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JOHN W. BUSBY II, ATTORNEY AT LAW, P.C.
251 LAFAYETTE CIRCLE, SUITE 350
LAFAYETTE, CALIFORNIA 94549
Tel (925) 299-9600
Fax (925) 299-9608
April 7, 2023
Via E-Mail
San Jose City Council
City of San Jose
200 E. Santa Clara Street
San Jose, CA 95113
Re: 9850 Yard Piping Improvements Phase 2 Project
This firm represents Mountain Cascade, Inc. (“MCI”), which was initially determined to be the lowest responsive and responsible bidder for the 9850 Yard Piping Improvements Phase 2 Project (the “Project”) for the City of San Jose (the “City”). This letter is being submitted in advance of MCI’s presentation at the April 25, 2023 City Council meeting, to present facts and legal analysis contesting the City’s decision to revoke its initial Notice of Intent to Award the project to MCI, in favor of Michels Trenchless, Inc. (“Michels”). MCI requests that the City reinstate its original Notice of Intent to award the project to MCI, the lowest responsible and responsive bidder by more than $1.15 million.
I. EXECUTIVE SUMMARY
After issuing a Notice of Intent to Award Contract to MCI in January 2023, Michels Trenchless, Inc., the second low bidder, submitted a bid protest on the ground that MCI’s bid was non- responsive because it did not include subcontractor superintendent resumes, a requirement not found on the City’s Bid Document Checklist, but rather buried deep within the technical specifications. Though Michels cited no decisional legal authority, and no argument that the resumes had any impact on the bid process, the City exercised its discretion to sustain the protest and issue a Revised Notice of Intent to award the project to Michels on February 7.
As detailed below, the Revised Notice of Intent conflicts with well-established California law holding that a deviating bid which substantially conforms to a call for bids should be set aside only if “the deviation is capable of facilitating corruption or extravagance, or likely to affect the amount of bids or the response of potential bidders.” (Bay Cities Paving & Grading, Inc. v. City of San Leandro, 223 Cal. App. 4th 1181, 1188; Ghilotti Construction Co. v. City of Richmond (1996) 45 Cal.App.4th 897, 908, citing 47 Ops.Cal.Atty.Gen. 129, 130 (1966).) As courts and the California Attorney General have recognized, deviations from precise technical requirements are to be expected, and must be allowed for: “It is inconceivable that inconsequential departures
San Jose City Council
City of San Jose
Re: 9850 Yard Piping Improvements Phase 2 Project
April 7, 2023
will not appear .. but if the unit, it toto … generally conforms to the city’s needs and will substantially perform the service which the city requires, non-conformity between plan and bid does not exist.” (47 Ops.Cal.Atty.Gen. 129, 130–131 (1966); Konica Bus. Machines U.S.A. Inc. v. Regents of Univ. of California, 206 Cal.App.3d 449, 454 (1988).) Indeed, the City Municipal Code recognizes that “informalities or minor irregularities in bids or bidding may be waived. (San Jose Municipal Code §27.10.570, “Minor Irregularities.”)
Under Bay Cities, Ghilotti, and the other cases briefed below, the factual circumstance here – the failure to submit subcontractor superintendent resumes which were not listed as a requirement on the Bid Submittal Checklist – plainly constitutes an inconsequential variance, as it did not afford MCI a competitive advantage and had no impact on the amount of the bid. Indeed, Michels’ bid protest did not even allege a competitive advantage or impact on the bid amount, nor did the City’s written decision to issue the Revised Notice of Intent. As such, and keeping in focus the City’s primary responsibility to the public interest, the City must accept MCI’s low bid. (Ghilotti, supra, at 908-909, “It certainly would amount to a disservice to the public if a losing bidder were to be permitted to comb through the bid proposal or license application of the low bidder after the fact, and cancel the low bid on minor technicalities, with the hope of securing acceptance of his, a higher bid. Such construction would be adverse to the best interests of the public and contrary to public policy.”)
MCI’s position is further supported by the attached expert opinion of Jim Foley, former Deputy Director of Public Works for the City. Mr. Foley opines that the inconsequential nature of the superintendent resumes is evident from the fact that the requirement is buried within 2,700 pages of technical specifications, and is not on the Submittal Checklist, which was expressly designed by the City to ensure bidders are fully aware of all documents required for submitting a successful bid and to eliminate opportunities for bid protests and/or bid subversion. Moreover, it is ill advised to require superintended resumes as part of the bidding requirement, as the superintendents may well change between the time of the bid and the start of the project, which would require a change order and potential increased contract price. For that reason, resumes are typically addressed through the submittal process at the commencement of the work on a project, not in the bidding process. (Exhibit 1, Expert Opinion.)
At most, the omission of resumes by MCI constituted a minor and insubstantial variation, which indisputably had no impact on the bid process. As a result, the City must exercise its discretionary power under the law to revoke the Revised Notice of Intent and award the project to MCI, and in the process save the City and its resident taxpayers over $1.15 million in project costs.
San Jose City Council
City of San Jose
Re: 9850 Yard Piping Improvements Phase 2 Project
April 7, 2023
II. FACTUAL BACKGROUND
A. Mountain Cascade, Inc.
MCI has had a long successful relationship with the City of San Jose spanning more than 42 years. During the last 15 years, MCI has completed public work improvement projects totaling 51 million dollars over 30 projects within the City’s jurisdictional purview for the City Public Works Department, Santa Clara Valley Water District, and numerous developers installing public utility infrastructure. MCI has never failed to complete a contract.
B. The Request for Bids (“RFB”) and Subsequent Addenda
MCI, along with numerous other potential bidders, received e-mail notice that the City was advertising an RFB for the project on November 21, 2022. The e-mail notice referenced that the solicitation documents would be stored on Biddingo. Of note, the e-mail also attached the Notice to Contractors, which referenced various matters in connection with submitting a bid, including the bid deadline (at that point December 15, 2022), required bid security, prebid meeting, Labor Code requirements, Project labor Agreement, licensing requirements, Department of Industrial Relations (“DIR”) requirements, bidder’s experience requirement, and bond and insurance requirements. There was no reference to submitting resumes for subcontractor superintendents. (Exhibit 2, Notice of RFB.)
The plans and specifications for the Project, posted on Biddingo, were split into two sections:
(1) Division 00, Procurement and Contracting Requirements; and (2) Technical Specifications.
The Procurement and Contracting Requirements section contained the Notice to Contractors, referenced above, along with a document titled “Submittal Checklist for Bidders,” which by its title purports to list the documents required to be submitted with the bid. The submittal checklist referenced the Proposal, Non-Collusion Affidavit, Bid Sheet, Bidder’s Bond, Statement of Bidder’s Experience, and List of Subcontracts. Even under the “List of Subcontractors,” the checklist did not reference any requirement for resumes. In fact, resumes are not mentioned anywhere in any of the Procurement and Contracting Requirements. The only reference to subcontractor resumes is buried deep within the 2,700 page Technical Specifications at the following sections:
33 01 30.73-8: Carbon Fiber Reinforced Polymer Rehabilitation 33 01 30.71-5: Cured-in Play Pipe Rehabilitation
40 05 37.71-4: Geopolymer Mortar Rehabilitation
San Jose City Council
City of San Jose
Re: 9850 Yard Piping Improvements Phase 2 Project
April 7, 2023
Each of these sections contains a subsection which states that on-site superintendent resumes for the contractor must be submitted, but provides the City discretion as to whether the absence of resumes would warrant a determination that the bid was non-responsive: “Failure to provide the required information [resumes] may result in determining a contractor to be non-responsive.”
The City subsequently published 5 addenda packages. While the addenda addressed certain specifications, and notably extended the bid submission deadline to January 12, 2023, they did not address the resume submission issue.
C. The Bid Proposals And Notice Of Intent To Award The Project To MCI
MCI submitted its bid proposal for $15,701,000.00, on January 12, 2023. MCI understands that the only other bid proposal was from Michels, and was significantly higher than MCI’s bid, at $16,855,430.00.
On January 23, 2023, the City issued a Notice of Intent to Award the contract for the Project to MCI, the apparent low bidder. (Exhibit 3, Notice of Intent.)
