REPORT TO COUNCIL
SUBJECT
Title
Allow the Withdrawal of a Bid in Conformance with State Law and Reject a Bid Received for the Wolfe-Evelyn Water Plant Reconstruction Project (PW16-20)
Report
REPORT IN BRIEF
Approval is requested to reject a bid in the amount of $3,525,606 received from Mountain Cascade Inc. of Livermore for the Wolfe-Evelyn Water Plant Reconstruction Project. A lower bid in the amount of $3,285,792 was also received from Blocka Construction of Fremont, but the contractor requested to withdraw the bid in conformance with State law due to a material math error in the approximate amount of $150,000. Staff recommends allowing the Blocka bid to be withdrawn as explained below. The withdrawal of this bid will make Mountain Cascade the sole bidder for this Project. Both bids are well above the engineer’s estimate.
EXISTING POLICY
Sunnyvale Municipal Code Section 2.09.140(b) enables the awarding authority, which in this case is the City Council, to reject bids greater than $100,000 received in response to competitive bid solicitations. Furthermore, this Code section provides that “if all bids are rejected, the City has the discretion to readvertise.” Sunnyvale Municipal Code Section 2.09.100(c) establishes that a bidder alleging a mistake in a bid may be permitted to withdraw its bid in conformance with State law, which requires the awarding authority to consent to the withdrawal (Section 5101(a) of the California Public Contract Code).
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines section 15378(b)(5) in that it is a governmental organizational or administrative activity that will not result in direct or indirect changes in the environment.
BACKGROUND AND DISCUSSION
The Wolfe/Evelyn Water Plant is one of the major facilities within the City’s potable water distribution system. The facility, located at 753 Ajax Drive in a residential neighborhood, includes one 5-million gallon water storage tank and a pump station. The mechanical and electrical systems associated with the Plant were built in 1959 and are now past their life expectancy. The associated site improvements, including paving and access to the structures housing the mechanical and electrical components, are not compliant with current standards, and are in need of replacement.
An Invitation for Bids to rehabilitate the facility was advertised on May 6, 2016, with two bids being received on June 1. Although seven potential bidders attended the mandatory pre-bid meeting, several of them declined to submit bids citing current workload. The apparent low bidder, Blocka Construction, submitted a bid in the amount of $3,435,642 but a math error in adding the bid line items was discovered by staff which decreased their bid to $3,285,792. Blocka requested that the City either pay the higher bid price or allow withdrawal of their bid in conformance with State law. Pursuant to Section 5100 et. seq. of the California Public Contract Code, a bidder alleging a mistake in a bid may be allowed to withdraw their bid within five working days by consent of the awarding authority without forfeiting their bid bond. Blocka submitted their request to withdraw within the required timeframe and was informed by staff that their bid appeared to meet the statutory requirements for withdrawal. However, the consent to allow a bid withdrawal must be given by the awarding authority, which in this case is the City Council.
The engineer’s estimate on the project is $2,513,000, and the construction budget is currently underfunded at approximately $1,660,000. As has been seen with similar projects such as the Baylands Stormwater Pump Station No. 2 Rehab (awarded June 28, RTC No. 16-0572), due to the high demand for electrical/mechanical work, costs have regularly been coming in higher than anticipated because of the labor shortages for these types of specialty subcontractors. Other local municipalities have mentioned to staff that they have experienced this with similar projects in recent months as well.
Staff recommends consenting to the bid withdrawal request by Blocka and rejecting the sole bid received from Mountain Cascade so the specifications can be re-evaluated and the project re-bid. Should the project be re-bid without substantial changes to the specifications, then Blocka will be precluded from submitting a new bid pursuant to Section 5105 of the California Public Contract Code.
FISCAL IMPACT
No fiscal impact results from rejecting the bid.
Funding Source
This project is funded by the Water Supply and Distribution Fund.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City's official-notice bulletin board outside City Hall, at the Sunnyvale Senior Center, Community Center and Department of Public Safety; and by making the agenda and report available at the Sunnyvale Public Library, the Office of the City Clerk and on the City's website.
RECOMMENDATION
Recommendation
1) Allow Blocka Construction to withdraw its bid in conformance with State law; and 2) Reject the bid received from Mountain Cascade Inc.
Staff
Prepared by: Pete Gonda, Purchasing Officer
Reviewed by: Timothy J. Kirby, Director of Finance
Reviewed by: John Stufflebean, Director of Environmental Services
Reviewed by: Manuel Pineda, Director of Public Works
Reviewed by: Kent Steffens, Assistant City Manager
Approved by: Deanna J. Santana, City Manager