Today's Featured Contract:
$6.5 Million to Nexus Partners
for design services
approved April 2012.
We'll start the new feature with a big one, the $6.5 million overall contract for the architects for the ECCL design process, Nexus Partners. Nexus Partners is an architectural/design team comprised of the firms MKThink, dsk, and Concordia. This contract includes 11% mark up for 'fixtures, furniture and equipment', meaning the architects will get money from the School District for every desk and chair and other equipment the District buys.
The early ECCL design phase was covered by an agreement made in January 2010 between the City, the former Redevelopment Agency, and the District called MOU #1. That agreement called for Nexus and other consultants to be paid $615,000 for architectural services for their work on the project during 2010 and 2011.
Under a subsequent contract, approved in April 2012 as part of MOU #2, Nexus will be paid $6,564,798. This 74-page document is notable for several reasons. First, on pages 3-9 it contains the architects "Conceptual Opinion of Cost" of the ECCL construction as well as the furnishings, fixtures, and equipment ("FFE"). This figure comes to $58,325,000 and does not include many expected costs, and mostly estimates costs based on expected costs per square foot, but it nonetheless provides the most detailed budget for the ECCL construction yet provided.
Also of note is what the document does not include. A detailed specification of what individuals will work on the design, at what rates, and for how many hours is not relied upon. Instead, the $6,564,798 compensation is apparently based on an 11% rate of compensation based off of the "Conceptual Opinion of Cost" of the construction and FFE costs.
Under a percentage-based compensation structure, such as this, one might expect that the arrangement covers every conceivable aspect of the design work. Not so. As was the case with earlier agreements with Nexus, numerous change orders have already been approved for additional work outside the defined scope of work, partially summarized here:
|01/19/2010||$448,060||MOU #1 Architectural Services ($615,000 total*)|
|Sep. 2010||$103,850||Addendum 1|
|Jan. 2011||$111,376||Addendum 2 (partially replacing amounts in MOU #1)|
|May 2011||No additional charge||Addendum 3|
|Aug. 2011||$341,850||Addendum 4|
|04/16/2012||$6,564,798||Overall Design Contract|
|10/22/2012||$137,495||$48M feasibility study|
|02/13/2013||$168,650||Full Service Community Task Force|
|02/13/2013||$18,750||Space utilization update|
|05/22/2013||$479,151||11% fee for increased project scope|
Cost to School District: $335
Nexus Partners take: $36.85
*Some of this amount from MOU #1 went to other consultants.
The amendment approved by the School District on May 22, 2013 is of particular interest. Among a few other small changes, the project's scope was increased to have a construction, furnishings, fixtures, and equipment cost of $62,699,375, up from the prior $58,325,000. So, Nexus sent an additional invoice for approximately 11% of the increase, adding $479,151 to their coffers.
This is a particularly lucrative way of doing business, particularly given that the compensation percentage is based off a total that includes the furnishings, fixtures, and equipment. Just imagine, whenever our School District buys a chair, a desk, a table, or a bookcase, Nexus collects 11% of the cost of that item. See page 70 of the overall design contract which explains, "FFE includes moveable furniture, fixtures or equipment that have no permanent connection to the structure of the building, landscape, or infrastructure."
That's what makes this contract, and its amendments, the Tattler's ECCL Contract of the Day!
Thanks to Brian Carver for providing research for the Contract of the Day