Subject
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(1) Pursuant to Section 17-88 of the City Code, adopt the attached resolution finding that a unique or unusual circumstance exists that makes competitive procurement of the third-floor renovation of the North Wing of the 6 Taft Court building contrary to the City’s interests, and (2) award and authorize the City Manager to execute an Amended and Restated Contract with Nichols Contracting, Inc, for the Phase 1A and Phase 1B renovation construction work at 6 Taft Court, with a term extending until January 31, 2025, in an amount not to exceed $10,311,264.38.
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Department
PW - Engineering
Recommendation
Staff recommends that the Mayor and Council, (1) pursuant to Section 17-88 of the City Code, adopt the attached resolution finding that a unique or unusual circumstance exists that makes competitive procurement of the third-floor renovation of the North Wing of the 6 Taft Court building contrary to the City’s interests; and (2) award and authorize the City Manager to execute an Amended and Restated Contract with Nichols Contracting, Inc. for the Phase 1A and Phase 1B renovation construction work at 6 Taft Court, with a term extending until January 31, 2025, in an amount not to exceed $10,311,264.38. The Amended and Restated Contract will be subject to approval as to legal form by the City Attorney.
Discussion
This agenda item will authorize the execution of an amended and restated contract for the construction of the first and second floors of the North Wing of 6 Taft Court (Phase 1A), including work previously authorized by contract and associated change orders, and construction of the third floor of the North Wing of 6 Taft Court (Phase 1B) by Nichols Contracting, Inc. The Phase 1B work is proposed to be authorized via a Special Procurement in accordance with the City Code.
On January 15, 2019, the Mayor and Council authorized the City Manager to execute a contract for $5,880,000 and all documents necessary to consummate the purchase of property located at 6 Taft Court. The property has a paved parking lot and a 64,995 square foot, three-story building which was built in 1991 on 2.29 acres of land.
In early 2021, during the space planning initiatives (Space Master Plan) which included both 6 Taft Court and City Hall, staff met with individual councilmembers to provide progress briefings. On February 8, 2021, staff presented to the Mayor and Council Space Master Plan Options 1 and 2 and provided an update on the City’s existing capital project to move the Gude Maintenance Center office operations, and establish a new Emergency Operation Center (EOC), to the building at 6 Taft Court, which the City purchased for this purpose. This was the first time this item had been brought before the Mayor and Council.
On May 12, 2021, a Purchase Order was issued to Delta Engineers, Architects, and Surveyors for the design of first and second floor renovations of the north wing at 6 Taft Court (the “Phase 1A Design Project”).
On October 25, 2021, the Mayor and Council approved Budget Amendment #1, which provided funding for additional Phase 1A Design Project plan modifications and increased building renovation costs.
On September 19, 2022, staff brought before the Mayor and Council a presentation of 6 Taft Court and City Hall. This included an update on the Phase 1A Design Project, as well as future space planning phases. After discussion, the Mayor and Council provided feedback to staff.
On October 3, 2022, the Mayor and Council awarded Contract #08-22 in the amount of $7,533,000 to Nichols Contracting, Inc. (the “Original Contract”) for the construction of the 6 Taft Court Phase 1A Renovations (the “Phase 1A Construction Project”). Concurrently, the Mayor and Council approved Budget Amendment #2, which provided additional funding for the construction of the facility improvements and the appropriate contingency.
On November 14, 2022, the Mayor and Council approved Budget Amendment #3, which provided funding for design of the third-floor renovations of the north wing at 6 Taft Court (the “Phase 1B Design Project”). The need for the Phase 1B Design Project was not known and could not have been foreseen prior to the award of the Original Contract, as staff was unaware of associated spatial need requirements, that is, the specific use and layout of the third floor.
On May 15, 2023, the Mayor and Council adopted the Fiscal Year 2024 budget which included the addition of funding for the Phase 1B Construction Project in the Maintenance and Emergency Operations Facility Improvements (GD19) CIP project.
On March 18, 2024, the Mayor and Council approved Budget Amendment #3, which provided the transfer to the Capital Projects Fund, $1,800,000 for the Maintenance and Emergency Operations Facility Improvements (GD19) CIP project to complete the Phase 1A Construction Project and the Phase 1B Construction Project which includes all three floors of the North Wing, atrium, and fitness room. The Staff Report for Budget Amendment #3 previewed the recommendation for a Special Procurement to award the Phase 1B Construction Project to the current contractor.
This unique two-track approach now results in the overlap of the Original Contract and the Phase 1B Construction Project. Nichols Contracting, Inc. is prepared to complete all the work in the Original Contract as well as the Phase 1B Construction Project to renovate the third floor. The outcome of this combined project will be the complete renovation of all three floors of the North Wing and atrium of 6 Taft Court. The award will also provide authority for staff to process necessary change orders that may arise.
Mayor and Council History
This is the first time this item for a special procurement has been brought before the Mayor and Council. The original award of Contract #08-22 was approved by the Mayor and Council on October 3, 2022.
Procurement
Per subsection (a) of Rockville City Code Section 17-88, Special Procurement, the Awarding Authority may authorize non-competitive procurement methods, upon written determination that a unique or unusual circumstance exists that makes competitive procurement contrary to the City’s interest. This Contract is for an amount over $100,000, therefore Council is the Awarding Authority per subsection (a) of City Code Section 17-39, Awarding authority.
