Public Works and Infrastructure Committee. General Manager, Solid Waste Management Services Director, Purchasing and Materials Management Division

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1 PW13.5 STAFF REPORT ACTION REQUIRED Amendment to Purchase Order No for Contract Administration and Technical Support Services for Completion of the Disco Road Organics Processing Facility Date: April 27, 2016 To: From: Wards: Reference Number: Public Works and Infrastructure Committee General Manager, Solid Waste Management Services Director, Purchasing and Materials Management Division All P:2016\Cluster B\SWM\May\005PW (AFS#22707) SUMMARY The purpose of this report is to request authority to increase the value and extend the term of the Purchase Order with GHD Limited (formerly Conestoga-Rovers & Associates Ltd.) to provide continued contract administration and technical support services (i.e. Owner s Engineer ) for completion of the Disco Road Organics Processing Facility. GHD Limited provides contract administration and technical support services for the organics processing facilities being constructed at the Disco Transfer Station and the Dufferin Waste Management Facility. In 2010 AECOM Canada Ltd. was awarded the contract to design, build, operate and maintain the Disco Road Organics Processing Facility. Delays in AECOM Canada Ltd. s completion of its design, build and commissioning phase of the project have resulted in additional time and costs required for GHD Limited s services. It is recommended that the contract amount for GHD Limited s services be increased by $333, net of taxes and charges ($339, net of HST recoveries), increasing the current total contract amount from $2,162, net of taxes and charges to $2,495, net of taxes and charges ($2,539, net of HST recoveries). The completion date is recommended to be extended from August 31, 2017 to December 31, 2018 to coincide with AECOM Canada Ltd. s projected date for completion of the work of its design, build and commissioning Agreement. As a result of the delays incurred, To Amend Purchase Order No

2 liquidated damages are being charged to AECOM Canada Ltd. The value of liquidated damages is sufficient to cover the increased costs of this requested Purchase Order Amendment. RECOMMENDATIONS The General Manager of Solid Waste Management Services and the Director of Purchasing and Materials Management Division recommend that: 1. Public Works and Infrastructure Committee, in accordance with Section C of the City of Toronto Municipal Code Chapter 71 (Financial Control), grant authority to amend Purchase Order No with GHD Limited awarded through Request for Proposal No by an additional amount of $333,350.44, net of taxes and charges ($339, net of HST recoveries), increasing the current total contract amount of $2,162, net of taxes and charges to $2,495, net of taxes and charges ($2,539, net of HST recoveries) and authorize an extension of the agreement with GHD Limited from August 31, 2017 to December 31, Financial Impact Purchase Order No was created to reflect the company name change (from Conestoga Rovers & Associates to GHD Limited) and the amount of the new Purchase Order ($315, net of taxes and charges) reflected transfer of the approved funds remaining on the original Purchase Order at that time. The amendment to Purchase Order No for an additional amount of $333, net of taxes and charges ($339, net of HST recoveries), increases the current value of Purchase Order No from $315, net of taxes and charges to $648, net of taxes and charges ($660, net of HST recoveries). The combined effect of this Purchase Order Amendment request will result in the total value of the combined Purchase Orders ( & ) for GHD Limited s services increasing the current contract amount from $2,162, to $2,495, net of taxes and charges ($2,539, net of HST recoveries). The required additional funding in the amount of $339, is included in the 2016 Approved Capital Budget and Approved Capital Plan for the Solid Waste Management Services, in account CSW , Disco Road Source Separated Organics (SSO) Facility. The Deputy City Manager & Chief Financial Officer has reviewed this report and agrees with the financial impact information. To Amend Purchase Order No

