01-30-1980 Council Minutes - Laserfiche WebLink

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' � Page 21 . Mr. R. W. Frank January 25 , 1980 Page Two damages from November 15 , 1979 , through June 30, 1980 , would amount to approximately $45 , 600 . If the completion of the project extends beyond that time, the liguidated damages would be even greater. The estimated work remaining on the project is $230 , 000 plus or minus, and in the event that this remaining work must be rebid because o£ the contractor ' s default, anticipated infla- tion of at least 15$ or $34 , 500 would have to be added to the project cost. Moreover, in the event the contractor left the job, any new contractor would undoubtedly charge a premium to finish the reduced project, which premium could amount to as much as $10 , 000, if not more . To date the City of Orono has paid out to the contractor $327 , 443 . 80 and has retained $36 , 338 . 20 pursuant to the retainage percentages set forth in the contract. The most recent request for payment by the contractor, payment number 5 , if paid, would result in a retainage by the city of only $43 , 732 . 75 , which amount is not sufficient to protect the city ' s anticipated financial exposure as noted above in the total amount of $90 , 100. The city has therefore informed the contractor that additional payments will not be made on the project unless the bonding company recommends release of the funds, because in the event of continued default by the contractor (and in any event, there is a claim for liquidated damages] , it may be necessary for the city to seek the payments for default and liquidated damages as set forth above from the bonding company. Because the contractor is clearly in default, the city is under no legal obligation to make payment to the contractor pursuant to section 10 of the general conditions of the contract. In fact, the city could, if it wanted to, declare the contractor to be entirely in default, and order the contractor off of the job. In that event, the city could require payment of the entire amount of the performance bond to insure that the money would be available to pay a new contractor to finish the work. However, as of this time, the city is not going to prevent the contractor from proceeding. The contractor has promised to work diligently on the project in the spring of 1980 , until completed and, therefore, the city is willing to allow the contractor to proceed.