06/03/1997 Meeting Minutes - Laserfiche WebLink

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Council Minutes of 6/3/97 couple of items that indicated that the contractor may not be able to complete the job. Based on the balance sheet--an income statement was not provided--and based on the city's prior experience with contractors who had the same problem that was indicated on this balance sheet, it was recommended that this contractor not be awarded the contract. Mr. Burns stated that it is nice to have a performance bond to do the job; however, when a contractor does fail to perform on a contract, that creates delays. It also creates an expense to the city by having to find another contractor to complete the job or by going through some other process in order for remedy under that contract. Mr. Kelly was not satisfied by this explanation and said that Addendum No. 2 that was sent out before the bid said in part, "The contract will be awarded within 60 calendar days. In no case will an award be made until all necessary investigations are made as to the responsibility of the bidder to whom it is proposed to award the contract." He believes no investigation was made because his bank and his references were never contacted. Law Director Gareau said that one of the problems with the material that was submitted was the federal tax liability had increased substantially from one year to the next. Mr. Kelly said he made a lot of money last year. Mr. Gareau commented that one of the reasons the city requests the financial information is to make sure that there are not problems with respect to federal tax liens and things of that nature. Mr. Kelly said that he did not owe any back taxes. Mr. Gareau said that the financial information gave our accountant cause for concern. Mr. Kelly asked if that wouldn't be a reason for the necessary investigation to be made. Mayor Boyle said, "not a criminal investigation." We did an investigation based on the material that was presented to us. He said the information received indicated a major tax liability had increased, and financial statements were incomplete if all we had was the balance sheet. Considering this was the Allendale Carey project, time was necessary. As Mr. Burns mentioned, if there is non-performance, all that the bond is going to do is pay us something. It will not buy time, and time is of the essence in this project. We would not be doing our job if we did not realize that a contractor had potential financial problems that could have been foreseen. State law requires that the contract be awarded not only to the lowest bidder but the most responsive, and the law allows us to do that investigation based on material that we have required be submitted. That is what happened. Mr. Burns found a financial flaw that was not explained. It is not up to the Board of Control to do a criminal investigation. An investigation was done based on the material provided by Mr. Kelly. If there is something in the financial information that needs further explanation, most contractors will provide the explanation in writing or in documentation. Mr. Burns noted that the increase in Mr. Kelly's payroll tax liability went from $17,000 to approximately $109, 000, a significant increase. He did not have information that would have allowed him to compare payrolls from year to year to see if such an increase may or may not have been justified. That is a significant amount of money, particularly payroll taxes on which the Internal Revenue Service is quick to place liens in order to protect their interests and the employees' interest for withholdings. Mr. Kelly said he did not believe there was any requirement to disclose his total set of books in order to get a contract with a municipality. He signed an affidavit for personal property tax, and he can sign an affidavit for any other as well. He has no delinquent taxes. Mr. Kelly said he felt that he was wrongfully denied the contract and that a phone call would have cost a lot less than $9,000. He said he would have furnished additional information upon request. Mayor 10