D. Michels’ Bid Protest And MCI’s Response
On January 27, 2023, Michel’s submitted a bid protest to the City in letter format. The bid protest asserted that MCI’s bid was not responsive to the bid documents based on the following two grounds: (1) MCI’s statement of experience did not meet the requirements stated in the bid documents; and (2) MCI did not submit superintendent resumes for its subcontractors. (Exhibit 4, Michels’ Bid Protest.)
Of note, while the protest letter promised to provide “specific references to … legal authorities,” not a single decisional authority was cited. As detailed in the legal analysis section below, California law does not support Michels’ bid protest. Moreover, Michels did not cite any evidence, or event contend, that the failure to submit superintendent resumes had any impact on the bid amount or created an unfair competitive advantage in favor of MCI.
On January 30, MCI submitted a letter response to the bid protest. As to MCI’s first point, the letter noted that the projects listed in MCI’s bid plainly satisfied the five experience criteria in the bid documents. MCI listed three “substantially similar” projects on which it was the general contractor, the project completion date was after January 2010, and at least two of the projects were completed at an operating wastewater treatment facility. In sum, MCI’s bid plainly complied with the bid requirements on the issue of MCI’s experience. Michels’ bid protest
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City of San Jose
Re: 9850 Yard Piping Improvements Phase 2 Project
April 7, 2023
appeared to purposefully misrepresented MCI’s bid in an effort to obtain the Project. (Exhibit 5, MCI Response to Bid Protest.)
As to the second ground of the bid protest, MCI noted that their bid was consistent with the bid documents (the submittal checklist, notice to contractors, and proposal), which precisely defined the requirements for a responsible and responsive bid, and none of which referenced resumes.
E. The City Sustains Michels’ Bid Protest, In Part, And Issues A Revised Notice Of Intent To Award
On February 7, the City issued a Revised Notice of Intent to Award Contract. The Revised Notice noted that the City reviewed the bid protest and MCI’s response, and determined that the bid protest should be sustained. (Exhibit 6, Revised Notice of Intent.)
In an accompanying memo, the City found that the first ground for Michels’ bid protest – that MCI failed to meet the requirements listed on the City’s Statement of Bidder’s Experience – was “baseless,” as three of the five projects referenced in MCI’s bid met the Bidder’s Experience requirements (of the remaining two projects, one was not yet complete, and the other did not meet the minimum pipeline diameter). (Exhibit 6, Revised Notice of Intent, Memo.)
The City found that the second ground for Michel’s bid protest – that MCI’s bid did not contain superintendent resumes – was valid, without acknowledging the discretionary nature of the requirement (“the failure to submit may result in determining a bidder to be non-responsive).
The City acknowledged that MCI had since provided the required documentation, but noted that accepting the late submittal would be “inconsistent with ensuring a fair, transparent, and competitive procurement process.” The City did not cite any evidence or rationale as to why the absence of subcontractor superintendent resumes rendered the procurement process unfair, non- transparent, or non competitive. (Id.)
F. Post Revised Notice Of Intent Communications With Department Of Public Works
On February 16, MCI requested a formal hearing from the City to contest the Revised Notice of Intent. In response, the Public Works Department notified MCI that the City Council was scheduled to consider the recommended award of the Project at its regularly scheduled public meeting on April 25, 2023, and that MCI could submit any documents to the City Council by no later than April 21. The e-mail further notified MCI that it could address the City Council when it receives public comment during its consideration of the Public Works Director’s Recommendation at the April 25 meeting. (Exhibit 7, E-mail Communication with Public
San Jose City Council
City of San Jose
Re: 9850 Yard Piping Improvements Phase 2 Project
April 7, 2023
Works.) In addition to this written submission and the attached documents, MCI intends to present its position at the meeting on April 25.
III. LEGAL ARGUMENT
A. California Law Dictates That An Agency May, And Should, Waive Bid Irregularities Where They Do Not Impact The Amount Of The Bid Or Afford Competitive Advantage, And The Waiver Is In The Public Interest
The fundamental rule of competitive bidding, applicable to public works projects in the City of San Jose, is that a contract “must be awarded to the responsible bidder submitting the lowest responsive bid.” (San Jose Muni Code §27.10.540, “Award”; California Public Contract Code §10180; Valley Crest Landscape, Inc. v. City Council, 41 Cal.App.4th 1432, 1438 (1996).) The term “responsive,” at issue here, means that the bid promises to do what the bidding instructions require, and responds accurately and completely to the solicitation. (Valley Crest, supra, at 1438; Ghilotti, supra, at 904.) It is clear, however, that California law permits considerable leeway in “responsiveness.” As the cases below illustrate, the de minimis variance in MCI’s bid was inconsequential to the bidding process or amount, and did not justify sustaining Michels’ unreasoned bid protest. As a result, and in light of the public interest of saving more than $1.15 million in project fees, the City must revoke its Revised Notice Of Intent and award the Project to MCI.
1. Ghilotti Construction v. City of Richmond
Ghilotti involved competing bids on a road construction project in the city of Richmond. The contract specifications included a provision that the contractor would itself perform “contract work amounting to not less than 50 percent of the original total contract price.” However, the lowest bid, by a company called GBCI, showed that “it would be subcontracting 55.44 percent of the total contract price.” After a protest by the second lowest bidder, GCC, the city decided to “waive the 50 percent requirement as ‘nonsubstantive and inconsequential’ and awarded the contract to GBCI. Thereafter, the trial court issued an order denying GCC’s petition for writ of mandate to prevent the city from awarding the contract to GBCI. (Ghilotti, supra, at 903.)
The Court of Appeal affirmed the trial court’s decision, emphasizing that a deviating bid must be set aside only if “the deviation is capable of facilitating corruption or extravagance, or likely to affect the amount of bids or the response of potential bidders." (Ghilotti, supra, at 908.) These considerations must be evaluated “from a practical rather than a hypothetical standpoint, with reference to the factual circumstances of the case. They must also be viewed in light of the public interest, rather than the private interest of a disappointed bidder.” (Id. at 908-909.) The
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Court noted that “it certainly would amount to a disservice to the public if a losing bidder were to be permitted to comb through the bid proposal or license application of the low bidder after the fact, and cancel the low bid on minor technicalities, with the hope of securing acceptance of his, a higher bid. Such construction would be adverse to the best interests of the public and contrary to public policy.” (Ghilotti, supra, at 908-909.)
In comparison to the percentage of subcontractor work requirement in Ghilotti – a requirement which appears critical but was nonetheless deemed “inconsequential” – the failure to submit subcontractor superintendent resumes here was entirely innocuous and insignificant; a “minor irregularity” which should be waived under section 27.10.570 of the Municipal Code.
2. Bay Cities v. City of San Leandro
In Bay Cities, the City of San Leandro published a call for bids for the construction of a BART project. The project requirements included submitting a proposal, using a standard form provided by the City, and providing a bid deposit securing the proposal, which could be in the form of a bond executed by an authorized surety company. Information regarding the bid requirements was on the face of the City’s contract book. (Bay Cities, supra, at 1184-1185.)
Contractor G&B was the low bidder, however its bid was missing the first page of its bid bond, which contained the terms of the form bid bond. The bid did include the second page, which contained the signatures of the surety, G&B’s president, and notary certificates. G&B subsequently rectified the error, submitting the first page of the bid bond, albeit after the sealed bids had been opened. (Id.)
The second lowest bidder, Bay Cities, filed a bid protest, arguing that G&B’s bid was non- responsive due to the omitted page. G&B’s attorney responded, stating that the inadvertent irregularity was minor and waivable by the City. The City ultimately agreed with G&B and adopted a resolution identifying G&B as the low bidder and waiving any irregularities in G&B’s bid. (Id. at 1185-1186.)
Bay Cities’ petition for a writ of mandate was denied by the Alameda Superior Court, with the court reasoning that the irregularity was “minor,” and did not affect the amount of the bid or provide G&B with a competitive advantage. Moreover, the bid bond was a form document and thus it was apparent that the second page of the bid bond referred to the first, and the second page identified the project at issue.
