Frustrated Saline City Councillors Waive Damages, Pay for WWTP Work

 03/28/2017 - 16:14
John Arvy (left) listens as Weiss Vice President Kevin Markhardt berates City Council for considering a late completion penalty.

A marathon session of Saline City Council on March 20 lasted almost five hours, yet it was not the soporific tedium that one might expect. The meeting was punctuated with sharp disagreements, emotional outbursts and a motion to reconsider a vote that had just been completed.

The antagonism was most evident in the hour-long discussion on concluding the contract with Weiss Construction Company, the contractor that upgraded the wastewater treatment plant (WWTP). In February, there had been disagreement among council members about whether the city should pursue collecting liquidated damages from Weiss because of their failure to meet the completion deadline.

The term “liquidated damages” refers to a designated fine written into a contract that specifies what an injured party can collect in the event of some breach of contract (such as missing a deadline) by the other. The City of Saline’s contract with Weiss included such a provision.

Council member Jack Ceo, who had previously encouraged Council to pursue collecting such recompense, said he had changed his mind. He pointed out that collecting damages could require the city to prove that they were somehow damaged, which could be difficult.

Attorney Scott Smith agreed that this was generally true, but suggested some possible ways the city could argue they were damaged. Throughout the discussion, Smith acted as the calm voice of reason when tempers flared.

There were two issues before Council. The first was whether or not to approve a change order that specified extra tasks done by the contractor, others found to be unnecessary and any extra charges resulting. There were other stipulations as well.

The second issue was whether to authorize the thirteenth and final payment to Weiss for their work on the WWTP. In the previous meeting, Council had already decided that they would withhold about $27,000 from this payment until they were sure that the latest filter repairs by Nova were going to work.

Brian Rubel was present representing Tetra Tech, the consultant company that had designed and overseen the construction project. Saline Wastewater Treatment Supervisor, Bob Scull was also present to answer questions.

“Nova [the filter manufacturer] did complete a series of really robust repairs to the filter,” Roubal said. “They really strengthened the device and since that repair about three weeks ago – knock on wood – things have been running very well.”

John Arvy, a representative for Weiss who is a resident of Saline, spoke about the challenges of the project and emphasized that the filter specified by Saline was the major reason for delays. Nevertheless, he said the filter is now working and “we have made it to the finish line.”

Ceo moved that the change order be approved, seconded by Mayor Pro Tem Linda TerHaar. Council voted affirmatively, with only Mayor Brian Marl voting nay.

Shortly thereafter, Rubel pointed out that the wording of the change order included an agreement not to hold Weiss responsible for any damages. This was a problem, because many, perhaps a majority, of council members were thinking of doing just that.

Council member Dean Girbach moved to reconsider the vote on the change order, and this was approved 5 to 2 with Ceo and TerHaar voting nay. So, the deliberation began anew.

Arvy explained how circumstances beyond the contractor’s control had forced the late completion.

“There were three pieces of sole-sourced equipment,” Arvy said. “This is equipment that we were specified, that we had to buy. There was no choice for Weiss.”

It was the suppliers of this city-specified equipment that were the major cause of delays. In particular, the Nova Disk filters were delivered late and had numerous breakdowns after being installed.

Kevin Markhardt, Vice President of Weiss was also there to represent the firm. He started out speaking diplomatically, but his tone quickly become confrontational.

“We’ve taken a stance to eliminate all of our delays and costs that we’ve impacted so that we can this this project closed,” Markhardt said. “And now you want to talk about liquidated damages? I’m just a little bit shocked here.”

“We thought we’d gone above and beyond . . . and now you want to damage us? I don’t think that’s quite fair . . . We’ve eaten a lot of costs to make sure we minimized your costs.”

This lead a frustrated Girbach to make a charge of communication failure between council members and city staff. Marl testily rejected the charge.

Girbach also questioned why Council was asked for and had approved an extension for Weiss, but was never asked for a second extension when the project dragged on even longer. Rubel said that he and city staff knew of the delays and probably should have informed Council.

Arvy described in even greater detail the specific challenges faced by Weiss during the project. He spoke of the sole-sourced equipment, unexpected challenges and altered requirements. He believed that Weiss had consistently acted in the best interests of Saline.

He compared the filter situation to a homeowner who hires a contractor to remodel his bathroom and asks that a special state-of-the-art toilet be installed. If that toilet is delivered late or won’t flush, it will cause delays and it’s not the contractor’s fault.

After Markhardt made some even more aggressive comments, a flustered Heidi McClelland complained of poor communication and defended Council, saying that they must be responsible to the tax payers.

Arvy spoke of an extended warranty on the filter that Weiss had secured from Nova.

“A three-year parts and labor warranty is unheard of in the industry,” Arvy said. “Weiss worked very hard to get Nova to do that for you guys. However, that deal was based off of us getting paid our full amount, so please keep that in mind.”

Attorney Smith attempted to summarize the situation.

“The contractor was relying on the equipment supplier being able to meet the promised deadlines for that equipment,” Smith said. “The equipment didn’t come in. That’s not a Tetra Tech problem; that’s not a city staff problem; that’s not a contractor problem.”

“There were other delays they’ve identified that Brian Rubel doesn’t necessarily think were excused delays, but there’s no question that the equipment caused significant delays and some of that equipment delay caused a delay after the initial deadline and the initial extended deadline.”

When Council finally called a second vote on the change order it was unanimous to accept it and waive any damages. They also unanimously approved a payment of $229,000 to Weiss. This complete the payments except for about $27,000 withheld to make sure the filter continues to function. The last payment will be made when city staff are confident the filter will hold up.

Bob Conradi Is a retired pharmaceutical scientist who has redefined himself as a photographer and journalist. He has lived in Michigan for 36 years and in the Saline area for 10. He enjoys researching and learning about new ideas. Reach him at bobcphotography@gmail.com. Follow him on Twitter at @RobertConradi.