Document GxqDJmkQpgOmMKmGzRJKvxG4

KAISER ENGINEERS INTER-OFFICE MEMORANDUM TO J. E. Hughes AT Oakland DATE FROM November l4, 1969 J* G Nelson COPIES TO R. J. WQlf yH. J. Hunsaker AT Oakland JOB NO. 6471-00 subject Armco Agreement - Amendment No. 6 (Formerly Amendment No. 9) Attached for your approval and signature are four copies of proposed Amendment No. 6 to the Armco Agreement. As indicated in Mr. Wolf's memo of November 11, 1969 (copy attached), this amendment is identical to the proposed Amendment No. 9 signed by Mr. Oppenheim and transmitted to Mr. Browning by Mr. Wolf's letter dated October 24, 1969, except that it has been retitled No. 3 and the words "with respect to which Ownertdesires to obtain Contractor's services and" have been inserted immediately following the word "Works" in the third line from the bottom. Armco had initially requested that the words "the construction of which Owner contemplates on a continuing basis" be stricken but John Griffin in conversation with Hal Hunsaker indicated that they would have no problem with these words being retained. Also attached is a suggested letter of transmittal to Mr. Browning. \ KEN 007664 Amendment No. 6 to Agreement dated May 21, 1964 THIS AGREEMENT, made and entered into as of September. 29, 1969, by and between ARMCO STEEL CORPORATION (hereinafter referred to as "Owner") and KAISER ENGINEERS, INC. (hereinafter referred to as "Contractor"), WITNESSETH: WHEREAS, Owner and Contractor on May 21, 1964, entered into an Agreement for engineering, construction, and other services to be performed by Contractor relating to Owner's proposed expansion and modernization programs at its Middletown Works and its Butler Works (hereinafter referred to as "Agreement"), the Agreement having been heretofore amended; and WHEREAS, Owner desires Contractor to perform certain engineering, . construction and other services relating to Owner's proposed Electrical Steel Program at its Butler Works and the parties desire to amend said Agreement to include such services. NOW, THEREFORE, IT IS AGREED: 1. Section A-l of the Agreement is hereby revised to include a second sentence so that Section A-l in its entirety shall read as follows: "Section A-l. Contractor's services are to be applicable on an integrated basis to such facilities as Owner may decide to include in the expansion and modernization programs at its Middletown Works and its Butler Works, the construction of which Owner contemplates completing on a continuing basis within seven years from the date of this A.greement. Contractor's services are also to be applicable on an integrated basis to such facilities as Owner may- decide to include in the Electrical Steel Program at its Butler Works with respect to which Owner desires to obtain Contractor's services and the construction of which Owner contemplates completing on a continuing basis irrespective of the seven year limitation." 1- - KEN 007665 1114uf6ic9, Except as herein expressly amended, the provisions of the Agreement and prior amendments shall remain in full force and effect. IK WITNESS WHEREOF, the parties hereto have caused this instrument tc he executed as of the day and year first hereinabove written. ARMCO STEEL CORPORATION (Owner) By Vice President KAISER ENGINEERS, IKCJ (Contractor) By Vice President KEN 007666 2- - 102169 TO R. J. Wolf AT Oakland COPIES TO p C. Meyer H. J. Hunsaker SUBJECT KAISER ENGINEERS INTER-OFFICE MEMORANL M March 5, 1969 FROM J. G. Nelson 0.?' r\'-; AT Oakland u. JOB NO. 52^,00 Attached for your further handling are five copies of the proposed Revision No. 1 of Amendment No. 7 to the Annco Agreement which provides for the fees for additional projects and changes of scope pursuant to your memo of January 8, 1969. This Revision No. 1 has been reviewed for legal by Hal Hunsaker. JGN:ka Attach. KEN 007667 TO R. J. Wolf AT Oiklinil COPIES TO Hank Adam ,: Hal Hunaakar SUBJECT Anaco Ho. 6 KAISER ENGINEERS INTER-OFFICE MEMORANDUM OATE 11, 1968 J. 0* Halaott FROM ORIGINAL AT JACK G. 6471-00 gy further to agr aaao of Dccaaber 9, 1968 attached la a ranrlaed draft (dated 12/11/68) afaloh incojpcratea Sal Hunaakar'a suggested Modifications to previous draft* KEN 007668 Amendment No. 6 to Agreement dated May 21, 1964 DRAFT J G:,' 12/11/68 THIS AGREEMENT, made and entered into as of ___________________ by and between ARMCO STEEL CORPORATION (hereinafter referred to as "Owner") and KAISER ENGINEERS, INC. (hereinafter referred to as "Contractor"), WITNESSETH THAT: WHEREAS, Owner and Contractor on May 21, 1964, entered into an Agreement for engineering, construction, and other services to be performed by Contractor relating to Owner's proposed expansion and modernization programs at its Middletown Works and