The Court of Appeal affirmed the trial court’s decision, citing Ghilotti for the well-established proposition that a bid which “substantially conforms to a call for bids may, though it is not
San Jose City Council
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Re: 9850 Yard Piping Improvements Phase 2 Project
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strictly responsive, be accepted if the variance cannot have affected the amount of the bid or given a bidder an advantage or benefit not allowed other bidders or, in other words, if the variance is inconsequential.” (Id. at 1188.) The court further referenced the Ghilotti “inconsequential” test: whether the deviation gave the bidder an unfair competitive advantage or otherwise defeated the goals of insuring economy and preventing corruption in the public contracting process. (Id.) As in Ghilotti, the Court emphasized the practical nature of the evaluation, with reference to the facts of the case, viewed in light of the public interest. The court echoed the Ghilotti mandate that a losing bidder should not be permitted to challenge the low bid on a technicality, forcing the public entity to accept a higher bid. (Id. at 1189.)
In analyzing the failure to provide the first page of the bid bond, the court noted that the first, missing page, contained only three blank places for the insertion of additional information: (1) the name of the principal (i.e., the bidder), (2) the name of the surety, and (3) the date of the submission of the bid. (Id. at 1190.) Yet the second page of the bid bond, which was submitted, contained the name of the principal and surety, and there could be no confusion at to the date of submission of the bid. In sum, the city had the required information, even absent the submission of the first page. Likewise here, the City had the requisite information to make a determination that MCI’s subcontractors were qualified, including their names, contractor license numbers, DIR registration numbers, place of business, and portion of work. The only absent information were resumes for the precise superintendent, a person that may very well change by the date of commencement of the project. Like the alleged failure to submit a complete bid bond in Bay Cities, the mere absence of superintendent resumes could not be deemed “consequential,” or impact the bid amount.
3. Konica v. Regents of University of California
In contrast to Ghilotti and Bay Cities, Konica provides an example of a bid that contained a “consequential” deviation that impacted the bid amount and led to a competitive advantage, and was therefore properly set aside. In Konica, the University of California advertised a “Request for Quotation” on a contract for photocopy machines and service, including detailed performance specifications for various categories of copy machines. Konica was underbid by Copy–Line.
The University awarded Copy–Line the contract even though the machines designated in its bid did not meet the required specifications in two categories, and the machines that where required to be bid (and which Konica did bid), cost thousands of dollars more than those bid by Copy- Line.
The Court examined legal authorities tracing back to 1941 for the proposition that a deviating bid may still be accepted “if the variance cannot have affected the amount of the bid or given a bidder an advantage or benefit not allowed other bidders,” because it is “inconceivable that
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inconsequential departures will not appear …” (Konica, supra, at 454, citing 47 Ops.Cal.Atty.Gen. 129, 130–131 (1966), quoting Dougherty v. Folk (1941) 70 Ohio App. 304.) In view of those authorities, the court conducted the necessary fact specific analysis and found that neither Copy–Line nor the University directly disputed the fact that strict adherence by Copy–Line to the performance specifications would have resulted in an increased bid. Because the deviation from specifications gave Copy–Line a competitive advantage, the court concluded the contract had to be set aside.
The distinction between the present matter and Konica is clear. Unlike Konica, there is no evidence, or even argument, that the absence of superintendent resumes had zero impact on the bid amount or process.
4. Menefee & Valley Crest, The Alternative Bid Bond Release Test
The Menefee and Valley Crest cases, among others, state an alternative approach to evaluating the validity of a bid, the bid bond test. As detailed below, MCI’s bid passes the bid bond test as well.
In Menefee v. County of Fresno, 163 Cal.App.3d 1175 (1985), Brewer–Kalar, the lowest bidder, failed to sign the bid on the appropriate line. County counsel determined the bid was “non- responsive” and invalid, and advised the board of supervisors not to accept the bid. The board voted to accept the lowest bid and waive any irregularity due to the absent signature. The second lowest bidder, Menefee, filed a petition for a writ of mandate to compel the board to award the contract to it. The trial court denied the writ and the appellate court affirmed. The reviewing court determined Brewer–Kalar's bid was valid despite the absence of the signature on the appropriate line, because the bid was signed elsewhere.
In Menefee – decided well prior to Ghilotti and Bay Cities – the court reasoned that the issue in determining the validity of a bid is whether the bidder would be liable on its bond if it attempted to back out after the bid was accepted, and that waiver of an irregularity in a bid should only be allowed if it would not give that bidder an unfair advantage by allowing the bidder to withdraw its bid without forfeiting its bid bond. “Thus, we should ask—what would have happened if Brewer–Kalar had refused to enter into a contract and sought to recover its bid bond? If they could use the absence of an executing signature on their bid to avoid a contract, then they had an unfair advantage—the opportunity to back out—not given to other bidders who signed their bids properly.” (Id. at 1181.) The court found that under the statute for relief of bidders, Public Contract Code §5103,1 a bidder could be released only for typographical or arithmetical errors,
1 Public Contract Code §5103, “Grounds for Relief,” states as follows:
San Jose City Council
City of San Jose
Re: 9850 Yard Piping Improvements Phase 2 Project
April 7, 2023
not a mistaken submission of a bid. Since relief was not available, the irregularity could be waived and the bid was valid. (Id.). Likewise here, MCI could not have been released from its bid bond for failure to submit subcontractor superintendent resumes, as that is not a “typographical or arithmetical error,” but rather an error in reading the specifications under §5103. As such, under Menefee, the “irregularity” in MCI’s bid can, and should, be waived.
In Valley Crest Landscape, Inc. v. City Council, 41 Cal.App.4th 1432 (1996), the second lowest bidder on a city project protested the lowest bid due to its failure to comply with a contract requirement that the bidder perform at least 50 percent of the work itself. The lowest bid, by North Bay Construction, was $4,077,675, however it deviated from the bid requirements in that it specified that 83 percent of the work would be performed by a subcontractor. The city engineer contacted North Bay regarding its subcontracting figures, warning North Bay its bid would be considered nonresponsive unless further information was forthcoming. North Bay responded that the 83 percent figure was “not correct,” and was the product of estimated subcontracting amounts which were all that were available until just before the bid closing.
North Bay provided “actual correct subcontractor percentages’ totaling 44.65 percent.” The city engineer and the public works director spot-checked the revised percentages by contacting the five largest subcontractors, and were satisfied the new figures were accurate. The city council voted to award the contract to North Bay.
Valley Crest, the second low bidder, sought a writ of mandate in the Superior Court, which was denied. The Third District Court of Appeal reversed, following the approach set forth in Menefee: a bid irregularity may only be waived if it would not give the bidder an unfair advantage by allowing it to withdraw its bid without forfeiting the bid bond. (Id. at 1442.) The court concluded,
The bidder shall establish to the satisfaction of the court that:
(a) A mistake was made.
(b) He or she gave the public entity written notice within five working days, excluding Saturdays, Sundays, and state holidays, after the opening of the bids of the mistake, specifying in the notice in detail how the mistake occurred. (c) The mistake made the bid materially different than he or she intended it to be. (d) The mistake was made in filling out the bid and not due to error in judgment or to carelessness in inspecting the site of the work, or in reading the plans or specifications.
The San Jose Municipal Code §27.10.600 expressly incorporates this public contract code section, stating: “The Director may consent to relieving a bidder of its bid for mistake if the bidder established the grounds for such relief in accordance with California Public Contracts Code Sections 5101 through 5103, as those sections may be amended.”
San Jose City Council
City of San Jose
Re: 9850 Yard Piping Improvements Phase 2 Project
April 7, 2023
North Bay had an unfair advantage because it could have withdrawn its bid. Misstating the correct percentage of work to be done by a subcontractor is in the nature of a typographical or arithmetical error. It makes the bid materially different and is a mistake in filling out the bid. As such, under Public Contract Code section 5103, North Bay could have sought relief by giving the City notice of the mistake within five days of the opening of the bid. That North Bay did not seek such relief is of no moment. The key point is that such relief was available. Thus, North Bay had a benefit not available to the other bidders; it could have backed out. Its mistake, therefore, could not be corrected by waiving an ‘irregularity.’ (Id.)
