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W♥V TOPIC: Part III of a Series on The Ventnor Fishing Pier:

W♥V TOPICPart III – The $1.5 Million Estimate, the $2.6 Million “first bid”, the $3.2 Million “second bid” and Questions about the Pier’s Final Costs

The July 9, 2003 Ryan Engineering Report had recommended immediate replacement of the 16 pilings rated POOR.  Operating under an assumption that the 33 pilings rated FAIR-to-POOR would become POOR in five years of mild weather or less time in severe weather, Ryan proposed that they also be replaced as part of a rehabilitation plan to impart 20 years of useful life to the pier.  

The plan called for replacing 65 pilings, re-surfacing the pier with new decking, removing and re-installing all railing with proper anchorages and support, replacing or “sistering” 50 stringers, replacing 16 girders,  replacing or adding 200 stringer anchor straps, replacing 100 bolts at the piling-to-girder connections, and making other miscellaneous bolt and hardware replacements. 

Estimate in 2003:  $1.5 Million.

A caveat:  Engineers and architects are not contractors.  Some design professionals encourage their clients to factor into their planning a +/- 20%  swing of possible cost for any estimate.  Even in 2003, the engineer’s estimate of $1.5 Million might have translated into a $1.8 Million bid from a contractor.

The rehabilitation plan was not pursued in 2003 nor in the short term thereafter.  Two years later, there was a June 27, 2005 letter to Ventnor from the DEP advising of Green Acres funding for $141,250 (grant) and $423,750 (loan), with both contingent upon legislative appropriation.  By spring 2006, more comprehensive plans for complete pier reconstruction appear to have been quietly pursued.  The engineer’s estimate had called for temporarily relocating the clubhouse in order to install new pilings in that area.  However, it appears that the Commission had a brand new clubhouse in mind.  An OPRA request directed at auditing issues, which sought e-mails between city officials and the city’s auditors at Bowman & Co., produced from its hundreds of pages, a three-page document which touched upon plans for a completely new clubhouse, rather than a relocation of the existing structure.   

The relevant three pages consisted of the e-mail exchange between Bowman’s auditor Jarred Corn and Ventnor’s City Administrator (one page) and an attachment (two pages) pointing to “missing items” or “open items” needed by the auditors.  Among the items, there had been a 4/20/06 disbursement of $28,235 to Blumberg Architects for Design of a Fishing Pier Building.  The auditors had flagged a check and were searching for an Ordinance and Account Number against which to charge the expenditure, as well as Purchase Orders and Invoices to support the expenditure. 

The three pages are imaged at these links.

E-mail Auditor to Administrator:
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Page 1 Attachment (with the architectural fees for clubhouse)
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Page 2 Attachment (provided for completeness of document presentation)
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In early 2007, Bid Specifications and Blueprints were prepared and finalized under date of February 14th.  Review of the following “lead pages” of the voluminous document show that the project’s scope was substantially larger than what the engineer proposed in 2003, since the plans called for replacement of not 65 pilings but over 100 pilings, and all girders and stringers.

Specifications cover:
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Bid Components 1:
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Bid Components 2:
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Performance terms:
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Provided form for Bid Bond:
http://i234.photobucket.com/albums/ee196/WeLoveVentnor/MunicipalPierBidSpecs4.jpg

An advertisement was placed as public notice for the bid-letting:
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Plans and Specifications were sent to the following contractors:
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On March 13, 2007, there was an opening of sealed bids.  Four contractors submitted bids in response to all the packages which had been sent out.  Midlantic Marine of Manasquan, NJ was the lowest bidder at $2,662,169; and it was represented at the bid opening.

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By June 25, 2007, Ventnor found itself needing to undertake another round of bid-letting with a new advertisement,

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and another round of sending out bidding packages to contractors,

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and another opening of sealed bids, this time on July 10, 2007, and with only three contractors sending in responsive bids.  Those bids ranged from a high bid of $3,512,580 to the lowest winning bid submitted by R. A. Walters for $3,227,100.

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What happened between March 13th and June 25th to necessitate this second bid-letting, with its costlier results, set off a controversy late in 2007.  In December 2007, there were charges back and forth between one irate Ventnor taxpayer and the city’s solicitor about what had happened to cause Ventnor to lose out on the earlier $2.6 Million bid.   While normally there might be two sides to a story, this one turns out to have three sides – and even then, the three sides find some details missing.    

