At a recent meeting, Milford City Council discussed the fifth change order related to the Milford Corporate Center. The change orders were for contract time extension and contract retainage reduction.
“The Milford Corporate Center Phase I was scheduled to be completed March 10, 2026,” Willis Shafer, Director of Public Works, said. “City Council granted a four-month contract extension on March 9, extending the completion date to July 10, 2026. George and Lynch are requesting a 49-day extension under change order number five due to delays in the Verizon telecommunication line relocation on Milford Harrington Highway and also electric conduit construction or installation that was approved under change order number one, so the new contract date would be August 28, 2026.”
Shafer continued that George and Lynch did not believe they would need any contract extensions beyond that, weather permitting. This was a no-cost change order.
“The second item is the George and Lynch retainage reduction request,” Shafer said. “George and Lynch have submitted a request to reduce the construction contract retainage from six percent to three percent. The city is currently retaining $1,015,685.99 with 89 percent of the project having been completed. If the reduction is approved by council, the retainage at the end of the contract would be $579,582.53. The contractor will be required to provide a one-year guarantee on all work upon conditional acceptance of the project.”
Councilman Jason James asked how the reduction in the retainage could impact the city as he felt the funds were retained for a reason.
“Roughly $600,000 representing half the retainage does not put a wrinkle in our financing or our plans for the project,” Finance Director Lou Vitola said. “It’ll be funded from existing sources, and the amounts have been recorded as expenses already.”
Vitola continued that a project as large as the industrial park relies heavily on the project manager to act as eyes and ears on the ground. KCI, who is the project manager, signed off on the reduction in retainage indicated to him that there were no major issues with the project at this point.
“I look at KCI’s signature on that and say ‘okay, we’re in agreement that they’re a solid 89 percent of the work completed,’ and therefore, it is a cost of funding for them, especially with the extension of the contract,” Vitola said. “Forces beyond their control have pushed the project out, so they will be waiting unnecessarily for the full retainage at the end of the project. That is a significant cost of funding for a small local or regional company. While I personally haven’t dealt with a project where retainage was cut at some point, it’s not ringing alarm bells or causing any concern.”
James explained that he had been involved in many construction projects over his career.
“I really don’t ever recall being put in the position or asked to reduce the retainage until the punch list period was over,” James said. “That’s what it is for because the retainage was about meeting of the mind at the beginning. I understand the cost of funds for George and Lynch, and I understand it has already been accrued, already been recorded as an expense, but the cash is not out the door, so that is my concern.”
Shafer agreed with Vitola, stating that George and Lynch had been excellent partners with the city. KCI and the public works staff feel very strongly there will be a limited punch list at the end of the project.
“As Lou pointed out, this project should have been done in July, so, again, we totally support reducing it to three percent,” Shafer said. “We also understand council needs to approve that and this was a request from George and Lynch, so we just want to pass it forward.”
Mayor Todd Culotta asked James to explain what he meant by cost of funds for George and Lynch.
“Well, George and Lynch, when they do the work, they’re absorbing costs as they go along and they have to recover that in the payments from the city and to pay the workers and to not have money out there,” James said. “It’s money that they can’t employ otherwise, and this pushed out 49 days longer so they really have 49 additional days of the retainage being held up that would not have been held up, they would have had the money in hand if that delay had not taken place.”
Vitola stated that if it were not for the delay, he would have been shocked at the request as the company knew from the beginning there would be a six percent retainage, so they should have arranged financing accordingly. He felt that the only reason George and Lynch were requesting the reduction was that the project was delayed significantly. Councilman Dan Marabello asked how long the city would hold the remaining $569,000. Vitola said that would be released once the project was deemed complete. A performance bond will then be put in place.
“What happens when we get to August 28 and they file for another extension because as Councilman James said, we are holding just three percent,” Councilwoman Madula Kalesis said. “So, what happens if they are not done? They still have to pay, so where does that put us? Do we have a guarantee that this project will be done?”
Shafer stated that there was minimal work left and that the majority left was the electric conduit work. Should there be a solid two weeks of rain, the company may ask for an extension, but Shafer reminded council that George and Lynch had been an excellent partner with the city and that he did not feel they would request the reduction if it would be a liability to the city.
“I was sitting here thinking I would not say anything, but I am trying to put all this together,” Councilwoman Katrina Wilson said. “First of all, you’re not used to reduction and second of all, you don’t want a company coming back to you asking for money when we’ve agreed on a set amount, so not that I am not for this, but I would like for KCI to make sure that they give detailed information to us and then there may not be as many questions.”
Shafer pointed out that the first change order was the most important, but if council wanted to table the second one, he could ask KCI to provide more details. Council approved the first change order unanimously. The request to reduce the retainage passed with a vote of four to three.
“I vote no,” James said. “My reason is because if I knew what the amount of the bond was, I would be more comfortable. One thing, this change order number five, we had several and I understand we’re close, but we just can’t seem to push this thing over the edge. I’m not saying it is George and Lynch’s fault, but they’re in this circle of people performing the work, so my vote is no.”
Marabello, who initially voted yes, changed his vote to no, agreeing with James. It was not a roll call vote, so it is unclear who the third no vote was.