Again, under Public Contract Code §5103, MCI could not have withdrawn its bid as a result of the absence of subcontractor superintendent resumes. As a result, there was no unfair advantage to MCI, and its bid irregularity could, and should, be waived.
B. The Failure to Submit Subcontractor Resumes was Inconsequential
Under the authorities cited above, a court of law clearly would not view the failure to submit a subcontractor superintendent resume as “consequential” where the requirement was not on the face of the bid, but rather buried in the technical specifications, and where there is no evidence (or even argument) that the deviation afforded MCI an advantage or had any impact on the bid process whatsoever.
This is further elucidated by MCI expert Jim Foley, clarifying that subcontractor resumes are typically addressed through the submittal process at the commencement of the work on a project, not in the bidding process. (Exhibit 1, Expert Opinion.) That is because the construction industry is subject to the same or similar employee turnover as most other industries, and there is no guarantee that a superintendent disclose in a bid package will be the superintendent months later when the project commences.
Moreover, had the City intended for the subcontractor superintendent resumes to be a consequential requirement, it should have been included in the procurement documents and, most notably, the Submittal Checklist, which was developed by the City to assure that bidders were fully aware of all documents required for submitting a successful bid and eliminating opportunities for bid protests or bid subversion. The City’s mistake in not including the resume requirement in the Submittal Checklist ironically defeated the intent of the checklist, as Michels has opportunistically subverted MCI’s bid based on an obscure technicality. At the very least, the absence of any mention of resumes in the Submittal Checklist is a glaring indication that it was not a consequential aspect of the bid process, and that the City’s revocation of MCI’s bid on that basis was unjustified.
San Jose City Council
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In sum, neither Michels nor the City has, or can, make a case that the deviation in MCI’s bid was consequential under the authorities cited above, or that it would have justified a release from MCI’s bid bond. As a result, the absence of subcontractor superintendent resumes cannot serve as a basis for usurping this project from MCI, only to saddle the City with a contract that exceeds MCI’s bid by more than $1.15 million.
C. The City Must Take Action to Rectify Its Error
Given that the sustaining of Michels’ bid protest and issuance of the Revised Notice to Intent did not comply with California Law, the City must take action to rectify this error. Under the Municipal Code, the City is required to revoke its Revised Notice of Intent, and reinstate its original Notice of Intent to Award to MCI, the lowest responsible and responsive bidder. (San Jose Municipal Code §27.10.540.) Alternatively, the City may reject all bids and re-advertise for new bids. (Id. at §27.10.530.) In the event the City takes neither action and moves forward with a contract for the project with Michels, MCI will seek all available relief from the Superior Court.
MCI looks forward to presenting its position, and addressing any questions, at the April 25, 2023 City Council meeting. If you have any questions in the meantime, or need further information, please contact me at your earliest convenience.
Regards,
JOHN W. BUSBY II
JWB/sm
cc: Lauren Profeit, CIP Procurement Manager ([email protected]) Matt Cano, Director of Public Works ([email protected]) Nora Frimann, San Jose City Attorney ([email protected]) Kevin Fisher, San Jose Assistant City Attorney ([email protected]) Toni Taber, San Jose City Clerk ([email protected])
San Jose City Council
City of San Jose
Re: 9850 Yard Piping Improvements Phase 2 Project
April 7, 2023
Mayor and Council Members:
Mayor Matt Mahan ([email protected])
Rosemary Kamei, District 1 ([email protected])
Sergio Jimenez, District 2 ([email protected])
Omar Torres, District 3 ([email protected])
David Cohen. District 4 ([email protected])
Peter Ortiz, District 5 ([email protected])
Devora Davis, District 6 ([email protected])
Bien Doan, District 7 ([email protected])
Domingo Candelas, District 8 ([email protected])
Pam Foley, District 9 ([email protected])
Arjun Batra, District 10 ([email protected])
EXHIBIT 1
James W. Foley, P.E.
ENGINEERING AND CONSTRUCTION CONSULTANT
P. O. Box 2153
Saratoga, California 95070
(408) 777-9917
[email protected]
Bid Protest - Project 9850 – Yard Piping Improvements Phase 2
Expert Opinion
I have been requested by John W. Busby, II, Attorney at Law, P.C., counsel for Mountain Cascade, Inc., to provide my opinion regarding the bid protest by Michels Trenchless, Inc. and the associated staff report prepared by Lauren Profeit, CIP Procurement Manager, dated February 7, 2023. I retired from the City of San Jose in 2003 as a Deputy Director of Public Works. I was a key participant in the 1992 update of the standard specifications, and the associated bid process, bid documents, and construction contract. The bid process and documents are essentially the same today as they were in 1992. In my 27+ year career with the City, I was directly involved in bidding for approximately 1000 projects.
Contrary to the findings of the staff report, I find that Mountain Cascade, Inc.,(MCI) is the lowest responsive, responsible bidder for the following reasons:
1. The ”Bid Documents” were completely clear and filled out correctly and submitted by MCI as a responsive bid. There was no requirement in the bid documents related to the requirement for superintendent resumes as referred to in Sections 33 and 40 of the project technical specifications. The Bid Documents in the “Specifications” included a “Submittal Checklist for Bidders” that was developed by San Jose to assure that bidders were fully aware of all documents required for submitting a successful bid and eliminating opportunities for bid protests and/or bid subversion. Therefore, MCI’s bid was responsive since they submitted all required documents in accordance with the requirements of this checklist – Section 00 01 13 (page 9} of the “Specifications.”
2. The requirement for superintendent resumes is part of the technical specifications and is not referenced in any of the bid documents – Notice to Contractors included. The plans and specifications for the project are comprised of 2 books of 1351 pages each or 2702 pages and 5 addenda. If this resume requirement were an essential requirement of the project, it should have been addressed in the Notice to Contractors and provisions made for inclusion in the bid package itself. And it should have been included as an item in the ”Submittal Checklist for Bidders.” This requirement for resumes as part of the bid documents is essentially buried in the project technical specifications in an obscure location.
3. The requirement for resumes as part of a bidding requirement is ill advised. Should the individuals submitted as part of the bid process leave the employment of the successful low bidder, a contract change order would be required for a replacement individual. A contract change order could result in an increased contract price or a possible claim from a contractor.
Bid Protest - Project 9850
Yard Piping Improvements Phase 2
Expert Opinion
EXHIBIT A
CITY CHARTER
Adopted in 1965 and
as Amended by Voters through November
2022
Updated February 2023
(pending attorney review)
60 | P a g e Updated 2/2023
City government at any time. Such accountant shall at all times abide by the current and most accepted standards of municipal accounting. As soon as practicable after completion of a special audit, if such an audit should be ordered by the Council, said independent accountant shall submi t a special report to the Council setting forth their findings and recommendations with respect to the matters covered by such special audit. Also, as soon as practicable at the end of the fiscal year, a final report shall be submitted by such independent accountant to the Council setting forth their findings and recommendations respecting the records, accounts, and fiscal procedures covered by their general audit. Three (3) copies of each report shall be placed on file in the office of the City Clerk whe re they shall be available for public inspection.
Amended at election June 7, 1994
Amended at election November 8, 2022
SECTION 1216. Bonded Debt Limit.
The City shall not incur any indebtedness evidenced by general obligation bonds which shall in the aggregate exceed the sum of fifteen percent (15%) of the total assessed valuation of all the real and personal property within the City.
SECTION 1217. Public Works Procurement Requirements.
(a) DEFINITIONS. For the purposes of this Section , the following w ords have the following meanings.
(1) “Public Works Project” means a project for the construction, erection, improvement or demolition of any public building, street, bridge, drain, ditch, canal, dam, tunnel, sewer, water system, fire alarm system, electrical traffic control system, street lighting system, parking lot, p ark or playground. “Public Works P roject” shall not mean or include the following: (i) maintenance of any Public Works P roject, (ii) any repairs , construction, erection, improvement, or demolition incidental to such maintenance, or (iii) the planting, care or maintenance of trees, shrubbery or flowers.
