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MINUTES/GROWTH FUND AUTHORITY (JDA)
Monday, October 31, 2005 - 5:00 p.m.____________

The city council of the city of Grand Forks sitting as the growth Fund Authority met in Room A101 at City Hall on Monday, October 31, 2005 at the hour of 5:00 p.m. with President Gershman presiding. Present at roll call were Council Members Brooks, Hamerlik, Glassheim, Christensen, Kreun, Mayor Brown, Gershman - 7; absent: none.

CIRRUS EXPANSION PROJECT BID PACKAGE C

Greg Hoover, Urban Development, stated they had a staff report regarding Bid Packet C for the Cirrus project and that they received 4 bids but only 2 were opened because 2 of the bidders did not submit the non-collusion affidavit, that they have considered 4 options and in looking at this and how to move forward with the project and the staff report before you recommends rejecting all bids and rebidding; that since that report was prepared the end of last week have had additional discussions and convened again today and are changing their recommendation and that you now declare the non-collusion affidavit as non-consequential to the bidding process, open the other 2 bids and then make a determination based on all those bids. He stated that in rejecting all the bids and rebidding them would be a disadvantage to those bidders who have already had their bids opened, that subsequent bidders would know the amounts and completion date, and in addition, opening the 2 bids that are yet to be opened will not change their dollar amount or their completion bid, and that by opening those bids you would be able to make a decision based on all information available for all the bidders and if in the Authority's judgment all those bids were non-responsive then could reject all the bids and rebid, if necessary.

Council Member Hamerlik questioned if opening all the bids and then make a decision and if the date isn't important because not a prerequisite then what would there be to decide unless the contractor isn't able to do the work - seems better to decide that factor before - has a problem of rejecting it afterwards because what reject it on, the date or the dollar amount and those are hard to override after opening the bids.

Howard Swanson, city attorney, stated any decision you make someone will be aggrieved by it, whether you decide anyone of the 4 options that he identified last week, that he is comfortable in defending the City's position, that if you choose not to waive the bidding irregularities by failure to include non-collusion affidavit, that he feels comfortable in defending the City if you decide that it is in fact a technical and non-material defect, that he has some concerns about rejecting the bids outright as it does create a potentially unfair situation if rebidding in the future and expose 2 of the numbers and not exposing the other 2 bids which were timely received, that poses some concern to him but as far as the question, can you find this to be a non-material deficiency the answer to that is yes and he would walk you through appropriate findings. Council Member Hamerlik asked if they open the 2 bids and then reject it or if say there is a date on there. Mr. Swanson stated it would be inappropriate for anyone on this body to decide at this stage that your intent is to open the bids with the expressed intent to then reject all the bids, and doesn't think you can presume that the remaining 2 bids are or are without some other irregularity until you see the actual bid form and would reserve judgment on that and if there is an issue or concern raise it at that time as whether it is appropriate to reject one or both of those bids or to reject all 4 bids; conceivably, you could find that the bids are all in order at that point or could find that only the 2 that are opened now are in order, and would counsel you to withhold judgment in that respect. He stated in essence he is asking what is the decision point. Statute in ND basically says you select your bid based upon the lowest and best bid you receive; that in your invitation to bid sets forth the criteria against what your bid will be judged; and is critical on this case that the question of timing is not very well articulated that it is in fact an element of decision making, what is clear is you should be receiving a specified dollar amount and may wish to decide that is in fact your decision making.

Council Member Christensen stated he had received the instruction for bidders, and asked some- one from the architectural staff or city staff to point out whether they enter anticipated completion date in the instruction for bidders other than February 20, 2006, where does it say that there is a date other than February 20, 2006.

