1 STAFF REPORT
DATE
: October 3, 2023
TO: J
ustin Hess, City Manager
FR
OM: Dawn Roth Lindell, General Manager, Burbank Water and Power VIA: Riad Sleiman, Assistant General Manager, Electric Services BY: Sven Knauth, Electrical Engineer
SUBJ
ECT: Approval of the Change Order to the Contract with Doty Bros. Equipment Company (Bid Schedule No. 1498)
RECO
MMENDATION
1. Approve the proposed change order to the contract with Doty Bros. Equipment Company (Bid Schedule No. 1498), increasing the contract amount from $1,000,000 to $3,500,000 for the third contract year from April 12, 2023, through April 11, 2024 , and authorize the General Manager (GM) of Burbank Water and Power (BWP), as designee of the City Manager, to execute the change order, and
2. Gr
ant the GM of BWP authority to renew Bid Schedule No. 1498 for an additional fourth renewal pursuant to an amendment in form and substance satisfactory to the City Attorney’s Office and to execute future change orders in the current or future renewal contract years up to the budgeted amount of the applicable project.
BACKGROUND
BWP utilizes an itemized pricing model, an industry standard, for yearly construction contracts that have 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 construct ed 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. At each contract renewal, prices are adjusted based on the consumer price index and producer price index.
BW
P’s contract with Doty Bros. Equipment Company ( Doty Bros. ) supports many underground capital distribution projects on an as-needed basis throughout the year. The BWP Board approved this contract on March 4, 2021. The contract became effective on April 12, 2021, for one year. BWP has renewed this contract twice. Additionally, BWP can renew one more time for an amount not exceeding $1,000,000 each contract year. The contract is in its third year, ending on April 11, 2024.
WATER AND
POWER
2 DISCUSSION
Typically, the $1,000,000 contract amount is sufficient for the annual work needed for substructure construction in a contract year . However, due to the significant amount of development and scale of customer projects, BWP is forecasting a large increase i n substructure construction and believes the best course of action would be to increase the contract size with Doty Bros. Before proposing the change order (Attachment 1) , BWP considered creating a new bid schedule for this work but doing so runs considerable risks since it introduces additional unknowns, including potential issues with execution, experience, quality of work, and the expected increase in overall costs due to the current market conditions with sustained inflation and supply chain issues.
Under the change order, the scope of the individual projects proposed to be completed would be the same as those the original unit bid intended. Since the units were already competitively bid and the application of the units is consistent, 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 and their quality work product has reduced BWP’s overhead and direct costs during construction. Increasing the size of this contract allows BWP to capitalize on the favorable terms for the unit items already included in Bid Schedule No.1498. This contractor’s high-quality work will help BWP accomplish the many planned and budgeted capital projects. While the supply chain has caused material price increases and limited availability, Doty Bros. has established vendor relationships that can help insulate BWP from some of those price increases and help ensure consistent material availability. Rebidding would expose BWP to higher prices and potentially more risk with a vendor that may not have the same vendor relationships. BWP also recommends the City Council to authorize the GM to approve a 4th renewal year option to conform this contract to current contract terms. This will allow BWP to capitalize on the existing pricing and contractor knowledge before rebidding the contract in late 2025.
Over the next several years, the need for significant substructure expansion is expected to accommodate large developer -funded projects. These are expected to include the airport replacement terminal and the Fry’s and Warner Ranch redevelopments. BWP
recommends that the City Council authorize the GM of BWP to execute additional future change orders in the current or future renewal contract years up to the budgeted amount of the applicable budgeted projects.
The underground substructure work proposed for the 2023-2 4 contract term is estimated at $3,500,000. The contract amount increase of $2,500,000 is due to several budgeted capital projects:
• Completion of remaining items for Willow Substation underground; • Distribution system expansion to customer developments such as 777 Front St; • Deteriorated vault replacement; and
• Additional as needed underground substructure repair work that is identified during ongoing assessments.
3 ENVIRONMENTAL REVIEW
This activity has no potential for resulting in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment, and as such, is not a “project” subject to the requirements of the California Environmental Quality Act (CEQA) 14 Cal. Code Regs § 15378.
The existing capital improvement programs in the approved budget consist of several projects. Prior to the commencement of each “project ,” staff will determine if it has the potential to result in a direct or indirect physical change to the environment and i f it is subject to the requirements of the CEQA.
FISCAL IMPACT
This change order will increase the contract amount by $2,5 00,000 to $3,500,000 from April 12, 2023, to April 11, 2024. Sufficient funding for this underground work is available and budgeted under the electric fund , 496, for the fiscal year 2023-24. Most 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 GM 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 $1,000,000 to $3,500,000 for the third contract year from April 12, 202 3, through April 11, 2024 . This change order will allow BWP to replace several deteriorating underground assets and expand the underground distribution system for new customer developments while taking advantage of competitive, stable pricing for the remainder of the contract. Staff additionally recommends that the City Council grant the GM of BWP authority to renew for an additional fourth contract renewal and authority to execute future change orders in the current or future renewal contract years up to the budgeted amount of the applicable project.
ATTACHMENTS
Attachment 1 – Change and Extra Work Order