its Butler Works (hereinafter referred to as "Agreement"), the Agreement having been heretofore amended; and WHEREAS, the parties desire to amend certain provisions of the Agreement as hereinafter set forth: NOW, THEREFORE, IT IS AGREED: 1. Section E-l of the Agreement is hereby revised in its entirety to read as follows: "Section E-l. Owner may at any time by written order issue' instructions making changes, additions or deletions within the general scope of The Work. Contractor shall proceed to comply with each such instruction immediately upon receipt thereof. As soon as practicable after receipt of each such instruction (generally within thirty (30) days) Contractor shall cause the then current estimate of cost at completion of the project affected by such instruction to be adjusted to reflect the estimated increase or decrease in project cost resulting from such instruction. In the event any such instruction (a) concerns a project for which Owner and Contractor have tfee-notofor agreed upon a fee base as provided for in Section C-l^ KEN 007669 (b) Routing of electrical power system must be revised to permit access. (c) Height of roof changed to assure proper clearance. (d) Increase width of passageways to comply with standard Armco specifications which were in effect at the time the Engineering Report was approved. KEN 007670 t=PQLsU\i=J=hit3 TO D.A. Daly AT Middletown COPIES TO K.J. Hunsaker J.G. Kelson Ammendment Ko. 6 to Armco Contract October 22, 1968 R.J. Wolf ' 6471 & 6474 I have received your memo of September 24 in reply to my memo of September 17. I would like you to prepare a list of scope changes for each of the projects at Middletown,and Butler. In order to assist you in the definition of a scope change, the answers to your questions 1 thru 10 in your memo of September 24 are as follows: 1. Labor Escalation - Management has approved Ammendment Ko. 5> there fore we cannot collect fee on labor costs other than the labor costs at the time of the preparation of the estimate. Labor escalation beyond this is excluded from the fee base. 2. Equipment Escalation - Ammendment Ko. 3 has been superseded by Ammendment Ko. 5, Section C-6. We are of the opinion that the sub contracts where the escalation is clearly identifiable from invoice documentation fall under the definition of Section C-6 and the fixed fee should be adjusted taking into account this escalation. 3. Material Escalation - Your assumption that we will make no attempt to collect fee on the increased cost for materials is correct only where the increased cost due to escalation is not documented. If the esca lation has been documented and can be identified it falls within mean ing of Section C-6. 4. Delays by Owner - The type of delay identified in your paragraph 4; that is, delays due to contractor negotiations with the union, does not in our opinion fall within the provisions of Section C-l. 5. Overtime - While we have not had a thorough discussion with our manage ment regarding premium time, for the purpose of this analysis you are requested to exclude it. This also includes documented change orders for premium time for sub-contractors. 6. Abandoned Engineering - I do not believe that abandoned engineering should be considered a "scope change'', nor should it be included in the fee base under any other definition. There are, of course, those programs which we started and did not complete because the program was abandoned, and on these we are collecting 20$ of the engineering cost. This also applies to Job 7185-1, Fume Abatement for Open Hearth Ko. 2 where we are preparing the engineering report only, McGraw is doing the construction, and the precipitator vendor will complete the detail design. KEN 007671 D.A. Daly Page 2 October 22, 1968 7. Revised Engineering Reports - I agree with your opinion that these revised reports constitute a new Scope of Work and that the difference between the original report and the revised report should be a scope change. Please reflect this approach in your analysis. 8. Added Appropriations - While not all supplemental appropriations necessarily qualify as "scope changes", the four supplemental appro priations for project 7128 are in my opinion scope changes. A supplemental appropriation to cover a pure over-run in cost would, of course, not be a "scope change". 9. Scope Changes To Date - I would like you to prepare for each project a list of the "authorized changes". I would also like you to identify and discuss any of these "authorized changes" which in your opinion would not qualify as scope changes. In doing this, please disregard Ammendment Wo. 6 as now written. 