Fire House Management Contract - Part 1 - the Contract

Monday June 1st 2015 at the Safety Service Committee meeting we discussed at length the management contract for the building of the new Fire House.  There are two themes to this article.  First I'll talk about some of the specific items in the contract I suggested but were rejected - for instance a conflict of interest / ethics clause so the project manager would have to act in the best interest of the City.  Second I'll talk about the need for us to take a "time out" from what has become the norm here in the City of awarding work via a no bid process especially when friends are involved. 
Here are some of the suggestions I made that were rejected by Ms. Vargo, Ms Dale and Mr. Lyons.  Mr. Starline didn't reject these ideas but he didn't show support for them either.  In the meeting Mr. Starline did indicate that he was not planning to vote for the legislation because of the no bid / lack of competition process used when picking Conaway LLC for the work. 
First off, I think there should be an ethics clause and a conflict of interest clause in the contract.  I suggested this when this company was chosen for the no bid award of the project management contract for the Music Center.  When I made that suggestion then, I pointed out that without such a clause there would be no restriction on the company owner accepting a cruise from another business trying to win the construction contract and then pushing for that company to win the contract.  Conflict of interest clauses are a standard practice.  One should be part of this contract and there should have been one as part of the Music Center Construction Management Contract. 
We had a decent discussion on the cost of this contract which as proposed was 3.9 % of whatever the budget for the building turned out to be as the maximum.  The actual cost will be an hourly rate times the number of hours worked up to the maximum.  I have two issues with this arrangement. 
When talking about hours work, the City Manager told the committee that only the hours on the job site would be billable.  This is not in the contract.  The implication was that the hours this business owner spent at committee meetings were donated time and would continue to be donated time.   There is nothing in the contract that states or even implies this.  Someone may point out that he could be there because he is also being paid by the developer of Carriage Trails and needs to be there to advocate for the special supplements the City gives this developer and only this developer.  Interestingly enough though without a conflict of interest clause or some other language preventing it he could legally and ethically charge both the development company he works for and the City for sitting in committee meetings.
The other issue is basing the maximum on the total cost of the project.  First it would have been nice if staff had come prepared with a number showing how much that would be.  You might think that I could multiply .039 times $2,900,000 and get $113,100 but of course he wouldn't be earning .039 on the money were paying him would he?  So is it .039 times $2,789,900 = $108,689?  Or would there be other deductions?  Just the same, I'm super perplexed because I think I remember the City Manager, say off the top of his head, that he thought it would be around $120,000 or $130,000.  I got off track there.  The point I was trying to get to was that we should have a fixed maximum.
I'm going to transition for a moment to supporting an idea that Tyler was trying to articulate.  He was asking for some type of clause that helped the City recover losses in case Conaway LLC did not perform.  This concept is good but the method and criteria he picked off the top of his head would usually not be considered.  The overall flaw in his example was that he was trying to get a guarantee of the discounted price.  I know that some businesses (like some car dealerships) will promise to meet a competitors price or pay you $200 but ............   Typically, a clause like this is meant to protect the City in case going with a company prevents the City from making another deal and then we are forced into another higher deal later.  For instance if Conaway LLC tells us they can do the job for $100,000 and we had another choice that would cost us $120,000, if Conaway LLC fails and we end up spending $150,000 then we should be able to recover $30,000 from Conaway LLC (Tyler was talking like we should be able to recover $50,000). 
What is more typical would be a hold back.  Right now the contract is structured to pay 15 equal payments.   I would recommend that there should be 15 equal payments but only of 2/3rds the estimated total.  The last 3rd of the contract would be paid upon completion.  The payment of all or part of the hold back is normally tied to criteria.  For instance completing by a certain date. 
I've spent more time on this first part than expected in fact I'm not even sure I've competed this section.
 - stand by till next time for me to talk about why Jan Vargo, Lu Dale and Ed Lyons should be fired i.e. How can anyone recommend a no bid contract to Conaway LLC when we had other choices and pictures of Mark Campbell and Mr. Conaway vacationing together this Thanksgiving are all over the City?