HomeMy WebLinkAbout03/21/2006, PH 7 - WATER REUSE PROJECT - CONSIDERATION OF PENALTY ASSESSMENT AGAINST PACIFIC MECHANICAL CORPORATION FO coun
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FROM: John Moss, Utilities Director
Prepared By: Katie DiSimo ,Water Projects Manager 43)
SUBJECT: WATER REUSE PROJECT — CONSIDERATION OF PENALTY
ASSESSMENT AGAINST PACIFIC MECHANICAL CORPORATION FOR
VIOLATION OF SUBCONTRACTOR LISTING LAW
CAO RECOMMENDATION
Assess a penalty in the amount of$6,801.44 against Pacific Mechanical Corporation, Inc. and
deposit penalty in Water Reuse Project account..
DISCUSSION
The Water Reuse Project (Specification #99124-90553) was bid in March 2003 with two parts;
one for the Water Reclamation Facility (WRF) Improvements and one for the distribution
pipelines. The combined total as bid was $10,465,476.50. The contractor for the WRF
Improvements is Pacific Mechanical Corporation (PMC), and for the distribution pipelines was J.
Fletcher Creamer& Sons (JFC). Construction began in August 2003 for both parts of the Water
Reuse Project,with a contract project completion date of September 13, 2004. JFC completed its
portion of the construction on-time. PMC has not completed its portion of the project yet, and is
over 500 days late.
Contractors bidding on public works are required pursuant to Section 4104(a) of the Public
Contract Code to list in their bids all subcontractors performing more than one-half of one
percent(0.5%) of the total base bid:
Section 4104(a) (1) "The name and the location of the place of business of each
subcontractor who will per work or labor or render service to the prime
contractor in or about the construction of the work or improvement, or a
subcontractor licensed by the State of California who, under subcontract to the
prime contractor, specially fabricates and installs a portion of the work or
improvement according to detailed drawings contained in the plans and
specifications, in an amount in excess of one-half of I percent of the prime
contractor's total bid or, in the case of bids or offers for the construction of
streets or highways, including bridges, in excess of one-half of 1 percent of the
prime contractor's total bid.or ten thousand dollars ($10,000), whichever is
greater. "
The statute further states that the contractor will perform with its own forces all work for which
no subcontractor is listed, and prohibits contractors from later subcontracting work for which no
subcontractor was listed at bid time absent "public necessity or emergency."
1
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Water Reuse Project-Consideration of Penalty Page 2
PMC listed five subcontractors. The work listed for the subcontractors was rebar, coating,
electrical, landscaping, and metal framing and erection. No subcontractor was listed for forming
and shoring, therefore pursuant to Public Contract Code section 4106, PMC represented that it
would perform that portion of the work itself.
During.the course of normal project administration in November 2005, City staff reviewed
PMC's subcontracting on the project for compliance with minority and women owned business
goals as part of State funding compliance. During this review, staff realized that PMC had used
an unlisted subcontractor - Patent Construction Systems - to furnish and install the shoring and
forming systems for the recycled water tank roof. This was not previously readily apparent, as
PMC had not submitted Patent's certified payroll, a requirement of the Labor Code. The City
immediately notified PMC of the problems in correspondence dated November 10, 2005 (see
attachments for a full administrative record on this issue).
The City requested a copy of the executed subcontract with Patent, and informed PMC of the
City's investigation. PMC denied that it subcontracted the work contrary to the law but provided
a copy of a contract with Patent dated September 22, 2003, executed November 16, 2004, for
$68,014.35. The subcontract describes the work to be performed by Patent as follows:
"Furnish any and all plant, labor, services, material, tools, equipment, supplies,
transportation, utilities, and all other items and facilities necessary therefore as
provided in the Contract Documents to furnish and install Shoring and Forming
of the Reclaimed Water Storage Tank Roof Structure complete. In accordance
with all project plans, specifications, and Addenda 1 and 2 specifically but not
exclusively Specification Sections 03100.
PMC's base bid was $5,440,948, and one-half of one percent of that base bid is $27,204.70.
Patent clearly acted as a subcontractor to PMC on this project. PMC did not bring a request to
have Patent perform work on the project to City staff or other agent(s) of the City at any time
during this project. This subcontracting was never found to be a necessity or public emergency.
PMC violated the Public Contract Code by engaging Patent after the bid date to perform work
valued at more than one-half of one percent of PMC's base bid.
Public Contract Code section 4110 provides the penalty for a general contractor that subcontracts
work in violation of the law:
"A prime contractor violating any of the provisions of this chapter violates his or
her contract and the awarding authority may exercise the option in its own
discretion of (1) canceling his or her contract or (2) assessing the prime
contractor a penalty in an amount of not more than 10 percent of the amount of
the subcontract involved, and this penalty shall be deposited in the fund out of
which the prime contract is awarded. In any proceedings under this section the
prime contractor shall be entitled to a public hearing and to five days' notice of
the time and place thereof. "
Water Reuse Project-Consideration of Penalty Page_3
Staff has notified PMC of its determination that FMC's subcontract with Patent violates the
Public Contract Code and that the City Council will consider this matter at this meeting.
Staff recommends a $6,801.44 penalty, 10% of the value of the subcontract between PMC and
Patent. This penalty is appropriate given staff s time spent researching, documenting, and
attempting to resolve this particular issue. The actions taken by staff and recommended here are
appropriate, fair, and in accordance with the provisions of the contract and Public Contract Code.
CONCURRENCES
This issue has been reviewed by the City Attorney's office. The City Attorney concurs with the
recommendation provided by staff.
FISCAL IMPACT
The penalty will have minimal fiscal impact to the City. The penalty will be used to compensate
outside legal counsel for consultation on the issue and other associated City costs in reviewing
the subcontracting violation.
ALTERNATIVES
Council may chose to reduce the penalty amount or waive the penalty. The 10% penalty
represents the maximum allowed under the Subletting and Subcontracting Fair Practices Act.
ATTACHMENTS
1. Subletting and Subcontracting Fair Practices Act
2. PMC's Contact Proposal pages a-c
3. Subcontract with Patent Construction Systems
4. Tetra Tech correspondence dated November 10,2005
5.. PMC correspondence dated November 16, 2005
6. City of SLO correspondence dated November 18, 2005
7. MHA correspondence dated January 24, 2006
8. Certified Payroll for Patent
9. Site Photos
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Attachment 1
California Laws: Public Contrac,\_ ode > Section 4100-4114 '-� Page 1 of 4
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Home>Califomia Laws>Public Contract Code>Section 4100-4114
fCautionl
CALIFORNIA PUBLIC CONTRACT CODE
4100.This chapter may be cited as the"Subletting and Subcontracting Fair Practices Act."
4101. The Legislature finds that the practices of bid shopping and bid peddling in connection with the.
construction, alteration, and repair of public improvements often result in poor quality of material and
workmanship to the detriment of the public, deprive the public of the full benefits of fair competition among
prime contractors and subcontractors, and lead to insolvencies, loss of wages to employees, and other evils.
4103. Nothing in this chapter limits or diminishes any rights or remedies, either legal or equitable, which:
(a) An original or substituted subcontractor may have against the prime contractor, his or her successors or
assigns.