10. Field Changes - In order for us to form any judgements on how to handle AWO's, I would like you to advise for each project the number of AWO's that fall into the following categories: a. Less than $1,000 b. $1,000 - $10,000 c. $10,000 - $50,000 d. Above $50,000 In addition, I would like you to identify the total value for each of the above four categories. For the present time, because our own thoughts are not clarified, I would prefer that you do not discuss Ammendment No. 6 or the definition of scope and supple mental appropriations procedures with Armco. RJW/mps KEN 007672 Contract No. 6471 Amendment No. 7 to Agreement dated May 21, 1964 THIS AGREEMENT, made and entered into as of, by and between ARMCO STEEL CORPORATION (hereinafter referred to as "Owner") and KAISER ENGINEERS, INC. (hereinafter referred to as "Contractor"), WITNESSETH: WHEREAS, Owner and Contractor on May 21, 1964, entered into an Agreement for engineering, construction, and other services to be performed by Contractor relating to Owner's proposed expansion and modernization programs at its Middletown Works and its Butler Works (hereinafter referred to as "Agreement"), the Agreement having been heretofore amended; and WHEREAS, Article C of said Agreement as amended by Amendment No. 5 effective June 1, 1967 provides that upon completion of the general arrangement drawings and a de finitive scope of work for each project and definitive estimates of cost for such projects will be agreed upon for purposes of determining the Contractor's fixed fee; and WHEREAS, a definitive scope of work and a definitive estimate of cost have been established for certain projects at the Middletown Works and the Butler Works as herein described; and Owner and Contractor desire to amend the Agreement as hereinafter provided, to make a matter of record for each such project the defini tive scope of work, the definitive estimate of cost, the amount of definitive estimate of cost excluded from the fee base, the allowance for total indirect cost included in the fee base, the fee base and the amount of the fixed fee allocable to such project; and WHEREAS, in the future as the definitive scope of work and definitive estimate of cost are established for additional projects for which Contractor's services have been authorized this Amendment No. 7 shall be appropriately revised. NOW, THEREFORE, IT IS AGREED: 1. The definitive scope of work for each of the projects being covered by this Amendment are as described by the applicable Engineering Report -1- KEN 007673 BUTLER WORKS Engineering Report No. 74o6-l 74o6-2 74l4-01 74l4-2 74l4-3 7418-1 7440-1 7442-1 7446-1 7446-2 7454-1 7464-1 7476-1 7476-2 7484 Title Date Project 74o6, Services and Supporting Facilities, Slab Track and Piping Relocation at Building 47-D September 22, 1966 Project 7406, Services and Supporting Facilities Central Maintenance Shop Utilities March 1, 1967 Melting Facilities, Project 74l4, Site Preparation, Relocation - B&0 Railroad and Connoquenessing Creek December 15, 1964 Melting Facilities, Project 74l4, Site Preparation, Underpass, Parking Lot and Bridge January 14, 1965 Melting Facilities, Project 74l4 Site Preparation, Melt Shop and Maintenance Shop Facilities Earthwork March 24, 1965 Melt Shop, Project 74l8, Melting Facilities Revised December 30, 1966 Project 7440, Relocation of the No.- 4l Sendzimir Mill Revised June 1, 1965 No. 44 Scrub, Weld, and Trim Line Project 7442 October 15, 1965 CRNO Decarburization and Annealing Facilities, Project 7446, Cold Rolled Non-Oriented Processing, Relocation of Stainless Steel Slab Grinders January 15, 1965 Project 7446, CRNO Decarburization and Annealing Facilities, No. 1 CRNO Line, CRNO Building 36-C, and Services September 15, 1965 No. 49 Coil Preparation Line, Project 7454 October 29, 1965 Project 7464, Central Maintenance, Spares Storage, Labor and Transportation Shop Revised August 15, 1966 Project 7476, Bright Annealing Facilities 1966 Building 1-M Extension July 12, 1965 Bright Annealing Facilities, No. 25 Bright Annealing Line, Project 7476 March l4, 1966 Project 7484, Electric Box Annealing Furnaces, Batteries No. 11 and No. 12 July 6, 1966 -3- KEN 007674 KAISER ENGINEERS vsJ ( ? i) (ste) As requested, we turn now explored the following area* of the Butler Project a* w did for Middletown to see whether or not there would be a difference in fee calculations} with the following results> 1. engineering reports far Sutler Jobs to date do not exceed Areoo's appropriated aments so differences will net exist in this area* 2. 