TO: HONORABLE MAYOR FROM: Kerrie Romanow
AND CITY COUNCIL Jim Shannon
SUBJECT: SEE BELOW DATE: March 25, 2022
Approved Date
3/29/2022
SUBJECT: CONTRACT CHANGE ORDER FOR 8687 – REPAIRS OF WATER SERVICES AND MAINS: 2017
RECOMMENDATION
(a) Approve the Fourth Amendment to the Construction Contract for the 8687 – Repairs of Water Services and Mains: 2017 project between the City and San José Water Company to increase the amount of maximum compensation by $700,000 for a total maximum contract amount of $4,595,679, with no other changes to the contract. (b) Adopt the following 2021-2022 Appropriation Ordinance amendments in the Water Utility Capital Fund:
(1) Increase the System Maintenance and Repairs appropriation to the Environmental Services Department by $700,000;
(2) Decrease the Facility Sites Improvements to the Environmental Services Department by $500,000; and
(3) Decrease the Unrestricted Ending Fund Balance by $200,000.
OUTCOME
The additional funding to the contract for the 8687 - Repairs of Water Services and Mains: 2017 project will enable the construction of required repairs to existing water mains and services, which will provide a reliable source of water to San José Municipal Water System (Muni Water) customers.
BACKGROUND
The 8687 – Repairs of Water Services and Mains: 2017 contract was awarded by the City Council on November 14, 2017 to the sole bidder, San José Water Company, for the initial term of November 2017 to November 2020, in an amount not to exceed $1,617,407. In June 2019, COUNCIL AGENDA: 04/12/22
FILE: 22-476
ITEM: 2.8
HONORABLE MAYOR AND CITY COUNCIL
March 25, 2022
Subject: Contract Change Order for 8687 - Repairs of Water Services and Mains: 2017
City Council approved a contract amendment to add $1,200,000 to the total compensation amount. The contract allows for two contract extension options, which would add one year and $539,136 per option year. Both options have been exercised, and the contract term is set to expire in November 2022. The current maximum compensation allowable under the contract is $3,895,679.
Under this contract, San José Water Company performs all water system repairs consisting of installing pipes, valves, fittings, and all appurtenances necessary to repair water distribution mains and services. San José Water Company is required to respond to emergency repairs (main breaks, etc.) within two hours of notice from the Muni Water and to effect permanent repairs within a designated time frame. The work is performed on an as-needed basis, and San José Water Company is paid based on the actual labor, equipment, and material costs of the work completed as calculated based on the bid unit prices, up to the maximum contract amount. The contract includes several funding sources including the Water Utility Capital Fund, Water Utility Fund, and San José – Santa Clara Treatment Plant Operating Fund/South Bay Water Recycling Operating Fund to accommodate work initiated by Muni Water for unplanned repairs to water facilities.
ANALYSIS
Over the past several years, the cost of minor repairs has increased. During calendar years 2020 and 2021, the City was invoiced approximately $549,000 and $669,000, respectively, for the costs associated with completing system repairs. Comparatively, as of March 1, 2022, the year- to-date expenditures totaled $716,000. Less than $150,000 of the remaining maximum contract payment amount remains available to facilitate water system repairs.
Increased repair costs over the past few years can primarily be attributed to the increased costs of materials, and implementation of COVID-related modifications, such as the additional time and equipment required to complete the work under the required safety protocols (e.g., individual trucks, spacing requirements, modified construction methods and type of equipment used, etc.).
Additionally, some individual repairs have required extensive work and materials to repair due to the size of the break and the associated impact to the street and surrounding environment. The current remaining contract funding would be insufficient to cover the costs to repair any large water main breaks, should one occur over the next several months.
A new Repairs of Water Services and Mains contract had been scheduled to bid in late summer 2022. In light of the status of the current contract, staff has expedited the schedule for the next contract and will complete the advertisement and bid process during April and return to City Council in June for awarding a new three-year contract.
To ensure that repairs to water distribution infrastructure can continue to be made while the replacement contract is pursued, staff recommends approval of a change order to allow for an increase of $700,000 in the contract’s maximum allowable compensation, as may be needed.
HONORABLE MAYOR AND CITY COUNCIL
March 25, 2022
Subject: Contract Change Order for 8687 - Repairs of Water Services and Mains: 2017
Once the new contract term is in place, any remaining funds encumbered to the current contract will be liquidated and returned to Ending Fund Balance.
CONCLUSION
Approval of the contract change order will allow for continued repair work to be completed on the water distribution system while a new contract for future repair work is underway within the City’s bid and award process.
EVALUATION AND FOLLOW-UP
Staff will return to City Council during June for award of a new Repairs of Water Services and Mains contract.
CLIMATE SMART SAN JOSE
The recommendation in this memorandum has no effect on Climate Smart San José energy, water, or mobility goals.
PUBLIC OUTREACH
This memorandum will be posted on the City’s Council Agenda website for the April 12, 2022 Council Meeting.
COORDINATION
This project has been coordinated with the City Attorney's Office.
COMMISSION RECOMMENDATION/INPUT
This contract change order does not require input from a board or commission. Prior to the original contract award, this item was heard at the November 9, 2017 Treatment Plant Advisory Committee meeting, due to the partial contract funding from the San José-Santa Clara Treatment Plant Operating Fund.
HONORABLE MAYOR AND CITY COUNCIL
March 25, 2022
Subject: Contract Change Order for 8687 - Repairs of Water Services and Mains: 2017
COST SUMMARY/IMPLICATIONS
To ensure there is sufficient budget in the System Maintenance and Repairs appropriation to continue repairs to water distribution infrastructure, staff recommends increasing this appropriation by $700,000 in the Water Utility Capital Fund, offset by reducing the Facility Sites Improvements project by $500,000 and reducing the Ending Fund Balance by $200,000. The Facility Sites Improvements project will repair and replace access roads and storm water drainage systems at various water infrastructure sites. Completion of a project has been delayed primarily due to staffing level constraints. A contract is not anticipated to be awarded until next fiscal year; therefore, repurposing these funds for System Maintenance and Repairs appropriation will have no impact to water utility operations. As part of the development of the 2022-2023 Proposed Capital Budget, staff will determine what funding level is necessary for the Facility Sites Improvements project.
BUDGET REFERENCE
The table below identifies the fund and appropriation intended to fund the costs recommended in this memorandum.
Fund
#
Appn
# Appn Name Current Total
Appn
Rec.
Budget
Action
Amt. for
Contract
2021-
2022
Adopted
Capital
Budget
Page
Last Budget
Action
(Date, Ord.
No.)
500 5876 System
Maintenance/Repairs
$760,000
$700,000 $700,000 302 6/22/2021,
30621
500 8999 Unrestricted Ending
Fund Balance
$841,689 ($200,000) N/A 90 10/19/2021,
30682
500 402K Facility Sites
Improvements
$538,000 ($500,000) N/A 260 10/19/2021,
30682
HONORABLE MAYOR AND CITY COUNCIL
March 25, 2022
Subject: Contract Change Order for 8687 - Repairs of Water Services and Mains: 2017
CEQA
Exempt, File No. PP17-050, CEQA Guidelines Section 15301, Existing Facilities; Section 15302 Replace or Reconstruction.
/s/
KERRIE ROMANOW JIM SHANNON
Director, Environmental Services Budget Director
For questions, please contact Jeff Provenzano, Deputy Director, Environmental Services Department, at (408) 277-3288.