www.mymanatee.org
Manatee County Government Administrative Center Commission Chambers, First Floor 9:00 a.m. - May 24, 2016
May 24, 2016 - Regular Meeting
Agenda Item #53


Subject
Approval of Settlement Agreement with URS Corporation Southern

Briefings
All

Contact and/or Presenter Information
Mitchell O. Palmer, County Attorney, ext. 3750.


Action Requested
Motion to approve the Settlement Agreement in the matter of  Manatee County v. URS Corporation Southern, Case No 2012-CA-02451 (Appellate Case No. 2D15-1500).

Enabling/Regulating Authority
Section 125.01(1)(b), Florida Statutes.


Background Discussion

Lake Manatee is a reservoir which serves Manatee and Sarasota Counties as a major drinking water supply.  The Lake Manatee Dam and Spillway was constructed in 1966.  In 1978, the dam was designated a high hazard dam as defined by the U.S. Army Corps of Engineers under its criteria. As a result of this designation, the County constructed an emergency spillway in 1983.  Having the dam and spillway operate properly to control water levels in a safe operating range is significant to the health, safety and welfare of the citizens of Manatee County and their property which could be impacted by an unintended release of waters from a dam failure.

URS is a California corporation which, through a business unit called URS Corporation Southern (URS), conducts business in Florida as a design engineer, geotechnical engineer and a general engineering consultant.  On May 22, 2007, URS and the County entered into an Agreement for Utility and Architectural/Engineering Services (“Agreement”).  Pursuant to the Agreement, the County would issue work assignments to URS identifying specific scopes of work as and when the County needed professional engineering services for a public works project.  These services would come to include design, project oversight and support activities regarding construction on and around the Lake Manatee Dam Tainter Gates (the “Project”) discussed below.

The Project

Given the importance of the proper maintenance of the County’s reservoir and the dam, and the fact that it is considered a high hazard dam, the Utilities Department (using funds paid by rate payers) retains engineering firms to perform an annual inspection to determine the structural condition of the dam, the condition of the tainter gates, areas of settlement and scour, the calibration of the tainter gates, the conditions of metal and concrete surfaces, and the toe drain condition.

Based upon recommendations made in the 2008 annual inspection that the County perform repairs and maintenance to the spillway and dam, on March 25, 2009, the County and URS entered into Work Assignment No. 10.  In this Work Assignment, URS agreed to provide professional engineering services to determine feasible approaches to the Project and then prepare a detailed design for, among other things, performing needed repair and maintenance work to the spillway. Under the Work Assignment, to include Change Order No. 1, URS also was to provide various permitting services and full time site inspection services during the duration of time the cofferdam was in place.

Under the terms of the Agreement, URS’s services included performing the engineering necessary to determine project feasibility, design parameters, engineering constraints and limitations, facility sizing, subsurface evaluation and design alternatives. Work Assignment No. 10 required URS to perform all engineering services necessary to design upgrades and repairs to the Lake Manatee Dam.

After the Project was well underway, the County determined that URS did not properly determine the project feasibility, design parameters, engineering constraints and limitations and evaluate the subsurface conditions.  Some of the work required for the upgrades and repairs to the Lake Manatee Dam could be performed “in the wet,” meaning that repairs could be made under water using special types of grout designed to harden under water.  Ultimately, some of the work for the Project was performed “in the wet.”

Without performing an appropriate analysis to determine project feasibility, design parameters, engineering constraints and limitations and subsurface conditions, URS recommended to the County that the Project be designed to be performed “in the dry.”  To perform the work in the dry, URS designed a three-sided temporary cofferdam around the spillway to hold back the Lake Manatee water from the work zone in front of the tainter gates once the area inside the coffer- dam was dewatered.  Accordingly, URS’s detailed design choice contemplated that the inspection and repair work be performed “in the dry,” because a dewatered site would theoretically allow for safe and effective visual and hands-on inspection of underwater conditions when repairing the concrete surfaces and applying paint coatings to tainter gates.

Significant discharges are required from time-to-time during the wet season which require the full unimpeded use of the spillway. Thus, given the significance of Lake Manatee during the wet and storm season, URS was aware that all work needed to be performed between December 1 and May 15.  On September 15, 2009, URS issued its Plans and Specifications to be used for bidding and execution of the Lake Manatee Dam Tainter Gates Project.

The  Plans  and  Specifications  are  also  known  as  the  Project’s  engineering documents, and included structural engineering documents for the cofferdam that were signed and sealed structural drawings, signifying URS’s professional approval and recommendation of the overall design requirements for the construction of the cofferdam.

The structural engineering documents reflected that URS was in possession of geotechnical data showing “loose sands” for approximately 20-25 feet below the bottom of the reservoir.  The design solution determined to be feasible by URS and engineered by URS for the cofferdam consisted of steel sheet piles driven into the reservoir's lake bed and two vertical walls of sand bags that sat on the lake bed and continued up the dam's soil cement cover on the earthen embankment on both sides of the spillway.