COUNCIL MEMBER KERIAN REPORTED PRESENT

Council Member Christensen asked if there is anything in this bid package C other than on page 00100-7 where it says under paragraph 13 A1, "the owners anticipated completion date is February 20, 2006", and is clear that this playing field be level for all these people that bid and that the owner, the City of Grand Forks, expects that this project be completed, nothing else in here and we don't have the liberty of going back after the fact once we open these bids and it should have been called out in the bids so that all knew what the playing field was when they submitted their bid, then interjecting the degree of subjectivity which is not permitted in reviewing these bids.

Council Member Brooks stated he is not comfortable with the recommendation that the non-collusion affidavit is inconsequential, that leaves us open - and won't go along with rejecting all the bids; that if we reject them all, that somebody is at a disadvantage and thinks that is an issue.

Mr. Swanson stated the affidavit of non-collusion is not required by State law and is not required by local ordinance. There is no legal requirement for it. The essence of that document indicates that the bidder or contractor has not colluded or manipulated the bid in concurrence with other bidders, that same assurance can be required at the time of execution of contract and provide the City with the same protection; what concerns him is if you look at the bid documents it is not called out in any shape, manner or form in the bid submission or in the invitation for bids that the affidavit of collusion is even required, the only place for that non-collusion affidavit appears is on the bid form itself under subsection 9C and grammatically not even correct - but doesn't wish anyone to believe that is a legal requirement imposed upon the City, it would be if there were federal funding in this project, but there is no federal funding in the project.

Council Member Brooks stated that doesn't change his mind, but doesn't want to publicly vote for a motion that says that is inconsequential because he thinks it is.

Council Member Glassheim asked where does the request for completion date appear. It was noted it was discussed in section 13 and on the bid sheet itself in section 9F. Mr. Hoover stated it appears in Addendum 1.

Council Member Glassheim stated knowing the importance of it to Cirrus, what would happen if we get higher bid which promises completion before February 28, what is legal ability to pass on to the lower bid and accept with element which promises to get it done before February 20.

Mr. Swanson stated because the invitation for bids is silent as to the manner in which the timing element will be considered in the award of the bids and is concerned that that interjects a term that a contractor prior to submitting a bid wasn't able to pre-evaluate, not sure that our specs. are definite, clear with uniform instructions to all bidders in that regard; it invites in his estimation an element of unfair discretion or arbitrary or capricious decision making at that point, without it being called out in some regard in the invitation for bids; that presents to him the most difficult defense. Council Member Glassheim stated the phrasing "anticipated completion date" is not strong enough to require completion date. Mr. Swanson stated if our intent was to award the bid on a combination of price and timing, our invitation for bid should clearly set that out and perhaps even taking additional step and identify either a weighted analysis or how those factors would be considered in the award. Council Member Glassheim stated that if he believes that you cannot use the date as a deciding factor, then should reject all bids because date is significant in this and rebid it saying that it is significant.

Council Member Gershman asked if it is even possible that date is even close based on the construction, when could contractor get in to do the finishing. Bill Schoen, Schoen & Associations, architect, stated the February 28 date was admittedly optimistic.

Ron Larson, Baukol Builders, stated 2 of the bidders did not have bid forms correct and asked Curt Siewert to please seal them up before going on so nobody could look at them and is here because received letter stating that they were going to open the other 2 bids and that is the only thing the letter says and not other discussion.

Mr. Swanson stated he was not aware of the letter that indicated that the bids were to be opened; that they should have received along with all bidders notice of this meeting. Mr. Larson stated he received notice they were to meet November 7, got pushed up and letter stated "…that JDA will meet at 5:00 on Monday, October 31 in Room A101 in City Hall to take action on Packet C, the staff recommends that with support of Cirrus mgmt. will be to reject all bids due to inconsistency in the bidding documents and immediately rebid the bid package. You are welcome to attend this meeting." -- now come here and they are talking complete difference and if it is going to be rebid, it will be LDS in there, liquidated damages, if you don't meet the completion date, has talked to mechanical and will be April 30 before they finish their mechanical work, and December 15 would probably be realistic date they could start bid package 3, and was out there today, precast is about 2/3rds up, roof probably 75% steel, no roofing material, so realistically February 28 is not a realistic date, and concern is that he is here for a different meeting than what letter called for. Mr. Swanson stated that the intent of the letter was to give notice that there was a meeting and staff makes recommendation and that this body makes a decision as to what decision they will make. Chairman Gershman stated they get reports/recommendations from staff, council might not accept it.

