us. “

“The costs are really beyond our control; they are linked to Covid, really related to the international supply chain. The materials market is right, he is the “Wild West.” “

City Councilor Jason Murray echoed the council’s position that all parties should honor the terms of the initial offer, especially in light of the federal funds and their parameters involved.

“One of my concerns, John, is that I am in caller projects bids before, and especially when you are up against competition, sealed scenarios and the thing that concerns me is that we have not taken offers from others who may have looked to the future, ”City Councilor Murray said. “The supply chain has been a problem for several months, going over a year. My main concern is that if you ask now, how many other supplies you not guarantee that we know that prices have risen since your offer and if you do not have looked before, knowing he was going to be a long -TERM project, knowing that prices very rarely go down, how many more demands are you making that we are basically bailing you out on? “

“I can’t speculate on the future, because I don’t know the future,” Elam replied. “I know this is the first time we’ve ever had something like this happen. To say that we can’t get things done this week or the next week is not a rare thing, but it is outside of anything I have ever seen.

Mayor William Nusser then spoke, noting that the situation was not simply a matter of two companies doing business.

“The problem I have is that with the CDBG project, we had to accept the lowest bid because of the federal agreement and there was a significant difference in the offers. We are a steward of taxpayers. We’re both in a difficult situation here, we try to make the right choice, not only for you but also as a representation of the taxpayers themselves.

Nine bids were received for the first phase of the project. The offer of True Solutions, accepted as required by the parameters of the overall grant, has emerged as the lowest bid to $ 200 000 for eight deals and $ 681,095 or 43% of the highest bid of 1.58 million.

Council members wanted to know whether all the equipment had been ordered and, if so, what had been received on site.

The contractors assured the council that all materials for the tender contract had been ordered and that a “majority” was on site.

The council was also concerned as the project was near the CDBG’s $ 600,000 cap and the city might not be reimbursed for the further increases.

Board member Sharon McGinness offered to share the increased expenses with the contractors.

“I would like to make a motion which, given the circumstances, I think they made their offer in good conscience and in good faith,” McGinness said. “This situation is unique, it has been several months since Covid started. I move that we approve this for 50% of the $ 49,000 and just split the difference.

The motion died for lack of a second.

Council member Gary Rainbolt then moved to accept the full change order.

“Due to the circumstances they find themselves in, I suggest we give them the full 49,” Rainbolt said. “I don’t like it, but like I say, this is a weird situation. “

Councilor George Elmore supported.

Other board members noted that prices were going up everywhere and that preparing for them was the cost of doing business.

“This is not just a plumbing problem,” said Councilor Kim Barnes. “This is not unique to this project. For me, it’s part of business. When the fuel rises overnight, I do not go back and ask my supplier to pay me. Companies must absorb what happens.

Board member Murray agrees.

“That was part of my work for many years. No one can run a business within a margin of 20 percent. You just told me you used that margin to account for any price increase. You need to either increase your margins, or obtain better purchasing and contract provisions.

“It’s part of the business,” he said. “You can’t come up with a 20 percent margin on a contract and then wait for that to stay stable all the time if you’re in a low bid situation. It came back and bit you in the ass because you are the bottom offering. This is part of the risk you run an operating company.

“I don’t think the Town of Larned should take on every person’s business risk. We can’t take another $ 50,000, because we can’t just raise taxes tomorrow.

Mayor Nusser then called for a vote on Rainbolt’s motion. The motion failed, with board members Barnes, McGinness, Murray, Josh Riedel, Terry Clark and Carroll Bennett opposed.


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