HomeMy WebLinkAboutR-81-0074"SUPPORTIVE
D,, S
F�/LLOW"
RESOLUTION NO. Q 1. " ( 4
A RESOLUTION AUTHORIZING 'fill: DIRECTOR
01' FINANCE TO PAY LITTON OFFICE: PRODUCTS
CENTERS, A DIVISION OF LITTON BUSTNESS
1;YS11E:M1,, INC:. , d/1) CF.%TRAL STAT10NERS,
WITHOUTTill; ADMISSION OF LIABTLITY,
AN AGGREGATE SUM UP TO THE MAXEMUM OF
$561, 805, T11CLUS U E Of
IN FULL AND COMPLETE SETTLEIMLNT OF ALL
CLAIMS Ai,:D DEMANDS TN CO; JUNCTION •.ITII A
LAI:SU IT I;:VOI.V LNG TIIE ACQU CSI:TION OF
OI'I'i C1: B1' THE CITY, CONDITIONED
UPUN V►)LU;:TARY DIS'NISSAL VIT.TH PREJUDICE
OF TIIE L:1!:SUI'I', AND COMPLIANCE i4l"i'll OTHF.E;
TERNS.
!tiHEREAS, the City of. "Liami, throu;:li its attorne.:s,
filed an action for Declaratory: Judgment against Litton
Office ProdULLS Centers, a division of Litton Business
Systetrs, Inc., d/b/a Central StaL Loners (herei.nafter
called "L.i.tLon"); aild
!•;iiEREAS, Litton :answered said action and filed counLer-
claims dumandiia;:; prav:aent for delivered furniture, rent,
storige cost, trans,►orLatlon, interest and attornev's
fees; and
WHERE:AS, ,after invcstit;ation by the City X;ana or and
with the concurrence of the City Attornev, it appears that
it would be in the hest interest of the CiLy to settle
this case_ in an at,;ount up to a maxi.P.aura of. $561.,805;
NOS;, THEREFORE, BE IT RESOLVED BY THE CO:I'MISS10N' OF
THE CITY OF MIAMI, FLORIDA:
Scotion 1. 111e Director of 1'.inancc is hereby author-
ized to pay to Litton Office Products Centers, a division
of Litton Bus.inoss Systems, Inc., d/b/a CL'ntral Stationers,
without the admission of liability, an ag ,rogato sung up to a
maximum c) $561,805 in full :and complete settlement of all
claims and demands against the Cite of Miami, involving tlae
acquisition of off icki furniture pursuant to Purchase Orders
Nos, 23003, 23004, 23o05, 23606, 23607, 23608 and 2.3609 and
including :any and :all changes to these purchase orders
previously made by tho City.
"DOCUMENT INDEX
ITEM NO. `L, 2
CITY Ct MMISSiom
VIES S ING O
'C
MOLUTION
....
Section 2. Said payment shall be disbursed in such
amounts as approved by the City Manager. The settlement
shall provide for (a) the execution and delivery of a Notice
of Voluntary Dismissal With Prejudice of the Complaint and
Counterclaims; (b) the execution of an agreement by Litton
to deliver and install the remaining undelivered furniture;
(c) the execution of an agreement to replace and repair all
damaged or defective furniture; (d) the execution of an agree-
ment to extend full warranties on the furniture; and (e) the
execution of an agreement to execute a general release from
all. other claims, including, but not limited to, the demand
for rent, against the City, its officers, officials and
employees.
PASSED AND ADOPTED this llth day of February, 1981.
MAURICE A. FERRE
----' ATTEST:
fi A L PAi G. O N G I I;-
CITY CLERK
G/
PREPARED AND APPROVED BY:
J0AN J. COPELAN,,JR.
ASSISTANT CITY ,ATTORNEY
APPROVED AS TO FORM AND CORRECTNESS:
OBERT F. CLERK
ACTING CITY ATTORNEY
-2-
"SUPPORTIVE
DOCU I'� � E [}ITS
FOLLOW
81 -74 1
-,'!Ty of 'AIANII. t 1.(DF,:PA
INTZP-CIF- ICE MEMORANDU�A
Mayor Maurice A. Ferre and February 5, 1981 r
Honorable Members of the
City Commission Commission Agenda of
1/15/81 - City Clerk
Reports - M-81-18
Robert F. Clark City v. Litton, et al.
Acting City Attorney
A proposed resolution authorizing settlement of the claim
by the above furniture manufacturer was deferred from the
January 15, 1981 meeting and is rescheduled to appear on
the February 11, 1981 meeting. The matter had been deferred
pending results of a hearing scheduled for February 2, 1981
which hearing has been rescheduled by the Court for Febru-
ary 9, 1981.
Accordingly, there will be no report available prior to the
distribution date for the February 11, 1981 Agenda material.
