Chapter 11, Contract Administration. Contents, we're gonna talk about general information,

administering construction contracts, administering non-construction contracts, contract

modifications, contract claims, and contract termination. Contract Administration refers to

everything that you do with the contractor. If it's a contractor, it means you have a contract and

everything you do to ensure that the work is performed properly, and that you have received

everything and that therefore, you can make payments, whether it's an end payment, or it's a

phased payment. It's everything you do. When I was young, there was a great song that I

really enjoyed. And I call it my contract management song. I'm not gonna sing it. (laughs) I'm

gonna rap it. (laughs) No, here we go. Smiling faces sometimes pretend to be your friend.

and put into every contract for construction. It's the 5370, which has requirements in it. For

non-construction, it's 5370 C, sections one and section two, depending on the contract type.

And for small construction or development, it's a 5370-EZ. Again, I put these in the bid or the

quote, so that contractors know what they're gonna have to sign, what they're gonna have to

agree to. Administering construction contracts. The contractor is fully responsible for

completing work within the time and within the scope of the work. The PHA is responsible for

monitoring the contract to ensure that the work is completed as scheduled on budget and

within the all of the quality standards, that's your responsibility. Well, Mike, if the contractor

don't do it, we do it. Well, that's a problem because that can void your warranties. The

contractor has to do the work, you're responsible to make sure they do or you don't pay them.

We discuss everything, timeframes, when they're gonna start work, when they're gonna

complete work. Oh we listed in the bid 120 days, now, maybe the bid got delayed so long that

now weather it's gonna affect it, and we may have to change that a little bit. Typically, that's

because of our fault, not theirs, maybe, but not always. We're going to as a result of the pre-

construction conference issue the notice to proceed. Now remember, a notice to proceed is for

construction only. We don't issue notices to proceed for landscaping, annual audit, legal

services. In those cases, the contract itself executed is the notice to proceed. 'Cause we write

in it, it's gonna start on this date and the other. But we do notices to proceed for construction

because many times the construction or rehabilitation work is tied to rent loss, meaning we've

got units out of commission so we want a time and date certain to begin work and to end work.

little or no risk. What am I going to deduct from that payment for the bonds, retainage to

retention. I remember once I had a 300 unit complex, it was done, and they had to put a fence

up all the way around it to protect the safety and welfare of the public. Everything was gonna

be rehabilitated. Another time everything was gonna be demolished. That fence going up cost

them 20-$30,000. I can pay them for the fence because I have the fence there. And if they

walk off the job tomorrow,

I have paid for the fence so I simply call the provider of the fence and say, leave the fence, I'm

taking it over. This is very typical and common. They might move trailers onto the site, Porta

Potties. They might during the performance of the contract store materials in a safe place. Now

for me, I had a warehouse, five acre complex, 30,000 square feet in the building. Outside I had

storage areas, 14 foot walls, razor wire, very secure, cameras, roving security, if they bought

300 tub and shower, surrounds, cast iron, the faucets which are very expensive, you know, for

want 50% mobilization." And I said, no, we don't do deposits. She goes, "Boy, you don't know

how we do stuff in Georgia. "And this is the way we do it. "I want 50%. "I got it from this

housing authority, "I got it from that one." We wouldn't do it. Of course not, it's a deposit.

We don't give deposits. We only pay for stuff once it's been received. Got it? Yeah. By the

way, you buy new software, they're gonna want 50% down, don't do it. I tell them right up in

the bid, we don't do deposits. But we will pay for mobilization. So when I bought a new system,

a new computer system with the software, and they said I can't order them, all of the hardware

without the money. I said, here's what I'll do. Y'all have it delivered here and I'll have a check

ready. And if you come check it all in and verify everything's there while my IT people were

how often you're gonna have a progress meeting, weekly. With small projects, how often you'll

happen? well, I don't know. Depends on how long it's going on. But what I do know is you're

gonna have inspections every day. Every site with construction or major rehab, which is

construction, has to have a site visit every day. How long you're there is gonna determine how

the work is progressing and what you need to see. I built four high rise buildings.

