Item C41BOARD OF COUNTY COMMISSIONERS
AGENDA ITEM SUMMARY
Meeting Date: June 19, 2013 Division: Public Works/Engineering
Bulk Item: Yes _ No _ Department: Project Management
Staff Contact Person/Phone #:Natileene Cassel X3470,
Kevin Wilson X8797
AUENDA ITEM WORDING: Approval to terminate for cause the construction contract for ADA
Compliance Segment #1 and the contract for ADA Compliance Segment #2, both of which are with
Mailloux and Sons, Inc.
ITEM BACKGROUND:
The two contracts for Segment #1 and #2 are financed entirely by the CDBG Disaster Recovery for
Tropical Storm Faye grant which impose, in addition to our county requirements, supplemental conditions on
the contractors. As part of the grant obligations the contractor was monitored by Government Services Group,
Inc., aka Meridian. Meridian served as the monitor for contractors under the grant to insure that they complied
with the Davis -Bacon Act and related statutes. This company provided the county with information and
documentation demonstrating willful failure to comply with CDBG Supplemental Conditions under the
Agreement, including alteration of employee timesheets, failure to properly pay overtime and using those altered
timesheets as the basis for Certified Payrolls. In addition, under Segment #2 the contractor failed to proceed
with the scope of the work in a timely manner, allowed permits for several facilities to expire.
On June 6, 2013, the contractor was afforded the opportunity to discuss these failures and to bring
documentation. However, the documentation confirmed in several cases the county's belief that the contractor
should be terminated for cause on both contracts.
The work has been stopped on both segments; county employees have been directed to secure the sites
and to accomplish work where possible in order to keep the work moving forward. Considerable work has been
completed on Segment #1; however on Segment #2 a new contractor will have to be hired.
Please note that this agenda item does NOT apply to Segment #3 and Segment #4 (May contract) of
ADA Compliance., these are under contract with a different contractor.
rxr.ViUrUN HELEVANT BUCC ACTION: Approval of ADA Compliance Segment #1 on August 15, 2012.
Approval of ADA Compliance Segment #2 on May 16, 2012 and the first amendment to that Contract on June
20, 2012 between the County and Mailloux and Sons, Inc. for facilities located between MM 47 and MM 0.
CONTRACT/AGREEMENT CHANGES: N/A
srA Y XhUUN1NMNDATIONS: terminate for cause
TOTAL COST: INDIRECT COST: BUDGETED: Yes No _
DIFFERENTIAL OF LOCAL PREFERENCE: n/a
COST TO COUNTY: SOURCE OF FUNDS:
REVENUE PRODUCING: Yes _ No X AMOUNT PER MONTH Year
APPROVED BY: County Atty OMB/Purchasing Risk Management
DOCUMENTATION: Included Not Required
DISPOSITION: AGENDA ITEM #
Revised 7/09
MEMORANDUM
TO: Board of County Commissioner
FROM: Natileene Cassel, Asst. County Attorney
DATE: 6-11-2013
RE: Recommendation to Terminate Contractor on ADA Compliance Segment #1
and on ADA Compliance Segment #2
Background on Contracts:
The County is diligently working to upgrade its facilities to comply with the requirements of the
Americans with Disabilities Act and its Amendments. In an effort to do so the County has surveyed its
facilities, determined the work to be done, and hired contractors through competitive bidding to do the
work. The work has been divided into segments due to the amount of work, the uniqueness of some
facilities, and the location of the work. At this point four segments have been bid. Mailloux and Sons,
Inc win the competitive bid for Segments #1 and Segments #2. These two segments were financed
entirely though the CDBG Disaster Recovery for Tropical Storm Faye grant. As part of the grant
obligations the contractor was monitored by Government Services Group, Inc., aka Meridian. Meridian
served as the monitor for contractors under the grant to assure that they complied with the Davis -Bacon
Act and related statutes, which was an essential part of the funding. The grant further required that
CDBG supplement conditions be incorporated into the contract documents.
