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HomeMy WebLinkAboutStaff Report 2502-4128CITY OF PALO ALTO CITY COUNCIL Monday, May 05, 2025 Council Chambers & Hybrid 5:30 PM     Agenda Item     9.Approval of Contract Change Order No. 1 in the Amount of $1,500,000 to Contract C23186274 with Monterey Mechanical Company, for On-Call Emergency and Critical Construction Services at the Regional Water Quality Control Plant, for a Total Compensation Not-to-Exceed Amount of $3,000,000, funded by Wastewater Treatment Fund Capital Improvement Plant Repair, Retrofit, and Equipment Replacement Capital Project (WQ-19002); CEQA Status – Not a Project 6 4 8 2 City Council Staff Report From: City Manager Report Type: CONSENT CALENDAR Lead Department: Public Works Meeting Date: May 5, 2025 Report #:2502-4128 TITLE Approval of Contract Change Order No. 1 in the Amount of $1,500,000 to Contract C23186274 with Monterey Mechanical Company, for On-Call Emergency and Critical Construction Services at the Regional Water Quality Control Plant, for a Total Compensation Not-to-Exceed Amount of $3,000,000, funded by Wastewater Treatment Fund Capital Improvement Plant Repair, Retrofit, and Equipment Replacement Capital Project (WQ-19002); CEQA Status – Not a Project RECOMMENDATION Staff recommends that the City Council: 1. Approve and authorize the City Manager or their designee to execute Change Order No. 1, adding $1,500,000 to Contract C23186274 with Monterey Mechanical Company for on-call emergency and critical construction services at the Regional Water Quality Control Plant, for a revised total amount not-to-exceed of $3,000,000; and 2. Approve an amendment to the Fiscal Year 2025 Adopted Capital Budget Appropriation for the Wastewater Treatment Fund (requires a 2/3 majority vote) by: a. Increasing the Plant Repair, Retrofit, and Equipment Replacement Project (WQ-19002) appropriation by $1,500,000; and b. Decreasing the Wastewater Treatment Fund balance by $1,500,000. EXECUTIVE SUMMARY The Regional Water Quality Control Plant (RWQCP) is an essential industrial facility that treats wastewater from Palo Alto and its regional partner cities. Because of its critical role, the City maintains on-call construction services with a contractor to respond quickly in the event of a serious equipment or process failure that is too large or complex for the RWQCP maintenance staff to handle. With three work orders already placed to the contractor under the existing contract, the initial funds are nearly depleted. Change Order No. 1 will add more funds to the contract to continue critical repairs and maintenance at the RWQCP. 6 4 8 2 BACKGROUND The RWQCP is a 25-acre industrial complex containing a number of complex treatment unit processes. The RWQCP facilities operate 24 hours a day, 7 days a week. The facilities include steel and concrete buildings, tanks, pumps, pipes, valves, motors, and other industrial machinery. The aging infrastructure must be maintained in a state of operational readiness to meet federal, state, and local regulations. A competitive bid process was conducted in late 2022 and on March 6, 2023, Council approved a contract with Monterey Mechanical Company (MMC) for $1.5 million through March 15, 2028 to provide critical and emergency construction services for the RWQCP.1 Over the past 11 years, MMC has consistently provided high-quality, timely, and cost-effective services for the RWQCP over the course of several previous on-call construction contracts. MMC has completed or is actively engaged in several critical work orders under the current contract, summarized as follows: Work Order 2301 - Repair of the RWQCP Outfall Pipeline in Embarcadero Road. During heavy rains in January 2023 and February 2023, staff discovered the pipe was leaking at joints, raising concerns about potential sinkhole formation. MMC was called in to assess the situation and plan for repairs. The work involved excavating the road, carefully working around existing underground utilities, and sealing the leaks from the exterior of the pipe. MMC used caution not to damage the pipe, as the pipe is always in service, conveying treated effluent from the RWQCP to the Bay. The work entailed driving sheet piles 10-feet into the subsurface and repairing the leaks with a hydrophilic concrete grout and polyurethane foam injection into the joints. MMC also had to plate and unplate the excavated road surface daily