Mr. Swanson asked Mr. Larson if Baukol takes any position as to whether this body should or should not reject all bids; Mr. Larson stated if they do reject all bids, would be the proper way to go right now, but should have the knowledge of what Community Contractor's and Innes' bids were and should open them up, and if reject hold them up as they all know what Peterson's bid and Baukol's bid were.

Council Member Hamerlik stated he heard legal advise that we should not go ahead with a pre-determined decision to automatically reject the bids. Council Member Brooks stated when looking at the date, that this is bid package C and is third in a series and to put a date on this of February 28 is difficult to do - and if first two phase start to drag, then this date less and less relevant or even possible.

Mr. Hoover stated his recommendation at this point is that you open the other 2 bids after you declare or waive the non-collusion affidavit, first action waive the non-collusion affidavit, then open the other 2 bids and at that point consistent with what Mr. Swanson has advised, you make the decision based on the opened bids and that could be anything to awarding to or rejecting all.

Mr. Swanson identified factors that the JDA should consider and include either before making any motion or concurrent with making any motion regarding the affidavit of non-collusion which was not included in the bid of Community Contracting or Innes Construction but was received later on the bid opening day from Community Contracting. Those factors included: 1) that the Affidavit of Noncollusion is not required by state statute, 2) that the Affidavit of Noncollusion is not required by local ordinance; 3) the Affidavit of Noncollusion does not affect price, quality, quantity, manner of performance or timing of completion of project. It does not affect substance or materiality of bid, price or competency of contractor; 4) that the Affidavit of Noncollusion does not deviate from or alter the published plans and specifications for the project It does not alter the scope of the project or bid. ; 5) that the purpose and intent underlying a requirement to submit an Affidavit of Noncollusion is adequately met with the contractor’s subsequent submission of the Affidavit of Noncollusion prior to the signing of any contract or beginning of any work. In the present situation Community Contracting submitted an executed Affidavit of Noncollusion shortly after and on the same day that the bids were opened. 6) that the failure to include the Affidavit of Noncollusion did not result in any competitive advantage to the noncomplying bidder nor did it provide any competitive disadvantage to the complying bidder; 7) that the failure to timely submit the Affidavit of Noncollusion did not deprive the owner of any assurances of the bid or bids security or assurances of contract performance; 8) that the failure to include the Affidavit of Noncollusion was not the result of fraud, bad faith or other impropriety on the part of the contractor; 9) that it is in the public interest to open the multiple bids for consideration of the lowest and best bid from all responsible submitting contractors; that all contractors submitting bids for this project are considered to be capable and competent contractors not otherwise disqualified from bidding; 10) that the failure by Community Contracting and Innes Construction to include an Affidavit of Noncollusion within the submitted bid envelopes is a nonmaterial, nonconsequential and minor technicality, irregularity or informality which is subject to the exercise of reasonable and discretionary waiver by the governing body.

Council Member Kreun moved to adopt the above findings. Council Member Glassheim seconded the motion.

Council Member Hamerlik asked if it would be improper that we state that it wasn't a mandate in the specs. that they be submitted other than being stated. Council Member Christensen stated that in 9B it is required in the forms that irregularity in the bid form, important that we do it that way. Mr. Swanson stated it they want to add an additional finding he doesn't have any problem with that although he thinks the findings he has listed for you were adequate basis.