(2) “Major Public Works Contract” means a City contract for a Public Works Project that, at the time of award, requires the expenditure of City funds of more than $600,000, excluding the cost of any materials, supplies or equipment the City may have acquired or may separately acquire.
(3) “Minor Public Works Contract” means a City contract for a Public Works Project that, at the time of award, requires the e xpenditure of City funds in an amount less than the threshold amount to be a Major Public Works Contract.
61 | P a g e Updated 2/2023
(4) “Design-Build Contract” means a City contract in which both the design and construction of the Public Works Project are procured from a single entity.
(b) ADJUSTMENT FOR INFLATION. Every July 1st the $600,000 threshold used to define a Major Public Works Contract will be adjusted for inflation in the construction industry as set forth more specifically by ordinance of the City Council.
(c) PROCUREMENT – MAJOR PUBLIC WORKS CONTRACTS. The primary means of procuring a Major Public Works Contract will be formal public bidding in which, following public notice, the City will award the contract to the lowest responsive bidder that is responsible. Formal public bid ding will occur consistent with the requirements in Subsections (e) through (h) of this Section, and as otherwise set forth by ordinance of the City Council.
(1) As a procurement alternative for Major Public Works Contracts, the City can select a contractor using objective criteria to determine the best combination of price and qualifications. This procurement process will be set forth by ordinance of the City Council consistent with the following requirements.
(i) The City will follow the formal bidding requirements in Subsections (e) through (h) except as otherwise provided in Subsections (c)(1)(ii) through (c)(1)(v).
(ii) The City will designate a panel to evaluate the qualifications of the bidders and to assign to each bidder a qualification score.
The panel will base the qualification score on an evaluation of objective criteria that may include, but is not limited to, a bidder’s safety record, past performance, labor compliance, demonstrated management competence, financial condition and relevant experience.
(iii) The qualification score may be determined as part of a prequalification or as part of the bid solicitation. In either case, the relevant documents will set forth the criteria, methodology and rating system the panel will use to evaluate bidders.
(iv) Bid prices will remain sealed until after the evaluation panel has assigned a qualification score to each bidder.
(v) Based on a formula that uses the assigned qualification score and bid price, t he City will award the contract to the lowest responsive bidder that is responsible.
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(2) As a procurement alternative for Major Public Works Contracts over $1,000,000, the City may negotiate and award a Design-Build Contract without formal public bidding if the City Council finds that such a contract would save money or result in faster project completion. The process for competitively selecting a design -build contractor, and for negotiating and awarding a Design -Build Contract, will be set forth by ordinance of the City Council.
(d) PROCUREMENT – MINOR PUBLIC WORKS CONTRACTS. The City will procure Minor Public Works Contracts in the manner set forth by ordinance of the City Council.
(e) NOTICE REQUIREMENT AND PROCEDURE.
(1) The notice inviting bids shall set a date for the opening of bids, and shall be published at least once, at least ten (10) days before the date set for opening of bids, in a newspaper of general circulation in the City or electronically so that the notice is publicly available to the general community of potential bidders.
(2) All bids, including such bidder’s security as may be required, shall be presented under sealed cover.
(3) If the successful bidder fails to execute the contract within the time specified in th e notice inviting bids or in the specifications referred to therein, the amount of the security required, if any, may be declared forfeited to the City and may be collected and paid into its General Fund, and all bonds so forfeited may be prosecuted and th e amount thereof collected and paid into such fund.
(4) All bids shall be publicly opened, and the aggregate bid of each bidder declared at a time and place specified in the notice inviting bids.
(5) The Council shall have the right to waive any informal ities or minor irregularities in bids or bidding.
(f) APPRENTICESHIP PROGRAM. Nothing herein shall preclude the City from including in any contract provisions that require contractor participation in an apprenticeship program for at-risk youth.
(g) OTHER PROGRAMS. Nothing herein precludes the City from implementing otherwise lawful programs supporting the use of small, local or economically disadvantaged businesses.
(h) SELECTION OF LOWEST RESPONSIBLE BIDDER. If no bids are received, the Council may re-advertise, or have the “ Public Works Project ” Bid Protest - Project 9850
Yard Piping Improvements Phase 2
Expert Opinion
EXHIBIT B
San Jose, California, Code of Ordinances
SAN JOSE MUNICIPAL CODE
San Jose, California, Code of Ordinances Created: 2023-03-22 14:18:26 [EST] (Supp. No. 41)
SAN JOSE
MUNICIPAL CODE
VOLUME I
2000
_____________________________
Contains the 2022 Supplement 41, including
local legislation current through December 13, 2022
_____________________________
Created: 2023-03-22 14:22:58 [EST]
(Supp. No. 41)
27.10.560 Award Authority - Director.
A. The Director is authorized to award and execute a Major Public Works Contract under the following conditions:
1. The amount of the Major Public Works Contract is $1,000,000 or less, exclusive of the amount of any bid alternates being awarded; and
2. There is no unresolved bid protest that conforms to the requirements of Part 6 of this Chapter 27.10.
B. The Director is authorized to award and execute a Major Public Works Contract under the following conditions:
1. The authority to award bid alternates, even if their cost would cause the Major Public Works Contract to exceed $1,000,000;
2. The authority to reject bid alternates; and
3. The authority to establish a construction contingency in an amount consistent with Section 27.04.050.
C. The Director's authority under this Section is subject to the limitation that the contract amount, plus the project delivery costs, plus the construction contingency must be less than or equal to the amount appropriated for the project.
D. The Director's authority under this Section includes the authority to approve the plan or design associated with the Major Public Works Contract the Director awards and executes.
E. The $1,000,000 threshold amount in this Section is subject to adjustment for inflation in accordance w ith Section 27.04.100.
(Ords. 30308 and 30540.)
27.10.570 Minor Irregularities.
In accordance with Section 1217(e)(5) of the Charter of the City of San José, informalities or minor irregularities in bids or bidding may be waived.
(Ord. 30308.)
EXHIBIT 2
Addendum No. 1 for the 9850 – Yard Piping Improvements Phase 2 Date: 11/22/2022
SECTION 00 91 13
ADDENDUM NO. 1
TO
PROCUREMENT DOCUMENTS
FOR THE
9850 – YARD PIPING IMPROVEMENTS PHASE 2
ISSUE DATE: 11/22/2022
Notice is given that the following changes are hereby made to the procurement documents for the above-referenced project.
THIS ADDENDUM CONTAINS 6 PAGES
(Including attachments)
Addendum No. 1 for the 9850 – Yard Piping Improvements Phase 2 Date: 11/22/2022
SPECIFICATIONS:
1. Replace the Notice to Contractors in its entirety with the Revised Notice to Contractors attached and included in this addendum (Addendum No.1).
CITY OF SAN JOSE NOTICE TO CONTRACTORS
ENVIRONMENTAL SERVICES DEPARTMENT
CIP PROCUREMENT
(408) 535-8300 / [email protected]
9850 – YARD PIPING IMPROVEMENTS
PHASE 2 00 10 11 - 1 NTC NON MUNICIPAL
REVISED 04/25/22
SECTION 00 10 11
NOTICE TO CONTRACTORS
NOTICE IS HEREBY GIVEN that the City of San José (“City”) seeks sealed bid proposals in accordance with the following.
Project Name: 9850 – Yard Piping Improvements Phase 2 (“Project”)
Description of Work: The Project generally involves: 1) Partial Depth Concrete Crown Repair with epoxy coating on the pipelines of 120” Raw Sewage (“RS”), 84” Secondary Effluent, 102” Nitrification Influent and Nitrification Junction Structure, and 84” Primary Effluent; 2) Rehabilitation of 48” Santa Clara Force Main Segment 1 with Cured-In-Place Pipe; 3) Rehabilitation of 48” Santa Clara Force Main Segment 2 and 3 with geopolymer mortar and epoxy coating; 4) Rehabilitation of 96” RS with carbon fiber- reinforced polymer; 5) Installation of Containment Wall at Effluent Junction Structure 1 and Fish Screens; 6) Installation of epoxy coating for the upper 4’ of the walls and the ceiling, and containment wall at the access opening, replacement of a 14” pipe penetration, sediment removal and miscellaneous rehabilitation in No. 3 Water Wet Well at Final Influent Pump Station.
