City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Utilities
Meeting Date: February 23, 2026
Report #:2504-4523
TITLE
Approval of Professional Services Contract Number C26194078 with M.E. Simpson Co., Inc. in the Amount Not-to-Exceed $642,609 Water System Leak Detection Survey Services for a Period of Three Years. CEQA Status – Exempt under CEQA Guidelines Sections 15061(b)(2) and (b)(3).
RECOMMENDATION
Staff recommends that the City Council approve and authorize the City Manager, or designee, to execute Contract Number C26194078 (Attachment A) with M.E. Simpson Co., Inc. for water system leak detection survey services for a term of three (3) years and a total not-to-exceed amount of $642,609 including $584,190 for basic services and $58,419 for additional services.
EXECUTIVE SUMMARY
The City of Palo Alto’s Water Distribution System Improvements (WS-11003) projects provide annual water system leakage surveys to identify water leaks in public water distribution mains that would otherwise be too small to surface above ground. These small leaks can be detected with specialized sound-based equipment. This contract engages M.E. Simpson Co., Inc., a qualified leak detection service provider, to conduct annual leak detection work for three (3) consecutive years. The survey will cover the entire water distribution system, identify sub- surface leaks, and provide analysis regarding repairs and capital replacement to reduce water loss.
BACKGROUND
The City owns and maintains 231 miles of public water distribution mains and over 23,000 water service lines throughout the City’s water service area. Most of the water distribution mains were installed from the 1950s to the 1970s. As water pipes age, small leaks develop that may not be visible from the ground surface. Since the late 1980s, the City has implemented annual water main replacement projects to replace aging water pipes. Pipes with multiple reported leaks are often prioritized and replaced; however, small leaks may not be identified without the use of specialized leak detection equipment.
California Senate Bill (“SB”) 555 requires water suppliers in California to perform annual water loss audits and evaluate leak detection as a strategy for meeting water loss standards. The bill required the State Water Resources Control Board (“SWRCB”) to adopt a performance standard for a maximum allowable volume of water loss. While Palo Alto’s water loss from the public water distribution has been below the State standard, in 2023, Utilities Department staff completed an economic analysis of leak detection and concluded that a full water system network leak detection project would be cost effective, with a projected return on investment around 2.5 times the cost of survey. This proactive effort is anticipated to reduce non-revenue water and anticipates repairing leaks earlier and reducing expensive emergency work and enabling the utility to optimize capital investments
This project is the City’s first full water system leak detection project. Under this contract, the first year of leak detection will be completed by the end of 2026. Utility Department crews will work alongside the leak detection services provider to repair leaks or identify pipe segments for pipe replacement. Subsequent years of leak detection in 2027 and 2028 will continue to monitor the system for new leaks and calculate increasing leakage rates for the system. By January 1, 2028, the City of Palo Alto is required to maintain a leakage rate below their water loss standard and maintain and submit a leak registry log to the SWRCB by January 1, 2029. This leak detection project will gather critical system leak data to help the City ensure compliance with the State’s Water Loss Performance Standard A subsequent leak detection project will be planned for 2029 through 2031.
ANALYSIS
The leak detection services will cover 231 miles of water distribution mains (the entire water distribution system) each year, for a total of three (3) years, under the Water Distribution System Improvements (WS-11003) projects. Global Positioning System (“GPS”) data and leak rate data will be gathered for each leak and submitted to Utility Department staff for reference when planning repairs and pipe replacement and to ensure compliance with the State Water Loss Performance Standard. The leak location will also be marked on the ground in the field by the consultant.
Solicitation Process
On March 19, 2025, staff posted a formal request for proposals (“RFP”) for the project on OpenGov, the City’s eProcurement platform, for professional consulting services for the Three- Year Water System Leak Detection Services, PR# 194078. A total of 44 vendors downloaded the RFP package, and the Utilities Department received responses from four leak detection service providers.
Table 1: Summary of Request for Proposal
Project Bid Name/Number 3-Year Water System Leak Detection Services RFP194078
Proposed Length of Project 3-years
Number of Vendors Notified 3572
Number of Proposal Packages Downloaded by Vendors 44
Total Days to Respond to Request for Proposals 56 Calendar Days Pre-Proposal Meeting N/A
Pre-Proposal Meeting Date N/A
Number of Proposals Received 4
Proposal Price Range $478,092 - $15,788,355
Public Link to Solicitation https://procurement.opengov.com/portal/palo-alto- ca/projects/155480/
Utilities Engineering staff reviewed the four proposals and rated the consultants in accordance with factors defined in Palo Alto Municipal Code Section 2.30.410. M.E. Simpson Co., Inc. was selected as the top-ranked proposer based on its demonstrated expertise, methodology, and relevant project experience.
Three proposals were near the expected price for the work, and the fourth proposal price was an outlier, with a much higher price that included unsolicited and unnecessary technology, services, and consulting.
FISCAL/RESOURCE IMPACT
Funding for the first year of this contract is available in the Fiscal Year 2026 Adopted Capital Improvement Program, Water Distribution System Improvements (WS-11003) project.
Subsequent years are subject to City Council’s approval of the annual budget process and appropriation of funds.
STAKEHOLDER ENGAGEMENT
The key stakeholders for this project include the Utilities Department, Office of Transportation, Fire Department, and the Public Works Department. Engagement strategies include Utilities Department Division meetings, planning, coordination meetings, and work reviews with other departments.
ENVIRONMENTAL REVIEW
Council action on this item is exempt from California Environmental Quality Act (CEQA) review under sections 15061(b)(2) and (b)(3) because the proposed actions to assess conditions and prepare a leak report have no potential to result in physical impacts on environment and because any pipe repair work, which the proposed action may relate to, was previously evaluated under CEQA prior to approval and was found to be categorically exempt under CEQA Guidelines Section 15301 (repair, maintenance, or minor alteration of existing public facilities involving negligible or no expansion of existing or former use).
ATTACHMENTS
Attachment A: M.E. Simpson Co., Inc. Contract #C26194078 APPROVED BY:
Alan Kurotori, Director of Utilities