REPORT TO STADIUM AUTHORITY BOARD
SUBJECT
Title
Report from the Stadium Authority Regarding the Stadium Manager’s Request to Execute Agreements with Bear Electrical Solutions, Inc. and Cupertino Electric, Inc. for Electrical Maintenance and Repair Services
Report
BOARD PILLAR
Ensure Compliance with Measure J and Manage Levi’s Stadium
BACKGROUND
On October 8, 2019, the Stadium Authority Board (Board) approved Ordinance No. 2005 amending Chapter 17.30 of the City Code (Stadium Authority Procurement Policy), which rescinded the delegation to the Executive Director to enter into agreements without prior Board approval. As result of Ordinance No. 2005, the Stadium Manager is also required to request Board approval before entering into agreements on behalf of the Stadium Authority. As of the effective date of the Ordinance (November 8, 2019), all Stadium Authority agreements for services, supplies, materials, and equipment require the approval of the Stadium Authority Board.
As the Stadium Manager, Forty Niners Stadium Management Company, LLC (ManCo), 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 Management Agreement between ManCo and the Stadium Authority. Electrical maintenance and repairs are required to maintain Levi’s Stadium.
The Stadium Manager is requesting approval to execute agreements with two vendors, Bear Electrical Solutions, Inc. (Bear Electrical Solutions) and Cupertino Electric, Inc. (Cupertino Electric). Each agreement is for a three-year term, with options to extend for two additional one-year periods (for a total of five years), and a not-to-exceed amount of $250,000 per contract year (for a total not-to-exceed amount of $750,000 for the three-year term). Combined, the request is for a not-to-exceed amount of $1.5 million, which is subject to the Board’s funding approval as part of the annual budgeting process.
Chapter 17.30.070 of the City Code states that, “Except for reserved purchase order numbers assigned by the purchasing officer, the purchasing officer shall not issue any purchase order or award any contract for supplies, materials, or equipment unless there exists an unencumbered appropriation in the proper account of the Stadium Authority to which the purchase is to be charged.” However, the agreements do include language that total compensation shall not exceed $250,000 per contract year and the term for subsequent fiscal years is conditioned upon the Stadium Authority budget for the applicable fiscal year that includes the amounts due under the agreements.
DISCUSSION
Stadium Authority staff reviewed the supporting Request for Proposal (RFP) documents for this scope of work and agreements with Bear Electrical Solutions and Cupertino Electric, and sent questions to the Stadium Manager for response. While the supporting documents for this service are in order, staff requested clarification on the items below to understand whether the contract amounts are appropriate, how the services will be funded, and the Stadium Manager’s procurement approach for using the two vendors. The Stadium Authority’s questions and the Stadium Manager’s responses are below:
SCSA Q1: The collective not-to-exceed amount of $500,000/year for on-call services seems high. Please provide the Stadium Manager’s (1) spend rate for past fiscal years to support on-call services at this level and (2) proposed on-call electrical repair and maintenance services for the proposed three fiscal years to understand how the $500,000/year will be spent.
Stadium Manager Q1 Response: The two on-call repair contracts are “not-to exceed” $250K each annually. There is no commitment to spend $500K annually. Indeed, we expect the annual cost will be less than that in most years. We decided it was prudent to have two contracts with two separate contractors to cover situations where one of the contractors is not available for whatever reason, and to provide an opportunity for some competition on individual task orders. The contractors bill on a time and material basis on an as-needed basis, which will be defined in a project task order.
For FY21, we anticipate the following task orders (all of which are within the FY21 budget):
• Testing of the Primary Main Switch Gear and Primary Switch Gear, - $200,000
• 480V Distribution Equipment Clean and Torque - $50,000
• Inspection and Testing of Emergency Inverter - $7,000
• Building Controls Service and Support - $39,000
• There is also an allowance miscellaneous unanticipated repairs for electrical equipment, security low voltage systems, fire alarm low voltage systems and other general equipment in the FY 2021/22 budget. - $24,000
Prior years’ spend for electrical repair/maintenance was relatively low as the building was new construction in 2014. Lower costs in these earlier years were due to warranty protection, and general low cost associated with maintaining new equipment. However, Industry best practices require testing and maintenance of the major electrical equipment for the first time in the equipment life cycle between years five and ten.
For FY22 and FY23 the expected spend will be determined as part of the budgeting process for those fiscal years.
SCSA Q2: Did the Stadium Manager enter into a contract with BidSync for e-procurement services? The Stadium Authority Procurement Policy requires that all service agreements require Board approval, regardless of cost, and the documentation references the use of BidSync.
Stadium Manager Q2 Response: Yes, Stadium Manager entered into a contract with BidSync (periscope), but that contract was on behalf of StadCo, not the SCSA. Ultimately, we decided to discontinue the use of the Bid Sync product. There was no cost to the SCSA for the use of BidSync.
SCSA Q3: Please let us know where the funds for these services are budgeted.
Stadium Manager Q3 Response: Budgeted in the FY 21 Engineering Outside
Services line item.