(b)The state or any county, city, body politic, or public agency may have against the prime contractor, his or
her successors or assigns, including the right to take over and complete the contract.
4104. Any officer, department, board or commission taking bids for the construction of any public work or
improvement shall provide in the specifications prepared for the work or improvement or in the general
conditions under which bids will be received for the doing of the work incident to the public work or
improvement that any person making a bid or offer to perform the work, shall, in his or her bid or offer, set
forth:
(a) (1)The name and the location of the place of business of each subcontractor who will perform work or
labor or render service to the prime contractor in or about the construction of the work or improvement, or a
subcontractor licensed by the State of California who, under subcontract to the prime contractor, specially
fabricates and installs a portion of the work or improvement according to detailed drawings contained in the
plans and specifications, in an amount in excess of one-half of 1 percent of the prime contractors total bid or, in
the case of bids or offers for the construction of streets or highways, including bridges,in excess of one-half of 1
percent of the prime contractors total bid or ten thousand dollars ($10,000), whichever is greater..
(2) (A)Subject to subparagraph (B), any information requested by the officer, department, board, or
commission concerning any subcontractor who the prime:contractor is required to list under this subdivision,
other than the subcontractors name and location of business, may be submitted by the prime contractor up to
24 hours after the deadline established by the officer, department, board, or commission for receipt of bids by
prime contractors.
(B)A state or local agency may implement subparagraph (A)at its option.
(b)The portion of the work that will be done by each subcontractor under this act. The prime contractor
shall list only one subcontractor foreach portion as is defined by the prime contractor in his or her bid.
4104.5. (a)The officer, department, board, or commission taking bids for construction of any public work or
improvement shall specify in the bid invitation and public notice the place the bids of the prime contractors are
to be received and the time by which they shall be received. The date and time shall be extended by no less
than 72 hours if the officer,,department, board, or commission issues any material changes, additions, or
deletions to the invitation later than 72 hours prior to the bid closing. Any bids received after the time specified
in the notice or any extension due to material.changes shall be returned unopened:
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Attachment 1
Cali fomia Laws: Public Contra, ode > Section 4100-4114 Page 2 of 4
(b)As used in this section, the term"material change"means a change with a substantial cost impact on the
total bid as determined by the awarding agency.
(c) As used in this section, the term"bid invitation"shall include any documents issued to prime,contractors
that contain descriptions of the work to be bid or the content, form, or manner of submission of bids by bidders.
4105. Circumvention by a general contractor who bids as a prime contractor of the requirement under.Section
4104 for him or her to list his or her subcontractors, by the device of listing another contractor who will in turn
sublet portions constituting the majority df the-work covered by the prime contract, shall be considered a
violation of this chapter and shall subject that prime contractor to the penalties set forth in Sections 4110 and
4111.
4106. If a prime contractor fails to specify a subcontractor or if a prime contractor specifies more than one
subcontractor for the same portion of work to be performed under the contract in excess of one-half of 1
percent of the prime contractors total bid, the prime contractor agrees that he or she is fully qualified to
perform that portion himself or herself, and that the prime contractor shall perform that portion himself or
herself. If after award of contract, the prime contractor subcontracts, except as provided for in Sections 4107 or
4109, any such portion of the work, the prime contractor shall be subject to the penalties named in Section
4111.
4107. A prime contractor whose bid is accepted may not:
(a) Substitute a person as subcontractor in place of the.subcontractor Listed in the original bid, except that
the awarding authority, or its duly authorized officer, may, except as otherwise provided in Section 4107.5,
consent to the substitution of another person as a subcontractor`in any of the following situations:
(1) When the subcontractor listed in the bid, after having had a reasonable opportunity to do so, fails or
refuses to execute a written contract for the scope of work specified in the subcontractor's bid and at the price
specified in the subcontractors bid, when that written contract, based upon the general terms,conditions,
plans, and specifications for the project involved or the terms of that subcontractors written bid, is presented to
the subcontractor by the prime contractor.
(2)When the listed subcontractor becomes bankrupt or insolvent.
(3) When the listed subcontractor fails or refuses to perform his or her.subcontract.
(4) When the listed subcontractor fails or refuses to meet the bond requirements of the prime contractor as
set forth in Section
4108.
(5)When the prime contractor demonstrates to the awarding authority, or its duly authorized officer, subject
to the further provisions set forth in Section 4107.5, that the name of the subcontractor was listed as the result
of an inadvertent clerical error.
(6) When the listed subcontractor is not licensed pursuant to the Contractors License Law.
(7)When the awarding authority, or its duly authorized officer, determines that the work performed by the
listed subcontractor is substantially unsatisfactory and not in substantial accordance with the plans and
specifications, or that the subcontractor is substantially delaying or disrupting the progress of the work.
(8)When the listed subcontractor is ineligible to work on a public works project pursuant to Section 1777.1 or
1777.7 of the Labor Code.
(9)When the awarding authority determines that a listed subcontractor is not a responsible contractor. Prior
to approval of the prime contractors request for the substitution, the awarding authority, or its duly authorized
officer, shall give notice in writing to the listed subcontractor of the prime contractors request to substitute and
of the reasons for the request. The notice shall be served by certified or registered mail to the Last known
address of the subcontractor. The Listed subcontractor who has been so notified has five working days within
which to submit written objections to the substitution to the awarding authority. Failure to file these written
objections constitutes the listed subcontractors consent to the substitution. If written objections are filed, the
awarding authority shall give notice in writing of at least five working days to the listed subcontractor of a
hearing by the awarding authority on the prime contractors request for substitution.
(b) Permit a subcontract to be voluntarily assigned or transferred or allow it to be performed by anyone other
than the original subcontractor listed in the original bid, without the consent of the awarding authority, or its
duly authorized officer.
(c) Other than in the performance of"change orders"causing changes or deviations from the original
contract, sublet or subcontract any portion of the work in excess of one-half of 1 percent of the prime
contractors total bid as to which his or her original bid did not designate a subcontractor.
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Attachment 1
Cali fomia Laws: Public Contrac ode> Section 4100-4114 Page 3 of 4
4107.2. No subcontractor listed by a prime contractor under Section 4104 as furnishing and installing
carpeting, shall voluntarily sublet his or her subcontract with respect to any portion of the labor to be performed
unless he or she specified the subcontractor in his or her bid for that subcontract to the prime contractor.