Recommendation to Terminate:
t
In early June 2013, Meridian notified the County Attorney of serious violations of the Davis
Bacon Act and related statutes, which had been uncovered in their investigations particularly on the
Segment #1 contract. They provided documents which gave the County serious reason to believe that the
contractor had altered or caused to be altered employee timesheets, and that those timesheets were used
as the basis for falsified Certified Payrolls. The County reasonably believes based on the facts presented,
that the falsification was willful. The timesheets were signed by Jade Mailloux the company president
and project manager. These altered payrolls apparently eliminated the amount of overtime actually
worked by employees, altered timesheets to reduce the number of hours worked, and failed to produce
authorization for loans or falsified authorizations from employees for certain "loans". These allegations
were verbally verified by an employee inside the company. Upon receipt of this documentation, staff
reviewed the documents and concluded with the assistance of Meridian monitors that the allegations
should be reported to the state. These are serious issues which placed the County in the unenviable
position of making a determination of whether to keep a contractor under its employ who it believed was
falsifying documents required under federal law. After consultation with the County Administrator,
Director of Public Works and Engineering and the County Attorney the report was forwarded to the state
and it was determined that the contractor should be issued a letter of intent to terminate (see attached) as
required by the contract documents. The letter of intent applied to both Segments #1 and Segment #2.
Segment #2 had been a concern to the county for several months due to lapsed permits and other work
left uncompleted. This letter of intent to terminate allowed the contractor to meet with staff and bring
documents in for review in an effort to determine if the allegations could be explained.
Unfortunately, the meeting held on June 6, 2013, produced more questionable documents and
unsatisfactory explanations.
After review of the most recent documents, comparison to the documents already received by
staff and comments from Mr. Mailloux regarding both segments, staff determined that it must
recommend termination of the contractor.
Termination for Cause vs. Termination for Convenience:
Under the supplemental conditions of the contract the County has the choice of terminating the
contractor for cause or for convenience. Staff recommends termination for cause on both contracts. The
termination section of the supplemental conditions is attached.
Section C. (1) and (2) is the termination for cause section and it allows the local government to
terminate for cause; the local government is not required to pay "anticipated profit on unperformed
services" and allows adjustment of payments to contractor to cover any additional costs because of
contractor's default.
The second paragraph of Section C applies to termination for convenience, in this case the
county will pay for reasonable profit for services or other work performed for which profit has not
already been included in an invoice.
In addition, in either termination for cause or convenience, the county is obligated to pay the
contractor for services already rendered and expenses incurred prior to receipt of the notice of intent to
terminate, in addition to termination settlement costs reasonably incurred by the contractor relating to
payments to his subcontractors and suppliers which were firm prior to receipt of the notice to terminate.
Section F states that after termination if it is determined that the contractor had not failed in his
obligations, the termination shall be deemed to have been for convenience and an adjustment in the
contract price will be paid based on termination for convenience.
County of Monroe
The Florida Keys
Mr. Jade Mailloux
Mailloux and Sons, Inc.
1500 15'' Avenue Dr. E #103
Palmetto, Florida 34221
BOARD OF COUNTY COMMISSIONERS
Mayor George Neugent, District 2
Mayor Pro Tern, Heather Carruthers, District 3
., Danny L. Kolhage, District 1
f David Rice, District 4
Sylvia J. Murphy, District 5
May 24, 2013
Certified Mail
Projects: (1) Agreement Between Monroe County and Mailloux and Sons, Inc. ("Mailloux") for ADA
Compliance Segment #1, dated August 15, 2012; and (2) Agreement Between Monroe County and
Mailloux and Sons, Inc. ("Mailloux") for ADA Compliance Segment #2, dated May 16, 2012 and
amendments.
Dear Mr. Mailloux;
ADA Compliance Segment #1
Please consider this letter as Notice of Intent to Terminate the Agreement between Mailloux and Monroe
County dated August 15, 2012, for ADA Compliance Segment #1 pursuant to Article 14.1 of the General
Conditions of the Agreement and Section 1 of the CDBG Supplemental Conditions both of which are part
of the contract documents, for default of your contract obligations.