I'm telling you right now I am not a construction expert. But I built them, I was the Construction

Administrator and I volunteered to do it my authority under the guidance of some other people

so I could have this experience. And the more I learned, the less I knew. The more I

discovered I did not know. Yeah, it was a big job. Now, you're gonna expect the site, some

the pad the proper thickness in the outside, but they slowly crown it up on the inside, so that

they can save money on concrete and give you a shorter pad in the middle. On one occasion,

we threw the laser and he was crowning the pad. Where we knew, the guy I was with could

cite it, he could see it, he goes, "This pad is crowned. "Let's do some site. "Hey, come over

here," he told the guy, and we started throwing the laser and the guy goes, "Man, I don't know

how that happened." Well, we know how it happened. He was hoping we wouldn't do it. We

measure the footings. See if the footings are proper. and what am I looking for the next

morning in the concrete pour? I'm looking to see if they're shaking the steel, you know the

rebar, shaking it to bring it up so that it's in the middle of the pad, and they don't just leave it

laying on the bottom, which a lot of lazy contractors do. So we're there on the site at certain

times. We might be at their top out times. Just you decide when to be there. What am I also

doing completing every inspection?

inspected and a report made. You have labor standards. Again, you have to ensure that you

do the on site interviews, you have to ensure that labor standards are all being met. That is

your responsibility to, it's their responsibility to pay the rates, but it's your responsibility to follow

up. You can make progress payments, we do it with construction. I have some people say not,

anything less than 100,000, I'm not gonna pay them at the end, that's not even fair.

Contractors have payroll to make and if you hold all payments until the end, they're gonna give

you higher bids. Why? 'Cause they gotta go borrow money to make their payments. No, make

phased payments to folks, be fair to them. The more you cooperate with contractor on things

you can cooperate with, the better work they're gonna do. That's my recommendation. I want

to encourage the contractor to perform by being as fair as possible. Remember, they're in

two, I will change the actual invoice. Never do that on construction. Make them redo. No

handwritten, make them redo their payment request to make sure that they're exactly properly

written the way they're supposed to be. They're required to do the documentation and to do it

properly as we talked about. We would always have our retained architects sign off on all pay

requests that they also agreed. You've got the form 51, schedule amount for contractor

payments, make sure all the paperwork is signed, prior to issuing a payment, look at

everything pertaining to it, everything, make sure all the paperwork is done, make sure the

work is done. HUD kind of repeats itself during this and so do we, but it's for a reason that the

request does not include an amount to retain by the PHA. Now, we always have it listed and

it's in a minus. We always have it listed on the on the pay request. That's what I do.

submit their request 10 days ahead of time. Good luck with that. Yeah, 'cause they're hoping

always to be able to catch up. And they just don't. If you get it, a request for a time extension,

but you're not yet ready to approve it, just acknowledge receipt, thanks, we'll take a look at

this. I'll let you know tomorrow. Consult with all the parties involved before you give extension.

Remember, most delays really are caused by the contractor. However, if we feel that giving

them an extension will get the work done and we're not gonna have to fight about stuff we

sometimes will approve them. I just wanna get the job done at this point. Completion of work

and closing. Contractor will provide written notification in the housing authority, all work is

complete. By the way, we conduct the walkthrough and do the punch list. It's not ever always

completed. Seldom is it ever completed. I can't remember a time when it was. After they've

completed the punch list we'll go and look again. If there are any deficiencies we may write

them up again. Well, you know what, if you'll just give me my retention now I promise I'll have it

done by next week. Does that work? No. Everything has to be documented in writing, there is

guy wants his retention and I have not given it to him "because there is one payroll report from

one subcontract "that was never turned in." What was my first thought on that? How'd you let

that happen? You ain't supposed to make a payment unless every certified payroll is there.

How did you do that? He goes, "Well, we don't know, "it just kind of slipped through." Well, that

ain't good. By the way, how much is the retention? $92,000. My goodness, this is a million

dollar bid almost. And he wants it. How long has this been going on? "Well, he finished work

about eight months ago." What have you been doing? Tell me how this has progressed. He

goes, "We keep asking for the payroll "and he keeps saying he can't get it." You know what I

say get your ED and your attorney. Bring them to the phone. I told him, listen, you guys are

making your own decisions but my recommendation to you is you self report yourself to HUD.

everything and he says, he ticked me off. I think he cut some of his pay back and the guy

wanted more money or something. You know, the Housing Authority got put on zero threshold

with their development stuff for a year. They were lucky they didn't take money away.