4107.5. The prime contractor as a condition to assert a claim of inadvertent clerical error in the listing of a
subcontractor shall within two working days after the time of the prime bid opening by the awarding authority
give written notice to the awarding authority and copies of that notice to both the subcontractor he or she
claims to have listed in error and the intended subcontractor who had bid to the prime contractor prior to bid
opening. Any listed subcontractor who has been notified by the prime contractor in accordance with this section
as to an inadvertent clerical.error shall be allowed six working days from the time of the prime bid opening
within which to submit to the awarding authority and to the prime contractor written objection to the prime
contractor's claim of inadvertent clerical error. Failure of the listed subcontractor to file the written notice.
within the six working days shall be primary evidence of his or her agreement that an inadvertent clerical error
was made. The awarding authority shall, after a public hearing as provided in Section 4107 and in the absence of
compelling reasons to the contrary, consent to the substitution of the intended subcontractor:
(a) If (1)the prime contractor, (2)the subcontractor listed in error, and (3)the intended subcontractor each
submit an affidavit to the awarding authority along with such additional evidence as the parties may wish to
submit that an inadvertent clerical error was in fact made, provided that the affidavits from each of the three
parties are filed within eight working days from the time of the prime bid opening, or
(b) If the affidavits are filed by both the prime contractor and the intended subcontractor within the
specified time but the subcontractor whom the prime contractor claims to have listed in error does not submit
within six working days, to the awarding authority and to the prime contractor, written objection to the prime
contractors claim of inadvertent clerical error as provided in this section. If the affidavits are filed by both the
prime contractor and the intended subcontractor but the listed subcontractor has, within six working days from
the time of the prime bid opening, submitted to the.awarding authority and to the prime contractor written
objection to the prime contractors claim of inadvertent clerical error, the awarding authority shall investigate
the claims of the parties and shall hold a public hearing as provided in Section 4107 to determine the validity of
those claims. Any determination made shall be based on the facts contained in the declarations submitted under
penalty of perjury by all three parties and supported by testimony under oath and subject to cross-examination.
The awarding authority may, on its own motion or that of any other party, admit testimony of other contractors,
any bid registries or depositories, or any other party in possession of facts which may have a bearing on the
decision of the awarding authority.
4107.7. If a contractor who enters into a contract with a public entity for investigation, removal or remedial
action, or disposal relative to the release or presence of a hazardous material or hazardous waste fails to pay a
subcontractor registered as a hazardous waste hauler pursuant to Section 25163 of the Health and Safety Code
within 10 days after the investigation, removal or remedial action, or disposal is completed, the subcontractor
may serve a stop notice upon the public entity in accordance with Chapter 4 (commencing with Section 3179)of
Title 15 of Part 4 of Division 3 of the Civil Code.
4108. (a) It shall be the responsibility of each subcontractor submitting bids to a prime contractor to be
prepared to submit a faithful performance and payment bond or bonds if so requested by the prime contractor.
(b) In the event any subcontractor submitting a bid to a prime contractor does not, upon the request of the
prime contractor and at the expense of the prime contractor at the established charge or premium therefor,
furnish to the prime contractor a bond or bonds issued by an admitted surety wherein the prime contractor shall
be named the obligee, guaranteeing prompt and faithful performance of the subcontract and the payment of all
claims for labor and materials furnished or used in and about the work to be done and performed under the
subcontract, the prime contractor may reject the bid and make a substitution of another subcontractor subject
to Section
4107.
(c) (1)The bond or bonds may be required under this section only if the prime contractor in his or her written
or published request for subbids clearly specifies the amount and requirements of the bond or bonds.
(2) If the expense of the bond or bonds required under this section is to be borne by the subcontractor, that
requirement shall also be specified in the prime contractors written or published request for subbids.
(3) The prime contractors failure to specify bond requirements, in accordance with this subdivision, in the
written or published request for subbids shall preclude the prime contractor from imposing bond requirements
under this section.
4109. Subletting or subcontracting of any portion of the work in excess of one-half of 1 percent of the prime
contractors total bid as to which no subcontractor was designated in the original bid shall only be permitted in
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Attachment l
California Laws: Public Contra 'ode > Section 4100-4114 Page 4 of 4
cases of public emergency or necessity, and then only after a finding reduced to writing as a public record of
the awarding authority setting forth the facts constituting the emergency or necessity.
4110. A prime contractor violating any of the provisions of this chapter violates his or her contract and the
awarding authority may exercise the option, in its own discretion, of (1)canceling his or her contract or(2)
assessing the prime contractor a penalty in an amount of not more than 10 percent of the amount of the
subcontract involved, and this penalty shalt be deposited in the fund out of which the prime contract is awarded.
In any proceedings under this section the prime contractor shall be entitled to a public hearing and to five days'
notice of the time and place thereof..
4111. Violation of this chapter by a Licensee under Chapter 9 (commencing with Section 7000)of Division 3 of
the Business and Professions Code constitutes grounds for disciplinary action by the Contractors State License
Board, in addition to the penalties prescribed in Section
4110.
4112. The failure on the part of a contractor to comply with any provision of this chapter does not constitute
a defense to the contractor in any action brought against the contractor by a subcontractor:
4113. As used in this chapter, the word"subcontractor"shall mean a contractor, within the meaning of the
provisions of Chapter 9 (commencing with Section 7000)of Division 3 of the Business and Professions Code, who
contracts directly with the prime contractor. 'Prime contractor"shall mean the contractor who contracts directly
with the awarding authority.
4114. The county board of supervisors, when it is the awarding authority, may delegate its functions under
Sections 4107 and 4110 to any officer designated by the board. The authorized officer shall make a written
recommendation to the board of supervisors. The board of supervisors may adopt the recommendation without
further notice or hearing, or may set the matter for a de novo hearing before the board.
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Attachment Z
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CONTRACT PROPOSAL
TO THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA
THE UNDERSIGNED, hereby agrees that he has carefully examined the location of the
proposed work, that he has carefully examined the plans and specifications, and that he
has carefully examined and read the accompanying instructions to bidders, and hereby
proposes to furnish all of the materials and do all the work required to complete:
WATER REUSE PROJECT
WATER RECLAMATION FACILITY IMPROVEMENTS
SPECIFICATION NO. 99124-90553 A
in satisfactory working condition, in accordance with said plans, specifications, and the
special provisions,for the prices set forth below:
rrEM A: For construction of Water Reclamation Facility site improvements for Water
Reuse Project, including landscape improvements, coagulant feed system, chlorination
feed system, aqua ammonia chemical station, meter vault, chlorine contact tank, storage
tank and pump station, motor control center, water utility extension, air gap manhole,
nitrified effluent diversion box alterations, distributed process control systems, testing and
commissioning, and all work necessary for a complete and operable Water Reclamation
Facility.
For the lump sum of$ r�-t��
ITEM B: Provision of the sheeting, shoring, bracing and other excavation supports
required by the Labor Code of the State of California, the Construction Safety Orders,of
the Division of Industrial Safety of the State of Califomla,-and the California Occupational
Safety and Health Act of 1973.
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By signing below, the bidder acknowledges and confirms that this proposal is based on the information
contained in all contract documents, including the plans, specifications, special provisions, and addendum
number(s) / d' �a . (Note: It is the contractor's responsibility to verify the number of
addenda prior to the bid opening.)
The undersigned further agrees that in case of default in executing the required contract, with necessary
bands, within eight days, (not including Sat rdays' Sundays, and legal holidays), after having received a
mailed notice that the contract is ready for signature, the proceeds of the check or bond accompanying his
bid shall become the property of the City of San Luis Obispo.
Licensed in accordance
with an act providing for the registration of contractors,License No. /3g9o?D
Expiration Date,�/47`._ dl.
