City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Utilities
Meeting Date: October 7, 2024
Report #:2408-3368
TITLE
Approval of Amendment via Change Order to Contract Number C22183580 with MP Nexlevel of California, Inc. in the Amount of $1,650,000 for the Fiber-to-the-Premise (FTTP) Pilot Project inclusive of $150,000 in contingency funding for a Revised Total Not-to-Exceed Amount of $11,347,390 From March 21, 2022 Through April 30, 2025; Authorize the City Manager to Execute Change Orders Not-to-Exceed $150,000 for FTTP ; CEQA Status – Council action on this item is within the scope of the Final Initial Study and Mitigated Negative Declaration (IS/MND) for the Fiber-to-the-Premises Project, adopted on June 17, 2024.
RECOMMENDATION
Staff recommends that the City Council:
Approve and authorize the City Manager or their designee to execute Change Order No. 1 to contract C22183580 with MP Nexlevel (Attachment A) for the installation of fiber optic cable and fiber hut site preparation in support of the FTTP Pilot Project, in an amount not-to-exceed $1,650,000, inclusive of $150,000 in contingency funding, for a revised total contract not-to- exceed amount of $11,347,390 through April 30, 2025; and Authorize the City Manager to execute change orders not-to-exceed $150,000 for FTTP for related but unforeseen work which may develop during the FTTP pilot.
EXECUTIVE SUMMARY
The City contracts with MP Nexlevel for the provision of substructure installation and trenching services with a $9.8 million three-year contract. Approval will increase these services to make the necessary capital improvements for the Phase I Pilot area of FTTP in the amount of up to $1.65 million. Specifically these funds will provide for the installation of fiber optic cable and fiber hut substructure site preparation.
BACKGROUND
On December 19, 2022, City Council directed staff to proceed with the Fiber Expansion Plan to implement the Fiber Rebuild project and Phase 1 of the FTTP Project. In Phase 1, FTTP would be built out in selected areas of the city and expanded gradually (Staff Report ID 148001).
Construction of the fiber backbone in the Fiber Rebuild project and last mile infrastructure to provide FTTP broadband internet to the community in the FTTP project will be a significant undertaking for the City.
On June 19, 2023, the City Council approved the FY 2024 CIP Budget with the new FTTP Project, and Grid Modernization for Electrification Project, as described above.
On December 18, 2023, staff informed Council that a pilot area would be used to evaluate how alignment of the FTTP and Grid Modernization Projects may help control project costs, minimize construction impacts to the community, and prevent major delays. Additionally, the FTTP project completed its California Environmental Quality Act (CEQA) review, resulting in a mitigated negative declaration (Staff Report ID 2403-27132). Specific to the pilot area, the preliminary construction work for the Grid Modernization Project has already begun, and staff is now ready to begin the work for the FTTP Project.
On June 19, 2023, the City Council approved the FY 2024 CIP Budget with the new Grid Modernization for Electrification Project (EL-24000, $250 million) and FTTP project (FO-24000, $20 million). Staff is deploying a pilot to determine how to align the grid modernization with FTTP to help minimize utility engineering pole make-ready work, pole replacements, noise disruption, and construction activity in neighborhoods. With hundreds of miles of overhead and underground construction activity between electric grid modernization and FTTP, the purpose of the pilot is to determine the feasibility of engineering designs and construction methods and implement best practices to facilitate the most cost-effective deployment of resources.
On June 10, 2024 and June 18, 2024, staff recommended the City Council approve a series of contract amendments (Staff Report 2312-23183 and Staff Report 2403-27144) to leverage existing on-call construction and engineering contracts to perform the engineering design, overhead and underground construction, and installation of power for the pilot area (approximately 409 poles and 1,224 homes), reducing the construction timeline by 6 – 9 months. The pilot area will be treated as a testbed to design and construct both projects in parallel to minimize community disruption and share construction costs. In 2022, the City 1 Staff Report ID 14800 https://www.cityofpaloalto.org/files/assets/public/v/1/agendas-minutes- reports/reports/city-manager-reports-cmrs/2022/12-19-2022-id-14800.pdf 2 Staff Report ID 2403-2713 https://www.cityofpaloalto.org/files/assets/public/v/1/city-manager/fttp-staff-report- june-172024.pdf
3 Staff Report 2312-2318 https://www.cityofpaloalto.org/files/assets/public/v/1/agendas-minutes- reports/reports/city-manager-reports-cmrs/2024/06-10-24-sr-2312-2318.pdf 4 Staff Report 2403-2714 https://portal.laserfiche.com/Portal/DocView.aspx?id=73856&repo=r-704298fc executed a three-year task order contract with MP Nexlevel to provide substructure installation and trenching services.