Citizen’s side
After reviewing public documents obtained from OPRA requests, Norm Klinger charged, in November 29th and December 6th Letters to the Editor of the Downbeach Current, that Ventnor had engaged in a “charade” about how it came to lose out on the $600,000 cost savings of the lowest bid opened on March 13th.  He noted that the 30-day time limit on the bid bond had expired because Ventnor never took pro-active steps to assure a bond extension with the surety (Liberty Mutual) and contractor’s principals (Midlantic) signing off.  He also charged that the City of Ventnor could have saved taxpayer money with a timely award of the contract to the winning bidder.  The award would have been timely if it was made within the 30 days after March 13th when the bid bond was in force.  It could still have been timely with all financial protections in place if the bid bond had been extended and the award had been made within the 60 days allowed as a statutory contract award period in New Jersey.  Instead, the City had awarded the contract after the 60 days, relying on a last-minute extension letter from an unauthorized party employed by the contractor. The City had also passed a Resolution of contract award on the evening of May 17, 2007 -- the same day that the contractor had made an earlier phone call and sent a follow-up afternoon letter to Ventnor to advise that it was rescinding the extension letter.

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City’s side.
City Solicitor Scott Abbott presented a rebuttal Letter to the Editor in the same newspaper on December 13th.   He claimed that even the lowest bid of $2.6 Million had come in higher than the 2003 engineer’s estimate for $1.5 Million, and that this was the reason that Ventnor did not have enough funds to “certify funds availability” which is a requirement for passing a legal Resolution to award a contract.  He also pointed to a Change Order that Midlantic had submitted in May (after the rescission of the extension) as support for the proposition that the contractor never intended to execute the contract for the amount of its original bid.  Assuming that the contractor never intended to sign a $2.6 Million contract, Abbott argued that the maximum amount recoverable would have been the $20,000 liquidated damages of the bid bond.  His letter suggested that litigation costs would be equivalent to the $20,000 that was the maximum achievable in litigation, and that there was “uncertainty” to making any recovery.     

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The documents which fill in what happened after March 13th are presented here, in a careful sequence, and then the “third side” of this story will provide some details of what transpired, which documents alone do not.

The completed bid bond submitted by Midlantic, originally provided as a “blank form” by Ventnor in the bid-letting package, looked like this:

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The signatures on the last few pages “suggest” who might have actual legal authority to bind contractor Midlantic – its President (Murray) and Secretary (Getz).  The document also states the willingness of Liberty Mutual Insurance to execute the Bonds required by the Contract Documents for the full amount of the contract.   These would have constituted a performance bond.  But the contract had to be awarded (a Resolution of contract award by the Commission) and a Contract executed.

Other documents, in sequence, which fill in the time after the March 13th bid opening are a Memorandum of April 20, 2007 discussing Green Acres funding for the pier.  It refers to the amount of the Midlantic bid, showing that the bid was still being entertained.

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There was a letter dated May 11, 2007, from Midlantic’s Jim Henbest to Ventnor’s Solicitor to provide an extension.

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There was a letter dated May 17, 2007, from Midlantic’s president which bears a FAX time stamp showing “15:08” (3:08 PM) and advises that the earlier May 11th letter was sent in error.  Midlantic’s letter declined to accept any award of contract.

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There is a Resolution 58 of 2007 to award the contract which was passed at the May 17th evening meeting, and Solicitor Abbott’s later claims about the matter included his contention that the Resolution was necessary to give the City of Ventnor any kind of legal leg to stand on, in attempting to retain Midlantic’s services to perform the work, and at the price established by its low bid. 

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There are the minutes of the Commission meeting of May 17th – which are now available as part of a full online compendium of all 2007 minutes from Commission meetings. 

http://www.ventnorcity.org/uploads/2007%20Minutes%20In%20Brief.pdf

And the May 17th minutes have been extracted to present relevant excerpts, with red highlights, here:

http://www.ventnorevoice.com/bulletinboard/showthread.php?t=156

It is noteworthy that over the course of 2007, the upload of Commission meeting minutes to the city website halted after the date of May 3, 2007,  and the situation continued in that fashion until the November 15, 2007 meeting minutes were uploaded, and then all minutes were uploaded into a compendium at the end of the year.  The minutes of the Commission meeting on May 17th do not reflect that city officials ever made note of any irregularity about the Resolution -- related to events earlier in the day which had found the contractor phoning and sending a letter.  Mr. Klinger characterized this behavior as a “charade” which concealed true facts at the public meeting; Abbott characterized this behavior as the City of Ventnor attempting to lay a legal groundwork to preserve whatever contractual rights it might have under the unusual and potentially precarious circumstances.  

