With a special Thursday evening meeting, members of the Spencer City Council awarded a contract worth $420,633 to Vaughn DeLoss Construction of Spencer.
A $416,520 contract for a paving extension to the Green Industrial Center in east Spencer was initially awarded to Godbersen-Smith Construction, of Ida Grove, on May 21.
"We awarded the contract based on the apparent low bidder, with it being contingent upon receiving concurrence from the Iowa Department of Transportation," City Engineer Jim Thiesse explained.
That approval was not granted.
"Part of the project requires them to make an effort to engage targeted small businesses, which are generally smaller businesses and oftentimes minority-owned businesses," Thiesse said.
Though there is no set number for how many targeted small businesses must be contacted, bidders must show a good faith effort to do so.
"In the opinion of the DOT, Godbersen-Smith's effort was not a good-faith effort. They contacted one targeted small business, who declined to give them a price," Thiesse said. "DeLoss had contacted several, certainly more than three and maybe five. They don't have to respond and they don't have to hire them, but they have to make an effort to contact them.
"The DOT was not satisfied with Godbersen-Smith's effort," Thiesse continued. "They determined they did not make a good faith effort, and they would not support the award of a contract to Godbersen-Smith, so then we go to number two."
Fortunately for the city, the difference is only about $4,000, Thiesse said.
"That's a really close spread for bids and, of course, could have been considerably more," he added.
Mayor Reynold Peterson explained that the meeting was nearly canceled.
"(City Manager) Bob (Fagen) has been going back and forth with the DOT on this," Peterson said. "As of 3:30 p.m., we were canceling this meeting tonight because the DOT said they hadn't made their mind up yet. At 4 p.m., Bob called and said DOT said reward it to DeLoss."
Peterson added that he is glad to see an end to the drawn-out ordeal.
"We'll award it and stick to our guns," he said.
Councilman Ron Hanson asked City Attorney Don Hemphill if the action could have any legal ramifications.
"I think the DOT would take the responsibility," Hemphill answered, adding, "The reward doesn't really guarantee they have the contract. That comes with the next step. I don't think you'll face significant risk."
DeLoss Construction was previously granted a $251,709 contract for the sewer and water extension to the industrial park.