CITY COUNCIL STAFF REPORT
Meeting: October 1, 2024
Subject
Approve a design-build project delivery method for the Photovoltaic Systems Design and Installation Capital Improvement Program project.
Recommended Action
Authorize the City Manager to undertake a design-build project delivery method for the Photovoltaic Systems Design and Installation Capital Improvement Program Project; and Adopt Resolution No. 24-XXX approving the procurement of a design-build contract for the Photovoltaic Systems Design and Installation Capital Improvement Program Project.
Executive Summary
This report provides background on the Photovoltaic Systems Design and Installation (PV) Capital Improvement Program (CIP) project and its fiscal impact. The report also includes an overview of the design-build process, the advantages of undertaking this project delivery method, and the next steps pending Council approval.
Reasons for Recommendation
The Public Contract Code (PCC) allows for an exception to the traditional design-bid-build process if approved by the City Council. The PCC Section 22162(a) states:
Except as provided in subdivision (b), and notwithstanding any other law, a local agency, with approval of its governing body, may procure design-build contracts for public works projects in excess of one million dollars ($1,000,000), awarding the contract either the low bid or the best value, provided that this article shall not apply to any projects on the state highway system.
The PV project was approved by the City Council as part of the Fiscal Year (FY) 24-25 annual budget. The PV project description included in the budget adoption and meeting details is attached (Attachment C).
The project delivery process proposed for the PV project is Design-Build, pursuant to California Public Contract Code section 22160 et seq., instead of conventional design-bid-build project delivery. The procurement method for this design-build project is based on best value rather than low bid. Design-Build delivery involves contracting with a single entity known as the Design-Build Entity (“DBE”) for both design and construction of the project. Using Design-Build can potentially afford greater integration of services and flexibility more than the conventional design-bid-build, and typically reduces project costs and expedites project completion.
Design-build is a project delivery method that can save time and money. The advantages of this method include:
Time and cost savings: Design-build can save time and costs by having all services delivered by a DBE which reduces overhead and increases communication when compared to other methods, such as design-bid-build.
Reduced risk: Design-build can reduce risk created by design or construction changes while saving time during design, scope development, and cost estimates when the designer and contractor work closely together.
Simplified project management: A single team manages the entire project, which can reduce claims and promote collaboration between vendors.
Single point of contact: The City of Cupertino will have a single contract and consistent project team for all aspects of the project.
Flexibility: Design-build process allows for negotiation of fees and services.
In addition to the projected cost savings, efficiency and flexibility noted above, utilizing design-build project delivery method is most likely to allow for an expedited schedule which is of critical importance to the success of the project. In April 2023, the City successfully submitted applications required to utilize PG&E’s Net Energy Metering (NEM) 2.0 rates rather than NEM 3.0 rates for photovoltaic systems at five City facilities.
The City must connect the proposed photovoltaic systems to the electrical grid by April 15, 2026 to take advantage of the NEM 2.0 rates, which provide 75 – 80% greater compensation than NEM 3 rates for electricity that is fed back into the electrical system. The savings in utility costs are projected to be $500,000 annually, and $17.8 million over a 30-year lifespan.
The next steps for the project, pending Council’s approval of the design-build project delivery method, are:
Review of the photovoltaic systems for the five City facilities with Parks and Recreation Commission, Sustainability Commission, and the Community before returning to Council in December 2024 for approval of the design intent for each facility.
Initiate the Design-Build procurement process, which will culminate in Council’s approval of the proposed Design-Build Contract at a future Council meeting.
Sustainability Impact
No sustainability impact.
Fiscal Impact
The Photovoltaic Systems Design and Installation (budget unit 420-99-274) was approved as part of the FY 2024-25 Budget at $6,300,000. There are no recommended changes to the budget.
California Environmental Quality Act
The CIP project will be subject to any applicable environmental review prior to project approval. _____________________________________
Prepared by: Susan Michael, Capital Improvement Program Manager Reviewed by: Christopher Jenson, City Attorney
Tina Kapoor, Interim Assistant City Manager
Approved for Submission by: Pamela Wu, City Manager
Attachments:
A – Draft Resolution
B – Public Contract Code Extracts
C – FY 24-25 CIP Project Narratives Excerpt