Johnson Brothers Construction was chosen by the County based on URS’s recommendation as the contractor for the Project and received a Notice to Proceed from the County on December 15, 2010.  During the construction of the cofferdam, URS modified the design to account for the actual location of the end of the soil cement beneath the water--a condition URS should have verified during the engineering and detailed design of the coffer dam. URS’s modified design extended the length of the sandbag walls.  Construction of the cofferdam was completed on February 15, 2011.  On this day, URS’s contemporaneous daily report stated that URS completed its inspection of the cofferdam and certified to Utilities that it had been constructed in accordance with the Plans and Specifications.

Relying on URS’s professional representation, the next day, Utilities attempted to dewater the area inside the cofferdam.  Immediately upon gradually opening the tainter gate to lower the water level, the sandbags began eroding and dislodging.  In addition, “boils” and turbulence inside the cofferdam became apparent indicating that water under pressure was entering the coffer dam area through the loose sand under the sandbags sitting on the lake bed and/or from under the submerged soil cement of the sand embankment. The dewatering effort was stopped within a few hours to avoid the potential of a complete washout of the sand bags.

The day after the attempted dewatering of the cofferdam, the contractor was preparing to install more sandbags if so instructed. However, the URS inspector’s daily report reported that “progress on the sandbag walls is on hold until a constructability issue is resolved.”  In the several weeks that followed the failure of the cofferdam, URS was unable to provide Utilities with: (a) a reason for the failure of the sandbags, (b) a re-design of the cofferdam that could be constructed before the onset of the upcoming wet/rainy season, (c) examples of successful cofferdams constructed with sandbags that URS in its vast  experience may have designed or observed anywhere else in the world, or (d) any assurance that an engineered re-design of the cofferdam was even possible in the future.

By mid-March 2011, it was apparent that there was no safe or effective way to complete the cofferdam with sandbags as designed by URS and the contractor was notified to begin the process of removing the sandbags from the water on March 18, 2011.  With the sheet piles of the cofferdam still in place, water flows into the spillway were impeded and swirled in a way which could erode the dam.  During the week of March 28, 2011, a major storm event occurred resulting in high inflow volumes which required water releases to maintain the lake level within the safe operating range.  As a result of the impeded flow at the spillway, an emergency flow was authorized through the emergency spillway to supplement the flow at the tainter gates.

Faced with the possibility of significant rainfall in a reservoir in which the spillway was impeded presented grave safety concerns for the County.  URS was unable to provide any reasonable assurance to the County that a cofferdam design in the reservoir using the installed sheet piles could ever be achieved. The County made the decision to remove the sheet piles of the coffer dam in the interest of public safety.  As a result of the failed cofferdam design, the County completed some of the required repairs to the spillway “in the wet.”

The County's Financial Losses

Because the Utilities Department received no benefit or use of the cofferdam, it concluded that it had been damaged by the failed cofferdam in the following respects:

a.   The wasted cost of the engineering services paid to URS to determine feasibility and then design the cofferdam;

b.   The wasted cost paid to URS for full time inspection services of the cofferdam;

c.   The wasted cost of construction and removal of the cofferdam;

d.   The wasted cost of professional geotechnical engineering services associated with the installation of the cofferdam;

e.   The cost of professional geotechnical engineering services associated with the failure and URS’s attempted redesign of the cofferdam;

f.   The cost attributable to the contractor’s stand-by time while awaiting URS’s redesign of the cofferdam; and

g.   The additional construction costs of performing some work out sequence as a consequence of the failed cofferdam.   

The Professional Duties of Engineers

Each engineer who performed design work on the Lake Manatee Dam - Tainter Gates Project was either a “professional engineer” as defined by Florida Statutes Chapter 471, or was under the direct supervision of a “professional engineer.”  Florida Administrative Code Rule 61015-19.001(4) defines engineering “negligence” as “the failure by a professional engineer to utilize due care in performing an engineering capacity or failing to have due regard for acceptable standards of engineering principles.”  Florida Administrative Code Rule 61015-19.001(4) also provides that “[p]rofessional engineers shall approve and seal only those documents that conform to acceptable engineering standards and safeguard the life, health, property and welfare of the public.”

The engineer of record for a project, or part thereof, is the Florida licensed professional engineer who develops the overall design of a project and the design criteria for the project.  The engineer of record also is the professional engineer who is responsible for the preparation of the engineering documents, and who certifies those documents by affixing his or her professional engineer’s seal on them.  The engineer of record is in responsible charge of the project and is required to maintain control over engineering decisions made personally or by others over which the engineer of record exercises supervisory direction and control.  The prime professional for a project in Florida is an engineer or corporation that engages with a client to provided planning, design, coordination, arrangement and permitting for a project.  In a project involving the construction or repair of dams, the standard in this community requires an engineer to exercise due care in conducting geotechnical analyses in designing the repairs.

URS’s Failure to Properly Perform

The Plans and Specifications for the Project were submitted to the County sealed by URS's professional engineers on September 15, 2009.  The Plans and Specifications for the Project included the structural engineering documents for which the URS engineer was engineer of record and for which the URS engineer was the engineer in responsible charge for the structural engineering related to the coffer- dam.