We will have a current and updated report on the hearing
distributed before the meeting of February 11, 1981 if
the ruling of the Court is known by that time.
RFC/rr
cc: Richard Fosmoen
City Manager
Angela Bellamy
Assistant to the City Manager
John J. Copelan, Jr.
Assistant City Attorney
r-;
o
-
c.
DOCWIF�, rS
FLLOWIP
11
47
tNT=R•�;FF'ICe ?-i�!��CJ�7i+��CIJ'•i
2'
Richard L. Fosmoen
City Manager
Howard V. Gary
Assistant City 0anager
December 30, 1980
City of. Miami vs. Litton/Central
Office Products
The above -mentioned suit arose from the adoption by the City Commission on December 5,
1979 and January 10, 1980, of Resolutions 79-840 and 80-10 which authorized the City
Manager to enter into contractual agreements with Central Stationers, Inc. (now
Litton/Central Office Products) for the purchase of furniture to be placed in the
new City Administration Building. Subsequent to the adoption of the above resolu-
tions, an error was discovered in the advertising for the bid; succinctly, the
substitution of the bid opening date being used in place of the advertisement
publication date. This error of dates led to the City Attorney's opinion that the
acceptance of the bid of Central Stationers, Inc. was not a valid act under City
Code Sections 16-20 and 16-21 and the Florida Statute 50.031.
As a result of the above disclosures, on August 15, 1980, the City Manager notified
Central Stationers, Inc. of the error in bid advertisement and the instructions to
the Purchasing Agent to withhold payment and to accept no further deliveries of
furniture or equipment. Central was also notified that they could take possession
of the delivered items, if they so desired.
In an effort to establish and resolve the status of the furniture, a Declaratory
Judgement was filed on behalf of the City of Miami in Circuit Court. A Declaratory
Judgment would enable the City to make payment on the invalid contract and receive
the balance of the items. However, as was anticipated,_counterclaims were filed
against the City for the amount of the contract by Central. Stationers. It now
appears that in order to resolve this matter in a manner that would be favorable
to the City, a settlement should be negotiated.
Central through their attorney, Mr. William C. Frye, has proposed three alternative
positions they would be willing to accept. Proposal I requires a payment of $513,349.
This would enable the City to retain the furniture in place, with no warranties
concerning the furniture. The breakdown of the $513,349 is as follows:
$442,448 Amount of furniture in City's possession;
46,000 Rental of furniture at $400 a day for the period August 18, 1980
through December 10, 1980;
3,901 Storage of undelivered furniture at $917.91 per month through
December 10, 1980;
6,000 Demurrages and miscellaneous expense; and
15,000 Attorneys' fees.
$513,349
1
«s, P TlVE
QL_t F.J1 V
t,
t
Richard L. Fosmoen
December 30, 1980
Page 2
Proposal I1 requires a payment of $561,901. This enables the City to retain the
furniture in place, and the balance of the furniture to be delivered upon payment
of the amount above stated. Using the previously employed figures for rental,
storage, miscellaneous expenses and attorney's fees plus the contract price of
$491,000, produces a total cost of $561,901.
Proposal III requires all furniture to be returned immediately at the City's ex-
pense with the City to pay the rental to December 10, 1980 (or the actual date of
repossession). The City will also pay attorneys' fees, storage and miscellaneous
expenses. The City shall also enter into an agreement to pay the difference between
the contract price of $491,000 and such sum realized, after deduction of expenses,
on the sale of the returned and yet undelivered furniture. The sale would be con-
ducted in a commercially reasonable manner at the expense of the City and Central
would be permitted to participate in the sale. Under this proposal, the City is
to pay $70,000 and enter into the agreement concerning disposition of the furniture.
The disadvantage of this proposal is the cost of replacing the furniture, vacating
and reoccupying the building upon the removal of the furniture and storage and
rental expense of the furniture prior to its sale. Excluding any liability for
Litton/Central's attorney fees, these costs would total approximately $635,000.
As prices have escalated due to inflation since the awarding of the bid, it would
be more economically reasonable to consider Proposal II in which the City would
receive all furniture specified in the contract. In order to consider this pro-
posal, exact amounts as to furniture delivered and undelivered would need to be
calculated. To this avail, a walkthrough investigation was conducted by a team
of representatives from the Cite ofMiami as well as Litton/Central Office Products.
Based on their physical inventory and review of purchase orders, receiving reports,
etc., $441,361.21 of furniture has been delivered and $57,446.10 has not been de-
livered, totalling to S498,807.31. This amount represents the furniture under
litigation as specified on purchase order number 23603, 23604, 23606, 23607,
23608, and 23609 and includes an v and all changes made to said purchase orders.
After discussions with the City Attorney's Office, it is recommended that the
following counter -proposal in the amount of $550,524 be offered to Litton/Central
Office Products in lieu of a Court ruling.
