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February 16, 1999 ~ Biil Wasson y Marion County Annex 3150 Lancaster Drive NE Salem, Oregon 97305-1398 RE: Contract for Architedural Services Agreement Between Marion County- Salem Area Mass Transit District and Architect CouRhouse Square Project No. 9828 o L~~~~~Il~ Ala Er. Costic, AtA~~~ ~ ~ ~~~ Walter E Bensman, Jr., AIA Clayton Vorse, A~ AD'O~ ^O~N~y Mark M Fos[er, r~~ V 1 I Leonard R;~h~~d S , ,~MMISSIONC~lS ARBUCKLE COSTIC ARCHITECTS, INC. 363 State Street Salem, OR 97301-3533 503/581-4114 Fax: 503/581-3655 E-Mail: acarchCopen.org Dear Billy: We congratulate you on the results achieved from the bidding process for Courthouse Square. We are equally pleased that our efforts on your behalf, to produce an economically feasible project, have succeeded beyond even our expedations. In antiapation that the valuation of our contract needs to be addressed now that a oontrad will be awarded to Pence/Kelly, we would like to address the difficulty that your success poses for our firm. Ever since our initial involvement in the project, the construdion cost of the project was estimated in excess of $20,000,000• This value was coROborated by Pence/Kelly prior to their leaving the projed at the end of 1997. Although Melvin Maiic Development Company did not have a complete estimate prepared by Howard S. Wright to the extent that they had proceeded, Howard S. Wright appeared to confirm the esti S ~t~ts also cponflrmed that he cost oflconstruct on should amoaunt to more than $21 OOO,OOp I Cost Con Our i~emal budgeting for preparation of coritrad documents and fee negotiations with sul}consultants were developed on this construdion budget. The fee credit negotiated in January 1997 was also calculated on the strength of this construdion budget. Our arrangements with sut~consuftants are based on fixed values for their respective disciplines, and as you are aware, the strudural engineering firtn, Century West Engineering Co. has approached us for additional fees to offse~t changes in the scope. Our intemal allocation of staff time was also based on budgeting our fees towards the separate phases of the work. We have put out additional effort in order to keep the projed on schedule, despite delays in signing off the space planning (Odober 19,1998) for the project, resulting in significant overtime costs during November and December. Ironically, it was our efforts to maintain your schedule and control construdion costs which placed us in an ideal bidding climate for the County and Transit and in an adverse fee for service situation for ourselves. With the low base bid of $16,625,538, fully $4.5 million (or 20°~) below the budget estimate, our fee for service to-date has fallen approximately $210,000. This reduction jeopardizes our ability to service the projed in the manner in which we are accustomed. This is especially true now that we have discovered at least two instances of sut~bidders taking liberties with the bid documents to which they were not entitled. We are concerned that the low bid price represents an increased level of risk for bid eROrs which will translate into a greater need for vigilance on our part to ensure compliance with contract requirements. We would appreciate your consideration of this issue and a possible re-evaluation of fees through the bid phase based on the budget we all expected, as follows: 1. On phases of service completed to the end of bidding, calculate the fee of 696 x 80% = 4.8% of the estimate of construction cost, consisting of the following: 3~ ~, ~~, ,~...~ ~r,~ ,~.. ~, ~ A~,~`"~,~^„~ ~ 1r ~''~ ~~~ ~ ~ ~v Base Bid Estimate: Add Altemate No. 1: Add Altemate No. 2: Add Altemate No. 3: Add Altemate No. 7: Add Altemate No. 11: $21,112,634.00 988,271.00 849,921.00 156,719.00 16,222.00 273,423.00 $23,397,190.00