1 STAFF REPORT
DATE: May 3, 2022
TO: Justin Hess, City Manager
FROM: Dawn Roth Lindell, General Manager, Burbank Water and Power VIA: Riad Sleiman, Assistant General Manager, Electric Services Division BY: Sven Knauth, Electrical Engineering Associate II
SUBJECT: Approval of the Change Order to the Contract with Doty Bros. Equipment Company for Citywide Electrical Projects (Bid Schedule No. 1498)
RECOMMENDATION
Approve and authorize the General Manager of Burbank Water and Power (BWP), as the designee of the City Manager , to execute the change order #1 to the contract with Doty Bros. Equipment Company (Doty Bros.) , under Bid Schedule No.1498, to increase the contract amount from $1,000,000 to $5,000,000 for the second contract year from April 12, 2022, through April 11, 2023 for Citywide Electrical Projects.
BACKGROUND
BWP utilizes an itemized pricing model , which is an industry -standard for yearly construction contracts and has proven to generate savings to the electric fund on substructure installation costs. Itemized pricing is an agreed-upon set price between BWP and the contractor based on the number and quantity of items constructed during each project. This agreed-upon unit pricing methodology creates a cost control for BWP since the price per unit of installation has already been established in the contract and is consistent for the contract year. Prices are adjusted based on Consumer Price Index and Producer Price Index at each contract renewal.
BWP’s contract with Doty Bros. supports many underground capital distribution projects on an as-needed basis throughout the year. The BWP Board approved this contract for $1,000,000 on March 4, 2021. The contract became effect ive on April 12, 2021, for a period of one year. BWP exercised its renewal option for an additional year on April 12, 2022, for a contract amount of $1,000,000 . The proposed change order of $4,000,000 would apply only to the current contract year 2022-2023.
WATER AND
POWER
2 DISCUSSION
Typically, the $1,000,000 contract amount is sufficient for the annual work performed by BWP in a contract year; however, due to the significant amount of development and scale of customer projects , BWP is forecasting a large increase in substructure construction.
BWP believes the best course of action is to increase the size of the contract with Doty Bros. Before settling on this course of action, BWP considered the possibility of creating a new bid schedule for this work. Such a new bid schedule runs considerable risks since it introduces additional unknowns , including potential issues with execution, quality of work, and the expected increase in overall costs due to the current unstable and volatile market conditions.
The scope of the individual projects proposed to be completed under the change order is of the same type and scope of construction as the original unit bid intended. Since the units were already competitively bid, and the application of the units is cons istent, it is appropriate to use a change order to increase the number of projects that can be completed using the existing unit prices instead of creating a new bid schedule.
Doty Bros. has been a good partner in construction, whose quality work product has reduced BWP’s overhead during construction. Increasing the size of this contract allows BWP to capitalize on the favorable terms for the unit items that are already included in bid schedule no.1498. The high level of quality from this contractor will help BWP accomplish the many planned and budgeted capital projects. While the supply chain has caused material price volatility and limited material availability , this contractor has established vendor relationships that can help shield BWP from some of those price increases and help ensure consistent material availability. Re-bidding would expose BWP to higher prices and more risk.
The underground substructure work proposed for the 2022-2023 contract term is estimated at $5,000,000. The contract amount increase is due to several budgeted capital projects:
• Willow Substation underground distribution
• Deteriorated vault replacement
• Additional underground substructure repair work based on assessment • Distribution system expansion to customer developments
FISCAL IMPACT
This change order will increase the contract amount by $4,000,000 to $5,000,000 for the contract period of April 12, 2022, to April 11, 2023. Sufficient funding for this underground work is available and budgeted under fund 496 for the fiscal year 2022-2023. The majority of the expected costs are associated with customer developments , which are fully reimbursable through aid-in-construction agreements.
CONCLUSION
Staff recommends that the City Council approve and authorize the General Manager of BWP, as the designee of the City Manager, to execute a change order to the contract with Doty Bros. , under Bid Schedule No. 1498, to increase the contract amount from 3 $1,000,000 to $5,000,000 for the second contract year from April 12, 2022, through April 11, 2023. This change order will allow BWP to replace several deteriorating underground assets in addition to expanding the underground distribution system for new customer developments while taking advantage of competitive , stable pricing for the remainder of the contract.
ATTACHMENT
Attachment 1 – Change and Extra Work Order