Engineer’s Estimate: $12,200,000.
FILING OF BIDS
All proposals must be filed with the Director of Public Works, City of San José, City Hall, 200 E. S anta Clara St., 5th Fl., San Jose, CA 95113-1905, on or before 3:00 p.m. on December 15, 2022.
A representative of the Director of Public Works will publicly open and declare the aggregate bid of each bidder, using the Zoom virtual mee ting platform, shortly after the filing deadline. Interested parties can access the virtual bid opening by visiting https://www.sanjoseca.gov/CIPBids.
OBTAINING PROCUREMENT DOCUMENTS
The City is using Bid dingo, an online bid solicitation website, to facilitate this procurement. This procurement is registered on Biddingo (https://www.biddingo.com/sanjose) under the bid number and bid name above and has the following commodity code classifications(s):
[017500] Concrete
[100301] Construction – Backfill, Digging, Ditching, Grading, Rock Stabilization, Etc. [100304] Construction – Curb, Gutter, Sidewalk, (Includes Driveway) [100306] Construction – Pipeline (Including Removal, Relocation, Lining, and Pipe Fittings) [100308] Construction – Shoring and Reinforcement
[100310] Construction – Structural and Reinforcement Steel [100313] Construction – Utilities
[100314] Construction – Vertical Concrete, Pour-in- Place, and Form/Place/Finish [100315] Construction – Wastewater Treatment Plant
[100501] Demolition Services
[023000] Earthwork and Paving Equipment
[101101] Excavation Services
[101401] Hydraulics (Pump, Hydraulic Motor, Valves, Gauges, Etc.) – Installation, Maintenance, Repairs [040600] Instruments and Testing
CITY OF SAN JOSE NOTICE TO CONTRACTORS
ENVIRONMENTAL SERVICES DEPARTMENT
CIP PROCUREMENT
(408) 535-8300 / [email protected]
9850 – YARD PIPING IMPROVEMENTS
PHASE 2 00 10 11 - 2 NTC NON MUNICIPAL
REVISED 04/25/22
[047000] Measurement and Control Devices
[071200] Sewage and Waste Treatment
[071500] Sewer and Storm Drain
All documents and information related to this procurement, including the Project plans and specifications, are on the Biddingo website under the bid number and bid name above. Once registered, bidders can vi ew and download information regarding this procurement, including the bid and contract documents, as well as submit questions related to the bid and contract documents.
Once a bidder views or downloads documents f or this bid, the bidder becomes a “docum ent taker.” Biddingo will send “document takers” a notification every time the City posts an addendum, responds to a question and/or provides new informat ion related to this procurement. Each bidder is responsible for selecting the appropriate notification options related to its Biddingo account. Following review by the City, proposals will be uploaded to Biddingo.
BIDDER’S RESPONSIBILITY TO CHECK FOR UPDATES
Bidders mu st periodically check Biddingo to make sure th e bidder has the most recent information about this procurement.
REQUESTS FOR INFORMATION
Bidders must submit questions or requests for information concerning any part of this bid in writing to the City via Biddingo. The City will not respond to any communication or question submitted directly to City staff or City consultants. Submit questions via Biddingo no later than December 8, 2022 at 3:00 pm.
All bidders are expected to have read and understand the "Procurement and Contract Process Integrity and Conflict of Interest," Section 7 of the Consolidated Open Government and Ethics Provisions adopted on August 26, 2014, a complete copy of which can be found at https://www.sanjoseca.gov/home/showdocument?id=19565.
Any bidder who violates this policy will be subject to disqualification. The grounds for disqualification include contact regarding this procurement with any C ity official or employee or evaluation t eam member other than the Procurement Contact or Purchasing Officer from the time of issuance of this solicitation until the end of the protest period.
RELIANCE UPON INFORMATION
Bidders can only rely on information obtained through Biddingo. Bidders can not rely on any other written or oral statements of the City or its officers, directors, employees or agents regarding this procurement. In the event a bidder obtains infor mation about th is procurement through any m eans other than Biddingo, the City will not be responsible for the completeness, accuracy or timeliness of the final bid proposal.
BID SECURITY
Each bid must be accompanied by cash, a certified check, a cashier's check or a bidder's bond in the sum of not less than 10% of the total aggregate amount of the bid . Checks shall be made payable to the order of the City of San José. Bonds shall be executed by a surety possessing a valid certificate of authority issued by the Californ ia Department of Insurance and shall name the City of San José as beneficiary. All bids must be addressed to the Director of Public Works, City of San José, shall bear the Project Number and Name and be in a sealed envelope.
PREBID MEETING
A non-mandatory site visit will be held on Tuesday, November 29, 2022 at 10:00am at the San José-Santa Clara Regional Wastewater Facility, 700 Los Este ros Road, San Jos é, CA 95134 . Attendees will check in at the
CITY OF SAN JOSE NOTICE TO CONTRACTORS
ENVIRONMENTAL SERVICES DEPARTMENT
CIP PROCUREMENT
(408) 535-8300 / [email protected]
9850 – YARD PIPING IMPROVEMENTS
PHASE 2 00 10 11 - 3 NTC NON MUNICIPAL
REVISED 04/25/22
Administration Building on Los Esteros Road and meet in Conference Room A. This meeting will be held to allow potential bidders to view the project location. No questions will be answered at this meeting.
The following Personal Protective Equipment is required for the site visit:
• Hard Hat
• Safety Glasses
• Safety Shoes
• Safety Vest
DEPOSIT OF SECURITIES IN LIEU OF RETENTION
Pursuant to the terms and conditions set for th in Public Cont racts Code Section 22300, the contractor may substitute certain securities for any money withheld b y City as retention to ensure contractor ’s performance under the contract. Such substitution of securities in lieu of retention shall be at the contractor’s request and at contractor’s sole expense. The securities shall be in an amount equivalent to the retention to be released.
PREVAILING WAGES AND RELATED LABOR REQUIREMENTS (Non-Municipal Affair) This project is a “public works” as defin ed in Sections 17 20 through 1720.6 of the California Labor Code. The contractor will be required to comply with th e prevailing wage, hour and labor requir ements set forth in C alifornia Labor Code Sections 1720 through 1861 (collectively “State Wage, Hour and Labor Requirements”).
In accordance with the Wage, Hour and Labor Requirements, the contractor will need to pay not less than the local prevailing rate of per diem wages and the local prevailing rates for holiday and overtime work, as determined by the Director of t he California Department of Industrial Relations. Copies of the local prevailing rate of per diem wages and the general prevailing wage r ates for holiday and overtime work in effect for this project are on file and available for your review from the City’s Office of Equality Assurance at 408-535-8430.
See Sections 2 -1.17 and 7 -1.01a(3) of the Special Provisions for the specific State Wage, Hour and Labor Requirements applicable to this contract.
PROJECT LABOR AGREEMENT
This project is subject to the Project Labor Agreement (“PLA”) entered between the City of San José and t he Santa Clara and San Benito Counties B uilding & Construction Trades Council. The awarded Bidder will be required to agree to the terms of the agreement by signing Addendum A – Agreement to be Bound, of the PLA agreement, and submit at the time the contract is executed.
See Attachment 6 for a copy of the PLA including Addendum A.
CONTRACTOR'S LICENSE REQUIREMENTS
All prospective bidders are hereby cautioned that t he Contractor’s State License Law regulates contractor licensing matters. The Contractor, in its bid proposal, shall be require d to disclose its lic ense type, number, and expiration date.
Bidders must have a California contractor’s license, Classification “A” to bid this project.
CONTRACTOR DIR REGISTRATION REQUIREMENTS
The contractor an d all listed subcontractors must be regi stered with the Depar tment of Industrial Relations in accordance with California Labor Code Sections 1725.5 and 1771.1. The City will not accept a bid in which the contractor or any of the listed subcontractors are not registered in accordance with Sections 1725.5 and 1771.1.
