2015-04-28 Water Board Minutes - Laserfiche WebLink

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3rd Additional Contingency request (emergency procurement) 23,581.06 4d' Additional Contingency & 274 day extension request: $413,680.15 The contractor, Beylik Drilling and Pump Service, Inc., is also requesting a contract time extension of 274 calendar days. This is due to unforeseen events, involving repeated failures of the motor's thrust bearing. This request is to cover the time expended on troubleshooting, well extraction and repair of damaged equipment; and the time required to procure replacement materials and for reinstallation work. These factors were beyond the control of the contractor and the original scope of the repair. The Manager -Chief Engineer recommended that the Board approve an increase in contingency of $413,680.15 to Beylik Drilling and Pump Service, Inc., and approve a contract time extension of 274 calendar days for JOB NO. 2012-985, HUALALAI DEEPWELL REPAIR. If approved, the contract completion date will be revised from October 31, 2014, to July 31, 2015. MOTION: Ms. Lee Loy moved to approve; seconded by Ms. Iokepa-Moses. Ms. Lee Loy noted that this Item was deferred, pending further information. Mr. Uyeda said the Board was waiting for the thrust bearing teardown report. Mr. Clyde Young of Operations Division said that the thrust bearing report came in, and it said pretty much what DWS staff had expected. The report found that the thrust bearing had failed amid lack of lubrication. This information was consistent with the repair facility's report, which Mr. Young said he had a copy of. Mr. Young drew the Board's attention to the slightly higher numbers on this month's Agenda Item; previously, the cost was $409,053.58, but the revised cost this month stood at $413,680.15. He noted that this was a mix of lump sum and forced account; one of the issues that arose was a change in the Hawaii Revised Statutes regarding mark-up on work done by the contractor. The contractor had been allowed 15 percent mark-up under the old rule, but now the contractor is allowed 20 percent mark-up. The other thing that affected the cost was the shipping cost, which varies day-to-day, Mr. Young said. Mr. Young noted that the Department had not addressed fully the fact that 88.7 percent of the cost of $413,680.15 was already committed to the contractor, Beylik. Beylik was given authorization to proceed by the Department, which was treating this project under emergency procurement. At 88.7 percent of that $413,680.15, DWS was basically committed to paying the contractor at least $366,000.00 of that. Mr. Uyeda asked why DWS was committed to that. The Manager -Chief Engineer said that at the time, DWS had problems with the other wells, and so the Department thought it best to go through the process of an emergency procurement — in order to get things done. In hindsight, DWS should perhaps have done a different method of procurement, such as through the exemption process, or DWS could have actually just stopped the project and gone through a regular bid. However, DWS felt that this repair needed to be done, and therefore, DWS committed to the contractor. The Manager -Chief Engineer said that unfortunately, there was an issue with how DWS processes payments, and as a result, the Department decided it was best to come to the Board for this additional funding. Mr. Uyeda asked if DWS were under a certain contract with Beylik at this point. He said he was surmising that if DWS terminates the contract, the Department would have to pay Beylik the $366,000.00 anyway. Page 6 of 15 Water Board Minutes 4-28-15 js