The above statement is made under penalty of perjury,and any bid not containing this information "shall be
considered non-responsive and shall be rejected"by the Ci
SIGNATURE OF BIDDER
Steven Delledera
(Print Name an r e of Bidder)
Business Name(DBA): PACIFIC MECHANICAL CORP
Owner/Legal Name: PACIFIC MECHANICAL CORP
Indicate One: Sole-proprietor Partnership Corporation
List Partners/Corporate Officers: Steven Delledera
President
Name Title
Gar Bailey
Vice President
Name Title
Pierre Bigras Iamsear.IJ&lazx
Vice President uasugofpnD trol
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Attachment 3
Pacific Mechanical Corporation SUBCONTRACT
2501 Annalisa Drive,Concord,CA 94520
ter% Phone: (925)8274940 Fax: (925)827-0519
CA License No. 138920 * NV License No.6244 Page 1 of 2
TO: Patent Construction Systems JOB NO.: 262
8210 Berry Avenue, Suite 180 SUBCONTRACT NO.: 262-004
Sacramento, CA 95828 PHASE NO.: 03100
DATE: 9/22/2003
ATTN: Frank Towse LICENSE NO.: 225339
PHONE: (916) 381-6090 FAX: (916) 381-1344
SUBCONTRACT AGREEMENT
THIS AGREEMENT,made and entered into on the date above set forth,by and between PACIFIC MECHANICAL CORPORATION,is CONTRACTOR and
above named,as SUBCONTRACTOR,for the consideration heeinafter stated and upon the following stated terms and condititms:
wnWESSETH,that
The Owner,Architect.dare of general contract(Owners Can=with Contractor),project involved,location of project,work hereby undertaken by Subcontractor.
amount to be paid to the Subcontractor,and time for aompletclion,are:
a Owner. City of San Luis Obispo
b Owners Architect: Brown&Caldwell
c Date of General Coaeact: July 2003
d. Project: Water Reclamation Facility Improv
e.Project Location: 35 Prado Road. San Luis Obispo,CA 93401
E Description of work undertaken by SUBCONTRACTOR
Furnish any and an plant,labor.services,material.tools,equipment,supplies,transportation,uMUes and all other items and facMes necessary
therefore as provided in the Contract Documents to fumish and install Shoring and Forming of the Reclaimed Water Storage Tank Roof Structure
complete,in accordance with all project plats.specifications,and Addenda 1 and 2 Spect6oaliy but not exclusively Specification Sections 03100
clarifications:
1. Shoring labor includes erectiom dismantle.and freight of all Patent equipment
2 Forming labor Includes forming of exterior edges up to the edge of the top of the deck along with removal of forms.
3. Lumber package indWas lumber and plywood with accessories for forming
4- 20K Frames with acipstitteras as required are provided.
S. Aluminum stringers are provided-
6 Aluminum)olds are provided for slab. Spacing is based on 314'plywood,supplied by Patera
7. Layout drawingsare provided by Patent. PE stemped drawings are provided.
8 Wood,plywood,stability Ues and mudsft are provided and Installer!by Patent.
9. Bid assumes structure sofd will be bell all at one lime.
10. Any provisions to the contrary notwithstanding.It is understood and agreed that Subcontractor shall be paid within 60 days of invoice date for
an mnfomting work,materials,services,rentals,or other items billed Including authorized extra work or Change Orders.
11. The language of any Indemnity,defense or hold harmless provisions nolwlttedantfng,D Is understood and agreed that the Subcontractors
obllgallons shall be limited to Subconlydclors sole negllgenee and proportionate share of joint or concurrent negligence.
12. Contractor to provide forklift andlar crane for unloading and loading of trucks at jobstle and locating equipment to erection and dismantling
areas.
13 Final retention payment to be trade 30 days atter work Is completed and all equipment and related matelots associated with the work are
dismantled and removed from the jtrbsite.
Exclusions:
1. AD construction joints,bulkheads and water stops
2. All embeds,penetrations.and block outs.
3 Stair landing and treads.
4 Parapet walls mobs stem walls.
5. Reshores.
Description Quantity Units Unit Price Amount
28 Days Rental for 20K Shoring and Components(including tax at 7.25%) 1.00 LS S420635 $4,206 35
Additional Calendar Days Rental(IF REQUIRED) 000 Days $140 07 So 00
Shoring Labor 1.00 31,
Ls $ 955.0 $31,95500
So1TU Forming Labor 1.00 LS $9,000.00 $9,000.00
Exterior Edge Forms Labor 1.00 _ LS $7,500 00 $7,500.00
Lumber Package 1.00 LS $15.353.00 $15,353.00
n Attachment?
�i.� Pacific Mechanical Corporation SUBCONTRACT
if 2501 Annalisa Drive,Concord,CA 94520
Phone: (925)827-4940 Fax: (925)827-0519 Page 2 of 2
CA License No. 138920 $ NV License No.6244
TO: Patent Construction Systems JOB NO.: 262
8210 Berry Avenue, Suite 180 SUBCONTRACT NO.: 262-004
Sacramento, CA 95828 PHASE NO.: 03100
DATE: 9/22/2003
ATTN: Frank Towse LICENSE NO.: 225339
PHONE: (916) 381-6090 FAX: (916) 381-1344
g. iota]eompeantion of SUBCONTRACTOR(Subconuauor Price):. $68,014.35
h.Time specified for delivery of Subconmctofs material and camPletion of his work:. to cornp]y with PMCs Construction Schedule
The foregoing and the continuation sheets if any anached together with the General Conditions set forth an the attached pager I through 4 rue hereby accepted.
Subcontractor: Contractor:
Patent�ConstrtoctioanSystems ✓77:disprJ Pad c l-C-oCJporatign
V4 Signed. ( ]Suited:
By: f By: Jon S Gud ohnsen, Project Manager
Date: t t$' D Date: ( t ti
License No.: oW,6-339
7_�a"
Attachment 4
TETRA TECH, INC.
November 10, 2005
Pacific Mechanical Corporation
Jon Gudjohnsen
P.O. Box 4041
Concord, Ca. 94524
Reference: Water Reuse Project
Water Reclamation Facility Improvements—City of San Luis Obispo
Subject: Subcontracting
Dear Mr. Gudjohnsen:
As part of the competitive bidding process for this job, all bidders were required to provide a
list of subcontractors performing more than %percent (0.5%) of the total base bid pursuant
to Section 4100 of the California Public Contracts Code "Subletting and Subcontracting Fair
Practices Act".
PMC provided five subcontractors as part of their bid proposal; Franklin Reinforcing, KnK
Painting, P&J Electrical, Gale Landscaping, and Paramount Metal. Not listed were Patent
and Garcia & Sons, Inc(Garcia)for forming and paving work, respectively.
It has come to our attention that PMC intends to use Garcia for paving work related to this
project. The schedule of values estimates the value of contract paving work to be $60,000.
This amount exceeds 0.5% of the total base bid, and as such should have been listed in the
subcontractors presented at bid time.
Pursuant to Section 4106 of the Subletting and Subcontracting Fair Practices Act, "lf a prime
contractor fails to specify a subcontractor or if a prime contractor specifies more than one
subcontractor for the same portion of work to be performed under the contract in excess of
one half of 1 percent of the prime contractor's total bid, the prime contractor agrees that he
or she is fully qualified to perform that portion himself or herself, and that the prime
contractor shall perform that portion himself or herself. If after award of contract, the prime
contractor subcontracts, except as provided for in Sections 4107 or 4109, any such portion
Of the work, the prime contractor shall be subject to the penalties named in Section 4111."