In the County’s assessment after the failure of the cofferdam, the structural engineering documents for the cofferdam were prepared without an adequate review, investigation or consideration of the geotechnical conditions associated with the reservoir or the earthen dam or at the proposed location of the cofferdam.  Having received from URS signed and sealed engineering documents, the Utilities Department and its contractor were entitled to rely upon those documents as URS’s representation that the Project was constructible, and that they conformed to acceptable engineering standards to safeguard the life, health, property and welfare of the public.  In the County’s assessment, URS and its engineers failed to meet their professional duties in at least the following ways:

a.   Failing to account for, appreciate and respond to the nature and consistency of the loose sandy soils in the area underlying and adjacent to the proposed coffer dam;

b.   Failing to properly investigate the feasibility of the coffer dam in light of design parameters, engineering constraints and limitations and subsurface conditions;

c.   Failing to design a dewatering solution which would deal with the rate of flow, the quantity of water and the rate of percolation through the underlying and adjacent sandy soils;

d.   Designing sand bag walls which could not withstand underseepage and water pressure at this location;

e.   Failing to obtain an independent technical (peer) review of the cofferdam design;

f.   Failing to design the Project consistent with the standard of care of engineers practicing in Florida in the engineering discipline required by this Project.

After the Utilities Department completed, to the best of its abilities and funding, the repairs it set out to accomplish initially, it attempted to obtain recovery from URS for its damages due, in the view of the County, to the failure to perform its professional duties.  While these informal attempts were cordially discussed, URS was not willing to accept financial or professional responsibility for the cofferdam failure and resulting losses to the Utilities fund.

The Lawsuit and the Notice of Intent to Debar

In light of the foregoing, the County filed a lawsuit against URS on April 11, 2012, eventually filing an amended lawsuit complaint on July 7, 2014.

On October 11, 2012, Manatee County served a Proposal for Settlement/Demand for Judgment on URS in the amount of $2,660,000.00.

On February 11, 2013, URS served its only Proposal for Settlement to Manatee County, in the amount of $20,000.00.

On January 29, 2014, Manatee County served a second Proposal for Settlement/Demand for Judgment in the amount of $2,400,000.00.  This proposal was rejected by URS.

A jury trial commenced on January 5, 2015.  The trial concluded on January 15, 2015, with the jury rendering its verdict (attached) in favor of the County in the amount of $2,172,215.00.  The jury found that URS had breached its professional duties to the County and apportioned 65% of the County’s damages to URS and 35% of the County's damages to the construction contractor.  It should be noted that the contractor was not a party to the lawsuit, and the County had consistently disagreed with URS’s assertion that the contractor was at fault.

After factoring in the jury’s finding of partial fault of the construction contractor, the Court entered a Final Judgment in favor of the County (attached) on March 9, 2015 in the amount of $1,411,940.00.  This sum was not inclusive of the County’s claims of pre-judgment interest, post-judgment interest or costs.

Subsequent to the entry of the Final Judgment, URS filed a timely Notice of Appeal and the County, in turn, timely filed a Notice of Cross-Appeal.  The appellate case remains pending in the Florida Second District Court of Appeal.

On September 15, 2015, the Manatee County Purchasing Official issued a Notice of Intent to Debar URS and a variety of individuals who had performed professional services for the County related to the Project.

Mediation and the Resulting Recommended Settlement

On October 19, 2015, counsel for URS requested a delay in responding to the Notice of Intent to Debar.  In addition, counsel requested that the County consider an attempt to mediate both the pending appellate case, as well as the issues raised in the Purchasing Official’s Notice of Intent to Debar letter.

Upon consultation with the County Administrator, Utilities Director and Purchasing Official, the County Attorney’s Office agreed to suspend the briefing schedule in the appellate case and the response requirement as to the Debarment Notice, and alternatively to participate in mediation.  Upon selection of an agreed mediator, the parties undertook a day-long mediation on March 16, 2016.

While the March 16, 2016, mediation session did not yield an agreed resolution, in the ensuing weeks, the mediator continued to discuss the matter with the parties.  Ultimately, on April 19, 2016, URS agreed to pay the County $2,153,000.  Days later, URS also agreed to permit the County to have the right to exclude, in the County's sole discretion, any professionals it may assign to perform work for the County in the future.  In exchange, the parties agreed to execute mutual releases and dismiss all pending judicial and quasi-judicial proceedings between the parties.

The County Attorney has consulted with the County Administrator, Utilities Director and Purchasing Official.  Each supports the terms of the proposed settlement.  The County Attorney believes that the terms of the proposed settlement, as fully set forth in the attached settlement agreement, are highly favorable to the County, and therefore approval of the agreement is recommended.



County Attorney Review
Other (Requires explanation in field below)

Explanation of Other
This is a County Attorney item.


Reviewing Attorney
Palmer

Instructions to Board Records
If approved, return one fully executed copy of the Settlement Agreement to County Attorney Mitchell O. Palmer.

Cost and Funds Source Account Number and Name
n/a

Amount and Frequency of Recurring Costs
n/a


Attachment:  URS Jury Verdict.pdf
Attachment:  URS Final Judgment.pdf
Attachment:  Settlement Agreement and Release - executed by URS individuals and URS' .pdf