and implement traffic control to reroute vehicles, pedestrians, and cyclists. The final cost for this work order was $635,000. Work Order 2302 – Replace Blend Tank Pipe and Valves. On November 13, 2024, a section of pipe in the Blend Tank Mixing Pumps recirculation line ruptured, causing sludge to spray into the air. Operations quickly isolated the system, and MMC was promptly called in to assess the situation and determine a course of action. The immediate task was to replace the damaged section of pipe to return the system to service. MMC was able to source and install a replacement pipe section within 10 days. While the system was being assessed, staff discovered that the entire 25- year-old piping system in the Blend Tank Mixing Pumps was in poor condition and required full replacement. Given the urgent need for these repairs, MMC was tasked with sourcing the necessary materials, including ductile iron glass-lined pipes and valves. The key challenge was the long lead time for delivery: the valves required up to 52 weeks for delivery. Recognizing this, staff directed MMC to immediately initiate a work order so that replacement could proceed as soon as 1 City Council, March 6, 2023; Agenda Item #5; SR #2212-0703 https://recordsportal.paloalto.gov/Weblink/DocView.aspx?id=82227 6 4 8 2 possible. In early January 2025, MMC provided pricing for the required materials, with the total cost for material supply and installation amounting to $847,000. Work Order 2303 – Aeration Basin No. 4 (AB-4) Base Concrete Leak Repairs. AB-4 has been out of service for more than a year as part of a major construction project. After AB-4 was re-filled in preparation to return it to service, staff discovered some weeping / leaks at the concrete foundation along the south wall of the basin. MMC was called in along with their specialty epoxy injection subcontractor. The subcontractor arrived at site (on a Saturday), pinpointed the areas of leakage, and injected polyurethane foam into the concrete to seal the leaks. This work was completed within a week of discovery, and the total cost for these repairs was $5,835. ANALYSIS 6 4 8 2 FISCAL/RESOURCE IMPACT The recommendation in this report will approve a change order to increase the authorized contract amount with MMC. To fund the change order, the report also recommends a budget amendment to increase the Wastewater Treatment Fund’s Plant Repair, Retrofit, and Equipment Replacement capital project (WQ-19002) by $1,500,000. The Plant Repair, Retrofit, and Equipment Replacement project utilizes a distinctive funding approach that includes multiple contracts over several fiscal years. The anticipated expenses are forecasted to project the necessary revenue needed from the partners to fund this project for future fiscal years. Palo Alto treats combined wastewater from Palo Alto, Los Altos, Los Altos Hills, Mountain View, Stanford University, and East Palo Alto Sanitary District (partners). Palo Alto’s share of this project is approximately 37%, and the other five agencies’ share is approximately 63%, based on the volume and strength of wastewater contributions of each partner. The Fiscal Year 2025 budget for WQ-19002 approved by Council is $13.4 million. The contracts listed in Table 1 are some examples of the larger contracts that were encumbered in the first year when the contract was signed, but the spending is over multiple fiscal years, with the expenses billed per the partner agreements. Table #1: Example of some of the larger projects that are funded out of WQ-19002 Project Description Total Cost Palo Alto Share Estimated Time 2 3 *Palo Alto’s share of the project is being reimbursed by Valley Water by the Guiding Principle Five (GP5) grant.4 Increasing the Fiscal Year 2025 Adopted Capital budget appropriation by $1.5 million for WQ- 19002 will provide the necessary funding to use this on-call construction contract for immediate repairs to the Dual Media Filters (DMF) and $0.9 million for future repair needs. This request increases the Fiscal Year 2025 appropriation to $14.9 million. 