There was a letter dated May 18, 2007, from Solicitor Abbott to Midlantic stating that the Resolution was passed in reliance on the May 11th extension, and that Ventnor would send a contract.

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There was a letter dated May 23, 2007, from Engineer Carter to Midlantic which enclosed the contract that Ventnor wanted Midlantic to sign.

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There was a memo dated May 29, 2007, from Engineer Carter to city officials, suggesting that none of them should expect Midlantic to sign and return the contract.

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There was a further memo dated June 7, 2007, from Engineer Carter to Solicitor Abbott, reviewing the 60 day requirement as defined by New Jersey statutes (calendar days) and as defined by the City of Ventnor through its Specifications (municipal business days).  The memo makes two significant points: first, that the Commission had discussed holding an emergent meeting to award the contract within the 60 day statutory period but had not done so, due to the May 11th letter; and second, that state law would likely “override” the Specifications in defining 60 days.  

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The original OPRA-demanded document had a problem with photocopier fade at the bottom, and the last paragraph is provided below:

"The Contracts Law does not impose penalties on the Contractor for failure to execute the Contract. The Specifications (which consist of both the Standard Specifications and the Supplementary Specifications) do. In the Standard Specifications under Subchapter 103.07, failure to execute the Contract results in an annulment of the award and exclusion of the Bidder on subsequent projects. The Proposal Bond submitted with the bid becomes forfeited. Therefore, the most sacrificed is the $20,000 Bond and a potential of being excluded on future Municipal Projects. Not bad when you are $600,000 lower than the next bidder."

There was a letter dated June 7, 2007, from Midlantic to Solicitor Abbott, advising him that the person who sent the extension letter was not authorized to bind the contractor, that there was poor cell phone communication causing the May 11th letter to not be an accurate reflection of the situation, and that the contractor would only perform if granted a Change Order which somehow related to “loss of the trestle” as well as delayed award of the contract.

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There was a Memo dated June 8, 2007, from Engineer Carter to Solicitor Abbott advising that the contract was returned, with a +$790,000 Change Order requested.  Mr. Carter states that “the award approval is actually invalid” in apparent reference to the May 17th Resolution.

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There was a letter dated June 15, 2007, from Solicitor Abbott to Midlantic which advised the contractor that it was “directed” to execute the contract documents by a certain date or City of Ventnor would “pursue any and all remedies” against it.

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There was a Resolution 67 of 2007 passed by the Commission at its June 21, 2007 meeting which declared Midlantic to be “in default” and which authorized the second round of bid-letting.

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Sorting out one of the claims.  Solicitor Abbott claimed that City of Ventnor could not legally award the contract within the 30 days of the bid bond because it lacked the funds, and that this lack of funds was attributable to even the lowest $2.6 Million bid being higher than the old 2003 engineer’s estimate for $1.5 Million.   Given the vastly increased scope of the project at the time of bid-letting, it would have been unrealistic to expect a bid for an essentially “new pier” to fall within range of the rehabbing estimate.  However, the City may have lacked funds for other reasons – a fiscal crisis.  Ventnor officials’ first awareness of the looming crisis may have been on or about March 8th and as the result of the auditors from Bowman & Co. arriving to start working on the City’s books and records for 2006.    As part of the OPRA demand for e-mail exchanges between auditors and officials, there was one e-mail which flagged Administrator McCrosson’s attention to a substantial reduction of property tax revenues due to the successful re-assessment challenges mounted by 730 homeowners.  Later in the month, on March 22nd, there was an early-morning emergency Commission meeting to deal with that problem, and others – a sharp increase in delinquent taxes, and $75,000 of unexpectedly higher utility bills which may, in large part, have been attributable to the utility costs of the new Library and Cultural Arts Center as it came into service during summer of 2006.  By the time the auditors completed their review of Ventnor’s Fiscal 2006 financials on August 17, 2007, there was a finding that the town had spent its Current Fund into a seven-figure deficit by the end of 2006.  It is uncertain whether city officials realized this was happening, even as it actually happened. 

The Third Side of the Story.  Due to the incomplete explanations offered up by the documents, a representative of WeLoveVentnor, inc. contacted Midlantic Construction LLC by telephone during the last week of November, and spoke to the Project Manager who authored the May 11th letter.   He advised that the firm was present at the opening of sealed bids, and stood ready, willing and able to perform the contract at the stated price, despite the substantial difference between his firm’s bid and the next lowest bidder. 