The City Manager submits that the following information provides justification for Mayor and Council to make the necessary finding:
1. Nichols Contracting Inc. was the lowest, responsible, responsive bidder of Phase 1A which was conducted through a competitive invitation for bid. Nichols Contracting Inc. is performing the construction of Phase 1A satisfactorily and staff has no reservations with the quality of the work performed.
2. Utilizing another construction contractor via a competitive procurement process for Phase 1B creates additional project risks and liabilities, as well as additional time and costs associated with bringing another construction contractor up to speed on the project, all of which is contrary to the City’s interest.
3. The use of two separate general contractors mobilized at the same site working on different floors creates a high risk for the city as it would be easy for each to claim delays based upon the other for access, staging, temporary facilities, damage to others work. This is a particular concern as the two floors are adjacent to one another and the space between the ceiling and floor would need to be accessed by both at the same time.
4. Labor rate changes continue to increase at an average of 3 percent year over year. This creates a risk that bringing in a new firm will increase costs for the City to complete this project.
5. After reviewing Nichols Contracting Inc. proposal and considering other options, the City Manager has determined that contracting with Nichols Contracting Inc. would be the most efficient choice because they have worked onsite and with the design since 2022. The Phase 1B design specifications are identical to Phase 1A, and familiarity greatly reduces submittal review and response time for Requests for Information on Phase 1B. There would be a steep learning curve that another construction contractor would need to go through to interpret and understand the design and its underlying considerations on such a large, multi-faceted project. Additionally, building preparation costs and the need to transfer construction responsibilities would be eliminated. Staff believes the fact that Nichols Contracting Inc. has intimate knowledge of the project provides the best value for the City for these services.
6. There will be significant savings as several components of the scope and process will not be necessary including:
A. Nichols Contracting Inc. remains mobilized at 6 Taft Court to complete the Phase 1A Construction Project. If Nichols Contracting Inc. were awarded the Phase 1B Construction Project, they could begin construction prior to demobilization of Phase 1A, avoiding costly mobilization and demobilization costs. In addition, as there are supply chain delays on Phase 1A, the start of the Phase 1B construction will allow the contractor to avoid costly construction delays associated with a partial demobilization.
B. There would be staff efficiencies realized for the following tasks:
i. Consultant bid package development.
ii. DPW bid package development, review, and approval.
iii. Procurement bid contract review.
iv. City Attorney bid review.
v. DPW and Recreation and Parks evaluation of bids.
vi. Risk Management review of insurance.
vii. Procurement issuance of Notice to Proceed.
viii. DPW and Recreation and Parks pre-construction meeting(s).
C. The duration of time required for the public bid process will result in a substantial increase in building costs compared to today’s building costs. A significant amount of time is necessary for the invitation for bid process. This time includes the preparation and internal review of the bid documents, and the entire procurement process including an internal review, bidding time, and preparing any necessary addendums. Once bids were received, they would need to be reviewed, references would need to be checked, a draft contract would need to be prepared, and a recommendation would have to be made to the Mayor and Council for award.
7. The scope of the Phase 1B Construction Project is identical to the scope of the Phase 1A Construction Project that Nichols Contracting Inc. is currently performing. The same consultant architect was used for the design of both Phase 1A and Phase 1B, and the design includes identical materials and technical specifications. This creates efficiencies in submittals, requests for information and material ordering.
8. Ongoing material supply chain issues continue to result in unique and unusual market conditions that impact timing and phasing of this construction project. For example, a supply chain delay on a critical piece of electrical equipment has delayed the completion of Phase 1A construction, resulting in further overlap of the construction phases.
9. Time is of the essence. Phase 1A construction is ongoing and the City has a limited opportunity to avoid costly demobilization and mobilization costs by continuing the Phase 1B Construction Project with the crews that are currently present on site.
10. Completing the construction of all three floors prior to occupancy will provide operational savings as there will only need to be one coordinated effort to relocate staff, their files, and IT equipment. There is also a benefit to the health and well-being of staff in that they will not be subjected to disruptive construction activities above them while utilizing their workspaces on the second floor.
11. The architect’s estimate for Phase 1B was based upon 2022 cost for Phase 1A. It was compared to the median unit cost of all Phase 1A Construction Project bidders and was deemed appropriate to use a preliminary budgeting estimate. The City compared the proposal for the Phase 1B Construction Project from Nichols Contracting Inc. to an independent 3rd party, and both exceeded the original architect/engineer estimate. However, based on work performed to date, the architect’s estimate and both proposals are within a standard +/- 10%, with Nichols Contracting Inc. being the lowest.
A draft resolution finding that a special procurement is warranted under the City Code is provided as Attachment A.
Implementation of the Phase 1B Construction project will be completed via amended and restated contract with Nichols Contracting, Inc., provided as Attachment B.
Nichols Contracting, Inc. is a non-MFD-V vendor.
Nichols Contracting, Inc.’s bid proposal for the third floor work is provided as Attachment C. To view all other contract documents, please click the link provided below:
<https://www.swisstransfer.com/d/87022506-a33f-4313-8703-fc07f96b4048>
Fiscal Impact
The amended and restated contract requires additional funding of $2,788,264.38 over the original contract. Sufficient funding for the execution of this agreement is available in the Maintenance and Emergency Operations Facility Improvement (GD19) CIP project. The FY 2025 Adopted CIP sheet can be found at Attachment C.
Next Steps
Upon adoption of this resolution by the Mayor and Council and authorization for the City Manager to execute an agreement in a form substantially similar to the attached contract, the City manager will execute an amended and restated contract with Nichols Contracting, Inc. in a form approved by the City Attorney and issue a purchase order for commencement of the Phase 1B Construction Project.