Section 4107 deals with instances when the prime contractor has listed a subcontractor
which cannot or may not perform the work; this does not apply in this instance as a
subcontractor was not listed for paving or forming work.
Section 4109 states "Subletting or subcontracting of any portion of the work in excess of
one-half of 1 percent of the prime contractor's total bid as to which no subcontractor was
designated in the original bid shall only be permitted in cases of public emergency or
necessity, and then only after a finding reduced to writing as a public record of the awarding
authority setting forth the facts constituting the emergency or necessity."
811 Palm Street,San Luis Obispo.CA 93401
Tel:805.542.9052 Fax:805.542.9254
www.tettatech.com
Page 1 of 2 13
Attachment 4
TETRATECH, INC.
You are hereby notified that the City does not consider this case to be a public emergency.
As such, the provisions of Section 4106 apply without exception. Please proceed in
accordance with the provisions of the Public Contract Code and the requirements of this
project's contract documents.
Pursuant to State Standard Specific9tions Section 8-1.01 Subcontracting, "Copies of the
subcontracts shall be available to the Engineer upon written request," please provide copies
by November 16, 2005 of the subcontract with Patent and Garcia including a breakdown of
labor, materials, and equipment provided. Preliminary notices from Patent show the value
to be approximately$550,000 in total value.
If you have any questions I may be reached at 818-426-3410.
Respectfully Submitted,
D�1
David Thomas
Construction Manager
Cc: Mr. Richard Fisher, Ms. Katie DiSimone, Mr. John Moss, City of San Luis Obispo
811 Palm Street.San Luis Obispo:CA 93401
Tel:805.542.9052 Fax:805.542.9254
vAm.tetratech.corn
Page 2 of 2 7�`/
Attachment 5
l �
I ,
PACIFIC MECHANICAL CORPORATION
GENERAL ENGINEERING CONTRACTORS
Calif State Lie No 138920 * NV State Lie No 0006244
P.O. Box 4041, Concord, CA 94524
(925) 827-4940 FAX (925) 827-0519
November 16, 2005
Tetra Tech, Inc. Log No: 262-00122
811 Palm Street
San Luis Obispo, CA 93401
Attention: David Thomas Fax: (805)7849081
Reference: Water Reuse Project
Water Reclamation Facility Improvements
City of San Luis Obispo
Specification No. 99124-90553A
Subject: Subcontracting
Dear Mr. Thomas,
We are in receipt of your November 10, 2005 correspondence regarding the above subject and
offer you the following.
The only executed work.in your complaint is an agreement with Patent for design services,
rental services, and services to facilitate the work. PMC receives bids from Patent on many
projects we bid. Patent in fact acts in many capacities for which they are not considered a
subcontractor, typically there is no intent to use their services at bid time as a subcontractor_
Patent in fact did not specially fabricate or install any portion of the work or improvement
according to detailed drawings contained in the plans and specifications for installation of
permanent materials.Any misunderstanding with respect to their status at bid time is merely an
over site or difference in definition.
In accordance with State Standard Specification Section 8-1.01 and your written request,we
have attached a copy of Patent's agreement We have not included a copy of our agreement
with GF Garcia as the execution of the agreement has beenput on hold pending the City's
response to our November 15, 2005 correspondence requesting the use of GF Garcia out of
necessity. In the meantime, PMC is self performing the work so as not to delay the project.
The spirit and intent of the code you have referenced in your letter is to stop the practice known
as"bid shopping" after a bid is made to a public entity. PMC has not participated in nor has
there been any complaint of"bid shopging"after the bid of this project.We therefore question if
this is a standard practice for the City of San Luis Obispo, or if this an execution of the threat
communicated November 10, 2005 as documented in our letter of the same date. If so I would
caution that personal liability is created under the federal code for an abuse of authority which
under the color of statute intends to injure PMC.
Attachment 5
November 16, 2005
David Thomas
Tetra Tech, Inc.
Page 2 of 2
Therefore prior to any proceedings regarding this matter we request the City provide its
standard written procedures for the review of subcontractors on awarded projects and all
documentation of investigations and imposed fines on prior projects where the City has taken
similar actions.We would require these at least two weeks prior to the five days notice of the
public hearing we are entitled to.
;Very truly ours,
on d' nsen
r Manager
Enclosures: Patent Subcontract
cc: John.Moss
Gary Howze
7_/6
Attachment 6
oSAn ull OBISPO
879 Morro Street• San Luis Obispo, CA 93401
November 18, 2005
Mr. Jon Gudjohnsen
Pacific Mechanical Corporation
P.O. Box 4041
Concord, CA 94524
Subject: City of San Luis Obispo Water Reuse Project,Patent Subcontract
Dear Mr. Gudjohnsen,
The City has received your submittal of Patent's subcontract agreement dated September 22,
2003 and your transmittal letter dated November 16, 2005.
The scope of work described in the subcontract confirms that Patent was a subcontractor to PMC
on this project. Patent "furnished any and all plant, labor, services, materials, tools, equipment,
supplies, transportation, utilities, and all other items and facilities necessary therefore as
provided in the Contract Documents to furnish and install Shoring and Forming of the Reclaimed
Water Storage Tank Roof Structure complete" according to the language of the subcontract PMC
signed with Patent. This scope of work constitutes subcontract work under Public Contract Code
Section 4100 et seq. The fact that Patent's work may not have involved installation of
"permanent materials" is irrelevant. The value of the work.Patent performed greatly exceeded
0.5%of PMC's total original bid.
PMC did not list Patent as a subcontractor at bid time. When PMC executed a subcontract with
Patent, after award of the contract and without notice to the City, PMC violated the Subletting
and Subcontracting Fair Practices Act.
The City discovered this violation in the course of typical project management activities. I
regularly check the MBEJWBE subcontracting list and payments to make sure there were no
improper substitutions of MBE/WBE subcontractors, as this could potentially jeopardize the
City's state funding. During this review, I checked the original bid documents including the
subcontractors list to verify the MBE/WBE compliance. This is when I noticed that Patent (and
GF Garcia & Sons)was not on PMC's subcontractor lists.
The City does not have an internal written procedure regarding subcontractor substitutions. We
follow the statutory procedures. The City has complied with all appropriate Federal, State, and
local laws in the bidding, awarding, and execution of this contract. The actions taken by the City
and its representatives were part of standard and typical project management practices. I am
unaware of any similar instances where a prime contractor violated the Subletting and
7-/ 7
OThe City of San Luis Obispo is committed to include the disabled in all of its services, programs and activities. OIJA
Telecommunications Device for the Deaf(805)781-7410
Attachment 6
Response to Subcontracting letter Gated November 16, 2005 March 8,2006
Subcontracting Fair Practices Act while under contract with the City, so I am unable to provide.
documentation on similar situations.
We also note that the PMC subcontract with Patent dated September 22, 2003 which you have
provided only covers work on the RWT Roof Structure and is for$68,014.35. The City received
two Preliminary Notices from Patent; one for $520,000 and one for $30,000. If PMC had
additional subcontracts with Patentor issued change orders for additional work, please provide
the City with copies by November 28, 2005. If the September 22, 2003 subcontract is the only
agreement PMC has with Patent,please confirm in writing by November 28,2005.
