COUNTY OF SAN MATEO

Inter-Departmental Correspondence

County Counsel

DATE:

June 12, 2003

BOARD MEETING DATE:

June 17, 2003

TO:

Honorable Board of Supervisors

FROM:

County Counsel

SUBJECT:

Execution of Amendment to Agreement Between the County of San Mateo and Farella Braun & Martel

Recommendation

Approve a resolution authorizing execution of amendment to the agreement between the County of San Mateo and Farella Braun & Martel.

Discussion

At the completion of the construction of Phase IV of the County of San Mateo Health Center, legal disputes arose with Neilsen Dillingham Builders, Inc. (NDBI), the County's Construction Manager, for which it was beneficial to consult with attorneys specializing in construction litigation. Your Board previously authorized an agreement with the law firm of Farella Braun & Martel, and, in particular, Alan Harris of that firm, to provide such expertise.

The financial disputes with NDBI which had remained unresolved included County back-charges against NDBI, payments owed to trade contractors and liquidated damages for late completion of Phase IV of the project. Farella Braun & Martel represented the County throughout the negotiations with NDBI on this matter, and an agreement with NDBI was reached and approved by this Board. This agreement resolved many of the issues and protects the County from lengthy litigation and additional lawsuits by trade contractors. This agreement also established that the County's claim to back-charges and liquidated damages would be determined by arbitration. This matter has been complicated by the bankruptcy of Dillingham, requiring appearances in bankruptcy court and arbitration is scheduled for this summer. Costs to date under the agreement with Farella Braun & Martel have been $400,000, the maximum amount of the contract, and there remains the cost of the arbitration. This amendment would therefore raise the maximum amount payable under the agreement from $400,000 to $600,000.

Vision Alignment

Goal 20 - Government decisions are based on careful consideration of future impact, rather than temporary relief or immediate gain.

Fiscal Impact

The agreement limits the fees to $600,000, unless this Board authorizes additional payment. These payments are made from the proceeds of the 1994 Series A Health Center bonds.