PORT ANGELES — A $1 million dispute centered on building delays and construction costs has bubbled up between city officials and the builder of key components of the city’s new $47 million Combined Sewer Overflow system, the priciest public works project in the city’s history.
An auditing firm will review Bellingham-based TEK Construction Inc. records today for the city, Public Works and Utilities Director Craig Fulton told City Council members at their regular meeting Tuesday.
“We are saying some of the costs are not valid,” Fulton said at the end of the four-hour council meeting.
The city and TEK will negotiate with a goal of determining “an equitable adjustment to the contract,” Fulton added.
City Engineering Manager Kathryn Neal said Wednesday that TEK asserts it is owed $1 million.
“We do not feel like they have a strong case,” Neal said.
TEK owner-project manager Dean Irwin did not return calls for comment Wednesday on the dispute.
Today’s review by Chicago-based Navigant Consulting Inc. is a prelude to negotiating with TEK over resolving the impasse, which revolves around the second and final portion of the project, $15.4 million Phase 2, which had been budgeted for $15.2 million.
Fulton told council members that negotiations, if unsuccessful, could lead to litigation.
Council members Tuesday unanimously approved paying Bellevue-based Vanir Construction Management Inc., which is overseeing Phase 2, an additional $156,000 out of the project contingency fund for negotiating with TEK and to cover the extended contract duration.
Vanir hired Navigant to conduct today’s review, Neal said.
The contingency fund has shrunk from its original amount of $968,305 to $256,287.
The Phase 2 contract was slated for completion June 27 and is now projected to be finished by the end of November, Neal said Wednesday, although the entire CSO project went online Aug. 15 — just in time for the rainy season.
Phase 2 includes a new First Street pump station and new, larger water mains that performed admirably during last weekend’s storm, Fulton told City Council members.
During a similar storm Oct. 30-Nov. 1, 2015, when 1.89 inches fell in Port Angeles, the city’s old system overflowed, spewing 450,000 gallons of rainwater and raw sewage into the harbor, Fulton said.
On Friday and Saturday, 1.93 inches fell on Port Angeles — and the harbor saw nary a drop of effluent from the city system.
“Due to the CSO project, it was zero,” Fulton told council members.
But with the aging, insufficient 49-year-old Front Street pump station scheduled for demolition within the next few weeks and the new facility across the street getting landscaped and paved, city officials and building contractor representatives have been unable to agree on a final bill.
The dispute revolves around a pump-warranty delay for the station’s pumps, expenditures and scheduling issues related to piledriving, a delay in TEK submitting a start-up plan for the pump station and flow-testing of a water recirculation system that tested the pumps before they went online.
Phase 2, approved by the City Council on Jan. 6, 2015, had a contingency of $968,000 that could be applied to the original $15.2 million contracted amount.
There have since been 12 change orders, not including contract amendments to Vanir’s oversight contract, totaling $172,077, Fulton said in a memo to City Council members.
In it, Fulton explained what was behind the $156,000 amendment to Vanir’s $1.56 million May 14, 2014, management professional services agreement to oversee Phase 2 that the council approved Tuesday.
He said the project had miscellaneous costs of $23,841 and that Vanir’s agreement had an amendment of $360,099 approved that was taken from the contingency fund.
The amendment was needed because the city underestimated the work that Vanir needed to perform, Neal said.
“It was a reasonable estimate at the time, but things didn’t work out as we expected,” she said.
Fulton said in his memo that Vanir also had been awarded construction management services for Phase 2 of the Waterfront Transportation Improvement Project in the belief both projects would be overseen simultaneously.
But, Fulton said, permitting delays with Phase 2 of the CSO project — the books for which will be audited today — caused the projects to be overseen consecutively instead, creating greater costs for Vanir.
Senior Staff Writer Paul Gottlieb can be reached at 360-452-2345, ext. 55650, or at [email protected].