Finally, the certified payroll submitted by PMC to date does not contain any of Patent's certified
payroll information. In light of this deficiency and in accordance with Section 7-1.OIA(3) of the
Standard Specifications and the Labor Code, the City is requesting a copy of certified payroll
records for all workers on site. This request includes work performed by your employees,
subcontractors and owner operators on the Project. Pursuant to Section 7-1.O1A(3c), PMC is to
provide these records within 10 days of this written request. Failure to comply with this request
may result in penalties as specified in the Labor Code.
If you have any questions,please do not hesitate to call me at(805) 781-7239.
Sincerely,
atie DiSimone
Water Projects Manager
Cc: Mr. Richard.Fisher,Mr. John Moss, Mr. Jonathan Lowell, City of San Luis Obispo
Mr. David Thomas, Tetra Tech
Attachment 7
McDonough Holland&Allen Pc
Attorneys at Law
p E C_ E a cf--r
Linda R.Beck
2006 Attorney at Law
G
Oakland Office
CITY OF SAN LUIS OBISPO 510.273.8780 tel
UTILITIES DEPT. 510.839.9104 fax
(beck@mhalaw.com
January 24,2006
VIA FACSIMME
Jeffery H. Speich, Esq.
Law Offices of Jeffery H. Speich
2026 Cliff Drive, Suite#168
Santa Barbara, CA 93109
Sacramento Re: Cit of San Luis Obispo - Water Reuse Project, Water Reclamation Facility
555 Capitol Mall y P
9th Floor Improvements
Sacramento CA
95814.4692
tel 916.444.3900 Dear Mr.. Speich:
toll free 800.403.3900
fax 916.444.8834
We are writing to bring some additional issues to your attention in connection with
Oakland this project. The City is investigating apparent violations of the subcontractor listing
1901 Harrison Street
9th Floor laws by Pacific Mechanical. The City has received a Civil Wage and Penalty
Oakland CA Assessment from the Division of Labor Standards Enforcement arising from alleged
94612-3501
tel 510.273.8780 violations of the prevailing wage laws. The City is also concerned about other
tau arae 510.339.3034
fax 510.839.9104 apparent prevailing wage violations.
Yuba c`e
422 Century Park Drive Subcontractor Listing Law Violation
0
Suite A
Yuba City CA
29 Section 4107(c) of the Public.Contract Code prohibits a rime contractor from
95991-5729 ( ) P P
lei 530.674.9761, subcontracting"any.portion of the work in excess of one-half of one percent of the
fax 530.671.0990 prime contractor's total bid as to which his or her original bid did not designate a
www.mhataw.com subcontractor." Pacific Mechanical did not lista subcontractor for shoring or forming
in its bid. However, the City received two California Preliminary Notices from
Patent Construction Systems ("Patent") stating that Patent would be providing an
estimated$550,000 in labor, material,equipment and services for wall and column
forming, aluminum joist, stringer, frames and beams to this project. Then the City
observed Patent workers at the site erecting forming and shoring for the reclaimed
water storage tank roof, but did not receive certified payroll reports from Patent.
In November, 2005,the City informed Pacific Mechanical of its concern and asked
the contractor to address this issue and provide a copy of any subcontract with Patent.
Pacific Mechanical sent the City a subcontract under which Patent was to provide
882723v4 05036/0005 i/
Attachment 7
J
McDonough Holland &Allen rc
1, Attomeys at Law
Jeffrey H. Speich, Esq.
January 24, 2006
Page 2
labor, material,equipment and services to "furnish and install Shoring and Forming
of the Reclaimed Water Storage Tank Roof Structure" for a price of$68,014.35. This
document established that Pacific Mechanical subcontracted work to Patent in clear
violation of Public Contract Code Section 4107. The City is evaluating the
appropriate penalty under Public Contract Code Section 4110.
Prevailing Wage Issues
The City received a Civil Wage and Penalty Assessment from the Division of Labor
Standards Enforcement assessing approximately$45,000 in unpaid wages and
penalties for violations by P&J Electric. Ordinarily, the City would be required to
withhold this amount from payments to Pacific Mechanical until Pacific Mechanical
or P&J satisfies this obligation. In doing so, however, the City will lose low-interest
loan and grant funds from the State Revolving Fund'program. In this case, the DLSE
has directed Pacific Mechanical to deposit the funds with the City. See attached
email correspondence dated January 17, 2005, from the Deputy Labor Commissioner,
Ms. Sherry Gentry, stating that it is"necessary for the Prime Contractor to submit
those funds to the Awarding Body where they will keep it in a separate escrow
account until such time as the Civil Wage &Penalty Assessment(CWPA)is no
longer subject to judicial review- which means either a settlement has been reached,
a hearing has been held, or a judgment is filed." The.City has not previously withheld
these funds from PACIFIC MECHANICAL, and is awaiting PACIFIC
MECHANICAL's compliance with the Department of Industrial Relations
requirement. The City expects to receive these funds within seven days of the date of
this letter. "If the City does not receive the funds, it will withhold them, as well as an
amount sufficient to compensate the City any increased financing costs it incurs on
account of the withholding.
In addition to this situation, the certified payroll reports Patent provided(at the City's
request following the observation that Patent had workers on the site) do not meet the
statutory requirements, as worker hours are reported weekly, rather than daily. This
issue is not a mere technicality, as the workers' entitlement to overtime rates is
determined based on daily hours worked. The City is working with the Department
of Industrial Relations to address these issues.
The City is also concerned about prevailing wage compliance by PACIFIC
MECHANICAL's second-tier subcontractors. The City requested certified payroll
for all workers on the project, but did not receive second-tier subcontractors' records,
such as for DJ Johnson and Hallett's Backhoe Service. The City understands that
some certified payroll records were submitted to DLSe after the Department of
882723v4 0503UW05 6
(� Attachment 7
J'
McDonough Holland & Allen Pc
1 Attorneys.at Law
Jeffrey H. Speich,Esq.
January 24, 2006
Page 3
Industrial Relations became involved, but the City still has not received records from
all lower-tier subcontractors, including DJ Johnson. The City is investigating
whether penalties are appropriate under the Labor Code.
The City expects Pacific Mechanical to take a proactive role in ensuring that all
subcontractors are complying with prevailing wage laws. Please advise us of Pacific
Mechanical's plan for addressing these issues within seven days of the date of this
letter.
Very truly yours, '
Linda R. Beck
LRB:dlp
cc: Jonathan Lowell, City Attorney
John E. Moss
Katie DiSimone
882723v4 05036/0005 /
r 1
Attachment 8
I�
PACIFIC MECHANICAL CORPORATION
GENERAL ENGINEERING CONTRACTORS
CW.stub M.No 135M
January 23, 2006
VIA GOLDENSTATE OVERNIGHT
LABOR COMMISSIONER, STATE OF CALIFORNIA
Department of Industrial Relations
Division of Labor Standards Enforcement
5555 Cafifomia Avenue, Suite 200
Bakersfield, California 93309
Attention: Sherry Gentry, Deputy Labor Commissioner
Re: Request for Certified Payroll Records
Pending Case No. -010
Dear Ms. Gentry:
In response to your Request for Certified Payroll Records, which we received on
Tuesday, January 17, 2006, enclosed please find all daily certified payroll records to date for
_�P?@tent.,Construcdon,Systerh� We are continuing to follow-up with DG Johnson Backhoe, and
,T
as soon as we receive certified payroll for them, we will forward to you, as well.
