SUBJECT: RESOLUTION AUTHORIZING AWARD OF A CONTRACT TO RAY'S ELECTRIC FOR THE CONSTRUCTION OF BULBOUTS ON GRAND AVENUE (PROJECT NUMBER G170430) IN THE AMOUNT OF THREE HUNDRED THIRTY-FIVE THOUSAND NINE HUNDRED THIRTY DOLLARS ($335,930)

PURPOSE AND SCOPE

In accordance with the Measure H Charter Amendment, which was passed by the voters at the General election of November 5, 1996, we have made an impartial financial analysis of the accompanying Council Agenda Report and Proposed Resolution. The purpose of our analysis was to evaluate the reasonableness of the proposed contract award.

In making our analysis we also obtained and reviewed a copy of the Notice Inviting Bids, as advertised in the July 20, 2003 edition of the Oakland Tribune, and held discussions with Public Works Agency staff.

Since the Measure H Charter Amendment specifies that our impartial financial analysis is for informational purposes only, we did not apply Generally Accepted Government Auditing Standards as issued by the Comptroller General of the United States. Moreover, the scope of our analysis was impaired by Administrative Instruction Number 137, effective May 21, 1997, which provides only (1) one week for us to plan, perform and report on our analysis.

SUMMARY

According to the Agenda Report, the proposed work consists of the construction of bulbouts and street medians, which, in general, includes structural excavation and backfill, sidewalk, curb and gutter, drainage, street medians, traffic signal modification, asphalt concrete and traffic control work along Grand Avenue (between Elwood Avenue and Lakeshore Avenue) and along Lake Park Avenue (between Grand Avenue and Lake Park Way).

PROCUREMENT PROCESS

On July 20, 2003, the Oakland Tribune published a Notice Inviting Bids for the project, but only one bidder responded:

Company	Amount
Ray's Electric (Oakland, CA)	$335,930

Since the sole bid of $335,930 was $104,985 (or 45 percent) higher than the engineer's estimate of $230,945, we discussed this matter with Public Works Agency Staff. They told us that (1) the engineer's estimate for the project was based upon the best information that was available at the time; (2) additional work was added at the late stages of project design development; and (3) in retrospect the engineer's estimate could have been higher. Agency staff offered to provide us with a reconciliation of the differences between the engineer's estimate and the sole bid, but we had not received it as of October 17th.

FISCAL IMPACT

Funding for the $335,930 is available in the Capital Improvements fund (5500); Organization 92242; Construction Contract Account 57411; Project G170430.

CONCLUSION

In the absence of a reconciliation between the engineer's estimate and the sole bid, we draw no conclusion and make no recommendation.

Prepared by:

Jack McGinity, CPA

Issued by:

Roland E. Smith, CPA
City Auditor

Report completion date:
October 17, 2003

Report Number:04-040