$498,807 Full amount of furniture delivered and undelivered as above stated;
26,617 Interest paid by Litton/Central on $495,000 borrowed in the money
market for the period August 18, 1980 through December 31, 1980;
4,100 Storage of undelivered furniture at $917.91 per month for the
period August 18, 1980 through December: 31, 1980;
15,000 Attorney's fees; and
6,000 Miscellaneous expenses and delivery of furniture in stornge.*
$550,524
*The City will reimburse the lower of actual expenses as documented by Litton/Central
or $6,000, with $6,000 being the maximum amount reimbursed for miscellaneous ex-
penses and delivery.
"SU PPOVJIVE
4
AV
Richard L. Fosmoen
December 30, 1980
Page 3
In exchange for the above monetary settlement, the City will expect a voluntary
dismissal of the Litton/Central complaint, delivery and installation of the $57,446
of furniture in storage, repair and/or replacement of all damaged items, a full
warranty on the furniture, and a release of any liability on behalf of the City of
Miami, City Commission and City employees invloved.
It should be noted that the City earned $20,465 in interest on the $491,000 it
appropriated for the purchase of the furniture, thereby bringing the total
available to $511,465. A comparison between the $511,465, the three alternatives
offered by Litton/Central and the proposed City of Miami alternative is as
follows:
FUNDS
PROPOSAL
ADDITIONAL
PROPOSAL
AVAILABLE
COST
FUNDS REQUIRED
I
$511,465
$ 513,349
$ 1,884*
II
511,465
561,901
50,436
III
511,465
635,000
123,535
CITY
511,465
550,524
39,059
*As this proposal does not include the delivery of all of the remaining furniture,
the cost of the undelivered furniture of $57,446 adjusted for the approximate
price increases of 18% would add $67,7F6 to the Additional Funds Required Column
bringing the total to $69,670.
It is apparent that the City proposed alternarive would lessen the cost of the
furniture to the City imder the current circumstances. Additionally, the
City proposed alternative would enable the City to retain the present furniture
thereby avoiding any loss of manhours and/or productivity invloved in the removal
of the furniture from the Administration Building, relocation of the Departments'
staff currently occupying the Building, redoing the bid process, etc.
In conclusion, the proposed City alternative settlement as outlined offers a
reasonable, benet-i.cal alternative to the Cite in light of the circumstances
surrounding the purchase of the furniture from Litton/Central Office Products.
Therefore, it is recommended that the proposed settlement be offered to
Litton/Central. if the proposal is accepted by Litton/Central, legislation
should be prepared in time for the .Tanuary 15, 1981 Commission meeting.
/jr
cc: George F. Knox, Jr.,
City Attorney
Carlos Garcia
Acting Finance Director
6
a'
Richard L. Fosmoen
December 30, 1980
Page 3
In exchange for the above monetary settlement, the City will expect a voluntary
dismissal of the Litton/Central complaint, delivery and installation of the $57,446
of furniture in storage, repair and/or replacement of all damaged items, a full
warranty on the furniture, and a release of any liability on behalf of the City of
Miami, City Commission and City employees invloved.
It should be noted that the City earned $20,465 in interest on the $491,000 it
appropriated for the purchase of the furniture, thereby bringing the total
available to $511,465. A comparison between the $511,465. the three alternatives
offered by Litton/Central and the proposed City_ of Miami alternative is as
follows:
FUNDS
PROPOSAL
ADDITIONAL
PROPOSAL
AVAILABLE
COST
FUNDS REQUIRED
I
$511,465
$ 513,349
$ 1,884*
II
511,465
561,901
50,436
III
511,465
635,000
123,535
CITY
511,465
550,524
39,059
*As this proposal does not include the delivery of all of the remaining furniture,
the cost of the undelivered furniture of $57,446 adjusted for the approximate
price increases of 18% Would add $67,7F6 to the Additional Funds Required Column
bringing the total to $69,670.
It is apparent that the City proposed alternarive would lessen the cost of the
furniture to the City imder the current circumstances. Additionally, the
City proposed alternative would enable the City to retain the present furniture
thereby avoiding any loss of manhours and/or productivity invloved in the removal
of the furniture from the Administration Building, relocation of the Departments'
staff currently occupying; the Building;, redoing the bid "process, etc.
In conclusion, the proposed City alternative settlement as outlined offers a
reasonable, benefical alternative to the City in light of the circumstances
surrounding the purchase of the furniture from Litton/Central Office Products.
Therefore, it is recommended that the proposed settlement be offered to
Litton/Central. Tf the proposal is accepted by Litton/Central, legislation
should be prepared in time for the January 15, 1981 Commission meetitig.
/jr
cc: George F. Knox, Jr.
City Attorney
Carlos Garcia
Acting; Finance Director