Council committee forwards tender agreement and award for 20 First Avenue S / S 320th signal and pedestrian work after contractor default

The committee forwarded two linked actions concerning the 20 First Avenue South / S 320th Street signalization and pedestrian improvements project: authorization to enter a tender agreement with Old Republic Surety Company, and authorization to award the remaining work to BES Electrical Services LLC.

John Mulkey, senior civil engineer with the city’s Public Works department, explained that the original construction contract was awarded to Rain City Services in January 2024 with a notice to proceed in July and a 110 working-day completion period. Rain City did not begin consistent on-site work until Aug. 7, failed to prosecute the work, disregarded directions from the engineer, employed subcontractors without proper documentation and did not complete work within the contract timeframe. The city terminated Rain City’s contract on July 11, per contract specifications.

Mulkey said the city worked with the bonding company to either have the surety complete the contract or to tender the contract to the city so the city could contract directly with a third party. The bonding company proposed tendering, and the city determined that would be the quickest path to complete the work and recover previously purchased materials. The bonding company also agreed to cover engineering, inspection and administrative costs arising from the original contractor’s delay; Mulkey said the project remains within budget despite these events.

Budget and payments: Mulkey said Rain City had completed work valued at $217,602.47 that is currently recognized as a completed-but-unpaid contract amount; the bonding company holds claims against Rain City and will reconcile payments and releases with subcontractors. The tender proposal included an expected mitigation payment of $100,000 from the surety to cover city administrative costs associated with the delay, and staff proposed adding an $80,000 contingency to the cost-to-complete calculation.

Award recommendation: The bonding company solicited prices to finish the work and recommended BES Electrical Services (BES) of Tacoma. The city reviewed BES’s estimate and deemed it reasonable. Staff recommended awarding the remaining work to BES for $120,203.22 and approving an $80,000 contingency for a total authorization of $203,203.22. Mulkey said the remaining work is mainly labor to install equipment purchased by the original contractor and staff expect the work to be completed quickly; they aim to finish prior to the planned Dec. 6 light-rail opening in the downtown core.

Council questions and clarifications: Council members asked about Lyft funding (local infrastructure financing) used for part of the project, whether the city had prior experience with Rain City (limited) and with BES (the city has a history with the predecessor Amaya Electric and retained many of the same staff), and how the bonding company handles claims and releases to subcontractors. Staff confirmed the engineering authority can terminate contracts per the original council contract authorization and that the surety’s role includes indemnifying or defending the city for claims related to the default.

Actions: Committee members moved and seconded forwarding both (1) approval to enter into a tender agreement with Old Republic Surety Company and (2) authorization to award the remaining work to BES Electrical Services LLC to the Sept. 16 consent agenda. The chair called the vote in favor.

Ending: If the council approves both items and the surety tender proceeds as described, BES would complete installation of signals and pedestrian improvements under the tendered arrangement and the city would work with the surety to reconcile payments to the original contractor and its subcontractors.