3 DECISION HISTORY At its meeting on June 19, 20 and 22, 2007, City Council adopted Item PW6.1 SSO Public Facility Business Plan - Recommendations of the Planning Study for Expanded Public SSO Processing Capacity. The City Council Decision document can be viewed at (refer to Page 64): At its meeting on April 23, 2008, the Bid Committee adopted Request for Proposal No for Professional Engineering Services for the New Source Separated Organic Material Processing Facilities at the Disco Transfer Station and the Dufferin Waste Management Facility (All Wards). The Bid Committee Decision document can be viewed at (refer to Page 8): At its meeting on May 28, 2015, the Public Works and Infrastructure Committee adopted Item PW5.5 Amendment to Purchase Order No for Contracted Professional Engineering Services Supporting Solid Waste Management Services Capital Projects. The Public Works and Infrastructure Committee Decision document can be viewed at: ISSUE BACKGROUND GHD Limited (formerly Conestoga-Rovers & Associates Ltd.) was retained through Request for Proposal No to provide Owner s Engineer contract administration and technical support services during the construction phase of the following two projects: 1. Design, Construction and Commissioning at the Dufferin Organics Processing Facility between the City and CCI-TBN Toronto Inc. dated October 20, 2010; and, 2. Design, Build and Commission Agreement for a SSO Processing Facility at the Disco Transfer Station between the City and AECOM Canada Ltd. dated October 8, An agreement with GHD Limited was executed on January 6, 2011 and subsequently Purchase Order No (dated February 1, 2011) was approved in the total amount of $1,341, excluding taxes. To Amend Purchase Order No

4 Since then, Purchase Order No has been amended as follows: 1. Purchase Order Amendment No. 1: Revised March 7, 2013 to extend the end date to June 30, 2014 due to Contractors delays and to increase the overall Purchase Order value by $294, from $1,341, to $1,636,738.63, including taxes, to provide additional site inspection and contract administration services for the Disco Road Organics Processing Facility Agreement and to add additional contingency for biological process and commissioning uncertainty. 2. Purchase Order Amendment No. 2: Revised July 31, 2013 to reallocate line items in the Purchase Order due to Contractors delays and to provide additional site inspection and contract administration services for the Disco Road Organics Processing Facility Agreement in support of final commissioning and acceptance testing and substantial performance contract recommendations. The total value of the Purchase Order was not amended. 3. Purchase Order Amendment No. 3: Revised May 15, 2014 to extend the end date to October 31, 2014 due to Contractors delays and to increase the overall Purchase Order by $108, from $1,636, to $1,745,624.27, including taxes, to provide additional site inspection and contract administration services for the Disco Road Organics Processing Facility and Dufferin Organics Processing Facility Agreements and to increase the contingency amount required for additional commissioning and final acceptance of the project. 4. Purchase Order Amendment No. 4: Revised October 21, 2014 to extend the end date to May 31, 2015 due to Contractors delays and to increase the overall Purchase Order by $95, from $1,745, to $1,841,620.96, including taxes, to provide additional site inspection and contract administration services for the Disco Road Organics Processing Facility and Dufferin Organics Processing Facility Agreements and to increase the contingency amount required for additional commissioning and final acceptance of the project. 5. Purchase Order Amendment No. 5: Revised June 17, 2015 based on Public Works and Infrastructure Committee decision PW5.5 at meeting No. 5 held on May 28, 2015 to extend the end date to August 31, 2017 due to Contractors delays and to increase the overall Purchase Order by $320,800 (excluding HST) from $1,841, to $2,162,420.96, excluding taxes, to provide additional site inspection and contract administration services for the Disco Road Organics Processing Facility and Dufferin Organics Processing Facility Agreements and to increase the contingency amount required for additional commissioning and final acceptance of the project. To Amend Purchase Order No

