Moyie Springs questions additional engineering fees

MOYIE SPRINGS — Moyie city councilors had heated words with Keller Associates, an engineering company tasked with working on a city sewer project, regarding additional costs for services and payment already rendered. The exchange took place at a special meeting Oct. 4 prior to the council’s regular meeting.

Present were the council, city attorney, sewer committee members, Nancy Mabile with the Panhandle Area Council, and Keller Associates president, vice president and project manager.

Due to changes in the project planning stages, Keller Associates had to redesign the fundamental plans. They requested additional funds of approximately $386,685.44 for “unforeseen inflation of construction costs,” additional engineering planning and work already completed and paid for.

The original lump sum agreement for the sewer project was $673,133. Now Keller has requested a total of $1,066,618.44 for an adjusted agreement amount and increased the cost of line items after the original agreement and services rendered.

Completed projects such as preliminary design phase increase, originally at $156,773, and final design phase increase, originally at $252,290, have increased to $186,773 and $250,419 respectively.

Keller also back dated this proposed amended agreement to June 18, 2020.

In 2019, the city went out for a $3 million bond to cover the project in full. Now the project is estimated at $7.5 million. Keller Associates redesigned the sewer project plans after the city removed a few buildings from the project.

Jim Mullen, vice president of Keller, said the additional cost was due to the scope of the project changing and that two designs were created for the project.

Members of the city council likened the request for money to a shakedown from Keller, now that the city has received additional funding and taken on debt from multiple state agencies in order to pay for the project that has now risen to more than double the original cost.

Merideth Keller, a member of the Moyie Springs sewer committee and not associated with the engineering company, asked how removing two to three buildings from the design nearly doubled the cost of the project.

David Sims, a member of the sewer committee, was part of the negotiations at the meeting.

“You’re treating things in the contract as being variable cost items, they are not,” Sims said. “You agreed to a lump sum payment.”

He added that Keller’s way of requesting additional funding was out of order, as they did not go to the council directly.

“You know no person in this room can approve a change order,” Sims said, adding that the council must meet on such requests.

He asked how changing a few items on the overall project caused Keller to redo the entire project and charge the city twice the original cost. Sims also questioned, why didn’t Keller inform the city of the added cost in advance and seek an amendment to the contract.

“I agree with Nancy [Mabilel] this is a gray ethical area,” Sims said.

“You want DEQ to pay you out of the funding they are giving to us,” said Terry Johnon, Moyie City councilor. “But our project will fall short. So you want them to pay you, not us.”

Sims said the 10 to 15% increase in engineering Keller was proposing was a slight of hand and would cost the city an additional $100,000 out of pocket. Approximately 100 city sewer rate payers would have to pay the bill if the council approved Keller’s proposal.

“As a small community and non-professional council persons the only persons and parties in this room sophisticated enough at this kind of this is Keller,” said Jeremy Featherston, Moyie Springs city attorney.

Featherston said, given Keller’s size, it’s likely they’ve had to redesign engineering plans before.

“This process is not new, this is what you do [build sewer systems],” he said.

While COVID-19 and supply issues affected projects, city officials said they were baffled that the company would ask for additional approximate $400,000 for work that had to be done.

“In your initial presentation you say, if the city doesn’t pay the additional cost then DEQ can pay,” Featherston said. “Not if it takes away from funding for our project. I cannot recommend as legal counsel that the city is obligated to pay that.”

“What you’re asking is almost nonsensical for a job rendered and already paid for in full, now you’re doubling the cost,” he said.

Project manager Kyle Meschko admitted city officials should have been notified earlier of the increased engineer costs but argued that he was trying to get a lot done as the market was shaking up in 2020.

New Moyie Springs Councilor Pat Stevens asked why the city was never notified during Keller’s quarterly project reviews.

Councilwoman Deborah Rauth agreed, noting that when the project was started, the council requested regular updates.

“I asked for an update in August and got a response in March the next year,” she said.

Communication was so bad that Sims said city officials called Keller to see if the project manager, the city’s only point of contact, was still employed.

“How are we to feel comfortable when the lead engineer has zero communication with us,” said Mayor Geoff Hollenbeck. “We had a complete lack of communication from November to March.”

Hollenbeck said the city was going to get Featherston involved and write a letter to Keller to express their concerns.

“This can’t be how you operate, or else you won’t be in business,” he said. “Six months, no contact is inexcusable.”

Johnson said the city barely makes their budget every year and it would be easier for Keller to absorb their costs than for the city to pay money it doesn’t have for work that has already been paid for.

“The city has to be a good steward of its citizen’s funds. If Moyie pays you $300,000 extra then citizens are on the hook for that cost for 30 years,” Sims said.

The sewer project bid was based off of a lump sum which entails all the work will be done at the bidded price.

Mabile said she’d never heard of a company coming back and asking for more money for engineering costs after work had already been paid for and completed.

“I find it unethical,” she said.

The council said Keller could reach out to DEQ for additional funds to cover engineering costs, but that it is contingent that DEQ does not reallocate funding from the city to the engineering firm.

Mullen said that, going forward, Keller will be more responsive. He added that he and company president Larry Rupp will be in contact with Moyie Springs going forward.

He admitted that Keller has no grounds for a lawsuit against Moyie Springs if they refuse to pay additional costs.

“We’re going to be better,” he said, adding that the miscommunication should have never happened.