FTTP consists of the construction of a fiber optic backbone and fiber distribution infrastructure to provide communication services throughout the City of Palo Alto. FTTP would provide municipal high-speed internet service to residences and businesses in Palo Alto. Council also approved the purchase of a modular building “fiber hut" including ancillary equipment to house fiber networking equipment and to serve as an aggregation site for FTTP. The MP Nexlevel contract amendment would expand the contract’s scope of work to include fiber construction and installation in the pilot area, as well as construction of a concrete pad to support the FTTP Hut.
ANALYSIS
The design of the pilot area strategically covers initial test area plans for grid modernization, and a core portion of the Phase 1 FTTP area. The pilot area is bounded by West Bayshore, Embarcadero Road, Louis Road, and Colorado Ave). The fiber hut required for FTTP will be located near the Colorado power station, with predominantly aerial construction in the grid modernization pilot area. FTTP build-out will be constructed in a manner that provides a pathway from the fiber hut to the areas of higher interest.
The City has been contracting with MP Nexlevel for over the past 10 years for substructure installations, utility trenching, and fiber conduit installations because of the volume and level of construction for CIP projects and customer service connections. For customer-related work, trenching and substructure work are reimbursed by the customers through the customer connection charges. The City does not maintain the staffing resources to provide substructure and trenching services because the amount of work varies year over year and use of contracted services allows for the most efficient and cost effective use of resources for this variable timing.
The current Task Order Construction Contract C22183580 with MP Nexlevel of California, Inc., was approved by Council March 21, 2022 in the amount of $8,815,809 for Trenching and Substructure Installation and Materials and a contingency amount of $881,581, for a Total Not- to-Exceed Amount of $9,697,390 over three years. In 2022, MP Nexlevel was deemed the lowest responsible bidder of a competitive solicitation for utility trench and substructure installation (Staff Report #139535). The performance and quality of work delivered by MP Nexlevel has been satisfactory over the years. As part of the task order completion process, MP Nexlevel’s work is inspected and signed off by internal staff.
Staff recommends amending the final year of the contract with MP Nexlevel to provide FTTP construction support for the pilot, for an additional $1,500,000 and $150,000 in contingency funding, for a new FTTP pilot area Task Order including the following work:
5 Staff Report #13953 https://portal.laserfiche.com/Portal/DocView.aspx?id=59397&repo=r-704298fc •Install, lash, splice and test approximately 57,000 feet of aerial fiber optic cable and 2,500 feet of underground fiber optic cable.
•Build underground laterals and pad mounts for six proposed fiber distribution hubs (FDH) which can serve up to 250 customers individually. •Excavate and construct a 10’ x 30’ concrete pad to support the fiber hut and emergency generator.
•Install electric wiring, lighting and HVAC inside the fiber hut. •Install security fencing and features such as locks, alarms, and surveillance cameras at the fiber hut site.
The FTTP pilot will inform the City the best mix of insource (internal staff) and outsource (contractors) to construct and operate the new municipal Palo Alto fiber internet business. The amendment requested will cover the FTTP Phase 1 pilot area only. Once the pilot area is complete and can inform the requirements for a competitive solicitation, staff will be requesting competitive bids for construction of the remainder of the FTTP Phase 1 scope.
FISCAL/RESOURCE IMPACT
Funding for this contract amendment is available in the Fiscal Year 2025 Capital Improvement Plan budget for the Fiber-To-The-Premises “FTTP“ Capital Project (FO-24000)
STAKEHOLDER ENGAGEMENT
Staff continues to share updates through the Palo Alto Fiber project webpage6 , City communications channels such as social media7, and Medium.com blog8.
ENVIRONMENTAL REVIEW
The FTTP Project, including construction of the fiber hut, has been assessed in accordance with the authority and criteria contained in the California Environmental Quality Act (CEQA), the State CEQA Guidelines, and the environmental regulations of the City. A final Initial Study-Mitigated Negative Declaration (IS/MND) that incorporated revisions, as appropriate, based on public comments was adopted by Council Resolution on June 17, 2024 (Staff Report 2403-27139). 6 Palo Alto Fiber Webpage, https://www.cityofpaloalto.org/paloaltofiber 7 City Social Media Channels, https://www.cityofpaloalto.org/connect 8 Palo Alto Connect, https://medium.com/@paloaltoconnect 9 Staff Report 2403-2713, https://cityofpaloalto.primegov.com/Portal/viewer?id=0&type=7&uid=2b77638f-b16d- 43a9-ae2a-4b57a96f813d
ATTACHMENTS
Attachment A: Contract change order to Contract No. C22183580 with MP NexLevel of California, Inc.
APPROVED BY:
Dean Batchelor, Director of Utilities