Thank you. Please give me a call with any questions and/or concerns.
Sincerely,
i
i
j el se
R cepti nist-Secretary
mdr r- E C E H E 71,
Copy—FYI: Jon Gydjohnse Project Ma er(w/o enclosure)
Enclosures
zJusers/certpay.mdr/Labor Co issioner Request Letter JAti C
I
CITY U"
P.O. Box 4041 • Concord,CA 94524 9 Tel: 925-827-4940 • Fax: 925-827-0519 • pmc@pmcorporation.com
Attachment 8
JAN 2 3 20,25
Patent Construction Systems
Harsco FAX TRANSMITTAL
San Francisco#80
2575 Williams Street
San Leandro, CA 94577
Telephone:(510)614-6630
Fax:(510)614-7093
dpuente(Pcshd.com
January 20, 2006
Pacific Mechanical Corporation
P.O.Box 4041
Concord, CA 94524
Attention: Michelle Reese
Re: San Luis Obispo—Water Reuse Project
Daily Certified Payroll Reports
Attached are copies of our Certified Payroll for the above-mentioned project,with the
hours noted on a daily basis.
If you have any finther questions or problems regarding the Certified Payroll or anything
else,please do not hesitate to give me a call. (510) 614-6630
ince el
Desiree Puente
Western District Billing Supervisor
Patent Construction Systems
Attachment 8
Patent Construction Systems
Harsco FAX TRANSMITTAL
San Francisco Branch#80
2575 Williams Street
San Leandro,CA 94577
Telephone:(510)614.6630
Fax:(510)614.7093
www.dpuenteepeshd.com
"FINAL"
STATEMENT OF NONPERFORMANCE
CUSTOMER: Pacific Mechanical Corp.
PAYROLL#: 80-0403041 PROJECT San Luis Obispo WWTP
NAME OF PRIlvIE/SUBCONTRACTOR: PATENT CONSTRUCTION SYSTEMS
I DO HEREBY STATE THAT NO PERSONS WERE EMPLOYED ON THE
CONSTRUCTION OF THE PROJECT: SLO Water Reclamation Improvements .
NAME OF PROJECT
315 Pizado Road. San Luis Obispo. CA .
ADDRESS OF PROJECT
DURING THE PERIOD COMIVIENCINGON THE 41h DAY OF Juh 2005
AND ENDING ON THE 101h DAY OF July 2005 .
NAME:
Scott McCashn
TITLE: Administrative Manager
DATE: November 22,2005
Attachment 8
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Artacttment 8
Patent Construction Systems
Harsco FAX TRANSMITTAL
San Francisco Branch#80
2575 Williams Street
San Leandro,CA 94577
Telephone:(510)614.6630
Fax:(510)614.7093
www.dpuente(&Dcshd.com
STATEMENT OF NON-PERFORMANCE
CUSTOMER: Pacific Mechanical Corp.
PAYROLL#: 80-0403041 PROJECT San Luis Obispo WWTP
NAME OF PRIME/SUBCONTRACTOR: PATENT CONSTRUCTION SYSTEMS
I DO HEREBY STATE THAT NO PERSONS WERE EMPLOYED ON THE
CONSTRUCTION OF THE PROJECT: SLO Water Reclamation Improvements .
NAME OF PRO ECT
315 Pizado Road,San Luis Obispo, CA__,.
ADDRESS OF PROJECT
DURING THE PERIOD COMMENCING ON THE 301h DAY OF June 2005
AND ENDING ON THE. 19" DAY OF June 2005
NAME:
Scott McCaslin
TITLE: Administrative Manager
DATE: November 22,2005
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Attachment 8
Patent Construction Systems
Harsco FAX TRANSMITTAL
San Francisco Branch 980
2575 Williams Street
San Leandro,CA 94577
Telephone:(510)614.6630
Fax-(510)614.7093
www.dpuente(&pcshd.com
STATEMENT OF NON-PERFORMANCE
CUSTOMER: Pacific Mechanical Corp.
PAYROLL#: 80-0403041 PROJECT San Luis Obispo WWTP
NAME OF PRIME/SUBCONTRACTOR: PATENT CONSTRUCTION SYSTEMS
I DO HEREBY STATE THAT NO PERSONS WERE EMPLOYED ON THE
CONSTRUCTION OF THE PROJECT: SLO Water Reclamation Improvements .
NAME OF PROJECT
315.Pizado Road,San Luis Obispo, CA .
ADDRESS OF PROJECT
DURING THE PERIOD COMMENCING ON THE 10`h DAY OF January 2005
AND ENDING ON THE 151h DAY OF May 2005 .
NAME:
Scott McCaslin
TITLE: Administrative Manager
DATE: November 22,2005
Attachment 8
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Attachment 8
Patent Construction Systems
Harsco FAX TRANSMITTAL
San Francisco Branch#80
2575 Williams Street
San Leandro,CA 94577
Telephone:(510)614.6630
Fax:(510)614.7093
www.d pue nte(al pcs h d.com
STATEMENT OF NON-PERFORMANCE
CUSTOMER: Pacific Mechanical Corp.
PAYROLL#`: 80-0403041 PROJECT San Luis Obispo WWTP
NAME OF PRIME/SUBCONTRACTOR: PATENT CONSTRUCTION SYSTEMS
I DO HEREBY STATE THAT NO PERSONS WERE EMPLOYED ON THE
CONSTRUCTION OF THE PROJECT: SLO Water Reclamation Improvements .
NAME OF PROJECT
315 Pizado Road, San Luis Obispo, CA .
ADDRESS OF PROJECT
DURING THE PERIOD COMMENCING ON THE 27th DAY OF December 2004
AND ENDING ON THE 2nd DAY OF January 2005 .
NAME: �f 1, '
Scott McCaslin
TITLE: Administrative Manager
DATE: November.22,2005
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Attachment 8
Patent Construction Systems
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San Leandro,CA 94577
Telephone:(510)614.6630
Fax:(510)614.7091
www.dpuenteapcshd.com.
STATEMENT OF NON-PERFORMANCE
CUSTOMER- Pacific Mechanical Corp.
PAYROLL#: 80-0403641 PROJECT San Luis Obispo WWTP
NAME OF.PREVIE/ SUBCONTRACTOR: PATENT CONSTRUCTION SYSTEMS
I DO HEREBY STATE THAT NO PERSONS WERE EMPLOYED ON THE
CONSTRUCTION OF THE PROJECT- SLO_Water Reclamation Improvements ..
NAME OF PROJECT
315 P_izado Road, San Luis Obispo, _CA-
ADDRESS
A ADDRESS OF PROJECT
DURING THE PERIOD COMMENCING ON THE 13`hDAY OF December 2004
AND ENDING ON THE - 19t' - DAY OF December. 2004 .
NAME: / `CtLT.(/ .6G"�t ��C.c�•�.
Scott McCashn
TITLE- Administrative .Manager
DATE: November 22,2005
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12/06/2004".
