REPORT TO COUNCIL
SUBJECT
Title
Action on an Award of Contract for the Kifer and Scott Receiving Station Rebuild and Replacement Project No. 2453 and 2456 to DMZ Builders and Related Budget Amendment
Report
COUNCIL PILLAR
Deliver and Enhance High Quality Efficient Services and Infrastructure.
BACKGROUND
The City of Santa Clara’s Electric Department, Silicon Valley Power (SVP), issued a public works bid packet for the Kifer Receiving Station and Scott Receiving Station Rebuild and Replacement Project, Project Nos. 2453 and 2456, respectively. The proposed projects were identified in SVP’s Three-Year System Growth Plan Strategy that was accepted by the City Council on September 28, 2021 (RTC #21-871), to support anticipated system growth and to replace end-of-life equipment for system reliability.
The Kifer Receiving Station (KRS) was first constructed in 1955 and has reached the end of its useful life. KRS has a maximum potential capacity of 372 megavolt-amperes (MVA) and will be upgraded to a maximum potential capacity of over 600 MVA. This project includes rebuilding KRS as a Breaker and a Half (BAAH) Air Insulated Switchgear (AIS) substation. The scope of services includes installation of two energized 336 MVA 115/60 kilovolt (kV) power transformers, with accommodations for one future spare 336 MVA 115/60 kV power transformer. The KRS re-build scope will also include seven (7) 60 kV and four (4) 115 kV transmission line terminals.
The Scott Receiving Station (SRS) was first constructed in 1975 and was last upgraded in 2002. SRS has a maximum potential capacity of 372 MVA and will be upgraded to a maximum potential capacity of over 600 MVA. This project includes rebuilding SRS as a BAAH AIS substation. The scope of services includes installation of two energized 336 MVA 115/60 kV power transformers, with accommodation for one future spare 336 MVA 115/60 kV power transformer. The SRS rebuild scope also includes six (6) 60 kV and three (3) 115 kV transmission line terminals.
DISCUSSION
On February 24, 2025, a competitive Request for Bid was published on the City’s bid notification system, BidNet Direct, for the projects. On May 1, 2025, the project bids were opened at the City Clerk’s office. The City received two (2) bids from Newtron, LLC (Newtron) and DMZ Builders (DMZ) ranging from $13,405,695 to $117,688,674.
At the bid opening, Newtron was declared the lowest apparent bidder with a submitted bid in the amount of $13,405,695. Upon evaluation, it was determined that Newtron inadvertently left a digit out in the City’s e-procurement system, BidNet, and their bid proposal and bid schedule substantiated a bid of $113,405,695, which is 6% percent less than the Engineer’s Estimate of $121,200,000. The corrected Bid Summary is included as Attachment 1.
On May 9, 2025, Newtron formally withdrew their bid for consideration as they listed an incorrect subcontractor and value in their bid. Subsequently, on the same day, the City notified DMZ that Newtron’s bid was withdrawn and that their bid was being evaluated for award as the next lowest bidder. DMZ submitted a bid in the amount of $117,688,674 which is 3% less than the Engineers Estimate.
DMZ’s bid was reviewed by SVP staff for compliance with the terms and conditions of the bid documents and has been determined to be the lowest responsive and responsible bid. Staff recommend awarding the contract to DMZ.
Awarding the contract will allow construction to commence in order to complete the project on schedule. The contract includes prevailing wage requirements.
ENVIRONMENTAL REVIEW
The proposed projects are exempt from the California Environmental Quality Act (“CEQA”) pursuant to Section 15268 of Title 14 of California Code of Regulations as it has been deemed ministerial based on the existing zoning of the project site and under the applicable laws and ordinances.
FISCAL IMPACT
The cost of the construction contract is $117,688,674, plus a 15% contingency, or $17,653,301, for any potential change orders for a total not-to-exceed contract amount of $135,341,975. Funding for the contract is included in the KRS and SRS Rebuild and Replacement Projects in the FY 2025/26 Adopted Budget. On September 10, 2024, the City Council approved the issuance of electric revenue bonds which fund the design and materials purchases associated with these projects. The FY 2025/26 Adopted Budget assumes additional debt will be issued to support the construction costs funded in the budget. Staff will present a recommendation in the future to initiate the debt-funding for FY 2025/26, either a short-term credit facility or long-term debt will be recommended.
While there is sufficient budget, including contingency, for the Construction Contract with DMZ, staff recommend the appropriation of additional funds to support other costs, such as project management services, construction management services, testing and commissioning support services, special testing services, and additional equipment and materials costs (e.g., transformers). Due to long lead times, SVP is purchasing many of these associated equipment and materials directly and so those costs are not included in this Construction Contract. Staff have estimated these costs and have added a 5% contingency in case of any additional unanticipated needs. Staff recommend the budget amendment below in the Electric Utility Capital Fund to allocate $6 million for the KRS Rebuild and Replacement Project No. 2453 and $9 million for the SRS Rebuild and Replacement Project No. 2456, funded by anticipated Load Development Fees. Contracts and authorizations associated with these activities have been authorized under separate City Council actions where applicable.
Budget Amendment
FY 2025/26
|
|
Current |
Increase/ (Decrease) |
Revised |
|
Electric Utility Capital Fund (591) |
|
|
|
|
Revenues |
|
|
|
|
Other Revenue |
$34,544,978 |
$15,000,000 |
$49,544,978 |
|
|
|
|
|
|
Expenditures |
|
|
|
|
KRS Rebuild and Replacement Project |
$93,024,573 |
$6,000,000 |
$99,024,573 |
|
SRS Rebuild and Replacement Project |
$86,112,417 |
$9,000,000 |
$95,112,417 |
COORDINATION
This report has been coordinated with the Finance Department, Human Resources Department, and the City Attorney’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 or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
1. Award the Public Works Contract for the Kifer Receiving Station and Scott Receiving Station Rebuild and Replacement Projects, No. 2453 and 2456, to the lowest responsive and responsible bidder, DMZ Builders in the amount of $117,688,674 (Contract Price) and authorize the City Manager or designee to execute the Contract (Contract), subject to the review and approval as to form by the City Attorney;
2. Authorize the City Manager or designee to take any actions necessary to implement and administer the Contract including executing any and all documents in furtherance of the award, completion, and acceptance of these projects and approval of any necessary change orders not to exceed 15 percent of the Contract Price, or $17,653,301, for a total not to exceed aggregate Contract amount of $135,341,975; and
3. Approve the FY 2025/26 budget amendment in the Electric Utility Capital Fund to increase Other Revenue to recognize additional Load Development Fee revenue in the amount of $15 million, increase the Kifer Receiving Station Rebuild and Replacement Project in the amount of $6 million, and increase the Scott Receiving Station Rebuild and Replacement Project in the amount of $9 million (five affirmative Council votes are required to appropriate additional revenue).
Staff
Reviewed by: Nico Procos, Acting Director of Silicon Valley Power
Approved by: Jovan D. Grogan, City Manager
ATTACHMENTS
1. Bid Summary