They were lucky that HUD didn't punish them further. And by the way, I got a call from him six

months later, and they said, "We've been really working hard "to do everything right in line and

HUD released us "after six months and said, never again." They all got closed out, but eight

months, no, no, no. Final payment, you're gonna have a certificate of occupancy if applicable.

You're gonna have a notarized statement that all bills been paid, you're gonna have lien

releases, you're gonna have all that paperwork done. But remember, if paid wages, there's no

responsibilities or work to do pertaining to it. Prior to any warranty expiration, you're gonna do

an inspection and make sure everybody's in agreement that everything's okay. It is the

contractors responsibility to address any faulty equipment or poor workmanship. But again, if

you wait for a period of time, it's problematic and you may have waived your right to be able to

go against the contractor. And here's the other issue, what if the contractor is out of business,

then you only have the equipment warranty to fall back on. Or perhaps you could make a claim

against their performance bond, perhaps, but probably not 'cause you waited too long. Non-

construction contracts are administered in basically the same way as construction.

You gotta walk the site for lawn cutters. For pest control, you gotta have people accompany

them. You've got to ensure all the work has been done. Non-construction is done in basically

the same way, just not so organized. For instance, when we started with new lawn cutters, my

people would go inspect the sites, the first four or five times with them, walk with them, when

who kept missing dates for pest for doing it, and the staff weren't even informing the housing

authorities and suddenly they're getting complaints from residents, and the staff said, "You hire

crummy contractors, they're not showing up." Purchasing manager said, "Did you ever tell

me?" Well, they didn't. With email, all they have to do is send email say, they didn't show up

today. See what I mean? Jump on that stuff right away. You may do a great bid, carefully

planned solicitation but if you're not doing the contract administration, you're gonna run into

problems. For non-construction contracts we don't have a pre-construction conference we

have a post-award conference. However, let me tell you when I do this, when I'm going to

execute the contract with them, and actually, I had an administrative assistant who did a lot of

this. We will sit with them go over the contract one more time, see is everything in order.

But typically, I have word I use when they're asking for changes. No, should have all been

brought up way back when. Well, you know, we'd really like to negotiate now and I'd like to be

president. It's not gonna happen. If you wanna negotiate now I'm gonna go to the next rated

firm. I'm doing this in Alabama, the Housing Authority now, we just told them, that's it we're

leaving. They didn't believe we would do it. In fact, they said as well, we understand and we

really want these changes. So we sent them a notice of termination of award. And we signed

the other contractors 'cause they were ready to go and this other people said, you know, a

couple of days later, they said, "You know, we decided we're gonna let go that, "that's their

negotiation." We go well, we already terminated your award. "I can't believe you did that." Well,

we did. I Guess they learned, didn't they? Any changes to a contract must be authorized by the

services, such as lawn cutting, it's their invoice and whether I sign it or not. Their invoice must

have the contractor P.O number, description of what's been done, the dates, the receiving

official goes on it by signature and the date that it goes on. They're also signing for the

inspection official. And if we are rejecting it, I will many times write that in an email to attach if

there's any partial exceptions, where I'm going to reject anything, I do the receiving report by

email. You must always monitor contractors, even as you're making face payments, don't be

lulled into they've done great before, it must be okay now. You must enforce all of the

requirements of the contract You must enforce all of the requirements of the contract including

the scope of work. You have the right to inspect.

Of course, you have the right, it's your site. You can at any point reject any amount of the

work, require a correction, conditionally accept, but remember, if you reject or require

correction or conditionally accept, you're not gonna pay them till it's all done. If you do not

says, "I'm not gonna agree to that." I said, then you're not gonna get the contract. He goes,

"Well, if you got it, I need the right "to issue contract change orders to you "and you have no

right to reject." I go, no you don't. He said, "Why?" I go, 'cause it's the golden rule. I got the

gold, you want the gold, you're gonna go by my terms and conditions as written in the bid in

the contract or you're not gonna get it at all. And by the way, when this contractor got that

aggressive, the executive director afterwards says, I don't wanna award to these folks. "He's

trying to dictate to us how we're gonna do our job." And because of a different issue we

eventually did not.