More specifically, the areas which Mailloux has failed to fulfill its contractual obligations and therefore
defaulted on the contract, include but are not limited to:
1) Failure to comply with CDBG Supplemental Conditions under the Agreement;
2) Failure to properly pay overtime and wage decisions;
3) Failure to properly complete certified payrolls;
4) Failure to abide by Monroe County Code Article IX.
ADA Compliance Segment #2
Please consider this letter as Notice of Intent to Terminate the Agreement between Mailloux and Monroe
County dated May 16, 2012 and amendments for ADA Compliance Segment #2 pursuant to Article 14.1 of
the General Conditions of the Agreement and Section 1 of the CDBG Supplemental Conditions both of
which are part of the contract documents, for default of your contract obligations.
More specifically, some of the areas which Mailloux has failed to fulfill its contractual obligations and
therefore defaulted on the contract, include but are not limited to:
1) Persistently and repeatedly failing to proceed with the scope of the work in a timely manner;
2) Allowing permits for several facilities to become void because the work did not begin and/or
inspections were not obtained within the 180 day timeframe;
3) Failure to submit revised drawings in a timely manner; and
4) Failure to provide payment to a subcontractor.
You shall promptly discontinue all affected work on both projects as required by CDBG
Supplemental Conditions at Section 11) and allow the County to take possession of the site as
required under Article 14.1.2.1. You are instructed not to remove materials, equipment, tools, or
supplies related to the project, and paid for by the County.
Pursuant to the Agreement at CDBG Section 2, you have ten (10) calendar days after receipt of this letter in
which to meet and to consult with the County prior to official termination. Monroe County requires that
prior to the expiration of the ten (10) day period you make arrangements to meet the necessary
representatives of Monroe County to address these and all other issues. In addition, Monroe County requires
that you provide access to your original books, documents, papers and records of any nature, all data,
drawings, reports, specifications, summaries and other information, as may have been accumulated by the
contractor in performing this contract, whether completed or in process which are directly pertinent to this
contract for the purpose of making examination, excerpts and transcriptions. The records shall be provided
at a date and time agreeable to both parties but within the 10 day period, at the Marathon Government
Center in Marathon. Florida. Please contact David Hill in the Project Management Division to discuss a
date and time.
In the event that termination for default is affected, an equitable adjustment in the price for these contracts
shall be made, but Mailloux shall not be paid for anticipated profit on unperformed services or other work,
and any payment due to the contractor at the time of termination will be adjusted to cover any additional
costs to Monroe County due to contractor's default, as detailed in both of the Agreements.
Monroe County requests that you place your insurance carrier/surety on notice of the default referred to
above. Should you wish to have a representative of your carrier/surety attend the meeting requested, please
feel free to do so. Further, should you wish to have legal representative at the meeting referred to above,
you may do so.
The final decision on termination of these contracts will be made by the Board of County Commissioners,
at the regularly scheduled meeting on June 19, 2013 at the Marathon Government Center in Marathon,
Florida.
Sincerely,
Roman Gastesi
County Administrator
Monroe County
Department of Community Affairs — Community Development Block Grant Program
CDBG Supplemental Conditions tuzrzo10
(Construction Contracts)
The supplemental conditions contained in this section are intended to cooperate with, to supplement, and to modify the
general conditions and other specifications. In case of disagreement with any other section of this contract, the
Supplemental Conditions shall govern.
1. Termination (Cause and Convenience)
2. Access to Records
3. Retention of Records
4. Remedies
5. Environmental Compliance (Clean Air Act and Clean Water Act)
6. Energy Efficiency
7. Special Equal Opportunity Provisions
8. Conflict of Interest
9. Utilization of Minority and Women's Businesses
10. Federal Labor Standards Provisions (Davis -Bacon, Copeland, and Contract Work Hours Act)
11. Guidance to Contractor for Compliance with Labor Standards Provisions
1. TERMINATION (CAUSE AND/OR CONVENIENCE)
A. This contract maybe terminated in whole or in part in writing by either party in the event of substantial failure by
the other party to fulfill its obligations under this contract through no fault of the terminating party, provided that
no termination may be effected unless the other party is given:
(1) not less than ten (10) calendar days written notice (delivered by certified mail, return receipt requested) of
intent to terminate; and
(2) an opportunity for consultation with the terminating party prior to termination.
