REPORT TO STADIUM AUTHORITY BOARD
SUBJECT
Title
Action on the Stadium Manager’s Request to Approve an Amendment No. 2 with ACCO Engineering Systems, Inc. and an Amendment No. 3 with O.C. McDonald Co., Inc. to Extend the Agreement Terms for One Year and Increase the Not to Exceed Amounts by $250,000 for On-Call 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 Santa Clara Stadium Authority (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. (ACCO Engineered Systems) and O.C. McDonald Co., Inc. (O.C. McDonald Co.) 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.
Original Agreements and Related Amendments
The Agreement with ACCO Engineered Systems (Attachment 1) and the Agreement with O.C. McDonald Co. (Attachment 4) 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. Failure of the domestic boiler would have resulted 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 and O.C. McDonald Co. for the emergency project and received a lower estimate from the latter. 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 5) 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 Fiscal Year (FY) 2024/25 Plumbing - Boilers Capital Expense (CapEx) Project funds to cover costs associated with the emergency project.
On August 6, 2024, the Stadium Authority Board approved the Stadium Manager’s request to execute an 1) Amendment No. 1 to the Agreement with ACCO Engineered Systems to extend the term 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 with compensation rate increases for the fourth contract year, subject to budget appropriations (Attachment 2); and 2) Amendment No. 2 to the Agreement with O.C. McDonald Co. to extend the term for one year 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 four year term and compensation rate increases for the fourth contract year, subject to budget appropriations (Attachment 6).
Stadium Manager Request
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. Amendment No. 2 to the Agreement with ACCO Engineered Systems (Attachment 3) that will extend the term for one year beginning September 7, 2025 through September 6, 2026, in an amount not to exceed $250,000 for the fifth contract year and a total not to exceed amount of $1,250,000 over the five-year term, and increase the labor rates for the fifth contract year; and
2. Amendment No. 3 to the Agreement with O.C. McDonald Co. (Attachment 7) that will extend the term for one year beginning September 7, 2025 through September 6, 2026, in an amount not to exceed $250,000 for the fifth contract year and a total not to exceed amount of $1,504,922 over the five-year term.
The Recommendation Memo submitted by the Stadium Manager describes the request and justification for the rate increases in more detail (Attachment 8).
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 and O.C. McDonald Co. 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.
During the term of their respective agreements, both ACCO Engineered Systems and O.C. McDonald Co. worked on mechanical and plumbing systems throughout the Stadium. The services performed include working on all aspects of the HVAC systems including resolving problems with air handling, cooling towers, refrigeration, supply and return fans, and exhaust fans. They have provided maintenance and repairs for various boiler systems. In addition, they have performed work on various plumbing systems ranging from repairing pipes to addressing sewer and storm drainage system issues.
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 availability and lowest cost. Below is a summary of expenditures during the term of the agreements:
ACCO Engineered Systems
• Contract Year One: $237,013.13
• Contract Year Two: $244,417.20
• Contract Year Three: $248,226.43
• Contract Year Four (as of June 12, 2025): $38,407.99
O.C. McDonald Co.
• Contract Year One: $0.00
• Contract Year Two: $37,424.02
• Contract Year Three: $254,922 (amendment issued utilizing Stadium Authority CapEx funds)
• Contract Year Four (as of June 12, 2025): $0.00
ACCO Engineered Systems is proposing a 3% rate increase in labor rates to compensate for annual union signatory labor increases. This increase is consistent with the following provision in the Agreement under Exhibit G-1 Rate Schedule: “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%.”
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. 2 to the Agreement with ACCO Engineered Systems and Amendment No. 3 to the Agreement with O.C. McDonald Co. 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 or agreements 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 action being considered does 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 FY 2025/26 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 2025/26 Shared Stadium Expenses Engineering line item to cover the Stadium Authority’s portion (50%) of the agreement costs for both agreements’ respective fifth contract year (up to $125,000 per agreement). As the agreement extensions cover multiple fiscal years, the terms for subsequent fiscal year(s) are 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. 2 to the Agreement with ACCO Engineered Systems to 1) extend the term for one year beginning September 7, 2025 to September 6, 2026, in an amount not to exceed $250,000 for the fifth contract year and a total not to exceed amount of $1,250,000, subject to budget appropriations, and 2) increase the labor rates by 3% as outlined in Exhibit G-2 for the fifth contract year; and
2. Approve the Stadium Manager’s request to execute an Amendment No. 3 to the Agreement with O.C. McDonald Co. to extend the term for one year beginning September 7, 2025 to September 6, 2026, in an amount not to exceed $250,000 for the fifth contract year and a total not to exceed amount of $1,504,922, 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
2. Amendment No. 1 to the Agreement with ACCO Engineered Systems
3. Proposed Amendment No. 2 to the Agreement with ACCO Engineered Systems
4. Agreement with O.C. McDonald Co.
5. Amendment No. 1 to the Agreement with O.C. McDonald Co.
6. Amendment No. 2 to the Agreement with O.C. McDonald Co.
7. Proposed Amendment No. 3 to the Agreement with O.C. McDonald Co.
8. Stadium Manager’s Recommendation Memo