REPORT TO THE CITY COUNCIL December 14, 2017 FROM: SCOTT L. MOZIER, PE, Director Public Works Department BY: ROBERT N. ANDERSEN, PE, Assistant Director Public Works Department BILL HERR, Construction Manager Public Works Department, Construction Management Division SUBJECT ..Title Approve a substitution of a listed Subcontractor, Centec Environmental Inc., for the Fire Station No. 11 Remodel, Project ID FS00011 (Council District 4) ..Body RECOMMENDATION It is recommended that the City Council approve the request from R&H Construction, Inc., (R&H) to substitute Centec Environmental Inc., (Centec) and utilize CVE Contracting Group, Inc. dba Central Valley Environmental (Central Valley), for the hazardous materials abatement portion of this project. EXECUTIVE SUMMARY R&H, the General Contractor who was awarded the referenced project, has requested to substitute Centec who is listed in the bid documents as performing the hazardous materials abatement portion of the work. In accordance with the bid documents, R&H listed Centec for the hazardous materials abatement work portion of the project because the work exceeds one-half of one percent of the total contract amount. R&H notified the City by a letter dated October 26, 2017, that their Subcontractor, Centec, after having a reasonable opportunity to do so, has failed or refused to execute a written subcontract. R&H is asking that they be allowed to use Central Valley for the hazardous materials abatement portion of this project. This action requires Council approval because Public Contract Code Section 4107 requires consent of the awarding authority to a request by a prime contractor for a substitution of a subcontractor. BACKGROUND On October 19, 2017, a contract was awarded in the amount of $443,900 to R&H for the Fire Station No. 11 remodel project; a Notice to Proceed has been not been issued nor has an anticipated start date been formalized. In the original proposal, Centec, was listed as the subcontractor for the hazardous materials abatement portion of work of the contract. On October 26, 2017, R&H provided the City a written request to substitute the listed Subcontractor, since the listed Subcontractor has refused to perform his or her subcontract under Public Contract Code Section 4107(a) (1). In accordance with Section 4107 of the Public Contract Code, a Prime Contractor may substitute a listed Subcontractor, with the consent of the awarding authority, when the listed subcontractor has refused to perform his or her subcontract as set forth in Section 4107. The Subletting and Subcontracting Fair Practice Act requires the Prime Contractor to secure the permission of the awarding agency before substituting a non-listed subcontractor for a listed subcontractor in order to protect the public and subcontractors from bid shopping and bid peddling. (Southern California Acoustics Co., Inc. v. C.V. Holder, Inc. (1969) 71 Cal.2d 719,726.) R&H has requested that they be allowed to substitute Central Valley to perform the hazardous materials abatement subcontract work in place of Centec by a letter dated October 26, 2017. Section 4107 of the Public Contract Code allows the Prime Contractor to substitute listed Subcontractors with prior consent from the awarding authority. In accordance with provisions of the Public Contract Code, the City has notified Centec of the proposed substitution by certified mail which the USPS attempted delivery on November 10, 2017. PS Form 3849, commonly referred to as a "Notice Left," was used in Postal Service's attempt because no one was available to accept delivery. In addition, the City sent Centec notification of the proposed substitution by standard USPS mail on November 20, 2017. To date, Centec has not provided written objections to the substitution. The City Attorney's Office finds the proposed substitution of subcontractor to be legal and proper if Council consents to the substitution. In accordance with Section 4107, the failure to file these written objections within five working days of receipt of that notification ending at 5:00 p.m. on November 17, 2017, constitutes the listed Subcontractor's consent to the substitution. The City has not received an objection in accordance with Public Contract Code 4107. The replacement of the Subcontractor for the hazardous materials abatement portion of the contract will not increase the cost of the project. This substitution does not affect the Disadvantaged Business Enterprise (DBE) goal because Centec Environmental Inc. is not a certified DBE. ENVIRONMENTAL FINDINGS This is not a project for the purposes of CEQA pursuant to CEQA guidelines Section 15378(b)(5), as it is an administrative action that will not result in direct or indirect changers to the environment. LOCAL PREFERENCE Local Preference was not considered because this action does not include a bid or an award of a City construction contract. FISCAL IMPACT There will be no impact to the General Fund or the project budget by this substitution. Attachment: Contractor's Request for Substitution Letter