SCSA Q4: What is the Stadium Manager’s basis for selecting a vendor to perform the services? E.g., will there be a primary vendor and a back-up? How will both vendors be used?
Stadium Manager Q4 Response: There will not be a primary and back-up contractor. We anticipate approaching both contractors and requesting quotes for the defined scope of work per each task order. We will evaluate which contractor will be awarded the work based on the contractor’s response, availability, cost and expertise. As our experience with the two contractors evolves, we may conclude that one is better suited for particular types of task orders.
It is important to note that the Stadium Manager and the RFP originally described the work as “on-call” services. “On-call” agreements are used for unanticipated needs and to have flexibility of available resources to respond quickly to service need. However, the Stadium Manager’s responses and the agreements’ scope of work reflect general electrical maintenance and repair services, which is different from the scope originally characterized. Except for the need for more transparency on what the actual scope will be for these agreements, there is no other concern with this change since on-call work can be classified as general services.
It appears that the Stadium Manager is setting up master agreements for electrical maintenance and repair services with these two vendors. It is also important to note that when asked who is currently performing this work, the Stadium Manager does confirm in writing through the RFP’s Q&A process that, “We do not have an on-call electrical maintenance and repair services agreement with any vendor currently.” This is yet another example of the lack of standard of care for maintenance of the Stadium, as a facility of this scale and size should have these important services in place for proactive maintenance, repairs, and on-call services when needed.
Stadium Authority staff previously recommended this solution to the Stadium Manager to expedite general service work, which models the City’s practice of having master agreements in place with pre-approved vendors for various services. The Stadium Manager’s vendor selection process, which is described in detail under their response to Q4, is sufficient for determining which vendor to award a task order to. The Stadium Manager should consistently follow the described process to ensure that there is competition and the Stadium Authority receives the best pricing possible.
The Stadium Authority will require full supporting documentation including compliance with prevailing wage laws, if applicable, before releasing public funds upon completion of work at the Stadium. Additionally, the Stadium Manager should work to improve the quality of documentation to demonstrate the proper use of public funds (e.g., improved invoicing, details of expenditures, proper verification, etc.).
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
There are sufficient funds in the FY 2021/22 Legal Contingency to cover the not-to-exceed amount of $500,000 for the first contract year for the service agreements with Bear Electrical Solutions and Cupertino Electric. The Executive Director will approve a budget amendment to reallocate $500,000 of funds from the Legal Contingency to the Stadium Manager Shared Expenses Engineering line item upon approval of staff’s recommendations. Delegation of budget amendment authority for Stadium Manager Shared Expenses from the Legal Contingency was included in the approval of the FY 2021/22 Adopted Budget on March 23, 2021.
COORDINATION
This report has been coordinated with the City’s Purchasing Manager and 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.
ALTERNATIVES
1. Approve the Stadium Manager’s request for authority to execute an agreement with Bear Electrical Solutions, Inc. in an amount not-to-exceed $250,000 per contract year (for a total not-to-exceed amount of $750,000 over the initial three-year term), subject to budget appropriations for every contract year, and authorize the Executive Director to approve and process the reimbursement of such costs upon receiving final invoices and supporting documentation from the Stadium Manager;
2. Approve the Stadium Manager’s request for authority to execute an agreement with Cupertino Electric, Inc. in an amount not-to-exceed $250,000 per contract year (for a total not-to-exceed amount of $750,000 over the initial three-year term), subject to budget appropriations for every contract year, and authorize the Executive Director to approve and process the reimbursement of such costs upon receiving final invoices and supporting documentation from the Stadium Manager;
3. Do not approve the Stadium Manager’s request for authority to execute an agreement with Bear Electrical Solutions, Inc. in an amount not-to-exceed $250,000 per contract year (for a total not-to-exceed amount of $750,000 for the initial three-year term);
4. Do not approve the Stadium Manager’s request for authority to execute an agreement with Cupertino Electric, Inc. in an amount not-to-exceed $250,000 per contract year (for a total not-to-exceed amount of $750,000 for the initial three-year term); or,
5. Any other direction from the Board.
RECOMMENDATION
Recommendation: Alternatives 1 and 2
1. Approve the Stadium Manager’s request for authority to execute an agreement with Bear Electrical Solutions, Inc. in an amount not-to-exceed $250,000 per contract year (for a total not-to-exceed amount of $750,000 over the initial three-year term), subject to budget appropriations for every contract year, and authorize the Executive Director to approve and process the reimbursement of such costs upon receiving final invoices and supporting documentation from the Stadium Manager; and
2. Approve the Stadium Manager’s request for authority to execute an agreement with Cupertino Electric, Inc. in an amount not-to-exceed $250,000 per contract year (for a total not-to-exceed amount of $750,000 over the initial three-year term), subject to budget appropriations for every contract year, and authorize the Executive Director to approve and process the reimbursement of such costs upon receiving final invoices and supporting documentation from the Stadium Manager.
Staff
Prepared by: Christine Jung, Assistant to the Executive Director
Reviewed by: Deanna J. Santana, Executive Director