CITY OF SAN JOSE NOTICE TO CONTRACTORS
ENVIRONMENTAL SERVICES DEPARTMENT
CIP PROCUREMENT
(408) 535-8300 / [email protected]
9850 – YARD PIPING IMPROVEMENTS
PHASE 2 00 10 11 - 4 NTC NON MUNICIPAL
REVISED 04/25/22
See Section 2-1.17 of the Special Provisions for the “registration” requirements applicable to the contract.
BIDDER’S EXPERIENCE REQUIREMENT
Bidders are advised that there are special expe rience requirements for this contract. Please see Section 00 43 25 - Statement of Bidder’s Experience for specific details.
NONDISCRIMINATION/NONPREFERENTIAL TREATMENT
The Nondiscrimination/Nonpreferential Treatment requirements of Ch apter 4.08 of the San Jose Municipal Cod e apply to this project.
BOND REQUIREMENTS
Bidder’s attention is directed to those provisions of the Specifications which require the contractor to whom the contract for the work is awarded, to file with the City Cl erk at the time the contract is executed , a Contractor’s Payment Bond and a Bond for Faithful Performance meeting all the requirements of the Specifications and approved by the City Attorn ey of the City of San José. Bonds shall be executed by a surety pos sessing a valid certificate of authority issued by the Califo rnia Department of Insurance and shall name the City of San José as beneficiary. The Contractor’s Faithful Performance Bond sh all be for 100% o f the contract amount. The Contractor’s Payment Bond shall be for 100% of the contract amount.
INSURANCE REQUIREMENTS
The CITY will use an Owner Controlled Insurance Program (OCIP) for this Project. The Bidder must submit its bid “net” of its insurance c osts for coverages provided under the OCIP Coverages and Other Coverages Provided by Owner as set forth in Specification Section 00 90 04 ATTACHMENT 4.
END OF SECTION
EXHIBIT 3
EXHIBIT 4
January 27, 2023
Hand Delivered and Sent Via Email to [email protected]
Lauren Profeit
CIP Procurement
Department of Public Works
200 E. Santa Clara St.
San Jose, CA 95113
Re: Bid Protest
Project: 9850 – Yard Piping Improvements Phase 2
Dear Ms. Profeit:
By way of brief introduction, my name is Andrew Simon and I represent Michels Trenchless, Inc. , a member of the Michels Family of Companies (www.michels.us) as Associate General Counsel under a Professional Services Agreement. Michels Trenchless, Inc. (“Michels”) submitted a bid for the 9850 – Yard Piping Improvements Phase 2 Project. Michels received a Notice of Intent to Award Contract to the apparent low bidder, Mountain Cascade, Inc. (“Mountain Cascade”), dated January 23, 2023. This document is attached as Exhibit A for reference. Please consider this letter Michels’ protest of this Notice of Intent to Award Contract . Michels’ legal and factual grounds for this protest, including specific references to relevant documents and legal authorities, are outlined herein.
As the second lowest (and only other) bidder for this Project, Michels has standing to protest this Notice of Intent to Award Contract pursuant to Section 27.10.250(B) of the City’s Code of Ordinances as it has a reasonable possibility of being awarded this contract if the City sustains Michels’ protest.
As outlined in the San Jose Municipal Code Section 27.10.540, the City is statutorily required to award this project to the lowest responsible and responsive bidder. Mountain Cascade’s proposal was not responsive to the Bid Documents as it failed to meet the relevant experience and qualificatio n requirements. Specifically, Mountain Cascade’s proposal failed to identify: (1) Projects demonstrating the experience requirement identified in the Bid Documents and (2) any documentation demonstrating it satisfied the mandatory qualification requirements.
Mountain Cascade’s Statement of Bidder’s Experience Does Not Meet the Requirements as Clearly Stated in the Bid Documents
Project Bid Documents Section 00 43 25 state a bidder must provide a Statement of Bidder’s Experience demonstrating a minimum of three (3) completed projects as references meeting four (4) listed requirements. The projects identified in the Statement of Bidder’s Experience submitted by Mountain Cascade with its Proposal do not meet these mandatory requirements. The four (4) listed requirements
and Mountain Cascade’s Stat ement of Bidder’s Experience form are included in Exhibit A beginning on page 117.
Specifically, the following Projects in Mountain Cascade’s Statement of Bidder’s Experience do not meet the Bid Document requirements:
1. Almaden Valley Inspection & Rehabili tation Project, San Jose, CA . This project is not completed yet, with only “Milestone 9B” being completed in January of 2023.
2. WPCF Primary Clarifier Conversion, Hayward, CA . Requirement No. 2 (b), requires each project involve the “repair of existing pipelines with a minimum diameter of 36 -inches” (emphasis added). This project does not meet this requirement as it did not involve the rehabilitation of an existing pipeline. Instead, the project involved rehabilitating “rectangle structures” comprising drying beds.
3. Digester Facilities Improvement Project, San Lorenzo, CA . Requirement No. 2 (b), requires each project involve the “repair of existing pipelines with a minimum diameter of 36-inches” (emphasis added). The project does not meet this requirement as it did not involve the rehabilitation of an existing pipeline. Instead, the project involved rehabilitating “cylindrical structures” in a digester.
Once these three projects are removed from the Statement of Bidder’s Experience, Mountain Cascade only has two remaining projects – less than the three (3) required in the Bid Documents . Additionally, neither of the two (2 ) remaining projects were performed within an operating wastewater tr eatment facility as mandated by Requirement No. 4 of the Bid Documents.
Note, Requirement No. 2(a) requires each project’s “original contract value amount related to repair of existing pipelines was at least $2.5 Million”. It is impossible to determine if any of the projects identified in Mountain Cascade’s Statement of Bidder’s Experience satisfies this requirement as Mountain Cascade did not complete the required Statement of Bidder’s Experience. The form submitted by Mountain Cascade replaced the column “Initial Contract Amount related to repair of existing pipelines” with a column entitled “Initial Contract Amount”. This failure to provide the information required by this form from the Bid Docum ents alone makes Mountain Cascade’s Proposal non -responsive. Notwithstanding this fact, Michels ques tions if the portion of each project “related to the repair of existing pipelines” exceeds $2.5 Million for each project – especially the WPCF Primary Clarifier Conversion Project (original value $2,993,824). It doesn’t appear this project included any pipe rehabilitation, much less a scope of work exceeding $2.5 Million.
For the reasons outlined above, Mountain Cascade’s Proposal was clearly not responsive to this crucially important requirement of the Bid Documents.
Mountain Cascade Failed to Submit the Required Qualifications Each Bidder was required to submit detailed information outlining the Bidder’s qualifications related to each of the following:
• Carbon Fiber-Reinforced Polymer Rehabilitation (Technical Specification 33 01 30.73-8); • Cured-in Place Pipe (CIPP) Rehabilitation (Technical Specification 33 01 30.71-5); and • Geopolymer Mortar Rehabilitation Technical Specification 40 05 37.71-4).
Specifically, Section 1.05(B) of each of these qualifications states:
Contractor must meet or exceed the criteria contained in this section. Documentation, including on-site superintendent resumes, must be submitted with the proposal to fully demonstrate the mi nimum requirements as outlined in this section. Failure to provide the required information may result in determining a CONTRACTOR to be non- responsive. (Emphasis added)
A copy of these qualification requirements is attached as Exhibit B.
Michels’ pro posal includes detailed information demonstrating Michels meets or exceeds each of the requirements. Mountain Cascade failed to include any evidence whatsoever with its Proposal demonstrating it satisfied these qualifications. As such, Mountain Cascade’s Proposal is non-responsive to the requirements outlined in the Bid Documents.
Additionally, since Mountain Cascade failed to provide any documentation regarding its qualifications, it is impossible to for Michels to opine regarding any specific deficiencies in Mountain Cascade’s qualifications. However, Michels questions if Mountain Cascade meets the requirements – especially with regards to the Geopolymer Mortar Rehabilitation. We reserve the right to raise additional specific concerns if Mountain Cascade submitted any qualifications that were not included in the Notice of Intent to Award Contract or subsequently provides additional qualifications.
