REPORT TO STADIUM AUTHORITY BOARD
SUBJECT
Title
Action on Stadium Manager’s Request to Approve an Amendment No. 1 to the Agreement with ACCO Engineered Systems, Inc. and an Amendment No. 2 to the Agreement with O.C. McDonald Co., Inc. to Extend the Term and Increase Rates for Mechanical and Plumbing Maintenance and Repair Services at Levi’s Stadium
Report
BOARD PILLAR
Ensure Compliance with Measure J and Manage Levi’s Stadium
BACKGROUND
As the Stadium Manager of Levi’s Stadium, Forty Niners Stadium Management Company LLC (Stadium Manager) is responsible for maintaining “the Stadium in the Required Condition and operate the Stadium as a quality NFL and multi-purpose public sports, public assembly, exhibit and entertainment facility” as required by the Stadium Management Agreement between the Stadium Authority, Forty Niners SC Stadium Company LLC (StadCo), and Stadium Manager.
As described in an August 24, 2021 report to the Stadium Authority Board (Board), the Stadium Manager conducted a Request for Proposal (RFP) process for mechanical and plumbing maintenance and repair services for the Stadium. Four proposals were received and through the evaluation process, ACCO Engineered Systems, Inc. and O.C. McDonald Co., Inc. were selected as the most competitive and responsive bidders to perform the required scope of work. The Stadium Manager recommended award to both vendors for the purpose of having master agreements in place for mechanical and plumbing maintenance repair services and planned to use the vendors for specific task orders and award work based on responsiveness, availability, cost, and expertise. On August 24, 2021, the Stadium Authority Board approved the Stadium Manager’s request to execute agreements with both vendors to perform mechanical and plumbing maintenance and repair services at Levi’s Stadium.
The Agreement with ACCO Engineered Systems, Inc. (Attachment 1) and the Agreement with O.C. McDonald Co., Inc. (Attachment 2) each include an initial term of three years with the option to extend for two additional one-year periods, in an amount not to exceed $250,000 per contract year, for a total not to exceed amount of $750,000 over the three-year period beginning September 7, 2021 through September 6, 2024. The Board’s August 24, 2021 approval did not include authority to exercise the two optional one-year extensions for either agreement.
On July 22, 2024, the Stadium Authority Executive Director (Executive Director) approved a request from the Stadium Manager to complete an emergency temporary domestic boiler project at Levi’s Stadium. Santa Clara City Code Sections 2.105.260 and 17.30.050 provide authority respectively for City and Stadium Authority emergency purchases for various reasons, including health and safety risks. The Fiscal Year 2024/25 Stadium Authority Capital Expense (CapEx) Budget includes a Plumbing - Boilers line item in the amount of $735,000 for the replacement of the permanent domestic boiler, which the Stadium Manager planned to complete in 2025. However, the existing domestic boiler deteriorated more rapidly than originally anticipated thus necessitating a temporary bypass allowing for a mobile domestic boiler to be put in place in the event the existing permanent domestic boiler fails. The Stadium Manager advised that failure of the existing domestic boiler would result in no hot water being available at the Stadium. Hot water serves numerous health and safety purposes and is essential for the safe operation of the Stadium.
The Stadium Manager obtained quotes from ACCO Engineered Systems, Inc. and O.C. McDonald Co., Inc. for the emergency project and received a lower estimate from the latter, in the amount of $280,414 (project estimate plus a 10% contingency). As part of the Stadium Manager’s emergency request, the Executive Director approved an Amendment No. 1 to the existing Agreement with O.C. McDonald Co. (Attachment 4) to increase the not to exceed amount by $254,922 (from $250,000 to $504,922) for the third year of the agreement term and use of the Plumbing - Boilers CapEx Project funds to cover the costs associated with the temporary domestic boiler project.
The Stadium Manager has a continued need for the mechanical and plumbing maintenance and repair services and is requesting approval to execute the following:
1. An Amendment No. 1 to the Agreement with ACCO Engineered Systems, Inc. (Attachment 4) that will 1) extend the term for one year beginning September 7, 2024 through September 6, 2025, with an option to extend for one additional year, in an amount not to exceed $250,000 for the fourth contract year and a total not to exceed amount of $1,000,000 over the entire four-year term, and 2) increase compensation rates for the fourth contract year.
2. An Amendment No. 2 to the Agreement with O.C. McDonald Co., Inc. (Attachment 5) that will 1) extend the term for one year beginning September 7, 2024 through September 6, 2025, with an option to extend for one additional year, in an amount not to exceed $250,000 for the fourth contract year and a total not to exceed amount of $1,254,922 over the entire four-year term, and 2) increase compensation rates for the fourth contract year.
The Recommendation Memo submitted by the Stadium Manager describes the request and justification for the rate increases in more detail (Attachment 6).
DISCUSSION
The Stadium is a 1.8 million square foot facility that utilizes complex mechanical and plumbing components throughout the Stadium. The Stadium Manager entered into the existing agreements with ACCO Engineered Systems, Inc. and O.C. McDonald Co., Inc. to establish a list of qualified and experienced contractors to provide maintenance and repair services on an as needed basis and has a continued need for such services.
As described in the Stadium Manager’s Recommendation Memo, the Stadium Manager utilizes the agreements by obtaining quotes from both contractors and issuing task orders for services based on lowest cost and availability. Below is a summary of expenditures during the initial term of the agreements:
ACCO Engineered Systems, Inc.
