Explanation
BACKGROUND
This legislation authorizes the Director of Public Utilities, Director of Public Service, and Director of Recreation and Parks, and the Director of Finance and Management to modify existing construction and service contracts for the sole purpose of adding escalator and de-escalator clauses to allow for costs increases to various construction materials and supplies and service costs.
Due to supply chain issues various commodities, supplies, and material costs have risen significantly and have impacted contractor’s ability to maintain bid prices in their contracts. To remedy these unforeseen conditions, a modification of the original contract to include an escalator and de-escalator clause for such increases is necessary. Without this modification, contractors may terminate their current contracts, requiring the City to delay or cancel important projects and services and or seek additional competitive opportunities to complete the project or service. A modification to current contracts saves the City both the expense, avoids contract delays, and avoids time associated with seeking services from new contractors.
Current construction and service contracts do not have escalator and de-escalator provisions to allow for such price adjustments. The escalator and de-escalator clauses will allow contractors to add percentage increases and price adjustments to each invoice that covers work completed during a time of high/rising commodity, supply and material costs. The de-escalator portion of the modification will eliminate the additional charges if/when such costs fall closer in line with costs at the time that the contract was entered into.
Additional funds for individual projects may need to be added with future construction and service contract modifications if the cost of such increases is anticipated to exceed the contract’s Maximum Financial Obligation or total contract amount.
Emergency action is requested in order to continue to ...
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