'Authorised changes by Amos' to date total $1,81(2,652. As for Middletown whether or not all of these will be considered changes In scope far fee purposes is open to question but is say sweat the agreed qpen anount would be cowered by the changes elenee and not 'manitsit Bo. 5- 3. leealaticn". Be hare ewulaated the eeeelatlaa by eetegoriee for the Butler project as follows t s. Iquipaant sad Bubaentraots 8 100,000 b. Labor above thact included in the Bagiweerlng Beporte 599,800 c. Construction Meterial &h9SL Hotel 1,059,800 BcuiTnswt sad Beboontraets (a). As for the Middletown evaluation we feel that escalation cat eqcdpnast and suboontraote is properly cowered by /anadnant Ho. 5 and we will reeowwr fee. Tabor (b). The nan*wit of potential fee difference at Sutler for labor escalation above that included in Boglnearlng Bcporta is 599,800 x .02 - $12,000. Construction Material (e). Be astinata that we have a potential feedifference tor construction natarial aacalatlon at Butlar (to the extant it ia buried in a purchase price and we have sot Included it in our estinate) of $360,000 x .02 $7,200. KEN 007675 2 22, 1968 k. PranLee portion of oves-tlaa'* Oar eatlaate of tho prenioa portion of overtime for the Botler Arojeot frcn the atari to job end i* $193*688 and w believe that we have a potential difference in fee of 193*688 x *02 * $3*870* 5. Since the application of the fee fomnia eatinate in ^nandim* *o, 9 la aueh that we do not apply the laanagenant indirect ooat percentage (15% at Botler) to eaoeletloa or the preside portion of overtine thia anoanta to $1,253,488 x 15% - $188,000 x .02 * $3*76o. In cannery, the fee difference at both Mlddletoan and Botler could then aeouat to: Xacalatlon on labor Middletown Botler $ 32,500 12,000 Baealatioo on Conatmation Material Mlddletoan Botler 22,000 7,200 Prealua Portion of Overtiae Middletown Botler 36,900 3,870 Bon application of Indirect portentago to aaoelation or premien portion of overtlee Middletown Butler 15,300 3,760 Baviaed Indirect thnagaaanl Fareentogea Total far Mlddlatown and Botler 74.000 Total $207,530 Difference per year for aix year Job life $3t,000/yeer. After yen have had a chanee to review thia additional infomation 1 would like to dlaewaa with yen the poeltlea we ehonld take with Araoo regarding their pgopoaed Aeeadaont So, 5. BJV:fo KEN 007676 J. *. Hugh-- -5- Januaxy 2, X968 5. Bevlaad Indirect Management Percentages 74.000 Total Difference per year for 6 year Job life $180,700 $ 30,000/year After you tear* had a chance to review the wards of the aswnitnant and to consider lte-- I have discussed shove I would appreciate it if we could have a aeetiag wad arrive at sows esaagwaunt decisions as to the position we wish to twee with Araoo. BJVifC AttS. KEN 007677 Amendment No. 5 to Agreement Dated May 21, 1964 THIS AGREEMENT, made and entered into as of June 1, 19o7j by and between ARMCO STEEL CORPORATION (hereinafter referred to as "Owner") and KAISER ENGINEERS, INC. (hereinafter referred to as "Contractor"), WITNESSETH THAT: WHEREAS, Owner and Contractor on May 21, 196k, entered into an Agreement for engineering, construction, and other services to be performed by Contractor relating to Owner's proposed expansion and moderization programs at its Middletown Works and its Butler Works (hereinafter referred to as "Agreement"), the Agreement having been heretofore amended; and WHEREAS, the parties desire to amend certain provisions of that Agreement as hereinafter set forth: '' NOW, THEREFORE, IT IS AGREED: 1. ARTICLE C of the Agreement, as amended by Amendment No. 1 and No. 35 is hereby revised in its entirety to read as follows: ARTICLE C - FEE Section C-l. In addition to reimbursement of costs and expenses as provided in ARTICLE B, Owner shall pay to Contractor a fixed fee as provided below. (a) Upon completion of the general arrangement drawings and a definitive scope of work for each project comprising Owner's proposed expansion and modernization programs at its Middletown works and its Butler works, an engineering report which will describe the scope of work for such project including a definitive estimate of the cost of the project, will be prepared and agreed upon by Contractor and Owner. Each such definitive estimate of cost shall include the total cost of all labor, employee benefits (burden), rental and operation of construction equipment, material, supplies, subcontracts, machinery -1- KEN 007678 Owner is ready to proceed with the construction of such portion. The fixed fee payable hereunder shall then be adjusted on the basis of such revised fee base. Section C-6, Contractor's fixed fee will be subsequently adjusted to take into account the actual escalation, if any, in the cost of material, machinery, and equipment which occurs after-agreement cn the definitive estimatesfof each project. In the event the purchase documents provide fo.r the possible application * of escalation and the invoice documentation appropriately includes escalation, such escalation will be determined and the applicable fee adjustment faeiiity pfy** upon completion of each/feei-brey* The amount of escalation will be determined from invoice documentation in accordance with the purchase order applicable to the material, ra-achinery and equipnsnt, purchased for such construction. Except as expressly amended, the provisions of the agreement shall remain in full force and effect and shall apply to all work heretofore performed thereunder, as well as that hereafter to be performed, IK VJITKSSS YbuftKO?, the parties have executed this fgrcement effective as of the dav and year first hereinabove written. ARKGO ST1-ISL COkPOlATIOi! (Owner) df V- ' ^ < Vicr.o-. iVesidI-We,n!.