Remember, change orders must be in writing, must be described the change in full, whether

change orders without documenting them. And we ascertained that those came up to, I'm

gonna make a guess, $18,000. And we had to do it because the work was done, it was all

there, all the claim was there, work was done. We reprimanded the folks you know, warn them,

give them written warnings. But I had to pay 18,000. However, the other 15,000, I could not

find or justify. He says, "I want that money, I did that too." I said it was part of the work or

something like that. And he says, "No, I want that money "and I'm not gonna accept $18,000.

Well, we have to do this in 60 days concluded, and he did not accept it. That's fine. I issued a

complete written response to his, said what we agreed to and why, and what we did not agree

to the 15,000 and why and I sent him the checks certified mail for $18,000. And it said at the

bottom payment in full. So he was mad. He took that check, he scratched out the payment in

modifications, it will have them listed. Woe to you if you don't have PHA as a modification

register. Woe to you if you have one it's blank and you did modifications, 'cause you'll open up

an audit seeing what else you're hiding. Construction modifications are very problematic,

okay? Contract claims. Anytime somebody is upset with you, they may make a claim. The

claim may or may not involve money.

However, the claim means, I wanna be released from these conditions, I don't agree with

these conditions, whatever. Whatever people write, even if you think it's funny, even if you

think, excuse me, silly, you have to address it. And when you address it, I wouldn't say, well, it

was silly, I would say, we do not agree with your claim. You know what I mean? The main

thing is, everything has to be addressed. You're required to have procedure, if you will, in your

policy, a section that addresses how you will handle disputes and claims. I have that in mine.

those informally, I don't say a thing, I leave them alone. Yeah, I've handled it. I don't know what

I'd say if I went to court, I'd probably say, well, I just didn't feel it was something I want to

address. What I'm saying is, you handle them informally by responding by email. If they still

press their claims, you may get to the point where you need to send a certified return receipt

letter, you know, where you say, this is how we're addressing this, we're done. Just remember,

you're in charge of your contracts, not them. Contractors are not in charge of us. We're in

charge of our contract and our work. So you decide how you're gonna do those things. My one

point about disputes and claims is don't ignore them, conclude them. You might even ignore

individual points and not respond to it but overall, you're gonna respond to the claim for the

points that you wanna make to them, this is what it's going to be. Contract claims continued.

the pertinent contract clauses. Now in the case of we were agreeing with him on some of the

verbal change orders, I just said we agree. Those should have been addressed and here's

what we've decided on those issues, and here's your money. For the items that we did not

agree with, I would probably reference some contract clauses saying, you should have brought

this up before, that would have been the proper procedure, we've inspected this and we can't

find anything to support your claim. But I do it all in detail. So that what's done is, I don't want

to use phrases such as, we have decided it's in our best interest not to pay that. No, you have

to explain why. No, people do that, because they don't like conflict. And they think that that will

decrease conflict by not telling them fully what they want. You know, the reasoning? No, you

tell them, it creates more conflict. Statement, any factual errors of agreement or disagreement,

have a left hand column on her form that she put in the file, sometimes it's just a legal pad, and

she put the date and time, who she talked to and what was discussed. She's got those one

after the other. Sometimes I come in and say, Linda, have we had any correspondence with

this contractor? She may say I think so, but she would reach over to her file, pull out that

contract, go to her notes write about, oh, yes, I remember now I talked to them. Written notes

are invaluable, invaluable for that. And you know, right now in the all the silliness that's been

going on for the past three years, there's a lot of people, former FBI directors and everything

that are referring to their written notes. Those are invaluable. Problem is, if you actually write

the written notes when you write them, that's good.

