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Patrick P. Gunn
+1 415 733 6145
[email protected]
Goodwin Procter LLP
525 Market Street
Floor 32
San Francisco, California 94105
goodwinlaw.com
+1 415 733 6000
April 1, 2026
VIA EMAIL AND FEDERAL EXPRESS
Gary B. Bell, Esq.
Town Attorney – Town of Yountville
Colantuono, Highsmith & Whatley PC
555 University Avenue, Suite 275
Sacramento, California 95825
[email protected]
Re: Yountville Commons Project – Suspension of Ordinance No. 26-539 and Concerns Regarding Design-Build Procurement
Dear Mr. Bell:
We write again on behalf of our client, Gary Jabara, as a follow-up to our letter of March 16, 2026, and in light of recent public developments concerning the Town of Yountville’s Yountville Commons Project (“Project”). This letter addresses irregularities regarding the Town’s design-build procurement approach and the pattern of pre-award professional services spending, which together raise significant questions under California law and which our client intends to scrutinize closely going forward.
I. SERIOUS CONCERNS REGARDING THE TOWN’S PROCUREMENT APPROACH Our client’s position regarding the effect of the Napa County Elections Division’s verification of sufficient valid signatures on the referendum petition challenging Ordinance No. 26-539, the expected formal certification by the Town Council at its April 7, 2026 meeting, and the Town’s obligation to take no further action implementing the Project pending resolution of that process, is addressed in detail in our companion letter of even date herewith. We incorporate that letter by reference and direct the Town’s attention to it for a full statement of our client’s position on these matters.
Our client also has serious and substantial concerns regarding related issues: the Town’s procurement conduct in connection with the Project: first, the procurement methodology the Town was employing for the construction of the housing component, and second, the pattern of sole-source and thresholdadjacent professional services contracting that preceded and surrounded the design-build procurement.
These concerns are addressed in turn below.
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A. The Applicable Legal Framework for Public Contracting California municipalities are generally required to publicly bid construction contracts above specified monetary thresholds. Under the California Uniform Public Construction Cost Accounting Act (“UPCCAAA”), codified at California Public Contract Code sections 22000 et seq., and under the general public bidding requirements of the Public Contract Code, a municipality that proposes to undertake construction work estimated to exceed certain thresholds must award that work through an open, competitive bidding process in which any qualified contractor may submit a bid based on complete and detailed plans and specifications. The fundamental purpose of these requirements is to protect the public fisc, prevent favoritism and corruption, and ensure that public funds are expended through a process that yields the most competitive and accountable pricing available. See Cal. Pub.
Contract Code § 20162; City of Inglewood-Los Angeles County Civic Center Authority v. Superior Court (1972) 7 Cal.3d 861, 867-68; Kajima/Ray Wilson v. Los Angeles County Metropolitan Transportation Authority (2000) 23 Cal.4th 305, 314.
The design-build delivery method is an authorized but exceptional alternative to traditional competitive bidding. It is governed by California Public Contract Code sections 22160 through 22169 for local agencies. Under section 22160, a local agency may use design-build contracting only after adopting, by resolution or ordinance, the procedures required by that statute. The Town represented in its FAQ that it did so by adopting Resolution No. 25-4371 on June 17, 2025. We do not dispute, for purposes of this letter, that the design-build method is potentially available to the Town under the statute.
However, the availability of design-build does not relieve the Town of its obligation to conduct a genuine, competitive, and transparent procurement process. California Public Contract Code sections 22160 through 22169 require that a local agency’s design-build process include: (a) a Request for Qualifications published to the widest possible audience; (b) an objective evaluation of proposers based on defined, pre-announced criteria; and (c) award to the proposer offering the “best value” to the agency, evaluated on a competitive basis considering price, technical expertise, life-cycle costs, and other defined factors. See Cal. Pub. Contract Code §§ 22161, 22164. The statute does not permit the Town to use the design-build label as a mechanism to steer a major public contract to a pre-selected firm or to convert what should be a competitively evaluated contract into a non-competitive, negotiated arrangement. See Kajima/Ray Wilson, supra, 23 Cal.4th at 316 (agency discretion in alternative procurement methods does not displace the competitive framework required by statute).
