(A) The city shall be authorized to provide, by appropriate clauses to contracts for supplies or services of all types, for changes and modifications to the contracts and providing for the method or methods of calculating the costs of any decrease, increase, or other change in the contract price resulting from the changes or modifications. The following provisions shall apply to any changes:
(1) In contracts for the purchase of fixed amounts of commodities, supplies, and equipment, increases in quantities in excess of ten percent (10%) of the original quantity fixed by contract shall not be permitted unless the invitation for bids or requests for proposals for competitive negotiation informed prospective bidders or offerors that an increase in quantities might be forthcoming.
(2) Increases in unit price shall not be permitted in contracts for increased quantities, except as provided by a price escalation formula authorized by the invitation for bids or requests for proposals for competitive negotiations.
(3) All changes or modifications to contracts for the purchase of commodities, supplies, equipment, and construction services shall be effected by an advice of change order to the contract which shall be supported by a written determination documenting the reason and basis for the change or modification to the contract.
(4) A copy of the advice of change in order and the supporting documentation relative to any change or modification to a contract shall be filed and maintained in the contract file.
(B) Every contractor to whom a contract containing clauses authorizing changes or modifications to the contract shall be deemed by acceptance of the contract to have agreed to the changes or modifications of the contract as provided herein.
(C) Any contractor who is determined in writing by the city to be in breach of any of the terms and conditions of a contract may, in the discretion of the city, be declared in default and the contract may be terminated for any of the following reasons:
(1) Failure to perform the contract according to its terms, conditions, and specifications.
(2) Failure to make delivery within the time specified or according to a delivery schedule fixed by the contract.
(3) Late payment or nonpayment of bills for labor, materials, supplies, or equipment furnished in connection with a contract for construction services as evidenced by a mechanic's lien filed pursuant to the provisions of KRS Chapter 376, or letter of indebtedness received from creditors.
(4) Failure to diligently prosecute the work under a contract for construction service.
(D) The city shall not be liable for any further payment to a contractor under a contract terminated for the contractor's default after the date of the default, except for commodities, supplies, equipment, or services delivered and accepted on or before the date of default and for which payment had not been made as of that date. The contractor or his surety, if a performance bond or payment bond has been required under the contract, shall be jointly and severally liable to the city for all loss, cost, or damage sustained as a result of the contractor's default. A contractor's surety's liability shall not exceed the final sum specified in the contractor's bond.
(E) The city shall be authorized to terminate for its own convenience all contracts for the procurement of supplies and services when the city determines in writing that termination will be in the best interest of the government, and according to the following provisions:
(1) When it has been determined that a contract should be terminated for the convenience of the city, the city is authorized to negotiate a settlement with the contractor according to terms deemed just and equitable.
(2) Compensation to a contractor for lost profits on a contract terminated for convenience of the city shall not exceed an amount proportionate to the sum that the contractor's total expected margin of profit on the contract bore to the contract price, based on the total out-of-pocket expense incurred by the contractor as of the date of termination of the contract. The contractor shall have the burden of establishing the amount of compensation to which he believes himself to be entitled by the submission of complete and accurate cost date employed in submitting his bid or proposal for the contract, and evidence of expenses paid or incurred in performance of the contract from the date of award through the date of termination.
(1986 Code)