But if you try to recap them later, which one person was just caught doing, he wrote the date

and time, but that person did not actually write those notes down that date and time, they wrote

them later, based on their recollections, which destroyed his credibility for all he talked about.

and then I go back to the email, respond to them and up in the thing I put in all caps in the

subject line at the end of their thing, Gifford response. And then I recap the substance of the

things, especially things that I told them to do. Those have been invaluable for me later, when

they said, you never told me that. I go, go to the notes I sent you. And they go, oh geez, you

did tell me. Invaluable. And I've learned that over the years because I'm not able to prove that I

told somebody something, I may have to refund money, because I can't prove that I was not at

fault that it was them at fault.

That's important stuff. Photographic evidence. (imitates explosion) If you have it. Permit

history, meeting minutes, PHA meetings, we seldom keep minutes. But if you do, they can be

relationship with them. You know, kind of a related thing, whenever somebody calls me, and

they have me on speaker, I go, am I on speaker? Yes, who's in the room? And then I'll make

notes of who they said was in the room. You don't know how many times I've been ambushed

by somebody saying, well, I don't agree with that. I go Who is that? And I said, you didn't tell

they're in the room. He goes, well, he ordered me not to. And I go, I'm done with you people.

Boom, I'm out. I can't trust you. But don't tape contractors without them knowing, it just won't

go well for you. It just doesn't sit right. Two types of contract termination, for convenience and

default. Now I said we were gonna re address this right here. Okay. What you have here is a

one plus on everything, right? We can only terminate for two reasons, convenience (scribbling)

and cause and causes also known as default. Now, termination for cause is real easy. We're

was unsatisfactory, it means that it was satisfactory enough to pay them, right? So if you're

having problems with a construction project, you have to tell them, you must cease work and

correct this item right now. That's the only way you can keep from paying because it's

incomplete. That item, okay? So we owe them money for what they've done up to that point,

and that's what we owe them. And we don't owe them for anything less if we terminate for

cause, we don't owe them any portion of the unpaid money. However, termination for

convenience, which is in the HUD forms and is required to be issued as part of every contract.

Termination for convenience means two things. You no longer have money to pay them, or

you no longer need the work done. Those are the only two conditions you can terminate for

convenience. You've run out of money to pay or you no longer need a contractor to do the

work. If you terminate a contractor for convenience and hire another contractor, you are not

terminating for the convenience. What were you terminated them for? Cause, but you didn't

terminate them for cause because you don't have the proper contract administration

Stay with me, do you want to pay them profit for a portion of the year or for all of the years?

Now remember, options to renew are not yet awarded so therefore, they do not pertain to this.

So anytime my clients who ever terminate for convenience, they're only gonna have to pay lost

profit for a portion of a year. If you sign a contract for three years, and you wanna terminate for

convenience before the second year, you're gonna have to pay him lost profit for two years.

Remember, not awarding an option, not awarding this option is not a termination, it is simply

letting a contract expire. I've had people come to the board and go, "He terminated me for no

good reason." And I said, we didn't terminate this contract. He goes, "Yes, you did. "You did

not renew the option that's a termination." And I said, no, it's not. And the attorney goes, "No,

it's not. "We simply did not renew the contract." I wanna know why. I've already told you why,

year, and you're awarding all task orders as they occur, right? And the contract is not to

exceed 20,000. Well, let me tell you what I did once. I had one for a flooring guy like a

plumber, where the contract was not to exceed 20,000. But we just didn't have that many

issues and at the last year of it, we had a lot of money left over the not to exceed amount.

Well, he didn't want 10%. We added the 20,000, if I remember correctly, we had spent 9000

and there was 11,000 left. So he booked a vacation to Hawaii and gave me a bill for $11,000.

He said, "That's my money." And I said no, that's a not to exceed amount. You don't get that

money 'cause I said I would only award contracts based on task orders. And I just can't exceed

that amount without changing the contract amount. You should have seen the look of terror on

his face, like my check is gonna bounce, my check for Hawaii, "I need that money now, my

does not mean that the work has been assigned. It's contract terminations. If you terminate

somebody, send a written notice by certified mail. What I do with every certified letter is I take

the letter and I do it 'cause it looks official and it is official. And they almost always reject the

letter. They just won't pick it up or won't receive it. That's fine, I've already sent them to them