CONCLUSION: Mountain Cascade’s Bid Should be Rejected as Non-Responsive and the Contract Should be Awarded to the Only Responsive & Responsible Bidder, Michels Trenchless, Inc.
Michels dedicated significant time and resources carefully reviewing the Bid Documents in order to submit a Proposal meeting all of the stated requirements , a bid which is both responsive and provided by an eminently responsible contractor.
As demonstrated above, Mountain Cascade’s Proposal was without question non -responsive to the Bid Documents in numerous ways. It is a basic tenant of public procurement in California that the City of San Jose must award this contract to Michels as the lowest responsible and responsive bidder. For this reason, Michels protests the Notice of Intent to Award the Contract to Mountain Cascade. We request the City award this Project to Michels as the lowest responsible and responsive bidder consistent with its statutory obligations.
NOTICE OF INTENT TO AWARD CONTRACT
9850 - Yard Piping Improvements Phase 2
January 23, 2023
Dear Bidders,
On January 12, 2023, the City of San José opened bids for the above referenced project. Bid results for this project will be made available on Biddingo at www.Biddingo.com/sanjose.
This letter serves as notification that the Director of Public Works intends to recommend that the City Council award the contract to the apparent low bidder, Mountain Cascade, Inc. on or about April 11, 2023.
A bidder who wishes to protest this Notice of Intent may file a written protest with the procurement contact listed below within five (5) business days following the date this notice is issued. Protests must be received before 5:00pm on the fifth business day, and must include the following information:
a. The protestor’s identity and standing to submit a protest; b. The name of the City Project as listed on the Notice to Contractors; c. A complete statement of the legal and factual grounds for the protest, including specific references to relevant documents and legal authorities; d. Copies of any documents that support the protest; and e. A request for a responsibility hearing in accordance with San Jose Municipal Code Section
27.10.470 of this Chapter if the bidder is protesting a proposed determination that it is not a responsible bidder.
The City of San José appreciates your interest and effort in preparing and submitting a bid for this project. If you have any questions about the bid process or the City's decision to award, please contact
the procurement contact listed below.
Lauren Profeit
CIP Procurement
Department of Public Works
200 E. Santa Clara St.
San Jose, CA 95113
[email protected]
Department of Public Works
Prj ID: 9850
Project Name: Yard Piping Improvements Phase 2
Project Manager: Feng, Tie
Bid Opening Date: January 12, 2023
Today's Date: January 23, 2023
BID RESULTS SUMMARY
Engineer's Estimate $12,200,000.00
Bidder's Name Base Bid %Variance
Mountain Cascade, Inc., Livermore, CA
Apparent Low Bidder
$15,701,000.00 28.70%
Michels Trenchless, Inc. , Brownsville, WI
$16,855,430.00 38.16%
Department of Public Works
EXHIBIT 5
EXHIBIT 6
Department of Public Works
REVISED NOTICE OF INTENT TO AWARD
CONTRACT
9850 - Yard Piping Improvements Phase 2
February 07, 2023
Dear Bidders,
On January 12, 2023, the City of San José opened bids for the above referenced project. Bid results for this project are available on Biddingo at www.Biddingo.com/sanjose .
This letter serves as notification that the City has reviewed the timely written protest filed by Michels Trenchless, Inc. on January 27, 2023, as well as the response submitted by Mountain Cascade, Inc. on January 30, 2023, and has determined that the protest should be sustained. As such, the Director of Environmental Services intends to recommend that the City Council award the contract to the lowest responsive, responsible bidder, Michels Trenchless, Inc. on or about April 11, 2023.
Pursuant to Section 27.10.270B of the San Jose Municipal Code, there will be no additional protest period for this procurement.
The City of San José appreciates your interest and effort in preparing and submitting a bid for this project. If you have any questions about the procurement process, please contact the procurement contact listed below.
Lauren Profeit
CIP Procurement Manager
Department of Public Works
200 E. Santa Clara St.
San Jose, CA 95113
[email protected]
February 7, 2023
Lee A. Zubrod
Michels Trenchless, Inc.
817 Main Street, PO Box 128
Brownsville, WI 53006
[email protected]
SUBJECT: PROTEST OF INTENT TO AWARD CONSTRUCTION CONTRACT FOR ESD 9850: YARD PIPING IMPROVEMENTS PHASE 2
Dear Mr. Zubrod,
This letter is to inform you that City staff has evaluated the letters from your legal counsel, dated January 27, 2023
has determined that your protest should be
sustained.
RECOMMENDATION:
The Director of Environmental Services intends to recommend that the City Council award the construction contract to the lowest responsive, responsible bidder, Michels Trenchless, Inc.
BACKGROUND:
On January 12, 2023, bids were opened for the ESD 9850: Yard Piping Improvements Phase 2 Project. Two bids were received, with Mountain Cascade, Inc. as the apparent low bidder with a bid of $15,701,000.
PROTEST:
On January 27, 2023, Michels Trenchless, Inc. submitted a protest requesting the City reject Inc. deemed non-responsive by
the City for 1) failing to meet the requirements listed on the Experience and 2) failing to submit the documentation required in the Technical Specifications.
SUBJECT: PROTEST OF INTENT TO AWARD CONSTRUCTION CONTRACT FOR ESD 9850: YARD PIPING IMPROVEMENTS PHASE 2
ANALYSIS:
ITEM 1:
The project experience list submitted by Mountain Cascade, Inc. provides projects that meet the experience requirements as laid out in the Statement of Bidders Experience form.
projects that met the following experience requirements:
1. The bidder must have been the general contractor on each of the projects.
2. The projects must have involved construction substantially similar to the
a. The original contract amount related to repair of existing pipelines was at least $2.5 million; and
b. The projects must have involved repair of existing pipelines with a minimum diameter of 36-inches utilizing any of the following methods:
cured-in-place pipe rehabilitation, geopolymer mortar rehabilitation, concrete pipe crown repair, or epoxy coating of inside diameter of pipeline.
3. The substantial completion date for each project must have been after January 2010.
4. The bidder must have completed construction of at least two (2) of the projects at an operating wastewater treatment facility.
In accordance with Section 2-
experience information provided by Mountain Cascade, Inc. and determined that the following three projects met all of the requirements listed in the Statemen ,
including Requirement No. 4:
1. Merced Street Sewer Rehabilitation and Sewer Main Reconstruction
2. WPCF Primary Clarifier Conversion
3. Digester Facilities Improvement Project
The remaining two projects did not meet all of the requirements listed in the Statement of Requirement No. 3 and the Ashlan Ave. Sewer Replacement & Rehabilitation Project did not meet Requirement 2b. As such, these projects were discounted.
ITEM 2
The bid package (proposal) submitted by Mountain Cascade, Inc. failed to provide the documentation specified in Sections 33 01 30.73-8, 33 01 30.71-5, and 40 05 37.71-4 of the Technical Specifications.
SUBJECT: PROTEST OF INTENT TO AWARD CONSTRUCTION CONTRACT FOR ESD 9850: YARD PIPING IMPROVEMENTS PHASE 2
Technical Specifications Sections 33 01 30.73-8, 33 01 30.71-5, and 40 05 37.71-4 establish experience requirements relating to the following:
1. Carbon Fiber-Reinforced Polymer Rehabilitation
2. Cured-in-Place Pipe Rehabilitation
3. Geopolymer Mortar Rehabilitation
Section 1.05B of each of the abovementioned Technical Specifications specifically states that documentation establishing that the bidder meets or exceeds the experience requirements, including on-site superintendent resumes, must be submitted with the proposal. No such it should be deemed non-responsive.
Although Mountain Cascade, Inc. has since provided the City with the required documentation, accepting their late submittal
commitment to ensuring a fair, transparent and competitive procurement process.
To that end, the City plans to issue a Revised NOITA on or around February 10, 2023, stating that the Director of Environmental Services intends to ask the City Council to award the construction contract to the lowest responsive, responsible bidder, Michels Trenchless, Inc.
Thank you,
Lauren Profeit
CIP Procurement Manager
San José City Hall, 5th Floor
200 E. Santa Clara Street
San José, CA 95112
[email protected]
EXHIBIT 7