He recollected that Ventnor informed Midlantic that a contract award would be made by “end of March” and that phone calls during March were primarily initiated by Engineer Carter to discuss technical details of the project.  Toward the end of March, Ventnor had then orally advised Midlantic that it was renegotiating its Green Acres funding and that the firm should expect an award by mid-April.   Although the Project Manager did not recall the precise date from unaided recollection, he recalled that Midlantic had been told it would be a firm date.   He further remembered that the flow of who initiated contact changed in early April, with Midlantic phoning Ventnor to inquire if there would be a deal or not, while calls from Ventnor were either infrequent or non-existent.  The “firm date” came and went without any contact from Ventnor.  The Project Manager then began to visit the city’s website to determine if a Resolution of award had been made.  He was asked if Ventnor ever requested Midlantic to extend the bid bond and he advised that no such request was made. 

By late April, Midlantic appears to have believed it should move on.  Indeed, the April 20th memorandum by Engineer Carter which raised the topic of Green Acres funding appears to have done so almost as an afterthought to other discussions with the DEP.   It was written a week after the bid bond’s original 30 day period would have expired. 

The Project Manager recalled that on Friday, May 11th, there was a sudden rash of phone calls from different officials in Ventnor, all with various questions or concerns and demanding “instant answers” which he tried to relay to the contractor’s principals who were out in the field.  That date would have coincided with the expiration of the statutory 60 day period, and would have been one day after the Workshop which might have raised the need for an “emergent meeting” to pass a Resolution of Award – although public notice might have had to be published on Friday itself, for a valid emergency meeting within 60 days of March 13th.   

Earlier in the same week, on Tuesday May 8th, there had been municipal elections in Margate where Solicitor Abbott had been a candidate for Commission, and in Somers Point where Administrator McCrosson also had been a candidate for municipal office.  While admittedly speculative, it also seems possible that those elections and the weeks leading up to them may have diverted the attention of key city officials from the routine city business of Ventnor.

The garbled communication from Midlantic’s president, out in the field and hampered either by bad cellular service or noise from heavy equipment, appears to have been a “conditional yes” to granting an extension which the Project Manager misunderstood in writing up the May 11th letter.   The Project Manager advised that when the contractor sought to re-assemble and re-confirm what had been the major cost components of the original bid, a trestle needed to stage the work from the beach side of the pier was no longer available.  Its approximate cost had been around $200,000 at the time the bid was prepared for March 13th deadline, but that trestle was found to no longer be available.  A substitute trestle -- when located after Ventnor re-contacted Midlantic -- was found to be more expensive by an order of magnitude.  The Project Manager advised that his rough recollection was of a $500,000 ballpark figure.

When later inquiry was made of city officials in early December, even this aspect of the overall Change Order – the cost of the trestle -- appeared to come as news to one official, engineer Carter.  City officials have never claimed that the bid bond was extended, and the contractor confirms that it wasn’t because no one from Ventnor requested it.  They did not raise their own recollections of other informal oral contacts with Midlantic which differed from the general flow of communications recollected by the Project Manager.  It appeared that communications between Ventnor and Midlantic after the multiple phone calls on May 11th may have been confined to the phone call between the Solicitor and the contractor’s president on May 17th, and the further exchange of letters.  

City officials now seem to maintain that Midlantic would have wanted the $3.4 Million amount of the original bid and the much-later Change Order all along.  Or, that Midlantic would have declined to execute the contract even if offered a timely award.  The information provided by the Project Manager for Midlantic is in contrast and differs from those contentions.  Relations between both sides took on a hostile tone, on and after May 17th, with an apparent escalation of hostilities.   It is impossible to determine whether informal negotiations to review all cost component changes confronting Midlantic might have worked toward a better financial outcome for taxpayers.  By the date of its June 7th letter, the contractor might reasonably be supposed to have consulted with its own attorney and been informed that it was in a relatively safe legal position vis-à-vis any contractual obligations. 

In a year which may offer a contested election, it is safe to assume that partisan sides will make characterizations about what might have been a “charade” or what might have been “bad faith intentions” when the topic of the Municipal Pier bidding process arises.  WeLoveVentnor, inc. is committed to catering to intelligent voters, and to presenting information in a form allowing for independent viewing of critical documents.

Part IV of this Topic series will bring it to conclusion with a review of the public hearing about the Municipal Pier, and then a new Topic series about Land Planning in Ventnor will commence.  It will be grounded historically with a starting point that traces back to the 1948 Master Plan.