5 6. New Purchase Order No issued replacing PO No : Conestoga Rovers & Associates provided notice that the company had undergone a merger and effective July 1, 2015 would conduct business as GHD Limited. Documentation was filed by GHD Limited during July 2015 on the new company business registration information. Consequently the City s Purchasing and Materials Management Division closed the former Conestoga Rovers & Associates Purchase Order No and created a new Purchase Order No for GHD Limited, which included reference to the original Conestoga Rovers & Associates Purchase Order history and agreement (dated January 6, 2011). Purchase Order No was issued September 3, 2015 with a completion date of August 31, 2017 and included transfer of the remaining approved budget amount of $315, (excl. taxes) from the original Purchase Order No The total value of the original purchase has been amended by $820,495.96, excluding taxes to date. With this new request, the accumulated year to date amendment increases are $1,153, excluding taxes and charges, which requires approval from Public Works and Infrastructure Committee. GHD Limited has been involved in the project since 2008 and has built special knowledge, skill, expertise and experience and is therefore uniquely positioned to continue to provide services to the City as the Owner s Engineer while AECOM Canada Ltd. completes its work. Dufferin Organics Processing Facility: Following resolution of a number of delays encountered by CCI-TBN, the work of the design, construction and commissioning of repairs at the Dufferin Organics Processing Facility has been completed. Disco Road Organics Processing Facility: AECOM Canada Ltd. continues to extend its estimated time for completion of the work of the Disco Road Organics Processing Facility project as briefly outlined below. In October 2010, the City contracted with AECOM Canada Ltd. for the design, build, commissioning, operation and maintenance of the Disco Road Organics Processing Facility. On July 1, 2014, a Certificate of Substantial Performance for the design, build and commissioning phase was issued to AECOM Canada Ltd. with identification of two major outstanding deficiencies required to be resolved to complete the work of the contract. The two deficiencies included: a) completion of acceptance test for the wastewater treatment plant; and b) completion of acceptance testing for the odour control system. AECOM Canada Ltd. was instructed to resolve these deficiencies as expeditiously as possible. To Amend Purchase Order No

6 After several months of investigations and on-site activities undertaken by AECOM Canada Ltd., in the absence of receiving a reliable commitment to a solution and timelines for implementation from AECOM Canada Ltd., the City imposed contractually mandated liquidated damages commencing in February Despite the imposition of liquidated damages, there continued a lack of progress towards a solution. As a result, the City issued a Notice of Default to AECOM Canada Ltd. dated November 10, In response to the Notice of Default, AECOM Canada Ltd. prepared and submitted a proposal to the City which acknowledged a shortfall in its designed wastewater treatment capacity and proposed a solution involving expansion of the wastewater treatment plant. In a proposed schedule presented by AECOM Canada Ltd. on December 14, 2015, it was projected that expansion of the wastewater treatment plant would be completed in the Fall of On February 5, 2016, AECOM Canada Ltd. extended its contract Performance Bond in the amount of $34,469,725.00, to provide financial security for the extended period of work required to resolve the deficiencies. A Contract Change Order is being prepared to document AECOM Canada Ltd. s contractual commitment to complete the wastewater treatment plant work. Within the Contract Change Order, the cost of the proposed solution is the responsibility of AECOM Canada Ltd., who has committed to delivering the proposed solution. AECOM Canada Ltd. has provided its 25% and 50% percent design submissions for completion of the wastewater treatment plant. AECOM Canada Ltd. s next steps involve completion of the detailed design, obtaining necessary permits and approvals and commencement of construction. As a result of AECOM Canada Ltd. s commitment to complete the design, construction and commissioning of expansion to the wastewater treatment plant, a further extension of the fees and term of Purchase Order No is required to allow GHD Limited to continue to provide services to the City as the Owner s Engineer for contract administration and technical review of AECOM Canada Ltd. s work to resolve its contract deficiencies. Since February 1, 2015, in accordance with the City s rights under the contract AECOM Canada Ltd. has been assessed liquidated damages in the amount of $1, per day for each day that the contract work remains incomplete. Liquidated damages are intended to address costs that continue to be incurred by the City due to delays in AECOM Canada Ltd. s completion of its work. Accumulated liquidated damages costs in the amount of $425, have been retained through March 2016 from the owner s set-off retainage account. A further amount of $609, will be retained through to December 2017 when AECOM Canada Ltd. has projected the construction and commissioning of the wastewater treatment plant work is expected to be complete. To Amend Purchase Order No

7 COMMENTS GHD Limited has confirmed that they are in agreement with the proposed extension and increase in the Purchase Order value under the similar terms and conditions of the existing agreement. Solid Waste Management Services with GHD Limited will continue to manage the contract with AECOM Canada Ltd., in order to attempt to avoid any further delays. CONTACT Carlyle Khan, Director, Infrastructure Development and Asset Management, Solid Waste Management Services, Telephone: , Fax: , Elena Caruso, Manager, Goods and Services, Purchasing and Materials Management Division, Telephone: , Fax: , SIGNATURES Jim McKay General Manager Solid Waste Management Services Michael Pacholok Director Purchasing and Materials Management Division To Amend Purchase Order No