• Contract Year One: $237,013.13
• Contract Year Two: $244,417.20
• Contract Year Three: $174,017.43
O.C. McDonald Co., Inc.
• Contract Year One: $0.00
• Contract Year Two: $37,424.02
• Contract Year Three: $254,922
Both contractors are proposing rate increases due to labor union contracts and cost of living adjustments, among other things.
ACCO Engineered Systems, Inc.’s proposed rate increase for year four ranges from 3.5% to 10%. The vendor provided cost of living adjustments, market conditions, and union contracts as reasons for the proposed rate increase. Rate increases were previously implemented once for year two of the agreement with ACCO Engineered Systems, Inc. (Attachment 7).
O.C. McDonald Co., Inc. did not have any rate increases during the three-year term and has proposed rate increases for the first time in the year four which ranges from 1.75% to 20.19% for daily weekday rates to substantiate increases associated with the vendor’s annual Union Labor Agreement for labor rates, which were updated in June to reflect the cost of living in the region for 2024-25.
The existing agreements’ Exhibit G - Rate Schedule includes language that allows for rate increases: “Contractor may request adjustments to the billable labor rates on each one-year anniversary during the initial three-year term of the agreement, plus any one year options to renew the agreement after the initial term. Contractor must demonstrate to the satisfaction of the Stadium Manager that a price increase is warranted. Price adjustments are subject to Stadium Manager's approval. Increases shall not exceed 3% annually, unless prevailing wage increases by more than 3%.”
The Stadium Manager is proposing to move forward with amending the agreements with the described rate increases reflected in each proposed amendment’s respective Exhibit G-1 and to update the Exhibit G-1 - Rate Schedule language to also reflect rate increases that may exceed 3% annually due to union labor contract increases.
Based on the information above and review of the Stadium Manager’s request and supporting documentation, staff recommends approval of the Stadium Manager’s request to execute an Amendment No. 1 to the Agreement with ACCO Engineered Systems, Inc. and Amendment No. 2 to the Agreement with O.C. McDonald Co., Inc. to ensure continuity of mechanical and plumbing maintenance and repair services at Levi’s Stadium.
The Stadium Authority Counsel’s Office has reviewed both amendments to the agreements for comparison to the Stadium Authority’s customary language. Nothing in the proposed amendments changes the Stadium Authority’s rights under the Management Agreement and specifically with respect to any dispute that may arise from the Stadium Manager’s obligations under the Management Agreement.
The Stadium Authority reserves all rights to confirm and dispute charges by and payments to the Stadium Manager during a fiscal year-end reconciliation/true-up, including but not limited to changes based on improper allocation, calculation, lack of support, or failure to comply with the Parties’ contracts or California law. The Stadium Authority may raise related questions before the fiscal year-end reconciliation/true-up, which the Stadium Manager agrees to assess and respond to in good faith.
ENVIRONMENTAL REVIEW
The actions being considered do not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(a) as it has no potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment or pursuant to CEQA Guidelines section 15378(b)(4) in that it is a fiscal activity that does not involve any commitment to any specific project which may result in a potential significant impact on the environment.
FISCAL IMPACT
The Stadium Authority Fiscal Year (FY) 2024/25 Budget contains Shared Stadium Expenses such as Security, Stadium Operations, Engineering, Guest Services, and Groundskeeping. Shared Stadium Expenses are split 50/50 between the Stadium Authority and StadCo per the Stadium Lease. There are sufficient funds in the FY 2024/25 Shared Stadium Expenses Engineering line item to cover the Stadium Authority’s fifty percent (50%) of the Shared Stadium Expenses portion of the agreement costs for both agreements’ respective fourth contract year (up to $125,000 per agreement). As the agreement extensions cover multiple fiscal years, the terms for subsequent fiscal year(s) will be conditioned upon approval of the Stadium Authority budget for the applicable fiscal year.
COORDINATION
This report has been coordinated with the Stadium Authority Counsel and Treasurer’s Office.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov.
RECOMMENDATION
Recommendation:
1. Approve the Stadium Manager’s request to execute an Amendment No. 1 to the Agreement with ACCO Engineered Systems, Inc. to extend the term for one year beginning September 7, 2024 to September 6, 2025 with an option to extend for one additional year, in an amount not to exceed $250,000 for the fourth contract year and a total not to exceed amount of $1,000,000 and increase compensation rates for the fourth contract year, subject to budget appropriations; and
2. Approve the Stadium Manager’s request to execute an Amendment No. 2 to the Agreement with O.C. McDonald Co., Inc. to extend the term for one year beginning September 7, 2024 to September 6, 2025 with an option to extend for one additional year, in an amount not to exceed $250,000 for the fourth contract year and a total not to exceed amount of $1,254,922 over the four year term and increase compensation rates for the fourth contract year, subject to budget appropriations.
Staff
Reviewed by: Chuck Baker, Assistant Executive Director
Approved by: Jovan D. Grogan, Executive Director
ATTACHMENTS
1. Agreement with ACCO Engineered Systems, Inc.
2. Agreement with O.C. McDonald Co., Inc.
3. Amendment No. 1 to the Agreement with O.C. McDonald Co., Inc.
4. Proposed Amendment No. 1 to the Agreement with ACCO Engineered Systems, Inc.
5. Proposed Amendment No. 2 to the Agreement with O.C. McDonald Co., Inc.
6. Stadium Manager’s Recommendation Memo
7. ACCO Engineered Systems, Inc.’s Rate Increase Summary