B. Specific Procurement Deficiencies of Record
1. Conflict of Interest: Paid Consultants on the Evaluation Panel Our client’s most serious concern regarding the design-build procurement as actually conducted relates to the composition of the evaluation panel and the apparent failure to satisfy the conflict-of-interest waiver conditions set forth in the Town’s own RFQ.
The August 5, 2025 staff report accompanying Resolution No. 25-4382 identifies the design-build evaluation panel as including Brendan Kelly of Kelly+Morgan Architects and Sean Grinnell of Pound April 1, 2026
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Management, alongside Town staff and committee chairpersons. At the time of their panel service, Kelly+Morgan Architects held approximately $935,000 in active Town contracts for the Project, and Pound Management held approximately $444,000 in active Town contracts , a combined financial relationship with the Town approaching $1.4 million. Both firms would, if a design-build contractor were selected, be expected to work alongside and coordinate with that contractor going forward.
Section 3.1.2 of the Town’s own RFQ provides that a potential conflict of interest may be waived only if “the role of the Consultant was limited to provision of preliminary design, reports, or similar ‘low-level’ documents” and the consultant “did not include assistance in development of instructions to Offerors or evaluation criteria.” Kelly+Morgan’s on-call contract (Resolution 25-4372, July 15, 2025) expressly includes in its scope of work “performance specifications and design criteria” and “RFQ/RFP support for design-build procurement.” On the face of this record, the RFQ’s own conflict-of-interest waiver conditions were not satisfied: Kelly+Morgan’s role was not limited to low-level documents, and it did include direct assistance in developing the criteria against which proposers would be evaluated — criteria that Kelly+Morgan’s principal then helped apply as a sitting panel member.
This structural conflict is compounded by an asymmetry in the RFQ’s communication rules. Section
3.1.2(b) prohibited proposers from communicating with “any other Town employees, representatives, or consultants” about the project under penalty of disqualification, while simultaneously allowing Kelly+Morgan and Pound Management — Town consultants — to serve as evaluators with full access to all submissions. Proposers were, in effect, barred from communicating with the very individuals who were scoring their proposals.
These facts present not merely a theoretical conflict but a concrete, document-supported structural irregularity that our client intends to raise formally if the procurement is resumed.
2. Systemic Sole-Source and Threshold-Adjacent Contracting Pattern The design-build evaluation panel conflict did not arise in isolation. It is the culmination of a 15-month procurement pattern in which the Town committed approximately $14.1 million in public funds with little competitive scrutiny.
Of the professional services vendor engagements associated with the Project from March 2024 through March 2026, our review of publicly available staff reports and resolutions reveals that only one, the KNN Public Finance engagement ($100,000), awarded in August 2025 through a documented RFP process with multiple proposals, was competitively procured. That single competitive contract represents approximately 0.7% of total Project spending commitments to date.
Most troubling is the pattern by which the Town established relationships with its two largest consultants. Kelly+Morgan Architects was originally engaged at $40,000 — $5,000 below the $45,000 threshold requiring Council approval — by the Town Manager, then expanded through three successive amendments (totaling $295,000 to the original PSA, an 838% increase) before a separate $600,000 oncall contract was added, bringing total capacity to $935,000. Pound Management was initially engaged at $44,000 — $1,000 below the same threshold — then expanded to $444,000 through amendments, a April 1, 2026
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341% increase. In neither case does the public record reflect any competitive process, any documented sole-source justification, or any formal evaluation of the firms’ qualifications beyond general staff characterizations. Multiple of these amendments were approved on the consent calendar without individual Council deliberation.
The pattern of structuring initial contracts at amounts immediately below the Council-approval threshold, then escalating through serial amendments, is a well-recognized indicator of circumvention of competitive procurement requirements. Whether or not it constitutes technical statutory violation, it falls far short of the fiduciary standards applicable to a municipality managing public funds of this magnitude. The first genuine competitive procurement in this Project, for KNN Public Finance, did not occur until June 2025, more than 15 months after the Project commenced in March 2024, by which time approximately $4 million in consulting commitments had already been made on a sole-source basis.