B. This contract may be terminated in whole or in part in writing by the local government for its convenience,
provided that the other party is afforded the same notice and consultation opportunity specified in l(a) above.
C. If termination for default is effected by the local government, an equitable adjustment in the price for this
contract shall be made, but
(1) no amount shall be allowed for anticipated profit on unperformed services or other work, and
(2) any payment due to the contractor at the time of termination may be adjusted to cover any additional costs to
the local government because of the contractor's default.
If termination for convenience is effected by the local government, the equitable adjustment shall include a
reasonable profit for services or other work performed for which profit has not already been included in an
invoice.
For any termination, the equitable adjustment shall provide for payment to the contractor for services rendered
and expenses incurred prior to receipt of the notice of intent to terminate, in addition to termination settlement
costs reasonably incurred by the contractor relating to commitments (e.g., suppliers, subcontractors) which had
become firm prior to receipt of the notice of intent to terminate.
15-1
Department of Community Affairs — Community Development Block Grant Program
CDBG Supplemental Conditions 11/212010
(Construction Contracts)
D. Upon receipt of a termination action under paragraphs (a) or (b) above, the contractor shall (1) promptly
discontinue all affected work (unless the notice directs otherwise) and (2) deliver or otherwise make available to
the local government all data, drawings, reports specifications, summaries and other such information, as may
have been accumulated by the contractor in performing this contract, whether completed or in process.
E. Upon termination, the local government may take over the work and may award another party a contract to
complete the work described in this contract.
F. If, after termination for failure of the contractor to fulfill contractual obligations, it is determined that the
contractor had not failed to fulfill contractual obligations, the termination shall be deemed to have been for the
convenience of the local government. In such event, adjustment of the contract price shall be made as provided in
paragraph (c) above.
2. ACCESS TO RECORDS
The local government, the Florida Department of Community Affairs, the U.S. Department of Housing and Urban
Development, the Comptroller General of the United States, and any of their duly authorized representatives, shall have
access to any books, documents, papers, and records of the contractor which are directly pertinent to this contract for the
purpose of making audit, examination, excerpts, and transcriptions.
3. RETENTION OF RECORDS
The contractor shall retain all records relating to this contract for six years after the local government makes final
payment and all other pending matters are closed.
4. REMEDIES
Unless otherwise provided in this contract, all claims, counter -claims, disputes and other matters in question between the
local government and the contractor, arising out of or- relating to this contract, or the breach of it, will be decided by
arbitration, if the parties mutually agree, or in a Florida court of competent jurisdiction.
5. ENVIRONMENTAL COMPLIANCE
If this contract exceeds $100,000, the contractor shall comply with all applicable standards, orders, or requirements
issued under section 306 of the Clean Air Act (42 U.S.C. 1857(h), section 508 of the Clean Water Act (33 U.S.C. 1368),
Executive Order 11738, and U.S. Environmental Protection Agency regulations (40 C.F.R. Part 15). The contractor shall
include this clause in any subcontracts over $100,000.
6. ENERGY EFFICIENCY
The contractor shall comply with any mandatory standards and policies relating to energy efficiency which are contained
in the state energy conservation plan issued in compliance with the Energy Policy and Conservation Act (Public Law 94-
163).
7. SPECIAL EQUAL OPPORTUNITY PROVISIONS
A. Activities and Contracts Not Subject to Executive Order 11246 as Amended
(Applicable to Federally assisted construction contracts and related subcontracts $10,000 and under.)
During the performance of this contract, the Contractor agrees as follows:
15-2