� H
r2;o6/2004
03/20/2006 16:58 FAX 9258275459 FMC tJuul
RECEIVED
RED FILE �
MAR 2 0 2006
MEETING AGENDA
PACIFIC MECHANICAL CORPORATION SLO CITY CLERK
DATE4 - Ob ITEM #-2d-2--GENERAL ENGINEERING CONTRACTORS
calla. State Lie. No. 138920 4 NV stale Lie..No. 0066244
P.O. Box 4041, Concord, CA 94524
(925) 827-4940 * FAX (925) 827-0519
f49Q6 t�o g-tC
March 20, 2006 Q-COUNCIL E- CDD DIR
iB CAO t FIN DIR
r-1 ACAO TFIRE CHIEF
City of San Luis Obispo -Z ATTORNEY ja PW DIR Log No: 252-00158
990 Palm Street 521 CLERK/ORIG 7e POLICE CHF
San Luis Obispo, CA 93401-3249 El D PT HEADS ro REC DIR
0 je LITIL DIR
Attention: Audrey Hooper 0 �'' 12 HR DIR Fax: (805)781-7109
K CAM
Reference: Water Reuse Project �,cj-ee-,C
Water Reclamation Facility Improvements
City of San Luis Obispo
Specification No. 99124-90553A
Subject City Council Meeting March 21,2006
Penalty assessment against Pacific Mechanical Corporation
Dear Ms. Hooper,
I was provided the path.to obtain the Council Agenda Report on March 16, 2006. This letter is a rebuttal
to that document and the recommendation by the CAO. Please consider this letter a submission for City
Council consideration.
The issue at hand here is not an issue of wrong doing but a.clerical mistake and conceptual difference of
opinion. There is no complaint by any citizen or licensed contractor of the state against PMC.The CAO
document is intent on painting avillainous picture of Pacific Mechanical Corporation (PMC). As proof that
the City staff is misusing state statute and their positions as reprisal for a contract dispute I would use
Council Agenda Report prepared by the CAO.The document is interesting not only for its skewed
portr3yaI of fact but for its omission of facts.
Under the sub heading DISCUSSION the opening paragraph describes two of the City's contracts. One
contract is in no way similar to the other and has nothing to do with the issue at hand..It is used to draw a
false comparison of one contractor against the other in support of its final conclusion that PMC is at fault
for the delays to the uncompleted contract.This falsely portrayed conclusion,stated as fact, is also
unrelated to the subcontracting issue.The paragraph mentions the project completion is over 500 days
beyond originally scheduled completion but makes no mention of the reasons for delay_The paragraph is
however demonstrative of the CAO staff intent
In the second paragraph of page 2 the document states the City staff reviewed PMC's subcontracting on
the project in November of 2005 for minority and women owned business goals. I question the veracity of
this statement as it is my understanding that is and was part of a bid package review and award not a
periodic process ongoing through the contract:
In the third paragraph of page 2 the document intends to portray PMC as disingenuousness by misstating
PMC's position and then disproving the misstated position.
PMC's true position is that subcontracted work is normally related to installed components and we do not
normally consider Patent a subcontractor as they did not specially fabricate or install any portion of the
work or improvement The title and verbiage of the document used to bind obligation is not the.
03/20/2006 16:58 FAX 9258275459 PMC 0 002
r March 20, 2006
Audrey Hooper
City of San Luis Obispo
Page 2 of 2
determination of relationship. PMC uses the same kind of language to bind equipment suppliers. In fact
except fora clerical miss-step much of Patents supplied value would have been set up under a rental
contract Patent shared our conception of the relationship, attached is a log of notes from PMC's staff
concerning conversations with Patent regarding certified payroll. On November 22 Patent Construction
Systems sent a letter to the City stating their concept of the relationship. The letter was conspicuously left
out of the package given to the board, it is attached herewith.
In the fifth paragraph of page 2 the document states a conclusion about the relationship that is contrary to
both Patent's and PMC's concept of the relationship.
The Council Agenda Report gives no indication of the extremely contentious relationship between the
CAO staff and PMC. The document has not advised the Council of the conflict of interest that exists due
to this contentious relationship that could bring their actions, expenditures and recommendations with
regard to the issue into question.
I believe the CAO has set the City up as Accuser, Prosecutor, Judge, and Jury in an action at law which
has no victim and in which it has a clear conflict of interest We maintain that the spM and intent of the
Public Contract Code has not been violated and any perceived violation is technical in nature and being
used as a blunt instrument in a contentious dispute.
We believe were it not for the contractual dispute this issue would not even be before the City Council, if it
were, the recommendation to the City Council by the CAO would be to waive penalties.We request that
be the direction of the City Council.
Very truly yours
: l
Gar ailey
C.E.O.
cc: City of S.LO. correspondence
Enclosures: Patent Construction Systems letter
11/18/05 Memo to JG from MR
03/20/2006 16:58 FAX 9258275459 PMC 121003
Patent Construction Systems
Hamco - 2575 Mams Sueat
Sm Leandro.cn 94577 USA
Telephone:510 614 66M
F=510 614 6033
Web:vAvw peshd cram
Dov � � 2p05
November 22, 2005
City of San Luis Obispo
879 Marsh Street
San Luis Obispo, CA 93401
Attn: Ms. K. Disimone
RE: San Luis Obispo WT? - Certified Payrolls
Since we were only a supplier of services to PMC for forming work we did
not realize we were required to provide certified payrolls for our work. We
have included the requested certified payrolls for the time period beginning
11/22/04 and ending 713/05.with non-performance notice for weeks without
employees on site.
e 610Z��
Scott McCaslin
Administrative Manger
Harsco Corporw1an Aecasa 9mlf Group
03/20/2006 16:59 FAX 9258275459 PMC fa004
November 18,2005 —Phone Notes—Memo to Jon Gudjohnsen per his request
Jon—
Per your request,the following is a summation of'my last couple of phone calls re:
certified payroll for the San Luis Obispo project:
11/18/05
Mid-afternoon
Call to Patent Construction—Northern California Office
I called.Patent Construction(510)614-6630. Receptionist referred me to "Liz"in their
Seattle office (253) 373-0210. Liz was not in; I left an urgent message to call me.
11/21/05
10:32 a.m.
Call to Patent Construction—Seattle Office
I called Liz since I still had not heard from her. She told me, quote, "Unless the
California office tells me we're a sub on a project, I don't know we are. Consequently, I
won't do certified payroll for the project." She then referred me back to Scott McCaslim
in their California office to find out what was going on.
11/21/05
10:45 a.in.
Call to Patent Construction—Northern California Office
I called and spoke to Scott McCaslim. He informed me he would create certified payroll
`Yzom scratch" since he was under the impression that Patent was only a supplier. I told
him it was imperative that the Owner receive his original payroll reports before the
Thanksgiving holiday_ He told me he would start working on them"immediately",
although he reiterated he was not aware they were a sub on this project.
Per Jon, I called Scott back and had him prepare a letter stating his "impression"that he
was not aware Patent was a sub.
11/21/05
10:50 a-m.
Call to Scott McCaslim at Patent Construction—Northern California Office
Jon called Patent and personally spoke to Scott McCashm explaining the letter we
needed.
Michelle Reese