-!t- KMofl ]v!Gi::*S?.S, li iG. (Contractor) i- ' . r ByVico President KEN 007679 Amendment No. 1 to Agreement Dated May 21, 1961; THIS AGREEMENT, made and entered into as of January 13, 1966, by and between ARMCO STEEL CORPORATION (hereinafter referred to as "Owner") and KAISER ENGINEERS, INC. (hereinafter referred to as "Contractor"), WITNESSETH THAT: WHEREAS, Owner and Contractor on May 21, 1961;, entered into an Agreement for engineering, construction, and other services to be per formed by Contractor relating to Owner's proposed expansion and moderni- zation programs at its Middletown Works and its Butler Works (hereinafter referred to as "Agreement")} and WHEREAS, ARTICLE C of said Agreement provides that definitive estimates of cost of facilities at each location will be agreed upon for purposes of determining Contractor's fixed fee and that until such fixed fee is established, Contractor shall be paid a tentative fee in an amount equal to twenty percent (20%) of certain specified reimbursable costs; and WHEREAS, pending establishment of Contractor's fixed fee and in lieu of the tentative fee provided for in Section C-3 of the Agreement, the parties desire, for fee progress payment purposes, to provide for an interim fee based upon preliminary estimates of cost of facilities at the Middletown Works and the Butler Works and desire to amend the Agreement to set forth provision for such interim fee. NOW, THEREFORE, IT IS AGREED: 1. ARTICLE C, Section C-3, of the Agreement is hereby revised in its entirety to read as follows: KEN 007680 APPENDIX "C" CIAS5IFICATI0NS OP ESTIMATED COST OF THE WORK A. ITEMS TO BE INCLUDED 1. The cost of all materials, machinery, equipment, labor, design, and other services in connection with the planning, design, and the construction of the initial facility, including vendors' erection super vision and technicians during construction and until completion of initial testing. 2. The cost of all materials, machinery, equipment, labor, design and other services used in (l) the relocation of facilities from one location to another, (2) the removal of facilities in the case of retirement or storage, and (3) the modification of existing equipment. (Retire ment includes only the cost to retire and not loss on assets.) 3. The cost of all materials, machinery, labor, and other services associated with the act of placing the completed initial facility into operation, including, but not limited tq, accept ance tests, lubrication, cleaning and flushing of pipe lines, changes or modifications to initial facility, stand-by services, temporary installations, etc. B. ITEMS TO BE EXCLUDED 1. The cost of training operating and maintenance forces, raw and semifinished material to be pro cessed, and the services of vendors' technicians and supervision after completion of initial testing. 2. The cost of acquiring non-installed motors, rolls, and subcomponents of equipment to provide insurance against failure of such identical pieces installed in the initial facility, i.e. replace ment parts. 3. Sales and use tax for any material supplied under a purchase order which will be incorporated into and become a part of the completed facility for which Owner will provide a Direct Payment Permit. KEN 007681 ARtMCO General Offices Mid? >wn, Ohio V March 15, 1965 Txivc*.* istri'il Cojsrilcsica cf Colo Coltcshus, Ohio Re* Kaiser Cs-ineers, Inc. Gentleness Kaiser Ui~3neer3, Inc. has been selected as the general contractor for our '`Project 600, a najor construction project ever the next sir. years. In the completion of this project, Kaiser IP:pincers will use t--s cr-cical and hospital i -<: lities of o i Cor.*oratici and will oo jr-au.burned or .'ill other ^n* 9 carper*saoica expense ty our cc:-- --7* Upon the comleticn of t.tn project, ir-co it-.dc-.irus to i :j,vwUi a::/ centinula;; pa/aer.tH to ci injuries ure sustained as a result of t-.o con;; ''Proj set ciX)**. /O V.%ivu ;v,vtu v.'.auo *c >*_ o,*. Very truly yours, H. Moore clh bcc: R. A. Davies A. R. Vlalker . D. J. loung / Corporate Insurance JUnajer -- - > OSM 0-2091 VCEN 007682