Additionally, our client notes that the BAE Urban Economics engagement, Agreement No. 2025-1030, which produced the financial feasibility analysis underlying the Town’s justification for a $91.5 million project, was approved under the Town Manager’s authority, and no dollar amount for that engagement has ever appeared in any public document that we can locate.
C. The Contemplated Design-Build Award Was Imprudent and Susceptible to Abuse Beyond the specific conflicts and contracting irregularities described above, our client’s principal concern with the Town’s overall approach is the substance of what was contemplated: the award of an approximately $60 million public construction contract at a stipulated sum — a fixed, negotiated price — selected from among a small group of pre-qualified design-build entities, without the benefit of complete construction documents.
This approach is problematic for several reasons. First, in conventional public contracting practice, a stipulated sum contract is awarded based on complete and detailed plans and specifications, so that the contractor bears the risk of building to known requirements at a defined price. In the design-build context, by contrast, the “price” is established before the design is complete, creating an inherent information asymmetry that creates fertile ground for cost inflation, scope manipulation, and change order practices that systematically increase the final contract price above the originally stipulated sum.
Second, the use of a stipulated sum in a context where the design has not been finalized effectively insulates the contract price from meaningful external scrutiny. Members of the public, including our client and other taxpayers, have no meaningful ability to evaluate whether a stipulated sum of approximately $60 million represents fair value when construction drawings do not exist. The normal safeguard that competitive bidding provides, market-tested pricing from multiple independent contractors working from the same complete plans, is precisely what the Town’s approach would have foregone.
Third, the size of this contract renders the stakes of any procurement irregularities especially significant. California courts have long recognized that the competitive bidding requirements imposed on public agencies reflect a fundamental policy judgment that large public contracts must be let by April 1, 2026
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competitive means to protect the public interest. See Kajima/Ray Wilson, supra, 23 Cal.4th at 314. The rationale for that policy is particularly powerful here, where the Town is a small municipality with limited financial reserves, where the Project is projected to carry operating losses from the outset, and where the Town has already committed approximately $14 million in public funds without a completed financial feasibility study.
D. Warning Regarding Future Procurement Actions
Given the foregoing, our client places the Town on formal notice that he intends to scrutinize closely any future procurement activity in connection with the Yountville Commons Project or any successor project on the same site. We do not, by this letter, assert that the Town’s RFQ and RFP process as structured was necessarily unlawful in its design, the Town appears to have followed the required statutory steps in issuing its solicitation and establishing evaluation criteria. Our concern is with what may come next: specifically, the risk that the Town, if it resumes the Project in any form, may seek to negotiate contract terms, pricing, or scope with a pre-selected design-build entity, or may again engage professional services on a sole-source basis, in a manner that lacks genuine competitive discipline and public accountability.
Should the Town ultimately repeal Ordinance No. 26-539 and thereafter advance a modified version of the Project, or should the voters approve the Ordinance at referendum, our client expects that any resulting construction procurement will be conducted with strict compliance with all applicable requirements of the Public Contract Code, including full transparency as to contractor selection rationale and pricing basis. Any resumption of procurement that bypasses genuine competitive evaluation, whether by direct negotiation, sole-source award, continuation of existing relationships without re-competition, or other means, will be subject to immediate legal scrutiny.
Our client further expects that the Town will comply scrupulously with all requirements of the Ralph M.
Brown Act, California Government Code sections 54950 et seq., with respect to any deliberations concerning procurement strategy, contractor selection, contract scope, and contract pricing. See Cal.
Gov. Code § 54956.8 (authorizing closed sessions only for real property negotiations; construction contract negotiations are not similarly exempt).
Should it appear that the Town is seeking to employ any approach that circumvents the competitive bidding requirements of the Public Contract Code, or that results in a stipulated sum contract awarded on the basis of incomplete design documents without proper competitive justification, our client will not hesitate to take appropriate legal action. This may include, without limitation, seeking injunctive relief to prevent the award of an unlawfully procured contract, as well as other relief available under applicable law.
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We trust the Town will govern itself accordingly.
Sincerely,
Patrick P. Gunn
Goodwin Procter LLP
cc: Gary Jabara (client)