City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Utilities
Meeting Date: September 28, 2026
Report #:2607-6560
TITLE
Approval of Contract Amendment Number 2 to Contract C21181846 with CAD Masters, Inc. in the Amount of $420,000 for a total not to exceed $2,370,000 for Continued Support of Utility Engineering Systems and Applications through August 2, 2029 (a total of 8 years); CEQA Status:
Not a Project Under CEQA Guidelines Section 15378
RECOMMENDATION
Staff recommends that the City Council authorize the City Manager to execute Amendment No. 2 to Contract No. C21181846 with CAD Masters, Inc., extending the term of the contract through August 2, 2029, and increasing the contract authority by an additional $420,000, for a revised not-to-exceed amount of $2,370,000.
EXECUTIVE SUMMARY
The Utilities Department requests approval of Amendment No. 2 to extend the existing professional services agreement with CAD Masters, Inc. through August 2, 2029, under a reduced scope of work. CAD Masters developed several of the City's custom utility applications and engineering workflows, including Service Order Generation (SOGEN), DWG Generation (DWGGEN), and Electrical Equipment Maintenance (EEM), and possesses extensive institutional knowledge of the City's utility engineering systems, software architecture, and business processes. Transitioning these services to another consultant would require significant time, cost, and operational risk.
Due to the ongoing transition from Autodesk AutoCAD Map 3D Enterprise (AME) to Esri ArcGIS Pro, the scope of services has significantly decreased. However, continued support remains critical for AutoCAD Civil 3D design work and for maintaining the SOGEN system, which is essential for daily utility operations and development services.
Extending the existing relationship avoids operational risk, ensures continuity during a major system transition, and reflects prudent fiscal management by reducing the scope of work and annual contract authority from $390,000 to $140,000.
BACKGROUND
Since 2009, CAD Masters, Inc. has provided professional services to the Utilities Department to support CAD systems, custom applications, and engineering workflows. Since the original 2009 agreement, the City Council approved a five-year extension in 2011, followed by new five-year agreements in 2016 and 2021.1 The 2021 agreement was originally scheduled to expire on June 30, 2026. Amendment No. 1 subsequently extended the agreement by six months, through December 31, 2026, without increasing the contract amount.
The annual authorization has varied under the successive agreements: $300,000 annually under the 2011 extension, $500,000 annually under the 2016 agreement, and $390,000 annually under the current 2021 agreement. Actual expenditures under the current agreement have averaged approximately $120,000 annually over the past five years, with expenditures reaching approximately $148,000 in one year, reflecting the City’s use of these services on an as-needed basis.
The City’s technology environment has evolved significantly, particularly with the migration to Esri ArcGIS Pro that is currently underway. As a result, Utilities reevaluated its long-term consulting needs and determined that a significantly reduced scope of services is sufficient to support ongoing operations during the transition. Based on anticipated migration and workflow-replacement activities, Utilities determined that an annual authorization of $140,000 over the proposed extension period would provide sufficient capacity while remaining substantially below the $390,000 annual authorization under the current agreement.
ANALYSIS
Technology Transition and Reduced Scope
The City is currently transitioning from Autodesk AutoCAD Map 3D Enterprise (AME) to Esri ArcGIS Pro as the primary platform for utility mapping and asset management. The migration is expected to be substantially completed by the end of February 2027. Following the migration, staff will begin using ArcGIS Pro for day-to-day operations, while Utilities and IT continue supporting user adoption, workflow refinement, and post-implementation support.
During the extension period, staff plans to actively pursue a replacement for SOGEN and transition the custom workflows currently supported by CAD Masters to more standard applications. Staff will reassess its reliance on CAD Masters each year. By the end of the second year, staff expects to issue an RFP for qualified consultants to provide ongoing support for these applications and other systems, such as AutoCAD Civil 3D. The extension period will provide continuity during the transition and allow time to complete a competitive procurement before the amendment expires.
1 City Council, May 17, 2021, Agenda Item No. 5, Staff Report No. 12082:
https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=2258&dbid=0&repo=PaloAlto As a result, a substantial portion of CAD Masters’ previous scope, particularly AME-related support, is no longer required. Future service needs are expected to be significantly reduced.
While the scope has been substantially reduced from previous contract terms, CAD Masters will continue providing support for critical utility engineering applications, including SOGEN, AutoCAD Civil 3D, ArcGIS Pro, Oracle databases, data integration, and related engineering workflows. IT Department will support Utilities in identifying and implementing a long-term replacement for SOGEN within the Esri ecosystem.
Ongoing Critical Support Needs
1. AutoCAD Civil 3D Design Support
Utilities Engineering continues to use AutoCAD Civil 3D for Capital Improvement Program (CIP) projects, including pipeline replacement and rehabilitation. CAD Masters’ familiarity with City standards enables efficient support without additional onboarding or training.
2. Service Order Generation (SOGEN) System
CAD Masters developed the custom SOGEN system to support the City's utility operations.
SOGEN is a tool used to generate and track service orders, support maintenance and repairs, and coordinate work between Engineering and Operations.
SOGEN also supports the WGW Development Services program by tracking utility-related work tied to private development permits and coordinating field operations. Disruption to SOGEN would impact operations, development coordination, customer service, and revenue.
Rationale for Amendment of Current Contract
Staff recommends amending the current contract rather than issuing a new RFP because the remaining services involve support of custom utility applications, specialized engineering workflows, and systems that are to be reviewed for standardization and scalability with current day best practices during this extension period. Conducting a competitive procurement at this time would provide limited value while increasing operational risk while system transition for GIS is ongoing and review of long term replacement of legacy systems is active.
FISCAL/RESOURCE IMPACT
The proposed amendment increases the contract authority by $420,000. Funding for the first year is available through Water Fund Capital Improvement Program Project WS-02014 (WGW Utility GIS Data), resulting in a revised not-to-exceed contract amount of $2,370,000 through August 2, 2029. Funding for any future years is subject to City Council approval through the annual budget process.
STAKEHOLDER ENGAGEMENT
This item involves internal coordination between Utilities Engineering, Operations, Development Services, and IT.
ENVIRONMENTAL REVIEW
This action is not a project under CEQA pursuant to CEQA Guidelines Section 15378(b)(5), as an administrative activity that will not result in direct or indirect physical changes in the environment.
ATTACHMENTS
Attachment A: Amendment No. 2 to Contract No. C21181846 APPROVED BY:
Alan Kurotori, Director of Utilities