Mr. Larson stated that on the bid form it did call for non-collusion and why wouldn't it be put in, that 2 out of 4 contractors did it and it makes the other 2 wrong, calls for rules and if don't follow them, that is what supposed to do. Mr. Swanson stated that the real question is what are the consequences or impacts of not including the Affidavit of Noncollusion and that is what this body is dealing with. Mr. Swanson advised that the Minnesota Supreme Court has specifically ruled that an affidavit of non-collusion if not included in a bid, is a minor irregularity and does not create an advantage or disadvantage to any bidder. So there is precedent out there for the exact same situation as you are facing here.

Upon call for the question and upon voice vote, the motion carried 8 votes affirmative.

Council Member Glassheim moved and seconded by Council Member Kreun to open the 2 remaining bids of Community Contracting and Innes Construction. Council Member Christensen called for the question. Upon call for the question on the original motion to open the bids of Community Contracting and Innes Construction, the motion carried seven votes affirmative, Council Member Brooks voting against the motion.

Keith Lund, Urban Development, advised that the bids of Baukol and Peterson were fully opened at the bid opening. The bids of Community Contractor and Innes Construction had not yet been opened pending a decision by the JDA regarding the non-collusion affidavit. Mr. Lund confirmed that Community Contractors provided the executed affidavit of non-collusion shortly after the bid opening. Mr. Lund also noted that o the outside of the bid envelope of Community Contractors there was a note by Community Contractors to deduct $30,000 from base bid and that such note contained the contractor’s signature. Mr. Lund opened the Community Contractors bid. He noted that the bidder’s bond and contractor’s license and receipt of Addendums 1 - 4 were previously received and opened at the time of the original call for bids and that all other requirements had been complied with by Community Contractors. The base bid of Community was in the amount of $1,037,000 less $30,000 = $1,007,000. The bid included alternates: G1 $9,200, G2A $12,100 or G2B $8,700, G3 $23,600, G4 $2,900, G5 $3,000, G6 $5,400, G7 $51,500 (the subcontractors were listed), completion of work March 31, 2006.

Mr. Lund stated that Innes Construction had included their contractor's license, bid bond and receipt of Addendums 1 - 4 along with their original bid. After opening the bid Mr. Lund announced that the base bid from Innes Construction was in amount of $1,147,400, and the alternates were as follows: G1 $7,300, G2A $12,600 or G2B $9,100, G3 $29,700, G4 $3,000, G5 $2,900, G6 $5,400, G7 $43,000, and completion date February 28, 2006.

Council Member Christensen asked staff what is affect of alternates, what is procedure whether base bid or all alternates, and questioned why have all the alternates. Mr. Lund stated the purpose for doing the alternates is because they are unsure of the project budget to determine whether if have funding based on the bids received alternates and weigh them in regards to the entire project, and that he would like to confer with our client and get back with a recommendation.

Council Member Christensen asked if it was proper for them to address all of the different alternates, what is procedure, take base bid and then pick alternates as no further negotiation. Mr. Swanson stated the use of alternates is standard recognized form to avoid further negotiation or alternation of the project, if the decision was made to award all alternates you can consider the value of the alternates in addition to the base bid, at this point where you don't know and if consider the base bid plus alternates have to do it across the board. Council Member Christensen stated that before we accept it that we decide on the alternates that we are going to accept - base bid plus alternates you're going to take and that is between client and architects before we made a decision. Mr. Swanson stated you cannot mix and match alternatives from one bidder to the other. Council Member Glassheim asked if you have to decide now which of the alternates you wish to take or simply decide on the base bid and then decide which alternates from the winning bidder you wish to include at a later time. Mr. Swanson stated you could exercise your alternates later if you only wish to exercise the option at this point of the base bid.

Mr. Lund stated budget established for this project is $9,180,000 and this is final package.

John Hitchcock, Cirrus, stated they were very frugal about going through this process and worked very diligently about taking every step that they can to make sure they do stay within budget, this leaves them with areas where they can actually make improvements to the building and to stay on course with the budget and will talk with Urban Development about the next steps, that this is a huge undertaking to date and team has worked very diligently to stay on track, and didn't want to come back to you and say that they would be over budget.