2 City Council, October 28, 2024; Agenda Item #5; SR #2408-3389 https://recordsportal.paloalto.gov/Weblink/DocView.aspx?id=83060 3 City Council, June 10, 2024; Agenda Item #6; SR #2405-2993 https://recordsportal.paloalto.gov/Weblink/DocView.aspx?id=82887 4 City Council. June 3, 2024; Agenda Item #6; SR #2404-2877 https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=82864 6 4 8 2 STAKEHOLDER ENGAGEMENT ENVIRONMENTAL REVIEW ATTACHMENTS APPROVED BY: Contract Change Order City of Palo Alto Department: Public Works WQCP Contract Number: C23186274 CONTRACT CHANGE ORDER PAGE 1 OF 3 Contract Change Order #01 Project Title: On-Call Emergency Construction Services Project No.: WQ - 19002 Contract Number: C23186274 Date: 3/24/2025 Contractor: Monterey Mechanical Company Change Order: 01 Description of Change Order Background Information: The 5-year contract runs from March 21, 2023 to March 15, 2028 for $1,500,000 ($300,000 / year) to cover the cost of immediate mobilization and construction costs by the on-call contractor for handling emergency and urgent construction services at the Palo Alto Regional Water Quality Control Change Order Justification: Work Order -2301 expenses of $634,535 have been disbursed for emergency and urgent construction services. Work Order -2302, underway with budgeted expenses of $847,000, will nearly deplete the contract budget. Work Order - 2304 budgeted expenses is $650,000, and there are insufficient funds to execute this work order. Another $1,500,000 is requested to replenish the contract with funds to execute Work Order -2304 and to cover future unforeseen urgent and emergency work over the next three years. This C/O will be subject to approval by the Palo Alto City Council. Description of Work to be Performed: Unexpected breakdowns or failures of equipment, piping, electrical, concrete, Incorporates Field Order Number(s): N / A Cost Time This change order will:  No cost change: N/A  Increase cost by $ 1,500,000  Decrease cost by $ N/A This change order will:  No change in time  Increase time by days  Decrease time by days The date of completion as of this change order remains as: March 15, 2028 G/L account number (s):31651 CONTRACT CHANGE ORDER PAGE 2 OF 3 Basis for change in cost:  Unit price(s)  Lump sum  Cost plus  Other: Contract Change Order – continued CONTRACTOR CERTIFICATION: The undersigned Contractor approves this Change Order as to the changes, if any, in the contract price specified for each Line Item and as to the extension of time allowed, if any, for completion of the entire work on account of each Line Item, and agrees to furnish all labor and materials and perform all work necessary to complete any additional work specified therein, for the consideration stated therein. It is understood that the time and cost adjustments set forth in this Change Order include full compensation for any impacts or delays associated with the Line Items addressed in this Change Order. CLAIM PROCEDURE: Any items in Contractor’s Change Order Request that are not included in this Change Order are hereby deemed rejected as of the date of this letter. If Contractor wishes to dispute this rejection, it may submit a Claim pursuant to Section 4.2 of the Contract General Conditions within thirty (30) days of the date of this Change Order. Accepted for Contractor: Accepted for City of Palo Alto: By: By: Title: Monterey Mechanical Co. Project Manager Title: Public Works Department - Project Manager Date: Date: PC O N o . AS I EW A CO R CO Description Amount Reason for Change -01 Unexpected emergency repairs $1,500,000 Replenishment of contract funds for unforeseen work. Total for this change order $1,500,000 Scope of Work Contract Change Order City of Palo Alto Department: Public Works WQCP Contract Number: C23186274 CONTRACT CHANGE ORDER PAGE 3 OF 3 Document Preparation City Approval – WQCP Head By: Tom Kapushinski By: Title: Sr. Project Engineer Title: Date: Date: City Approval – Division Head Signature required on all change orders By: Title: Karin North Asistant Director, Public Works, ESD Date: . By: Title: Brad Eggleston Director of Public Works Date: Contract Change Order – continued Summary of Amounts Payable Under Contract (For Internal Purposes Only) Original Contract Amount: $ 1,500,000.00 Previous Change Orders $ 0.00 This Change Order $ 1,500,000.00 Revised Contract Amount: $ 3,000,000.00 Compare to: Original Contract Authorization:$ 1,500,000.00 Contingency: 0.00 Contract Amendment Authorizations $ 0.00 Contingency added: 0.00 Contingency Authorizations:$ 0.00 Used to date 0.00 Total Authorized Funding: $ 3,000,000.00 Balance remaining 0.00 Change orders shall not be initiated for Council-approved contracts if the revised contract total exceeds the total authorized funding amount.