Mr. Lund stated all alternates choosing 2A as opposed to 2B bid for Community Contractor is $1,114,700; Innes Construction is $1,251,300; Baukol Builders is $1,134,232; and Peterson Construction is $1,202,550. Selecting Alt. 2A and 2B are options, cannot choose both and in calculating chose 2A in all bids.

Council Member Kreun asked what factors would have any determination or give us any reason to have a different determination other than the low bid. Mr. Swanson stated that North Dakota statutes require you to award a bid to the lowest and best bidder. If you were attempting to award to someone other than the lowest bidder you need to have a rational and articulate basis why the low bid should not be accepted.

Council Member Kreun asked whether they take timing into consideration from February 28 to March 31 and that he is indicating that completion date should not be a factor in awarding the bid. Mr. Swanson stated if it were his decision that is how he would treat it.

Council Member Glassheim stated at first he was thinking that the completion date was pretty important and therefore was thinking rejecting all bids and making it clearer in a rebid offering, but now seems to him that the low bidder is within a month of completion date and that is not significant enough time to hold the project back, and then moved that we award the base bid to Community Contractors in the amount of $1,007,000. Council Member Kerian seconded the motion.

Mr. Lund stated after consultation with their client they would like to include the following alternates: G1 for $9,200, G2A for $12,100, G3 for $23,600; G4 for $2,900, G5 for $3,000, G6 for $5,400, G7 for $51,500 for a total award of $1,114,700. Council Members Glassheim and Kerian accepted that as a friendly amendment to their motion.

Council Member Kerian questioned risks in proceeding in approving this bid. Mr. Swanson stated the risk in approving the bid are essentially the same as risk in not approving the bid, the contractor could litigate bids and obtain a restraining order, in light of research they have done confident that would not be a successful challenge, litigation every day risk in business of government, and if look at all of the dollar amounts, there is no tie, and thinks discussion you have had to this point establishes rational basis as to what your decision based on that being the base bid and alternates and comparing all bids on that basis you are awarding to the lowest priced bid. The purpose of public bidding in ND as recognized by the ND Supreme Court and for the benefit of the public and taxpayers in light of competition and to award to the lowest priced bidder supplying the best work and thinks you have met that goal. He stated as he understands the discussion is that all contractors are capable of performing the work, there are no other issues with regard to form or submission of bid and he thinks we are in a reasonably strong position.

Council Member Glassheim asked if we had just awarded the base bid, could staff then decide on their own decide as to which alternates to take or should they have had to come back to use for permission. Mr. Swanson stated his recommendation would be to have staff bring it back for authorization to award the alternates.

Mr. Lund stated this afternoon when they discussed this and found out this was a possibility he called and spoke directly to Mr. Baukol and told him that this is likely to occur, the discussion involved in opening the bids and spoke to him, and he returned his call on his cell phone around 4:00 to 4:15 p.m. Council Member Christensen asked if the letter this gentleman had if Mr. Swanson authorized the sending of that letter. Mr. Lund stated that Mr. Swanson suggested to contact the bidders and let them know the meeting time and what was to be discussed, and that he did not forward a copy of the memo to Mr. Swanson for his review.

Council Member Christensen stated he had some comments, that this invites review of why we have these problems, legal issues should have been resolved before certain things happened, they weren't resolved and didn't get input of Mr. Swanson; Mr. Swanson did a very good job, gave us findings. Mr. Brooks stated he has some different thoughts along the same line and perhaps bring up at a council meeting.

Council Member Kreun called for the question.

Upon call for the question of accepting the bid and alternates, and upon voice vote, the motion carried 7 votes affirmative; Council Member Brooks voted against the motion.

ADJOURN

It was moved by Mayor Brown and seconded by Council Member Brooks to adjourn. Carried 8 votes affirmative.

John Hitchcock stated that everyone has been working very diligently on this program since day one, and diligence that everybody put forward has been immense, and wanted to say thank you.

Respectfully submitted,



John M. Schmisek